(FORTUNE Magazine) – The early reviews of Inside Warner Bros. (1935-51) have told you to read the book for its entertainment value, which is indeed considerable. But long before I had finished Rudy Behlmer's superbly edited collection of interoffice correspondence from the studio's great days, I was impressed by a quite different virtue of Inside Warner (Viking, $19.95). The book is marvelously illuminating on the subject of management. It keeps reminding you that in the great days, movies were actually produced on time and on budget. Warner's itself was dependably profitable. The letters do much to explain this remarkable state of affairs. Casablanca, Yankee Doodle Dandy, The Maltese Falcon, Little Caesar, The Adventures of Robin Hood, The Treasure of the Sierra Madre, Mildred Pierce, The Big Sleep, and (lest we forget the best screen acting the current occupant of the White House ever did) Kings Row -- these were all Warner films. In their several genres, each is a logical candidate for best-of-breed. And several decades later, all of them remain beloved movies that one can watch with aesthetic pleasure and without any campy condescension to the dated conventions and stylizations of their historical moment. At Warner Bros., at least, the profit-driven studio system had more than profits to be proud of. One might argue that Warner's record is a matter of purely historical interest. The studio system is gone forever, and conditions in the motion picture industry have changed so radically that an examination of one studio 40 or 50 years ago might seem irrelevant today. But the book's antique memos convey another message: that the gift of managing a business as singular as a motion picture production company may just be immutable, and that one reason Hollywood is in trouble today is that executives of the old-fashioned kind are in disastrously short supply. Of course, today's not-quite-mogul lacks the ultimate disciplinary weapon that the long-term contract afforded his predecessors. He cannot, for example, place stars and directors under suspension without pay if they refuse to do a picture. And yet Behlmer's book suggests that studio bosses had less usable power than one might suppose. The bosses certainly did not want to deny themselves the services of people able to lure millions into theaters. The stars, meanwhile, knew that if they simply hinted at their willingness to accept an unpaid vacation now and then, and combined the hints with a certain amount of flattery and wheedling, they could get out of almost any assignment. Or get into a picture they truly longed to do. The current Hollywood cant phrase -- ''It's a relationship business'' -- applied as strongly then as now. What the front office spent most of its time on was what we might nowadays term cost efficiency. Efficiency was an obsession with crude, shrewd Jack Warner, who supervised production while his brothers attended to more boring matters, like distribution and finance. Jack was known to prowl the lot looking for lights that had been left on unnecessarily. But what riled him most were directors who required too much time to set up their shots or, worse, wasted time shooting material that would never make it to a film's final cut. ''If you will stop all this superfluous roaming camera,'' he once memoed director Michael Curtiz, ''you will make a great picture . . . For your information, in the case of Four Daughters 2,000 feet had to be cut out of everything you worked so hard and wasted your time on . . . As an example, the reflection shot of Jeffrey Lynn at the piano was 64 feet long, took several hours to get ready, and we had to take it out . . . Do you call this good business . . . ?'' WARNER USUALLY DID NOT go into this much detail in his chidings. Mostly he was content to set a frugal tone for the studio, leaving his underlings to find the pennies most in need of pinching, the troubles most in need of shooting. Chief among the underlings was Hal B. Wallis, who in 1933 succeeded Darryl Zanuck as Warner's executive producer and held the job for a decade. Wallis today is pretty much a forgotten figure, perhaps because he never became a C.E.O., perhaps because he generally hid his keen intelligence and movie sense under a phlegmatic manner. But he is the central figure of Inside Warner Bros., and the man whose management style should be the subject of respectful study among young people thinking of getting into the movie business. All the day-to-day decision-making flowed through his office; all the crises came to him for resolution. Was Paul Muni's makeup for The Life of Emile Zola too good, so the audience could not recognize their favorite? Wallis stepped in to make sure the star looked more like Muni, less like Zola. Did Errol Flynn hate his Robin Hood wig? Wallis would see to it that he had something more comfortable. Did Erich Wolfgang Korngold object to scoring Robin Hood? (''I am a musician of the heart, of passions and psychology,'' he told the executive producer. ''I am not a musical illustrator.'') Wallis refused to release him from the job, and he won an Oscar for his efforts. Were George Raft