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The Dolly Sisters is based on the lives of Yansci and Roszika Deutch, twin sisters who were born near Budapest, Hungary in 1892 and immigrated to the United States in 1900. [In the film, their Hungarian first names are spelled Jansci and Rozsicka, a less-used alternative spelling. Also, the sisters in the film are not twins.] The dark-haired sisters, who became famous under the names Jenny and Rosie Dolly, were as well known for their beauty, romantic attachments and exploits in European casinos as for their dancing. Although the sisters were indeed world-famous dancers, much of the film's story is fabricated. Rosie's first husband was songwriter Jean Schwartz, and after their divorce in 1921, she married millionaire Mortimer Davis, Jr. in 1927. After divorcing Davis, Rosie married department store owner Irving Netcher in 1932. Jenny was married to Harry Fox from 1914 to 1920, and married lawyer Bernard Vinnisky in 1935. The sisters, who began their career in 1907 in vaudeville, went on to star in musical shows produced by Florenz Ziegfeld, Oscar Hammerstein and Charles Cochran, and perform in plays in New York, London and Paris. In 1915, Jenny starred in the Kalem Co. film The Call of the Dance, directed by George L. Sargent, and Rosie appeared in Fine Arts Film Co.'s picture The Lily and the Rose, which was produced by D. W. Griffith. In 1918, the twins were directed by Leonce Perret in The Million Dollar Dollies (see AFI Catalog of Feature Films, 1911-20; F1.0571, F1.2497 and F1.2943). The sisters retired in 1927, but because of their highly publicized gambling exploits, their fame persisted. Jenny adopted two young Hungarian orphans, Klari and Manzi, in 1929, and was seriously injured in an automobile accident in 1933. After her recovery, Jenny returned to the United States with her daughters and married Vinnisky. Jenny committed suicide in 1941, and Rosie died of a heart attack in 1970. According to information in the Twentieth Century-Fox Records of the Legal Department and the Produced Scripts Collection, both of which are located at the UCLA Arts-Special Collections Library, when Rosie sold the rights to the story of the Dolly Sisters to Fox for $52,500, the studio was forbidden to include in the film any information about Jenny's adoption of Klari and Manzi or her suicide. The studio records also reveal that the film was partly based on a fourteen-page biography of the sisters, written by Rosie, as well as scrapbooks, correspondence, newspaper clippings, etc. that she supplied.
Hollywood Reporter news items announced that Fox was producing a film about the Dollys in May 1943, and later news items and studio records reveal that Alice Faye was originally scheduled to play "Jenny." Faye declined to make another musical, however, and instead appeared in the drama Fallen Angel (see below). The film's production was delayed due to Betty Grable's pregnancy, and during her temporary retirement from the screen, Fox considering casting other actresses, including Gale Robbins, Janet Blair, Vivian Blaine, Patricia Romero and the Dowling Twins. Studio records indicate that Robert Wyler May have worked on the screenplay, although his contribution to the completed film is doubtful. Hollywood Reporter news items and a studio press release note that John M. Stahl was originally scheduled to direct the picture, Milton Berle was set to play "Professor Winnup" and Jessel was set to play himself in the picture. According to studio records, Jessel was to play the master of ceremonies in the benefit show sequence at the end of the picture. Jessel, who knew the Dolly Sisters, also wrote a foreword about them included in early versions of the screenplay, but it was not used in the finished picture. A Hollywood Reporter news item noted that Jessel would not appear in the picture due to the pressures of his producing schedule.
The film marked Jessel's debut as a motion picture producer, and also marked the return to the screen of actor John Payne, who had served in the military for two years. Studio records indicate that J. Edward Bromberg was originally signed to play "Oscar Hammerstein," but the casting was protested by Hammerstein's grandson, Oscar Hammerstein, II, who feared that Bromberg would "give the public a visual and mental impression that May be totally different" from what he and production chief Darryl F. Zanuck were contemplating in connection with a biographical film about Hammerstein. [That film, which they intended to call Romance with Music, was not made.] Zanuck assured Hammerstein that the role would be recast "with a more perfect physical double in an effort to match original photographs." Robert Middlemass appears in the role in the completed film. Hollywood Reporter news item and a studio press release include the following actors in the cast, although their participation in the finished picture has not been confirmed: Fefe Ferry, Helen Kimball, Lois Barnes, Lucille Barnes, January Bryant, Juanita Cole, Ann Corcoran, Virginia De Luce, Marietta Elliott, Donna Hamilton, Marjorie Holliday, Savona King, Elaine Langan, Eve Miller, Martha Montgomery, Mary Jane Shores and Yvonne Vautrot. S. Z. Sakall was borrowed from Warner Bros. for the production. The film received an Academy Award nomination for the song "I Can't Begin to Tell You," written by James Monaco and Mack Gordon. Monaco died on October 16, 1945; The Dolly Sisters was his last screen assignement.
Several lawsuits concerning the film were filed, including one by songwriter Jean Schwartz, who was Rosie's first husband. Even though the studio's legal records indicate that Rosie had obtained a release from Schwartz and several other current or former family members, allowing for the use of his "name, likeness, actions and activities, in fact or in fiction," Hollywood Reporter and Los Angeles Examiner news items reported that Schwartz had demanded $100,000 in damages. Schwartz made numerous allegations, including that his career had been damaged by his not being characterized in the film; that there was a breach of oral contract by the studio to employ him as a technical director; that Rosie had misled him to believe his songs would be included in the production; and that the picture presented a gross distortion of history by portraying comedian/actor Harry Fox [Jenny's first husband] as a songwriter, when, in fact, Schwartz was the only songwriter married to either sister. The highly publicized trial, at which Rosie and Jessel testified, was dismissed on April 1, 1947 by Judge Campbell E. Beaumont, who stated that Schwartz could not have been injured by a film in which he was not named or characterized. Harry Fox also filed suit against the studio, Jessel and Rosie in March 1946, claiming that his reputation had been injured by the film's portrayal of him as a "lowly songwriter," according to a Los Angeles Herald Express news item. The same news item also reported that Fox asserted that Rosie "induced him to agree to the film portrayal as part of a 'conspiracy' to injure him." The disposition of Fox's suit has not been determined. The legal files indicate that several other complaints or suits were lodged against the studio, one by Jenny's daughter Klari and another by Beatrice Fox White, who was Harry Fox's third wife, but their exact nature and disposition have not been determined.