This film is based on actual events, though it takes liberties with the details. Marc Blitzstein's 1937 anti-capitalist operetta 'The Cradle Will Rock', about the effort to unionize steelworkers, was originally produced as part of the Federal Theatre Project. The Federal Theatre Project (1935-1939), in turn, was part of the Works Progress Administration (WPA), which was created in 1935 by President Franklin D. Roosevelt to employ people during the Great Depression. Directed by Orson Welles and produced by John Houseman, Cradle was shut down right before it was due to open because of "budget cuts" at the FTP. Everyone involved believed the government deliberately cut funding because the play's message offended its more conservative contingent; Actor's Equity prohibited its members from taking part, apparently oblivious to the fact that Cradle was a pro-union piece and Actor's Equity was - and is - a union. Welles, Housman and Blitzstein spontaneously rented another theater and planned to put on Cradle with Blitzstein himself singing/reading the piece; the show sold out and various actors defied Equity and performed their parts from the seats they'd bought. The secondary plot which involved Mexican painter Diego Rivera butting heads with Nelson Rockefeller when the mural the latter commissioned for a Rockefeller Center lobby on the high-minded subject of "human intelligence in control of the forces of nature" included a portrait of Lenin, is also based on fact, though it happened in 1933. The incident is also dramatized in the 2002 film Frida (2002). Tim Robbins included it because it tied into the theme of artistic integrity vs. economic practicality.
The planned 1984 version of this story, which had to be abandoned for financial reasons, would have been directed and written by Orson Welles himself. Rupert Everett would have played the young Welles, and Amy Irving his first wife, Virginia Nicholson. Welles's unmade screenplay was published after his death. Tim Robbins has always insisted that he has never read it.
The part of the movie in which Congressman Joe Starnes asks Federal Theatre Project director Hallie Flanagan if Christopher Marlowe is a Communist and Flanagan responds that he was not--that he was "the greatest dramatist in the period immediately preceding Shakespeare," is repeated verbatim from the transcript of Flanagan's testimony in front of the house Un-American Activities Committee (HUAC) in December 1938.
Despite the fact that his then wife would have the female lead, Steven Spielberg was unwilling to provide financing to Orson Welles for this project. Spielberg also paid $55,000 for the " Rosebud " sled around this time.
Originally, an adaptation of 'The Cradle Will Rock' was supposed to be filmed in 1984. Amy Irving and Rupert Everett were already cast in their roles and was supposed to be filming in Rome when the production fell apart.