and Edward G. Robinson almost at blows on the set of Manpower, where both had fallen for their co-star, Marlene Dietrich? Wallis would be called on to smooth things over. Were the Hays office censors telling the studio it could not make something as racy as Kings Row? Wallis would lead the search for innuendoes that might replace the explicit details offensive to the Hays people. Did George Raft think he would be better than Humphrey Bogart for the lead in Casablanca and pressure Jack Warner for the part? Wallis turned him aside. (''He hasn't done a picture here since I was a little boy, and I don't think he should be able to put his fingers on just what he wants to do when he wants to do it.'') Wallis ran a tight ship. Like every studio then and now, Warner Bros. remade past hits, but with Wallis in command, this was not just a case of dusting off old story ideas and doing them over. The studio thriftily dusted off the old footage too, and whenever possible it ran this used material into the new picture. Directors worked with small viewing screens nearby so that they could perfectly match their new shots to the old ones available for ready reference in the machines. Under Wallis, the studio also pioneered the style that has come to be known as film noir. It called for night shooting and lots of fog, and provided an effective atmosphere for thrillers. But what really commended it to Wallis and Warner Bros. was that the murkiness permitted them to scrimp on sets. You could slap up a doorway and a lamppost on a relatively short stretch of cobbled pavement, and the mist and blackness would hide the fact that your sets didn't quite stretch to the edge of the picture frame. It is perhaps needless to add that the studio produced no equivalents of Heaven's Gate or Revolution (to name the latest extravaganza more notable for cost overruns than content) while Wallis ran Warner Bros. Obviously, he had a head for detail. And no taste for long lunches. But -- and this was his great strength -- he knew as much about practical moviemaking as anyone who worked for him. This included Curtiz, who was one of the best directors under Warner contract. Inside Warner includes numerous Wallis memos to the director reiterating a point Jack Warner had previously made, which was that Curtiz's trademark, the complicated moving camera shot, was too expensive and slowed down the narrative. When the director resisted these memos, and tried to get his own way by ''cutting in'' the camera (that is, providing only enough angles so that the picture had to be edited his way), the executive producer instantly caught him out and laid down the law. ''I remember . . . when you came to my office and pleaded . . . to make this picture,'' wrote Wallis, ''and promised that if you got it you would absolutely behave and do everything that you were told to do . . . '' Wallis had a quite different problem with Raoul Walsh, the studio's other great director. Walsh was an action man, determined to bang the story along but oblivious to the atmospherics that were so important to Curtiz. In dealing with Walsh, Wallis constantly counseled taking time to shoot the flowers, if not actually sniff them. ''Those straight-on two-shots and individual close- ups are going to get monotonous and make for choppy cutting,'' he wrote in one memo. In another he ordered Walsh to reshoot the ending for The Roaring Twenties and laid out, shot for shot, the wonderfully melodramatic sequence that appears in the finished film. It requires James Cagney, a gangster redeemed by love, to die on church steps in the snow, as Gladys George speaks his epitaph: ''He used to be a big shot.'' The words turned out to be one of the great movie tag lines, and the whole sequence, originated by a profit- seeking manager, was utterly unlike anything else Walsh ever made. AND YET, WITH ALL the hectoring and nagging about costs that Curtiz and Walsh put up with, they seemed to like it at Warner. Curtiz worked there for a quarter of a century, Walsh for more than a decade, and both did all their best work there. What both must have sensed is that, along with control of their excesses, they were being offered guidance by a knowledgeable executive who encouraged their strengths. This kind of relationship cannot be sustained if the man in nominal charge cannot talk the language of the artists and craftsmen he employs. It cannot be sustained by people unable to recognize the moment where a script or a director or a performer has gone wrong, or even if they have this insight, unable to suggest practical alternatives. In short, the relationship cannot be sustained by people whose knowledge of the picture- making process begins and ends with the deal memo. Inside Warner's ultimate message about management is that managers need a lot of ground-level experience in the businesses they run. In Hollywood today, ignorance of movie-making details is pervasive at the top, which is why big decisions are so often driven by ''artistic'' arrogance and egotism. What the business has seemingly forgotten is that in a relationship business, relationships need to be based on mutual respect.