Point 3.-The minority argues that there is now no lack of community freedom since the interest of the public and religious organizations is adequately taken care of by representatives of these groups at Hollywood-"the source of production."

Comment: Blind selling alone is completely destructive of freedom of choice. Neither in this report nor elsewhere do spokesmen for the industry ever attempt to deny blind selling. Attempt is made to evade the issue by stating that the public is not compelled to attend any particular exhibition, thus wholly ignoring the fact that in thousands of small towns there is only one theater and that even in cities families usually attend the neighborhood movie.

The statement in the minority report on page 4, that "it is usual in all communities, even in the very smallest, that there are several theaters" is completely repudiated by the figures of the producers' own spokesman Mr. Carl E. Milliken which show (p. 449) “that out of a total for the whole country of 9,187 cities and towns with theaters, at least 6,337 towns have only 1 theater." (A simple calculation shows that there are 7,385 towns under 5,000 population with only 8,433. theaters among them.)

Mr. Milliken says (p. 479) with respect to "John Q. Public and his family, the motion picture is a local issue."

The issue which is dodged by the minority is simply: How can the local exhibitor furnish a desirable program for his patrons under the compulsory block-booking, blind-selling imposition?

On page 4 the minority report also describes a long-distance vicarious effort to interpret public taste, stating that: "The motion-picture industry, particularly at its source, that is in the production of motion pictures, has much contact with public and religious organizations truly representative of the people for whom motion pictures are made, etc."

It should be remembered that those employed by the industry at the source of production are chosen and remunerated by the industry and therefore that their opinions are not wholly unbiased. (See testimony, Miss Katharine Lyford, p. 54 of the hearings, on the 13 broken promises; also statement, p. 527, of Dr. Harris who resigned from the National Board of Review, calling it "futile due to link with the industry"; also Father Lord's statement, p. 547, hearings.)

Point 4.-The minority states that "compulsory block-booking" and "blind selling" are catchwords or slogans; figures are quoted to minimize the extent to which block-booking exists.

Comment: Nowhere has the industry ever given the break-down of the industry figures for (1) affiliated or producer-owned theaters; (2) unaffiliated circuits; and (3) independent theaters. The situation in each of these three types of theaters is quite different. Any jumble of figures into one compilation on all three types which the industry presents can have no other purpose than to conceal rather than to reveal the true situation. In the case of the Department of Justice against the "big eight" it is stated (hearings, p. 557):

"Block-booking is seldom, if ever, enforced by the producer-exhibitor defendants against each other. On the contrary, the exhibition contracts between and among the defendants herein are usually placed upon a selective basis, whereunder each defendant and its affiliated theaters may play such product or pictures of the other, or others, as it may select." (See also quotation from Catholic Digest, p. 165, hearings.)

Both block-booking and blind selling are further amply proven not only by the testimony of large numbers of bona fide independent exhibitors (hearings, pp. 107-127, also 1936 Senate hearings, pp. 34-57, inclusive) but also by a statement issued preliminary to the case of the United States of America, petitioners, v. Paramount Pictures, Inc., et al., defendants, which reads as follows (hearings, p.644): "1. Independently owned theaters are being driven out of business because of the onerous and discriminatory conditions not only on the rental of film but with respect to other trade practices. At the present rate at which independently owned theaters are being driven to financial failure, it will only be a question of a short time before there are no independents left in the field.

"2. New competitors who attempt to enter the field of motion-picture exhibition find it almost impossible to secure film for exhibition on any reasonable and nondiscriminatory basis. The result is that there is practically no effective new competition.

"3. Those independently owned theaters that have managed to date to survive are compelled, in order to get pictures, to operate under terms which leave them very little freedom in the selection of film and in the management of their own business.

"4. Independent producers find it practically impossible to secure a satisfactory market for their film because of the domination by the major companies over the exhibition houses. These independent producers are up against an almost hopeless bargaining disadvantage in securing markets for their film in exhibition houses that are controlled by the major producers with whom the independent producers are trying to compete.

"5. New capital investment in the motion-picture business is discouraged because of the great difficulty of competing on a fair basis with the major companies, either in production or exhibition, so long as the major companies control the principal markets for film.

