and grind again these statements into the small exhibitor's mind without ceasing-then you will hardly wonder that many an independent exhibitor, confused and deceived, has allowed his name to be used against the bill.

The machinery used to disseminate this progaganda was as well thought out and as thoroughly executed as any Hitler blitzkrieg. With their unlimited ammunition (finances) and crushing superiority in manpower, we who were defending the bill could do little toward holding our lines. In Texas, which was a rather lively sector of the battle front, the large chains (which have never had compulsory blockbooking forced upon them, and whose monopoly is threatened by enactment of this bill) control and operate 400 theaters.

Included among these chains was Interstate circuit, a Paramount subsidiary, the same circuit which was convicted by the Supreme Court of conspiracy in restraint of trade, in forcing its competitors to increase admission prices.

Representatives of two of these chains toured the State, holding a series of meetings to which all exhibitors were invited. The mail, phone, wires, and printing press were used freely. Every manager of every chain theater received instructions from his boss to cooperate fully, using phones and personnel visits to surrounding towns. All expenses of these meetings were pald by the chains. Every film. salesman received instructions to plug these meetings and obtain signatures against the bill. (There are about 40 film salesmen in the Dallas territory, and each of these sees an average of 10 exhibitors a week.)

Advertisements came out in the papers, and editorials containing the same false propaganda were numerous.

I wish to insert in the record an editorial in a Dallas newspaper which argues the increased cost of pictures and increased admission prices. It also states that the bill would add another autocratic bureau to the Government expense with hundreds of employees. I wonder where the editor gets his information; certainly not from the bill itself.

(The editorial referred to from the Dallas Journal is as follows:)

NEELY BILL UNDESIRABLE

The Neely bill is coming up again in Congress. The Neely bill would forbid a motion picture studio selling its output of pictures in groups under a system which is known as block booking. The system used permits a studio to plan its production schedules, have a continuity of work and scale the prices to the exhibitors on the sales assured. The contracts written permit exhibitors to reject a certain percentage of pictures, which is likely to be greater than the percentage of "flops" that any good production company will suffer. To abandon this system would force the employment of a large force of traveling salesmen, selling pictures one by one instead of in blocks, or frequent visits to film centers by exhibitors contracting for film. In either case, the cost of pictures would be higher.

The Neely bill also prohibits "blind selling," which consists simply of an exhibitor making a contract for the pictures of a studio in which he has confidence, in advance of production and without detailed knowledge of the development of the picture plot. The bill requires an "accurate synopsis" of the plot be provided in advance of sale. Studio developments and inspiration result in many alterations in plot in the making of a picture. Sales could not safely be contracted in advance of production under the provisions of the bill.

The quality of pictures now made by the major studios and presented in most theaters is sufficient evidence that decency and the public interest are being considered. The objectionable pictures are the very ones which are now sold indi

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vidually, and to theaters which now cater to the decadent. On these, the Neely bill would have no effect.

The Neely bill, if made law, will not serve the purpose which its supporters assert inspires it. It will raise the cost of motion pictures, and that means theater prices. It probably will result in the production of fewer great pictures, since inspired deviation from an advance synopsis would be inviting prosecution. Moreover, the adoption of this bill would add another autocratic bureau to the Government expense, with hundreds of employees when the public is clamoring for a reduction instead of an increase in expensive governmental functions.

Mr. COLE. I also desire to insert in the record two pieces of propaganda which were broadcast. I will quote a few statements from these to show how the process of undermining was carried on:

It is literally true that no exhibitor ever plays a picture he does not want to play.

Fortunately this statement is so extreme that it becomes absolutely ridiculous and answers itself.

Synopsis and treatment must be exactly as the picture no changes could be made in the synopsis or script used in selling the picture in advance.

Why not? If such changes become necessary or desirable they certainly could be made. It is of course true that with any material change, the buyer, exhibitor, would have to be extended the option of acceptance or rejection of the particular picture so changed but what is so wrong or unworkable in that?

Public groups have been misled into endorsing the Neely bill, thinking that it would do away with the so-called "sex picture" or gangster picture. As is well known, such pictures are not produced under the strict provisions of the motionpicture production code.

