In the depths of the Great Depression, Yates' laboratory was no longer serving the major studios, which had developed their own in-house laboratories for purposes of both economy and control, while the small, independent producers were going under in the face of increased competition from the majors combined with the general impact of the depressed economy. In 1935, he thus decided to create a studio of his own to insure Consolidated's stability. Six surviving small companies (Monogram Pictures, Mascot Pictures, Liberty Pictures, Majestic Pictures, Chesterfield Pictures, and Invincible Pictures) were all in debt to Yates' lab. He prevailed upon these studios to merge under his leadership or else face foreclosure on their outstanding lab bills. Yates' new company, Republic Pictures Corporation, was presented to their producer-owners as a collaborative enterprise focused on low-budget product.