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According to some contemporary sources, this film was based on the story Dracula's Guest by Bram Stoker. However this story, originally a chapter of Stoker's novel Dracula, was not published until 1937, twenty-five years after the author's death. According to modern sources, the film Dracula's Daughter was also loosely based on the 1872 British novel Carmilla by Sheridan Le Fanu, frequently called the first work of British fiction to deal with lesbian relationships. Oliver Jeffries, a name included in the onscreen credits after Stoker's with the words "Suggested by Oliver Jeffries," was a pseudonym for David O. Selznick, an executive producer at M-G-M from 1933 to 1936. According to news items in Hollywood Reporter and Daily Variety, Selznick considered purchasing the story for use by M-G-M, however, Universal purchased the rights in July 1934. Information contained in the Universal properties book notes that the rights were obtained by Universal on October 5, 1934. The news items record that rights to the story were to revert to M-G-M if Universal did not begin production by October 1935, however, Universal was granted an extension to February 1936. Hollywood Reporter notes that Universal began production in February 1936 with the script only partially completed in order to meet their final deadline. The Screen Achievements Bulletin notes that Garrett Fort's screenplay was developed from a story by John L. Balderston, based on Stoker's story, and a production chart in Hollywood Reporter credits the original story to Balderston and R. C. Sherriff. The Universal properties book indicates that Balderston's treatment, submitted to Universal in January 1934 (and possibly originally submitted to M-G-M), was the first, followed by a short treatment by Kurt Newman, that apparently was rejected. Subsequent to Sheriff's first screenplay submission in July 1935, he wrote three revisions through October 1935. Fort wrote two versions, one in January and one in February 1936. The final Fort screenplay, with revisions by Charles Belden in March 1936, was apparently the one used for the film, and he is the other writer credited onscreen, aside from Stoker.
Bela Lugosi was initially slated to appear in the film, as noted by Daily Variety news items. Edward Van Sloan, who appeared as Professor Von Helsing, portrayed the same character in Universal's Dracula. A pre-production news item credits Charles Carroll with sound. According to correspondence in the file on the film in the MPAA/PCA Collection at the AMPAS Library, a story was submitted unofficially to the Hays Office, which advised Carl Laemmle, Jr. that it was unacceptable under the guidelines of the Production Code. Further revisions by Sherriff were still found to contain an unacceptable "combination of sex and horror." In a letter to Joseph I. Breen, director of the Studio Relations Office of the AMPP, associate producer E. M. Asher announced that the first script had been discarded. During a February 1936 conference with Universal executive Harry Zehner, Asher and Fort, Hays officials requested that the scene in which the character Lili poses for a painting by Marya be handled in a manner to suggest that she was not modelling nude. In addition, they asked that "the whole sequence...will be treated in such a way as to avoid any suggestion of a perverse sexual desire on the part of Marya or of an attempted sexual attack by her upon Lili." In April 1936, the completed film was viewed and deemed acceptable by the Hays Office, although it was later rejected by some countries for its horror elements.