That is a truly amazing statement. I might list a few that come under this category, put out to the public in the last few months: Strange Cargo, Primrose Path, Return of Dr. X, Invisible Stripe, Dust be My Destiny, Roaring Twenties, Smashing the Money Ring, Cafe Hostess.

Distributors now advance money to producers but would not do so in the future where a picture would have to be screened before sold. * * * Efforts like Gone With the Wind, Pinocchio, Mr. Smith Goes to Washington, and Gulliver's Travels would never be contemplated because of lack of financing.

This is a remarkable statement, but the author was quite unfortunate in the pictures selected to illustrate his point. The fact is that three out of the four pictures he names were never sold in blocks or groups, but were marketed separately and individually.

And here is another most amazing statement:

Under the Neely bill, our industry becomes subject to another Government burcau, which from all past experience, will want to enlarge its duties and surround us with more restrictions than provided in the original law.

You have read the bill, gentlemen. In what paragraph is that boogyman, a Government bureau, mentioned?

Another amazing statement is this:

As to the exhibitor being able to buy in block, the bill prohibits this when it is analyzed for the following reasons: Section 3 says that it shall be unlawful for a distributor to lease or offer to lease any films in a block or group of two or more, and places a penalty in section 5 of a fine not exceeding $5,000 or imprisonment for 1 year, or both, if this clause is violated.

This, gentlemen, is the last word in misrepresentation and false propaganda. Here we have the author quoting accurately one-half of a sentence from the bill, and deliberately leaving out the last half

of that sentence, thus changing the whole thought. The complete sentence from the bill is as follows:

SEC. 3. (1) It shall be unlawful for any distributor of motion picture films in commerce to lease or offer to lease for public exhibition films in a block or group of two or more films, and to require the exhibitor to lease all such films or permit him to lease none.

You can readily see that this omission completely changes the entire meaning and intent. It is quite an important item also in this campaign of propaganda, as most exhibitors want to buy in blocks, but blocks of their own choosing.

I ask that these two pages of "Propaganda" put out over the name of the president of the Theater Owners' Protective Association be made a part of the record.

(The statements referred to follow:)

OBJECTIONS TO THE NEELY BILL

The Neely bill, known as Senate bill 280, "A bill to prohibit and to prevent the trade practice known as 'compulsory block-booking and blind-selling' in the leasing of motion picture films in interstate and foreign commerce.”

Block-booking and blind-selling, the subjects of the bill, are referred to as oppressive evils in our distribution system which, according to the bill seems to be engaged principally in licensing pictures of unknown quality and dripping with sex. There is nothing blind to the experienced exhibitor in buying a season's product from the majority of the producers whose stars, directors, and past reputation for producing are recognized factors in our business, even though they do not create every season with mechanical precision.

Block-booking is nothing more than the wholesale method of selling a season's output of a recognized producer. Besides the 10 percent and 20 percent eliminations granted by distributors, split contracts, trade-outs, and cancelations when negotiating new deals provide means for further cancelations when needed. Hence it is literally true that no exhibitor ever plays a picture he does not want to play.

Even the smallest town uses four changes a week, 206 pictures a year.

Whether

your investment in a theater is $5,000 or $500,000, the exhibitor must have some assurance of a steady flow of product, and theater policies are arranged to use all classes of pictures.

Outstanding personalities and the product of a well-known producer could not be identified with any particular theater where competition existed for the reason that under the terms of the Neely bill each picture or group of pictures would be placed on the auction block. You might compare this to an automobile dealer who could only buy one carload of a certain make of car at a time and who did not know from one carload to the next what brand of cars he would be selling. The only difference is that cars can be made as long as our natural resources hold out, while motion pictures are a limited, complex product created with personalities and human elements. There are actually less than 30 stars who individually mean anything at the box office.

New ideas and new talent might be suppressed without a chance if everyone wanted to buy only the known box office hits. Micken Rooney, Deanna Durbin, Mae West (She Done Him Wrong), and Shirley Temple all started in so-called "program pictures" hidden in blocks of other pictures thought to be better.

