Film rentals on sound pictures were high-so high that small independents suffered great hardship. A committee of Allied States Association of Motion Picture Exhibitors called upon R. K. O., then a newcomer in the business-and asked it to reduce film rentals in return for an effort to marshal independent buying power. I was then president of Allied States Association as well as its counsel, and I was a member of the committee. When Tiffany Productions (another established company) heard of these negotiations, it asked to come in on the arrangement. The companies worked out the franchise agreements which provided for an elastic system of film rentals adaptable to the situation of each exhibitor. Cole and I did not go into the production and distribution business as stated by Mr. Pettijohn. The franchises show on their face that they are the contracts of the companies in question, one of them being a member of the Hays Association and of the Big Eight. The franchises provided for block booking because that was the established policy of each company and of the industry. The companies would not make the concessions in regard to price on any other basis. I was entrusted with certain duties in regard to establishing the value of certain pictures and the amounts the exhibitors should pay. The reference to me as a "representative of the distributor," made by Mr. Pettijohn was false. Mr. Pettijohn would not show me a copy of the print he gave the committee, but the copy I have before me reads as follows: The findings and recommendations of such representatives shall be transmitted to a National Appeal Board, consisting of Abram T. Myers, a representative of the distributor and a third member to be chosen by the other two. Now this very sentence says that it shall be a board of three, and if the words "a representative of the distributor" referred to me, there would only be two members. It is perfectly apparent that I was to represent the interest of the exhibitors, the distributor was to have a representative, and we were to choose a third member. (b) Mr. Pettijohn succeeded in keeping out of the record virtually all information concerning the income and resources of the Hays Association although the proponents freely answered all such questions directed to them. He need not have made such a mystery of the matter because a few years ago (1934) Mr. Kent president of Twentieth Century-Fox, discussed the matter openly and freely. According to the testimony of Mr. Kent before the subcommittee. of the House Committee on Patents, investigating patent pools, his company pays to the Hays Association annual dues amounting to approximately $100,000. This he said was based on a percentage of the total film rentals collected. He placed the total dues of all members at approximately $600,000, but added that the exact amount was known to only one man, Mr. Hays. However, assuming that all companies pay on the same basis, three other companies should each pay approximately as much as Mr. Kent's company and the four remaining members should each pay at least half as much. This would make up the $600,000 without taking into account the other members including Erpi (Western Electric). R. C. A., Eastman Kodak and the various producing companies releasing through the Big Eight. Company earnings have greatly increased since 1934, and dues based on such earnings must also have increased. It is idle to speculate what the dues may be since it is obvious that, in case of need, the resources of the Hays association in combatting unwanted legislation are practically unlimited. (f) George P. Aarons: This witness followed a serpentine course to avoid being identified with the major companies. He came as an independent exhibitor representing only himself. He admitted he was associate general counsel for the M. P. T. O. A., but said that he received no compensation therefor, and did not appear in that capacity. He admitted that he was secretary of the United Motion Picture Theater Owners of Eastern Pennsylvania. He did not state that the latter is a salaried position; that the U. M. P. T. O. includes affiliated theaters in its membership; and he did not inform the committee that the Warner Bros. theaters are the principal dues-paying members of that organization. (g) Henry R. Berry; (h) Hugh W. Bruen; (i) O. C. Lam; (j) Maurice Lowenstein; (k) William G. Ripley; (1) Stanley Sumner; (m) Lyle M. Wilson are faithfuls of the M. P. T. O. A. who appear regularly under the chaperonage of Mr. Kuykendall to testify against this legislation. (See record of former hearings.) They always testify to the ease with which they can buy and cancel pictures, indicating that they enjoy privileges not granted to others less fortunately situated-or affiliated. (n) Robert H. Poole; (0) Otis Harvey; (p) Bob White. These men came to Washington as a result of action taken by the trustees (mainly themselves) of the Pacific Coast Conference of Independent Theatre Owners. That group held a convention in Los Angeles the week before the hearing opened. They were entertained by the Motion Picture Producers' Association. They were addressed by Ed Kuykendall and Wm. F. Rodgers. They did not submit the Neely bill to a vote by the rank and file in open meeting. In connection with this exhibitor testimony it should be explained that the proponents at this and prior hearings have always had to combat the time element. Therefore, they have made no attempt at a show of strength by calling a large number of independent exhibitors as witnesses. At the 1936 hearings before this committee letters from exhibitors in all parts of the United States in favor of the bill were offered but were not included in the record (hearing, p. 83). At the Senate hearing