Anybody who hates Toto in The Wizard of Oz is my man. In his witty and vivacious appreciation of the film, [The Wizard of Oz,] Salman Rushdie gives the little terrier a severe dressing down. “Toto,” he writes with self-evident glee, “that little yapping hairpiece of a creature, that meddlesome rug!”

It's about as negative as Rushdie gets in his shrewd and joyous assessment of a film that has played such a large part in the imaginative landscape of America, and in his own. Rushdie's first short story, aged ten, was called “Over the Rainbow”, and the movie's faith in the value of taking up residence in the imagination certainly parallels his own creative philosophy. After the technicolour wonders of Oz, return to the drab black and white of Kansas looks to Rushdie like sloppy seconds: “This is the home that there's no place like?”

Rushdie's intellectual antennae for the film are finely tuned to the originators' inspiration. “Over the Rainbow,” he writes, “is, or ought to be, the anthem of all the world's migrants, all those who go in search of a place where the dreams that you dare to dream really do come true. It is a celebration of Escape, a grand paean to the uprooted Self, a hymn—the hymn—to Elsewhere.”

To the man who wrote the songs in The Wizard of Oz, E Y Harburg, the rainbow symbolised “the heaven of the imagination”. Harburg was from a family of migrants. He told me that “to be a Jew in New York at the turn of the century was a terrible adventure. From a very early age, I was aware of the power of the imagination to make people better, more peaceful, and friendly. How to make people decent? How to soften them up so they'd have more compassion? These questions were very important to my life. It was part of my psyche which songwriting finally answered.”

The film enacts the mission of the songs: man being coaxed out of his misery and into his best self. To Harburg, who was writing his Academy Award-winning lyrics when two million Americans were out of work and industrial production had lost two-thirds of the gains made during the previous years of the New Deal, the film was a paean to Roosevelt's vision of a better world: “FDR pleaded for learning and for the arts, so the scarecrow—longing for knowledge—sang: ‘I would not be just a nuffin / My head all full of stuffin’. FDR's Good Neighbour Policy became the Tin Man hoping ‘That I could be kinda human / If I only had a heart’ and the Cowardly Lion heard FDR's message that the only thing we have to fear is fear itself when he sang: ‘But I could change my habits / Never more to be scared of rabbits / If I only had the nerve.’”

Harburg really was writing about home; but not the metaphoric home that Rushdie brilliantly winkles out of the scenario. “The real secret of the ruby slippers is not that there's no place like home,” he says. “But rather that there is no longer any such place as home; except, of course, for the home we make, or the homes that are made for us, in Oz: which is anywhere, and everywhere, except the place from which we began.”

Among Rushdie's many pleasures are “the scrubbed, ever so slightly lumpy unsexiness of [Judy] Garland's playing which makes the movie work” and “the fully-realised comic masterpiece” of Bert Lahr's Cowardly Lion. The “Jitterbug” sequence, where bugs bit the foursome who begin to dance with the trees and flowers, was cut from the film because, according to Harburg, “it slowed the pace and gave too much of the picture to Bert Lahr”. This accounts for the absence of music from the last quarter of the film.

“The heretical thought occurs: maybe the Witch of the East wasn't as bad as all that,” Rushdie says. “She certainly kept the streets clean, the houses painted and in good repair … and again, unlike her sister, she seems to have ruled without the aid of soldiers, policemen or other regiments of repression. Why, then, was she so hated? I only ask.”

Rushdie also floats the notion that The Wizard of Oz, with its three credited writers and four directors, “is as near as dammit to that will-o'-the-wisp of modern critical theory: the authorless text”. Tell that to Harburg and Harold Arlen, who wrote the music. Whoever was the film's auteur, the film's subject and structure seem to have liberated the talents of those who contributed to it.

For all the stars, except perhaps Garland, and for the Harburg/Arlen musical collaboration, it was the high point of their movie careers. In fact, soon after finishing The Wizard of Oz, Lahr left Hollywood for Broadway, explaining to the press: “How many lion parts are there?”

The Wizard of Oz was sui generis. How the movie got made is somehow not as important as the fact that its fun and its solace are still here to help us along our own journeys. Rushdie's lucid and puckish monograph is a re-viewing of the film through his own mischievous imagination. It adds to the movie's wonder, which is saying a lot.