(6) The term "commerce" means commerce between any State, Territory, or the District of Columbia, and any place outside thereof; or between points within the same State, Territory, or the District of Columbia, but through any place outside thereof; or within any Territory or the District of Columbia. For the purposes of this Act (but in no wise limiting the definition of commerce) a transact on in respect of any film shall be considered to be in commerce if the film is part of that current of commerce usual in the motion-picture industry whereby films are produced in one State, leased for exhibition in other States, and distributed to them through local exchanges in the several States, the films circulating from the exchanges and between the various exhibitors. Films normally in such current of commerce shall not be considered out of such commerce through resort being had to any means or device intended to remove transactions in respect thereto from the provisions of this Act. For the purpose of this paragraph, the word "State" includes Territory, the District of Columbia, and foreign country. (7) The terms "aggregate price" and "price" as used in section 3 (1) shall mean the aggregate of all flat rentals, and of all rentals based upon a percentage of prospective receipts together with any other consideration named in the lease or offer to lease. 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; or to lease or offer to lease for public exhibition films in a block or group of two or more at an aggregate price for the entire block or group and at separate and several prices for separate and several films, or for a number or numbers thereof less than the total number, which aggregate price and separate and several prices shall bear to each other such relation (a) as to operate as an unreasonable restraint upon the freedom of an exhibitor to select and lease for use and exhibition only such film or films of such block or group as he may desire and prefer to procure for exhibition, or (b) as tends to require an exhibitor to lease such entire block or group or forego the lease of any number or numbers thereof, or (c) that the effect of the lease or offer to lease of such films may be substantially to lessen competition or tend to create a monopoly in the production, distribution, and exhibition of films; or to lease or offer to lease for public exhibition films in any other manner or by any other means the effect of which would be to defeat the purpose of this Act. (2) It shall be unlawful for any person knowingly to transport or cause to be transported in commerce any motion-picture film which is leased, or intended to be leased in violation of subdivision (1) of this section. SEC. 4. It shall be unlawful for any distributor of motion-picture films in commerce to lease or offer to lease for public exhibition any motion-picture film or films over two thousand feet in length unless such distributor shall furnish the exhibitor at or before the time of making such lease or offer to lease an accurate synopsis of the contents of such film. Such synopsis shall be made a part of the lease and shall include (a) 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. It is the purpose of this section to make available to the exhibitor sufficient information concerning the type and contents of the film and the manner of treatment of questionable subject matter to enable him to determine whether de wishes to select the film for exhibition and later to determine whether the film is fairly described by the synopsis. SEC. 5. (1) Every person who violates section 3, or who fails to furnish the synopsis required by section 4, or knowingly makes any false statement in such synopsis, shall be deemed guilty of a misdemeanor and, on conviction thereof shall be punished by a fine of not exceeding $5,000 or by imprisonment for not exceeding one year, or by both such fine and imprisonment in the discretion of the court. (2) The several district courts of the United States are hereby invested with jurisdiction to prevent and restrain violations of this Act, and it shall be the duty of the several district attorneys of the United States, in their respective districts, under the direction of the Attorney General, to institute proceedings in equity to prevent and restrain such violations. Such proceedings may be by way of petition setting forth the case and praying that such violation shall be enjoined or otherwise prohibited. When the parties complained of shall have been duly notified of such petition, the court shall proceed, as soon as may be, to the hearing and determination of the case; and pending such petition, and before final decree, the court may at any time make such temporary restraining order or prohibition as shall be deemed just in the premises. Whenever it shall appear to the court before which any such proceeding may be pending that the ends of justice require that other parties should be brought before the court, the court may cause them to be summoned whether they reside in the district in which the court is held or not, and subpenas to that end may be served in any district by the marshal thereof. SEC. 6. If any provision of this Act is declared unconstitutional or the applicability thereof to any person or circumstances is held invalid, the validity of the remainder of the Act and the applicability of such provision to other persons and circumstances shall not be affected thereby. SEC. 7. This Act shall become effective twelve months after its enactment. Attest: EDWIN A. HALSEY, Secretary. The CHAIRMAN. I understand the first witness will be Mrs. Mary T. Bannerman. STATEMENT OF MRS. MARY T. BANNERMAN, CHAIRMAN NATIONAL COMMITTEE FOR THE LEGISLATION TO ABOLISH COMPULSORY BLOCK BOOKING AND BLIND SELLING OF MOTION PICTURES Mrs. BANNERMAN. Mr. Chairman and gentlemen of the committee, I am Mrs. Mary T. Bannerman, 1882 Columbia Road, NW., Washington, D. C., chairman of the National Committee for the Legislation to Abolish Compulsory Block Booking and Blind Selling of Motion Pictures. The other members of this committee are as follows, several of them will speak later: Mrs. Harriet Ahlers Houdlette, American Association of University Women. Miss Helen Atwater, American Home Economics Association. Miss Mary Leeper, Association for Childhood Education. Mrs. Sina M. Stanton, Council of Women for Home Missions. Mrs. Marguertie T. Fischer, Girl's Friendly Society of the United States of America. Miss Elizabeth Eastman, Motion Picture Research Council. Mrs. James