Mr. SAMUELSON. Well, we are talking about a supposition, Mr. Kennedy, and I do not know how that is going to work out. I say this, judging by my memory in the matter, there is a difference, going back to the early 1920's, when there was competition and there was a possibility and a probability that the exhibitor could choose what he wanted to run. Mr. KENNEDY. There is a difference in picture houses, difference between theaters too, is there not? Mr. SAMUELSON. That is right. Mr. KENNEDY. You cannot compare a 1920 with a 1940 automobile or picture. Mr. SAMUELSON. No. All I know, sir, is when you had no compulsory block-booking you got more good pictures from the total number, a greater proportion of good pictures than you do today. Mr. KENNEDY. Did you ever hear of an agreement between your own people, or members, owners of theaters in a given community not to show the same picture at the same time? Mr. SAMUELSON. What was that question? Mr. KENNEDY. Have you ever heard of an agreement or a general understanding existing between the independents not to show the same picture in the same community on the same day? Mr. SAMUELSON. I have not heard of such an agreement. Mr. KENNEDY. They are practical men are they not? Mr. SAMUELSON. Please wait a minute. We have a contract in writing and that contract provides as to when we will run the pictures as to availability dates, and the area and the territory and everything else. That is completely controlled by the distributors. I have a copy of that contract here. Mr. KENNEDY. I do not care to see the contract. I am talking about the practical side of the situation. Take any four theaters,, any four that you pick out in any given community, I am asking you if the same pictures are available to them, will they all show them at the same time? Mr. SAMUELSON. No. Mr. KENNEDY. No, of course not. Mr. SAMUELSON. Pardon me. Let me explain that, sir, please. There is a certain thing, selectivity and runs. Now, there is a difference in the theaters; there is a difference in box-office possibilities; difference in admission prices. There is a difference in rental prices which they can pay and the one which pays the most gets the picture first; then after a certain lapse of time later another one can show it and then after a certain lapse of time later a third can show it, and in some instances there are simultaneous subsequent runs, but not usually. Mr. KENNEDY. But is not this complaint here that the small man or independent, or idealist in this line does not have an opportunity to get the particular picture he wants when he wants it? Mr. SAMUELSON. No, sir. The only complaint here is that he is compelled to buy all to get the best and that he buys them blindly. The complaint is not about when he gets it or how he gets it. The complaint is that he is compelled to buy all to get any, and that he buys without identification. That is the complaint. Mr. KENNEDY. Do you not think that there is a human problem which cannot be dissociated from Mr. SAMUELSON. Sir? Mr. KENNEDY. Do you not think that there is a human problem which cannot be dissociated from this campaign-I mean, it is something that lies in the hands of the people, like prohibition. You can not tell the people what they can do and what they cannot do. Mr. SAMUELSON. You mean the motion-picture patrons? Mr. KENNEDY. Yes. Mr. SAMUELSON. I said, before you came in, sir, and I presented for the record a list, an accurate list of box-office gross and I said then, and I repeat now, that the American public believes in good things and that one reason why we have this wide slump in various box-office receipts is because poor pictures have been forced in theaters, and that the producers have misunderstood their public: and if you give this industry freedom there will be a return to the finest era of prosperity that they have ever known. Mr. KENNEDY. Do you think that that means all good pictures? Mr. SAMUELSON. I think that it will mean a greater proportion of good pictures, much greater. Mr. KENNEDY. Are they not bound to have failures? Mr. SAMUELSON. Yes, sir. There are changes in ownership, of course. I do not know about failures; naturally you cannot go into the motion-picture business on a shoestring. You have got to have money. You have got to meet public requirements. You have got to meet the necessities of public authorities and a theater represents a very large investment; and whether they go broke or not, I do not know. I do know this business is missing possibilities, when it is insisting on trying to compel the public to go for something the public does not want. The CHAIRMAN. Mr. Samuelson, could you conclude your statement in a few minutes if you proceeded without interruption? Mr. SAMUELSON. I am through right now, except to say I have here these announcement_books of practically all of the companies. They are all the same, as I indicated earlier in the record. The CHAIRMAN. Before you conclude Mr. McGranery would like to ask you a