They will have little time to worry about getting their salaries cut

In 1927, MGM's big boss Louis B. Mayer decided to found an organisation that would settle labour disputes without unions. To discourage writers, directors and actors to get organised and start demanding pensions, health benefits etc., Mayer got together with a group of industry people and created the Academy of Motion Picture Arts and Sciences (AMPAS). While initially focusing on labour issues, the Academy soon decided to also give out annual awards for achievements in filmmaking (again at the suggestion of Mayer). Of the several committees AMPAS formed in those early days, one of them was the committee for Awards of Merits. This committee would be instrumental in shaping the awards and the awards ceremony, with its efforts ultimately leading to the first ceremony being held on 16 May 1929. The "award of merit for distinctive achievement", then presented in 12 categories, is now of course known as the Academy Award or by its nickname Oscar. 

In the 1920s, Darryl F. Zanuck, mostly known as producer and executive for Twentieth Century Fox, was under contract to Warner Brothers. He wrote stories for the successful Rin-Tin-Tin series, and also wrote more than 40 scripts under pseudonyms before becoming a producer. On 7 November 1927, Zanuck wrote a letter to Frank Woods (secretary of AMPAS), discussing the Awards of Merit committee, apparently after Woods had talked about it in his letter to Zanuck. Zanuck calls the committee "a marvelous thing for the Industry", as the awards would surely keep the minds of writers and directors busy and keep them from worrying about their salaries. Zanuck also makes flippant nomination suggestions, putting forward Rin-Tin-Tin as "most popular player". The implication in Zanuck's letter that there was an ulterior motive for creating the Oscars has at one time been corroborated by Louis B. Mayer himself: "I found that the best way to handle [filmmakers] was to hang medals all over them [...] If I got them cups and awards they'd kill themselves to produce what I wanted. That's why the Academy Award was created." [source]

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Transcript:

November 7th, 1927

Mr. Frank Woods, Secretary,
Academy of Motion Picture Arts and Sciences,
6912 Hollywood Boulevard
Hollywood, Calif.

Dear Frank:

Your letter received and digested. I think this Awards of Merits committee is a marvelous thing for the Industry, as it will cause so many arguments and discussions among the various directors and writers who did or did not get the award that they will have little time to worry about getting their salaries cut.

Now that the salary cut is all over with, we need some topic like this to start discussing, and I want to congratulate you and your Board of Directors for thinking of such a wonderful subject to keep the minds of the writers and directors busy for the next six months.

My nominations for the award of merit are as follows:

Producer -- Jack L. Warner.
Asssociate Producer -- Darryl Francis Zanuck
Director -- Any Warner Brothers Director (Same to be selected by drawing straws.)
Writer -- Any writer under contract to Warner Brothers.
Most popular player -- Rin-Tin-Tin

Will you kindly submit this list to the balance of the committee, so that we may get together on same.

All kidding aside, I think the magazine committee functioned quite well in their first issue, and I would certainly appreciate the invitation to donate an article to one of the forthcoming issues. Once upon a time, I too was a magazine subscribe, and it looks like this magazine is going to give me an opportunity to prove it.

Sincerely yours,

Darryl Zanuck (signed)


Note: 
The Academy's magazine for which Zanuck hoped to write an article was very short lived. The November 1927 issue was the first and only issue of the magazine.

Darryl F. Zanuck, studio boss Jack Warner, Rin Tin Tin and Lee Duncan (the dog's owner).