"6. Theater patrons in any given community are not given an opportunity to exercise choice as to the type of pictures they desire to see. Under present conditions it is impossible for community taste to find expression through a locally owned theater free to bargain for the type of films its patrons wish. As matters now stand, each community is regimented into accepting the kind of picture which will make the most profits on a Nation-wide scale.

"7. There is no opportunity for new forms of artistic expression which are not approved by those in control of the major companies, even though there exist communities which would support them.'

If block-booking and blind selling do not exist, why oppose the Neely bill at such enormous expense of money and effort?

Point 5.-The minority assumes that the penalty clause is something new and unheard of for law violations of this character.

Comment: As a matter of fact, the penalties imposed are the same as those which have been imposed for similar offenses under the Sherman Antitrust Act for the past 50 years.

Point 6.-The minority asserts that section 4 is impossible to be complied with. Comment: This is the only convincing criticism of the bill anywhere presented by its opponents. This objection is completely met in the amendments suggested by Mr. Myers on pages 561 and 562 of the hearings and mentioned on page 11 of the majority report. (See Goldwyn on costs and quality p. 519 hearings; also quotation from Harrison's reports, p. 646 hearings.)

Point 7.-The minority assumes (p. 18) with "special emphasis" that selfregulation "to govern motion-picture production at its source to the morals of the American public" in cooperation with public-welfare groups is adequate and satisfactory. (Partially repeats point 3.)

Comment: This method of moral regulation has been tried and found wanting repeatedly for the past 20 years. (See hearings pp. 54, 55, 56, and 518; also Milliken 1924 lists of such groups, p. 472 of hearings.) Some of the groups listed by Mr. Milliken found cooperation impossible and futile within a year and withdrew. Some persons listed by Mr. Milliken died as long ago as 1925. Many groups listed are now working for the passage of the Neely bill. (See Father Lord's statement, p. 547 hearings; also Mrs. Reeve's letters and telegrams, 1936 House hearings, pp. 486-489.) Two of these telegrams and one letter follow (p. 448, House hearings, 1936):

[Copy of telegram dated January 13, 1925, from Philadelphia Public Ledger to Mrs. Augustus H. Reeve, president]

"Will you explain reasons for withdrawal of national congress from committee on public relations of the motion-picture industry. Is it true the congress has disagreed on certain policies and will return to the committee when agreement is reached? Wire answer collect. Thank you.

"EVENING PUBLIC LEDGER."

Mrs. Reeve's reply to the Evening Public Ledger is as follows:

EVENING PUBLIC LEDGER,

Philadelphia, Pa.:

JANUARY 13, 1925.

National Congress of Parents and Teachers withdrew from committee on public relations for two main reasons. First, in 1924 only one meeting was held, no business transacted except endorsement of resolutions expressing wholesale confidence in good intentions of the industry, enormous quantity of correspondence carried on by executive secretary salaried by Motion Picture Producers & Distributors, Inc., in name of committee but without its knowledge or approval; second, subcommittee appointed for specific activities have with one or two exceptions never been allowed to function because executive secretary was too

35749-40-pt. 1-2

much occupied with other matters to develop them. Subcommittee on books protested filming even expurgated films would increase sale of vicious book. Report of committee ignored, book filmed, committee never asked to function again. Our organization withdrew because we cannot cooperate with a committee which we believe has ceased to operate. Action final. No thought of returning to committee.

MRS. A. H. REEVE, National President.

[Copy of letter to State presidents in connection with our withdrawal from the committee on public relations]

NOVEMBER 13, 1924.

MY DEAR MADAM PRESIDENT: I desire to take this opportunity to inform you that in view of the continued release of films of undesirable character and of screen adaptations of books and plays unfit for general circulation, the National Congress of Parents and Teachers has withdrawn from membership in the committee on public_relations. This committee, of which Mr. Lee F. Hanmer, of the Russell Sage Foundation, is chairman, was organized by Mr. Will H. Hays with the avowed object of bringing public opinion to bear upon the motion-picture producers to the end that high standards of film production might be reached and maintained. It is our belief that the effectiveness of this committee, which at first seemed to open the way to a solution of some problems, has been steadily decreasing, and that our organization is deriving no benefit from a cooperation which has ceased to operate, while our position as being apparently satisfied with its activities as now carried on, subjects us to criticism in view of the standards of child welfare and of recreation which we endeavor to uphold.