question. Mr. MCGRANERY. I was interested in what Mr. Kennedy said about the theaters in the downtown section, whether or not all of them wanted to run these very fine pictures, the same pictures on the same days. I do not think that that would happen any more than that all of the restaurants down in Times Square would have the same special on the same day, would it? Mr. SAMUELSON. I do not think so. I agree with you, sir. Mr. McGRANERY. Now, in listening to the proponents of the bill, it is my understanding that under this block-booking that you subsidize all of the bad risks, bad judgment, and bad business sense of the producers, by being compelled to take their poor products along with their good pictures? Mr. SAMUELSON. That is right. Mr. MCGRANERY. In other words, the exhibitors under this set-up now, subsidize the producers. Mr. SAMUELSON. They assume the entire risk and subsidize them; yes, sir. The CHAIRMAN. If there is no objection we will permit the witness to conclude his statement without interruption. Mr. SAMUELSON. Now, Mr. Chairman, if this monopoly were eliminated and we had identification, I would say that then we could identify the pictures. I have here this whole mass of material from virtually all of the companies identifying their products adequately, showing that it can be done and if it is done there will be a restoration of conditions as they existed when this business had its greatest era of prosperity; and that it is unfair to insist, as Mr. McGranery pointed out, that the exhibitors and let me make this clear-cut distinction the independent exhibitors, because the affiliated exhibitors are not compelled to buy blocks and buy blindly--to guarantee the entire risks of this business. That is all, sir. The CHAIRMAN. The committee will stand adjourned until 2:30 o'clock this afternoon. (Thereupon, at 12:10 p. m., the committee took a recess until 2:30 p. m. of the same day.) AFTERNOON SESSION The committee reassembled, pursuant to the taking of recess, at 2:30 p. m., Hon. Clarence L. Lea (chairman), presiding. The CHAIRMAN. The committee will please be in order. Mr. Chadwick. STATEMENT OF MR. I. E. CHADWICK, PRESIDENT, INDEPENDENT MOTION PICTURE PRODUCERS' ASSOCIATION, LOS ANGELES, CALIF. Mr. CHADWICK. Mr. Chairman, my name is I. E. Chadwick. My home is Los Angeles, Calif. I have been a distributor and producer of motion pictures since 1910. The CHAIRMAN. How much time do you want, Mr. Chadwick. The CHAIRMAN. I presume you understand that you can extend your remarks in the record. If you have something that you think is not particularly important to say to the committee personally, you could skip that over and it can be included in your remarks in the record. Mr. CHADWICK. As my arguments are few, and I will talk with a good deal of brevity and more or less extemporaneously, I do not think there is much danger of my running over an hour. In 1910 I engaged in the business of distributing motion pictures. In 1915 I entered into the business of manufacturing or producing motion pictures. As to this hearing I not only appear for myself, but as president of the Independent Motion Picture Producers' Association. This association comprises in its membership the producers of motion pictures who have no distribution facilities of their own and no theaters of their own. They are the producers who have been producing during the entire history of the motion-picture industry for what has been described here as the State rights' market and we are the small-business men of the industry. A producer of motion pictures in the independent field makes a picture or a series of pictures with his own capital, or with his own credit, and after making the picture, or sometime prior to the making of the picture, he enters into a contract of sale for the distribution of the picture in various sections of the country and in foreign countries. To the independent producer the United States is divided into 26 territories, Boston, New York, Philadelphia, and the other large cities, known as key cities. The CHAIRMAN. Known as what? Mr. CHADWICK. Key cities. New York would be the key city for Greater New York and northern New Jersey; Philadelphia for eastern Pennsylvania; Boston for the New England States; Atlanta for the Southeastern States and so on. In connection with the bill pending before this committee, it is more important, more vital, to our membership and to the independent producers than to any other class in the industry. For them it means their livelihood. It does not mean a greater degree of prosperity or a lesser degree. The smaller businessman has come much in the news and has come into the consideration of the Members of Congress, and justly so. His problem is not the problem of securing capital. His problem is not the problem of securing credit. That is the independent businessman, the smaller businessman. It is a matter of individual concern, but in general, his problem is that there shall be economic freedom in this