last year letters in favor of the bill from various parts of the country were put into the record (hearing, pp. 107–127). It is hoped that the committee will consult those letters as they constitute a complete refutation of the individual exhibitor witnesses who have appeared here to say that compulsory block booking is not a monopolistic and burdensome practice so far as the independent exhibitors are concerned. (q) William F. Rodgers: Who thinks witnesses should be put under oath. He said that Allied reneged on the trade-practice code last year after having agreed to it in principle. And he added that this was no new thing for Allied. This is of doubtful relevance to the bill; but it must be answered. In my testimony before the Senate committee last year I gave a brief summary of the efforts of Allied to negotiate for better practices in the industry and how they came to naught due to the failure of the major producer-distributors to carry out their end of the bargain. The story is not worth repeating here, but it can be found in the Senate hearing (pp. 548-549) by anyone interested in reading it. A complete refutation of Rodgers' claim is to be found in the report of the Allied negotiating committee, a copy of which I am filing with the committee. (The document referred to was filed with the committee.) Mr. MYERS. This was published in the Congressional Record during the Senate debate on the bill and need not be set out in the record. I also submit as a physical exhibit a bulletin entitled "Allied Answers" being a further refutation of Rodgers' baseless charges. (The document referred to was filed with the committee.) Mr. MYERS. In view of these documents Rodgers should, but probably will not, apologize to the committee for his gratuitous insult to the exhibitors who have had the courage to risk recrimination and retaliation by appearing here in support of the bill. (r) W. B. Stein: In regard to this witness I quote the following telegram: A. F. MYERS, Washington, D. C'.: Stein at our Atlantic City convention of Allied of New Jersey in 1936 seconded motion approving actions of the national convention which had previously been held at Cleveland. As I recall, the Neely bill was part of the program of the Cleveland convention and it would seem in his seconding of such action he had been in favor of the Neely bill. In 1936 Stein was a member of Allied. At present Stein is not a member of Allied. LEE NEWBURY, President, Allied Theater Owners of New Jersey, Inc. Mr. Newbury's recollection is correct. The Neely bill was a part of the program adopted at the Cleveland convention. Mr. Chairman, I am sorry that more members of the committee could not be present, as I think I could have been of some help, but under the circumstances I have followed your suggestion and filed much of the statement for the record. The CHAIRMAN. The members of the committee had to answer a roll call. Mr. MYERS. I think, Mr. Chairman, that the record might show, at the time I concluded my oral statement, only the chairman was present. The CHAIRMAN. I regret very much we did not have time for all the members of the committee to hear your statement. I do want to say that it has been the purpose of the committee to give both sides an opportunity to present their case, and we appreciate the efforts of both proponents and opponents in cooperating with us to that end. Mr. MYERS. Speaking for the public groups, Mr. Chairman, I want to express the very real appreciation of the remarkable patience and fairness which the chairman has evidenced, and also that we appreciate the interest which all the members of the committee have shown in the subject. I think the questions have shown a great deal of interest and have been very helpful in developing a very difficult subject, and we appreciate very much the time which the committee has given to us. I think this is the fullest and best hearing that we have ever had on this measure, down to but not including the last hour and a half. STATEMENT OF C. C. PETTIJOHN-Resumed Mr. PETTIJOHN. Mr. Chairman. The CHAIRMAN. Mr. Pettijohn. Mr. PETTIJOHN. Mr. Chairman, now that hearings have been concluded on the so-called "Neely bill," S. 280, and the companion bill, H. R. 145, may I just say this: First, may I thank you, Mr. Chairman, and the entire House Committee on Interstate and Foreign Commerce, for both your time and patience in giving to all, both sides, a full and complete hearing. Second, may I leave with you, if I can, one concluding and kind thought for the entire motion picture industry. It is unfortunate that quarrels on trade practices within this great American industry should be projected just at this time when a large part of the people of the world, even entire nations, are at each other's throats. Our industry as such has not been accurately pictured in these hearings. It is composed overwhelmingly of American men and women, sincere, hard-working, and well-intentioned people. God forbid that it shall happen, but if our country is ever attacked you will find us all on the same side, and our trade problems will fade into insignificance and you will find that the motion-picture industry will and can mobilize within 24 hours when and if our country calls. We did it once before, and we were most useful. There will be no room in our ranks for "fifth columnists" or anything else to disturb our efforts. for peace, if possible, and for a united usefulness if anything else is required to maintain our American democracy. Thank you. The CHAIRMAN. We thank you. As stated before, each side will be granted the privilege of extending its statements in the record. With that, the hearing stands adjourned. Re Neely bill, S. 280. PARAMOUNT