I shall esteem it a favor if you will give space in the next issue of your bulletin to this second announcement.

Faithfully yours,

MARGARETTA REEVE, National President.

"Long distance" decisions regarding moral questions with commercial motives uppermost in the minds of those who make the decisions is not democracy; it is totalitarianism. (See who makes these decisions, p. 164 hearings, Frank Capra.) Is it not more compatible with American democratic ideology that "Mr. John Q. Public" in the thousands of local communities throughout the Nation determine voluntarily his own social standards, culture, and thinking rather than that they be predetermined for him by an industry-selected and financed censorship board in Hollywood? Let Hollywood produce what it likes, but do not coerce the public to buy what it does not like.

Point 8.-The minority asserts that leading sponsors of the bill favor letting the industry handle these questions without legislation.

Comment: The dearth of convincing arguments against the bill is nowhere more completely revealed than in the next to the last paragraph, page 18, of the minority report where it is stated:

""Prominent persons foremost among the sponsors of this measure at the last session of Congress have addressed the committee, stating their desire now that the industry be given the chance of handling these problems without legislation." This reference is undoubtedly to the letters from Dr. Ray Lyman Wilbur, president of the Motion Picture Research Council. Dr. Wilbur in all of his letters to the committee assumed that the industry was acting in good faith and that compulsory block-booking and blind selling were actually to be eliminated. Realizing the fallacy of his assumption, after the hearings were concluded, he addressed the following letter to all organizations supporting the Neely bill:

"During the recent hearings on the Neely bill (S. 280) before the subcommittee of the United States Senate Interstate Commerce Committee, the Motion Picture Research Council made every effort to test out the sincerity of the producerdistributors' proposals to reform voluntarily the distribution system of the industry. By the end of the hearings we were convinced that at this time the industry had no intention of making any effective reformation.

"Due to this effort on the part of the council, erroneous information appears to have been circulated that we were changing our position. On behalf of the board of directors I wish to inform you that we have not changed our stand and that we will continue to support Neely bill (S. 280) to eliminate compulsory blockbooking and blind selling of motion pictures.

Faithfully yours,

(See letters pp. 68, 378, 616, hearings.)

RAY LYMAN WILBUR, President.

Point 9.-- The minority opines that the bill would not "work out in actual practice" and would do an injustice to the industry.

Comment: The Neely bill is designed to protect the public interest, an interest which careful research and long experience have demonstrated needs protection from Hollywood social standards and monopolistic trade practices.

No one who regards the interest of the public as of greater importance than commercial domination by a limited group within this industry can justifiably oppose this bill.

Nowhere in the minority report is the slightest regard for the public interest shown other than by an omniscient, paternalistic verbosity, characteristic of the industry opponents to the bill.

Similar legislation has "worked out in actual practice" in other countries. There is no valid reason why it should not work out in any democracy.

The minority report is silent, emphatically silent, with respect to injustices long imposed by the industry upon the American public and upon independent exhibitors; likewise it is silent with respect to the far-reaching implications of the trade practices employed by the motion-picture industry with relation to democratic Government. Nowhere does the report mention the dangers to democracy inherent in unregulated monopoly; rather does it, through omission, appear to agree with the representatives of this industry who assume that the Government should function solely in their special interest. (See quotations from testimony of Willis J. Ballinger, director of studies Federal Trade Commission, and John T. Flynn, economist, before the monopoly committee, hearings, p. 78; also quotation from Senate Document 71A of 1934 hearings, p. 503.)

The CHAIRMAN. Mr. Wolverton has some questions, Mrs. Banner

man.

Mrs. BANNERMAN. Yes, Mr. Wolverton.

Mr. WOLVERTON. Mrs. Bannerman, in the early part of your statement I understood you to state that a suit was pending in New York City attacking the legality of block-booking.