Section 1 of the bill declares that blind selling is contrary to public policy; interferes with the free selection of films by the exhibitor; prevents local communities from influencing their selection. Given the privilege few exhibitors could select even a majority of the pictures the public wants to see by reading a synopsis of the story-many of us are fooled even after screening them. So-called "public influence" would be voiced by busy welfare groups not always representative of public tastes. The choice of such groups would be the picture they think "the public should see," and not always, as we know, the picture the greatest number of people will pay to see.

Section 3 makes it unlawful to lease or offer to lease films in a group of two or more films at a lump-sum price for the group or requires the exhibitor "to buy all or none, etc." Section 4 makes it unlawful to lease a motion picture without a true synopsis of the contents, this to be in writing as a part of the contract. Furthermore, a statement describing the treatment of dialogue concerning scenes

depicting vice, crime, or suggestion of sexual passion. Section 5 provides the teeth to enforce sections 3 and 4 by imposing a $5,000,000 fine or imprisonment not exceeding 1 year.

Hence if the Neely bill becomes law, the exhibitor has the privilege of "passing up" a possible 20 or 30 pictures a year in addition to the number he can now cancel under the present method. With personnel, facilities, and fixed overhead for producing a group of 40 or 50 pictures a year, what will be the distributor's new method of selling one picture individually at agreed prices per picture? The price of each will necessarily be the maximum, not knowing what pictures you will choose to buy. Forget about the questionable benefit to be derived from refusing to buy a limited number of pictures, and think of what you will have to pay for the 75 or 100 big money making pictures you must have.

The average feature is 8,000 feet long and costs 2 cents a foot-$160 a print (technicolor, of which there are 20 pictures this year, costs 8 cents a foot, $640 a print). A print is good for 33 bookings, hence wear and tear on prints alone is $5 per booking. In addition to this, under the Neely bill, the picture must be sold individually at 5 or possibly 10 times the previous cost of selling in blocks; your account must be handled and serviced by the local exchange at great increased cost. In fact, under this individual picture basis, the distributor will (not may) find it unprofitable to sell certain types of small accounts which, under the present system, make it possible to service such accounts at a low average figure of overhead cost. The present system makes it possible for a small town to use a picture a comparatively short time after release, at $20, because the same picture has played such towns as Dallas, at a rental that may exceed $3,000.

Requirements regarding synopsis and treatment of pictures are so rigid that selling the picture until after it is completed would be inviting a fine or imprisonment. Synopsis and treatment must be exactly as the picture no changes could be made in the synopsis or script used in selling the picture in advance, and the picture could not be revised, as it often is, after trial exhibition. More than one picture can be bought at a time, but it must be bought on an individual basis, and if you wanted to buy 10 pictures in a group the chances are you would have to wait until the 10 were produced. You may not require the synopsis, but the distributor either furnishes the complete and accurate synopsis and treatment at the time of the sale, or goes to jail.

Public groups have been misled into endorsing the Neely bill, thinking that it would do away with the so-called "sex picture" or gangster picture. As is well known, such pictures are not produced under the strict provisions of the Motion Picture Production Code. They are not distributed through established exchanges, and they are always sold individually. The Neely bill does not prohibit the production of any type of picture so long as it is sold individually with a complete synopsis, etc.

The average major production requires a cash outlay of about $400,000, mostly for labor. Under our present system, it requires about 6 months to service the theaters of this country with a picture. Under the Neely bill the returns on the investment, if it may be called that, would be greatly delayed because selling would just start where releasing now starts.

Producers could not produce big-cost pictures because financing would not be available due to the fact that bankers would not loan money where distribution is not arranged for in advance. Distributors now advance money to producers, but would not do so in the future where a picture would have to be screened before sold. This would put some of our top-notch producers like Walter Wanger, Goldwyn, Roach, Charles Rogers, Sol Lesser, Walt Disney, Max Fleischer, David Selznick, and Frank Capra out of business. Efforts like Gone With the Wind, Pinocchio, Mr. Smith Goes to Washington, and Gulliver's Travels would never be contemplated because of lack of financing. Where today there are innumerable independent producers in Hollywood, these would be cut down to a minimum.

