One of the factors in the decision was economic. But once that decision was made, all subsequent decisions were artistic.
First of all, they didn’t just choose a script and go, “Nope, I’m feelin’ cheap today. Do this one in BW.” They (the deciders) decided *which *scripts would be appropriate to the extra cost of color *based on the script. *Some movies they thought would do better in color, so they budgeted for it. Some they thought were more about story than spectacle, so they didn’t. It wasn’t an arbitrary dollars-only decision.
And then, once a director knew what medium he’d be working in, he worked accordingly. He didn’t shoot a BW film as if it were a color film only desaturated: he concentrated on story; on pure composition; on montage; etc. etc. If he’d been directing for color he would have directed a different picture.
Compare color photography to BW photography. Color photography is almost always about little more than color. If you desaturate a beautiful color picture, suddenly there’s not much picture there. (Of course there are exceptions; don’t waste our time pointing this out.)
If you only have limited budget to cook a dinner, you choose your ingredients differently and make a meal that emphasizes the value of those less expensive ingredients. If decide after the fact that you can spend more on it, you don’t go back and dump caviar and champagne all over what you’ve already carefully made and imagine that this will “improve” it.
Directors who worked in BW paid more attention–or at least a different kind of attention–to texture and composition and montage and story to make a complete picture. The pictures they made are not lacking anything, anymore than The Passion of Joan of Arc or Sunrise are “missing” sound and need to be fixed with laid on dialogue tracks. Imagine the closeups of Dietrich in The Scarlet Empress filling the screen with baby’s butt pink, instead of the sculptural shadows Von Sternberg lit for. If he were filming in color, his every composition, every single lighting set up, would have been different.
(And of course there were hack directors whose direction was arbitrary and shallow and made no distinction between color and BW, but theirs are not the movies that have stood the test of time; those are not the movies that are the first to have color spread over them like Betty Crocker frosting on a loaf of crusty French bread. <<shudder>>)