PICTURES, INC., Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D. C. DEAR SIR: On June 4, 1940, Mr. Abram F. Myers appeared before your committee for the proponents of the bill in rebuttal. He filed with the committee a long statement which he had not finished reading. At page 2397 of the stenographic record he states that he is filing a copy of an affidavit by Colonel Cole to contradict what he states was my "flat assertion that no reprisals had been practiced against exhibitors." He ran into the record an excerpt from the affidavit appearing at pages 2297 to 2400, inclusive, of the record. I enclose herewith my replying affidavit to Colonel Cole, filed in the suit of U. S. v. Paramount Pictures, Inc., et al., and ask that it be made part of the record on this hearing. I did not say (although I could have done so) that no reprisals had been practiced against exhibitors. I made a definite statement denying the claim asserted by Mr. Lydon, president of the Allied Theatre group in New England, at page 97 of the record. Under the rules of practice the Department of Justice was required to furnish to the defendants the names of all persons known to the Government to have knowledge or information concerning facts asserted by the Government. Many of these persons were witnesses. The Government sought to withhold this in235749-40-pt. 240 formation until the court issued an order directing the manner in which the defendants could interrogate these persons in preparation for the defense. After hearing an argument the court denied any such order and the Government was directed to and did furnish the list of names. Were it not for the fact that Colonel Cole's affidavit had been made a part of the record on this hearing, I should not have bothered to answer Mr. Myers further. Characteristically, he did not refer to, or file, my answering affidavit which puts a very different light upon the matter. Will you please make part of the record both my answering affidavit and this letter. I enclose an extra copy of this letter for that purpose. Very truly yours, AUSTIN C. Keough. United States District Court, Southern District of New York. United States of America, petitioner, against Paramount Pictures, Inc., et al., defendants. Equity No. 87-273 STATE OF NEW YORK, County of New York, ss: Austin C. Keough, being duly sworn, deposes and says: I am a vice president, the general counsel, secretary, and a director of Paramount Pictures, Inc., one of the defendants in the above action. I have read the affidavit of H. A. Cole sworn to February 16, 1940, submitted by the Government in support of its motion for an order with respect to interviewing persons to be listed in the Government's answers to interrogatories filed by the defendants. The affidavit of Mr. Cole refers to testimony given by me concerning one Rubin Frels, of Victoria, Tex., in the case of Paramount Pictures, Inc. v. Langer et al. in the United States District Court for the District of North Dakota. This is the second time that the Government in this suit has referred to this testimony of mine in the North Dakota suit. In this connection I refer to my affidavit sworn to May 10, 1939, which was submitted to Judge Bondy of this court in connection with an application concerning a bill of particulars requested by the defendants. On this present motion as well as upon the prior application to Judgy Bondy, the Government seeks to convey the impression that Paramount Pictures, Inc. (which I will for brevity hereafter refer to as "Paramount"), penalizes exhibitors who participate in or testify in judicial proceedings brought against distributors. In honesty and fairness, there is no basis for the impression sought to be given. Mr. Cole testified as a witness for the defendants in the case of Paramount against Langer et al., above mentioned, stating that when Jefferson Amusement Co., which was affiliated with Paramount, opened a theater in 1931 in Victoria, Tex., in competition with the theaters operated there by Rubin Frels, Paramount in the year 1933 took its pictures away from Mr. Frels and licensed them to Jefferson Amusement Co. because Mr. Frels had testified in a suit brought against motion picture distributors in a Texas court by a man named Legg. The partial quotation of my testimony contained in Mr. Cole's affidavit submitted upon this motion gives an untrue and unfair picture of the situation. The situation was as follows: In 1930 Paramount acquired a controlling stock interest in Saenger Theatres, Inc., which at the time of the acquisition owned 50 percent of the stock of Jefferson Amusement Co., the other 50 percent being owned by Messrs. Gorcon and Clemmons. Messrs. Gordon and Clemmons were two of four directors of Jefferson Amusement Co., the other two directors representing the Saenger Co. Messrs. Gordon and Clemmons were, respectively, president and chairman of the board of directors of Jefferson Amusement Co. and were the active executive officers and operating heads thereof. Without the knowledge or approval of either Paramount or the Saenger Co. or of the directors of Jefferson Amusement Co. representing Paramount or the Saenger Co., Jefferson Amusement Co. acquired a theater in Victoria, Tex. Mr. Frels had been for years a satisfactory customer of Paramount. Upon learning of the acquisition of the theater in Victoria by Jefferson Amusement Co., Paramount protested to Gordon and Clemmons and stated that Paramount intended to continue to serve Mr. Frels with its pictures, and for 2 years thereafter it licensed all its pictures to Mr. Frels for exhibition in Victoria as well as for exhibition in Frels' other theaters in Texas. In the spring of 1933, Paramount learned that Mr. Frels participated in the bringing and financing of a lawsuit by |