Under the Neely bill, our industry becomes subject to another Government bureau which, from all past experience, will want to enlarge its duties and surround us with more restrictions than provided in the original law.

This is a regulatory bill which will bring supervision and additional burdens upon an already overburdened industry. The law does not arbitrarily supervise first run and affiliated theaters. It supervises everybody.

The Neely bill will prove itself a cancerous germ to the motion-picture industry. Science knows little about the cancer-only the results-Mr. Neely seems to know less about our business.

ROY L. WALKER,

President, Theater Owners' Protective Association.

SUPPLEMENT

In addition to what I have said in the main article enclosed, I desire to add the following because of the fact at one of our meetings, an exhibitor made the statement that under the Neely bill the exhibitor could still buy in block if he so desired and that the Neely bill would help the small exhibitor.

I emphatically deny that the Neely bill will help the small exhibitor in any way and answer with the following statement:

Any exhibitor knows whatever increases the cost of production and distribution must increase the cost to the exhibitor.

There is no further argument needed because under the bill, instead of the exhibitor being approached one or two times each year it will be necessary for the distributor to call on the exhibitor at least once a month or the exhibitor go into the exchange at least once a month; and when this expense is added to the purchase of the pictures you cannot operate.

As to the exhibitor being able to buy in block, I will admit the bill does not sayin so many words that he cannot make an offer to a producer or distributor for their entire block of pictures, but I do say the bill prohibits this when it is analyzed for the following reasons: (1) Section 3 says that it shall be unlawful for a distributor to lease or offer to lease any films in a block or group of two or more and places a penalty in section 5 of a fine not exceeding $5,000 or imprisonment for 1 year, or both, if this clause is violated. And no distributor is going to place himself in a position whereby an exhibitor can become dissatisfied and claim that the block was forced on him or that the exhibitor offered to sell a block, for it would be a question between the seller and the buyer who made the block offer for sale. There can be no safe way for the distributor, under the bill, except to close the deal picture by picture, and you know and I know that when this is done he is going to put a price on the good pictures that will take care of his entire production. (2) If the distributor is foolish enough to accept a block offer it will be impossible for him to do so because section 4 says that it shall be unlawful for any distributor to lease or offer to lease any film or lease or offer of lease an accurate synopsis of the contents of such film and that such synopsis shall be made a part of the lease and shall include (a) general outline of the story and descriptions of the principal characters, and (b) a statement describing the manner of treatment of dialogs concerning and scenes depicting vice, crime, or suggestive of sexual passion.

This prohibits absolutely any distributor from selling pictures more than one at a time, or an exhibitor from buying unless the distributor waits until the end of the year and all pictures are made before offering them to the exhibitor. If he offers a picture that has not been made he subjects himself to the same penalty if there has been the least change in story, principal characters, and dialogs.

I say that the bill is made to force the small independents out of business and force the distributors to operate their own shows in every town if they want to exhibit their pictures. As an independent exhibitor and a small-town exhibitor, I say that to buy pictures under this bill will close our doors.

ROY L. WAlker.

Mr. COLE. Before closing this subject I wish to mention that three of our good members in Texas are against the bill for a perfectly good reason, although selfish. These three men, one of them my own brother, have similar situations and the same argument. Each of them has two or three theaters in towns of 6,000 or 8,000 population. Each has no competition, enjoying a local monopoly. Each of them needs and consumes all the pictures that are made, and voluntarily buys complete blocks since each requires all. Consequently they argue this bill would not benefit them. On the other hand, they figure it would threaten their local monopoly by allowing some other exhibitor, some potential competitor, to buy products. This I agree is a reasonable though selfish explanation of opposition to the bill. It is the identical reason that brings the opposition of the large chains, a threat to their monopoly.

Now, may it please the committee, I have one additional statement to make. In view of the amount of time that has already been consumed, some of the witnesses listed in Mr. Myers' original schedule