The industry itself tended to assume that great aspirations equalled great art, which explains how movies like HAMLET and GENTLEMAN’S AGREEMENT managed to win the Academy Award: the “worthy” movie was the Hollywood ideal of a great movie.
To follow up on this: one way you can get an idea of what Hollywood thought of itself, and what it thought of as the best it had to offer, is by looking at the winners of the Academy Award for Best Picture. It's often noted that the Best Picture winners tend to be middle-of-the-road, "worthy" pictures; the stuff that Hollywood did best -- like musicals, screwball comedies, swashbucklers, gangster pictures -- rarely managed a win or even a nomination. And that's exactly the point: in the industry, the genre stuff was thought of as bread-and-butter commercial work, rather than Art. And Hollywood's idea of Art was something that dealt directly with serious issues, preferably based on a novel (because a story conceived by a successful novelist was thought to be of more value than a story pitched out by a mere screenwriter). But you'll also notice that very few open "message" pictures won Best Picture. Gentleman's Agreement is an exception, but in general, the Academy tended to avoid pictures that were openly built around a message. Stanley Kramer, thankfully, never won a Best Picture award; in 1968, the Best Picture was not Kramer's rotten "message" picture about race, Guess Who's Coming To Dinner, but an entertaining detective picture about race, In the Heat of the Night. Which is to say that the Academy's selections have been middle-of-the-road and kind of bland, but they're not as bad as they could have been, because the industry voters at least recognized the need for a movie to be entertaining and well-made; hence they ignored the openly preachy or badly-made movies that the New York Times critics used to praise. Put it this way: West Side Story is the ultimate Best Picture winner: middlebrow, impersonal, a genre picture that tries desperately not to be a genre picture, a picture with a good humanist message. But at least it beat out Judgement at Nuremberg, which just plain sucked.
One other example of Hollywood self-evaluation comes in one of my favorite movies, The Bad and the Beautiful, directed by Vincente Minnelli, produced by John Houseman and written by Charles Schnee. The main character of the movie is a movie producer played by Kirk Douglas, who is mostly modelled on David O. Selznick but whose story also borrows from the lives of various other producers, including Val Lewton, producer of the Cat People movies. At one point in the movie, Douglas and his director friend (Barry Sullivan) finish making "Doom of the Cat Men," and find that the studio now expects them to make a sequel. Frustrated with making cheap horror movies, Sullivan declares: "Enough practicing. It's time we made one for real," and pitches his dream project: an adaptation of a big thick novel called "The Faraway Mountain," which appears to be a big, serious picture that demands to be shot on location in Vera Cruz. Douglas takes all the credit for the idea, produces the picture with someone else directing, and wins an Academy Award. The implication throughout The Bad and the Beautiful is that the best Hollywood pictures are the biggest, and that the Douglas character is great because he produces big, ambitious, Selznick-type pictures. That's a weakness in the film, because it's hard to agree with that evaluation of Selznick, and by extention Douglas's character. As one critic pointed out, we know now that "Doom of the Cat Men" would probably turn out to be a better and more entertaining picture than "The Faraway Mountain."
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