Mrs. BANNERMAN. Many practices are included in that suit, Mr. Wolverton. I think the largest one probably is what is called theater divorcement-the divorcement of production from exhibition.

Mr. WOLVERTON. Was that suit instituted by the Government? Mrs. BANNERMAN. Yes.

Mr. WOLVERTON. You asked permission to file, in connection with your statement a clause taken from the complaint. Do you have the answer that has been filed to that complaint?

Mrs. BANNERMAN. The suit, I understand, Mr. Wolverton, goes to court on the 3d of June.

Mr. WOLVERTON. Then I assume an answer has been filed, the issue has been fixed and that it will be tried before the United States court in New York City on June 3?

Mrs. BANNERMAN. Yes. That suit does not include blind-selling of motion pictures.

Mr. WOLVERTON. Who are the defendants in that suit?

Mrs. BANNERMAN. I understand the complainants are those who have been victims of law violation and that, in the main, they are independent exhibitors.

Mr. WOLVERTON. Was the suit brought by private parties?

Mrs. BANNERMAN. Well, in the public interest, I dare say. I am not entirely familiar with all of it.

Mr. WOLVERTON. That is not the point I am trying to get at. I am trying to ascertain whether it was a suit instituted by the Department of Justice or whether it was instituted by private parties, and, who are the parties defendant?

Mrs. BANNERMAN. They are known as the big eight producers. Mr. WOLVERTON. Have you a copy of the complaint?

Mrs. BANNERMAN. Yes; Paramount Pictures Corporation; Loew's, Inc.; Twentieth Century; Universal Films; United Artists-I will be glad to leave this bill of complaint with you.

Mr. WOLVERTON. I would like to see it. Who is the complainant? Mrs. BANNERMAN. United States of America, petitioner, against Paramount Pictures et al., defendants.

Mr. WOLVERTON. Then the suit was instituted by the Department of Justice?

Mrs. BANNERMAN. Yes, sir; by the Department of Justice. I think you will find this a very illuminating document.

The CHAIRMAN. Mr. Boren.

Mr. BOREN. You stated four reasons why your group was supporting this legislation. I got three of them. Will you restate the fourth?

Mrs. BANNERMAN. The fourth one was a matter of public policy against monopoly. [Reading:]

These two trade practices are basic pillars of the economic monopoly which the big eight producers enjoy. Their removal will help the present independent exhibitors to survive and other enterprising Americans to enter the business. There is a basic public policy against monopoly which is behind this bill.

Mr. BOREN. I want to ask you if personally you are sponsoring this legislation largely from the moral or economic point of view? Mrs. BANNERMAN. We are sponsoring it, I should say, from all of those points, but largely from the standpoint of community freedom. Mr. MCGRANERY. From what standpoint?

Mrs. BANNERMAN. From the standpoint of community freedom, in order that we may have freedom in the local community to influence the type of programs which are to be presented in the local community.

Mr. BOREN. Is it the quality of the picture, the moral or artistic quality of the film in which the public is interested, or is it the price. of the theater ticket, the economic phase of it, when you refer to the community?

Mrs. BANNERMAN. I think the public groups pretty largely are interested, as I said, in community freedom in the selection of films in order that those most interested in the welfare of children may exercise some influence on the type of pictures that are shown in the local theaters. The motion picture is one of the most potent factors, as one of our leading educators has said, in teaching, but it does teach the bad as well as the good. Many pictures are suitable for children and many more are not.

Mr. BOREN. I take it then that your principal interest is in the quality of the picture, but it has been indicated in my correspondence that the contention of the producers is that the best quality picturesand I am simply reflecting the contention in the correspondence that I have received are those pictures that are produced and exhibited by the producers' own theater.

I would like to get your statement concerning that viewpoint. Mrs. BANNERMAN. The producers' own theaters, as you will see in this bill of complaint, do not show a good many of the pictures which they themselves make. They have an agreement, the big eight producers, among themselves, that any of them can show the best pictures that any of them make, and they do not have block-booking or blind selling in their own theaters. They do not impose on each other many pictures which they inflict on the independent theaters. It so happens that right here in Washington many of the best pictures are exhibited in their own theaters where block-booking and blind selling does not apply as it does to the independent theater