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The film's working title was Fathoms Deep. According to a New York Times news item dated May 6, 1949, Republic chose this title to disguise the nature of the film's subject matter. The item added that "the producer of the picture will never be officially identified...because his family is vulnerable to 'reprisals.'" While Republic president Herbert J. Yates is credited onscreen as executive producer, no producer credit is listed. Lloyd G. Davies is credited twice in the cast list, first as "Inspector O'Toole" and second as "Lloyd G. Davies, Member of City Council, Los Angeles, California" the narrator. The Red Menace was originally planned by Irving Allen and James S. Burkett as an independent production, according to a notation in the film's file in the MPAA/PCA Collection at the AMPAS Library. A Los Angeles Times item claimed that "fully 500 persons were interviewed for the nine leading parts in the film and its 10 supporting players." Republic purposely chose unknowns for the cast, according to Variety, and many cast members made their screen debuts in the picture. According to a Motion Picture Herald article, the picture was filmed on a closed set, and when word about the story's content was leaked to the press, the Communist paper People's World issued a scathing attack against the film, quoting verbatim from its script. In a May 15, 1949 New York Times article, writer Albert DeMond was quoted as saying, "There are Communists working at the studio, I know....That's how they got the scenario."
A Hollywood Reporter news item noted that to advertise the picture, Republic Studios launched its most extensive promotional campaign to date, calling it "the most impressive exploitation campaign in...the history of the motion picture business." An unidentified, undated news item found in the AMPAS Library stated that because of "disappointing grosses," Republic withdrew The Red Menace from release several months after its opening, and planned to re-edit it significantly and re-issue it under the title Underground Spy. Ads for the film, dated November 1953, indicate that the picture was, in fact, re-released as Underground Spy. According to a May 28, 1949 Motion Picture Herald news item, after the film's release, Yates was given a special commendation by the Senate Fact-Finding Committee on Un-American Activities, which stated "in recognition of the great contribution that has been made by Republic Studios in the fight against those forces who seek to deprive the American people of the freedoms we all cherish so dearly, the Senate Committee does commend Republic Studios and those persons who have so courageously assisted in this production." Shortly after this film's release, RKO released its own anti-Communist film, The Woman on Pier 13, which like The Red Menace, was a box-office flop. According to modern sources, actor Jack Lord had a bit part in The Red Menace, marking his motion picture debut.