She was born Louella Rose Oettinger in Freeport, Illinois, the daughter of Joshua Oettinger (1859-May 26, 1890) and Helen Stein (born November 1859), both of whom were Jewish. She had two brothers, Edwin Oettinger (May 1885-October 1962) and Fred Oettinger (May 20, 1887-July 7, 1888), and a sister, Rae Oettinger (August 26, 1889-December 1, 1889).
In 1890, her widowed mother married John H. Edwards (born March 1858). They lived in Dixon, Illinois, later hometown of Ronald Reagan. While still in high school, Louella Oettinger obtained her first newspaper job when she became drama editor for the Dixon Morning Star.
She and her first husband, John Parsons, moved to Burlington, Iowa. She was a lonely and unhappy Iowa housewife who hated small-town life. Her only child, Harriet (August 23, 1906-January 2, 1983), who grew up to become a film producer, was born there. While in Burlington, Parsons saw her first motion picture, The Great Train Robbery (1903).