country. Political freedom we have. The CHAIRMAN. Could you tell me how many independent producers there are now as compared with, say, 10 years ago? Mr. CHADWICK. Less than one-third as many today. There are 11 independent motion-picture producers in the field, which I am describing, and which I represent. In 1925, which was a normal year as it is taken in all economic statistics, our membership comprised 34 independent producers, who were producing from 6 to 24 pictures. From 1920, sir, to 1929, our independent producers for this field produced from 175 to 250 features, motion pictures per year. I do not desire to appear egotistical or immodest, but I wish to give some of my own experience merely as illustrative of the point. In the years 1920 to 1928, my own production consisted of from 12 to 18 pictures per year, with an annual expenditure on my own part, as an individual small-business man, approximately $900,000 per year, as an independent producer. And, when I speak of the year, I speak of the motion-picture year, not of the calendar year. This past year 8 pictures comprised our total production, at a gross manufacturing cost of less than 1 important picture that I used to make in 1925. During the years 1918 to 1928, there were available to us not less than 140 exhibitors of motion pictures or outlets for our products. Today, in the entire country, there are not 20, and those 20 are merely awaiting the time when the motion-picture field shall again become one of three competitive enterprises, something which it is not today. The CHAIRMAN. Is the interference that you complain of on the basis of production or distribution? Mr. CHADWICK. No. I misunderstood you, Mr. Chairman. If by the word "interference" is meant as an active act The CHAIRMAN. I understood you to say Mr. CHADWICK. I beg your pardon. The CHAIRMAN. I understand that you claim that the group of eight are responsible for the decline of your industry. Now, what I was asking you, is that occasioned by interference with your production? Mr. CHADWICK. No, sir. The CHAIRMAN. Or in the distribution? Mr. CHADWICK. That is occasioned merely by this group and the theaters affiliated with them, making the rules of the game in their favor. The CHAIRMAN. You can produce a picture as free as you did originally? Mr. CHADWICK. Yes, sir. The CHAIRMAN. So far as production is concerned? Mr. CHADWICK. So far as the law allows. I can produce a picture just as freely as I could at any time, but business, common sense, tells me, "don't you dare do it," and now, I will be specific on that. The CHAIRMAN. You do not have the market for them that you formerly had? Mr. CHADWICK. The market which existed under free enterprise, under rules which are not framed by and for the major companies would be sufficient for us; but block-booking is one of the things which obstructs the free flow of our industry and other industries and is one of the most vital things, and I think that the attitude of Congress is coming rapidly to recognize that fact, that the economic health of this Nation requires that there shall be a stop to self-imposed regulation on the part of the powerful units in industry and that industry shall be free from interference in which the small-business man shall have a fair opportunity to operate. We ask for no favors. We ask for no subsidies. We ask for no Government loans; but we do say that these obstructions, these artificial rules and regulations which are made in order to concentrate economic power and the status quo in the hands of those who have it shall be removed and this piece of legislation is one typical piece which will help the small-business man not only in our industry but is characteristic of that which will help the small-business man in every industry, if pursued. It is not a long step, but it is a step in the right direction for economic freedom. Now, I have stated that the drastic descent and decline of independent motion-picture producers not only involves a number of pictures, but in the amount of money which one dares to put into a picture is something terrible to contemplate. Today some of the most efficient and experienced men in the industry; men who have records of from 10 to 20 years of successful production; successful businessmen-not failures are sitting in their offices doing nothing, only because they realize that under the rule of block-booking and other rules which are under consideration by Government authorities, would make it not only perilous but insanity for them to invest their money. One man who operates the Chesterfield and Invisible Motion Pictures Cos. for years, more than 10 years, produced 24 pictures every year he has not lost his money. He was too sensible to lose his money. But, when he saw his markets taken from him by these artificial rules, one of which is block-booking, he is taking his capital and today is investing $150,000 of his own money in another enterprise in Hollywood. Take my own case-and I do not wish-I again |