W. Irwin, National Board of Young Women's Christian Associations. Mr. Fred Brenckman, National Grange. Miss Izora Scott, National Woman's Christian Temperance Union. Miss Mary Winslow, National Women's Trade Union League. Mrs. Robert Noble, Service Star Legion, Inc. Mrs. Joy Elmer Morgan, Woman's Home Missionary Society, Methodist Church. I appear on behalf of this committee in support of S. 280, entitled "A bill to prohibit and to prevent the trade practices known as 'Compulsory block-booking' and 'blind selling' in the leasing of motion picture films in interstate and foreign commerce." This bill was passed by the United States Senate after the adoption of certain minor amendments, which appear on the copies before you. Before proceeding I wish to introduce as counsel for the public groups which I represent, a member of the legal committee of the Motion Picture Research Council, Henry R. Atkinson of Boston. STATEMENT OF HENRY R. ATKINSON, REPRESENTING LEGAL COMMITTEE OF THE MOTION PICTURE RESEARCH COUNCIL, BOSTON, MASS. Mr. ATKINSON. Mr. Chairman, since Mrs. Bannerman has called my name, I would like to request a ruling from the Chair with regard to the conduct of the hearing, that there will be no interruption of the presentation of these groups, from the floor. The CHAIRMAN. That is the general practice of this committee; we permit only members of the committee to ask questions; and each side is in control of its own presentation. Mr. ATKINSON. That is fine. The CHAIRMAN. Of course, we recognize the proper courtesies to the normal interruptions that may occur. Mr. ATKINSON. Also, Mr. Chairman, that of the time that is given to the proponents, I believe that 7 hours would cover the organized public groups, and that 1 hour of that be set aside for rebuttal at the end of the testimony presented by the opponents. The CHAIRMAN. I think that will be satisfactory to the committee. Mr. ATKINSON. I wanted to be sure that it was understood that the proponents would have that much time at the conclusion of the opponents' testimony. The CHAIRMAN. We want to give a reasonable opportunity to both sides to present their testimony, and we try to be fair to each group. Mr. ATKINSON. Thank you. STATEMENT OF MRS. MARY T. BANNERMAN-Resumed Mrs. BANNERMAN. My statement is written, and while I shall be glad to answer any questions from the committee at any time, I suggest that some are likely to be answered in the course of the statement, and that members of the committee may, therefore, find it simpler to withhold their questions until the end. The conditions which demand legislative action are as follows: As everyone familiar with the motion-picture industry realizes, it is divided into three functions-production, distribution, and exhibition. There are approximately 17,000 theaters which form the exhibition branch. Of these 17,000 theaters, there are, according to the figures of the Department of Commerce, some 16,000 in operation. Again in accordance with that Department's figures, there are approximately 10,000 of these 16,000 theaters which were independently owned in 1937. You will find that statement in the Senate hearings on page 301. That is to say, they are neither affiliated with the producers nor parts of large circuits. Generally these independents are so-called neighborhood houses, located in residential or rural areas. These independent theaters are subjected to two harsh, onerous, and unfair trade practices known as compulsory block-booking and blind selling, which prevent their owners from exercising power of choice as to what pictures shall be exhibited within their walls. These two trade practices are inseparably connected the one with the other and not only prevent the local patrons from securing the type of pictures they wish to see, but exclude independent producers from the exhibition market, thus eliminating competition and reducing the quality of pictures available. These two trade practices can be very briefly described. Compulsory block-booking is the practice "whereby unaffiliated or independent exhibitors are compelled to take blocks or groups of pictures in order to obtain any of them." This definition is that given by the Department of Justice in its antitrust proceeding now pending in the southern district court of New York, paragraph 214 (1) of the bill of complaint. I offer the whole of that subparagraph for the record. (The statement referred to follows:) (1) Block-booking.-Block-booking is a practice whereby unaffiliated or independent exhibitors are compelled to take blocks or groups of pictures in order to obtain any of them. Compulsory block-booking, such as is enforced against the independent exhibitor, should not be confused with voluntary block-booking whereunder a group or block of pictures is purchased as the result of a voluntary agreement freely entered into between distributor and exhibitor. 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. In the case of the independent exhibitor, however, he is compelled to contract and pay for a whole block or group of pictures in order to obtain any of them which he may desire. This practice has the effect of imposing upon the independent exhibitor a great number of pictures that are not desired by him, and tends to arbitrarily fill up and consume his screen time, thus preventing him from securing other pictures through other distributors. Mrs. BANNERMAN. Blind selling is the practice whereby pictures. are leased without any binding and adequate description of their contents. There will be testimony offered later to show that pictures are frequently leased without any identification beyond their price bracket. Obviously an exhibitor who is contracting for his future program under these two practices is absolutely helpless, and has no power of choice. It is as if one were required to furnish one's house by a blank order to the furniture company for 40 pieces of furniture at such and such a price without knowing whether they were to be tables, chairs, beds, bookcases, or sofas. The furniture company might deliver 10 sofas, 10 tables, 20 chairs, and nothing else. The result would be pretty hard on the family. There would be nothing to sleep on, no place for books, and no light to ready by. Similarly, the consequences of such blind selling in the motion picture industry, combined with compulsory block-booking, are pretty hard on the community that has to see and live with whatever pictures the distributor chooses to send. Such a community is at the mercy of distant Hollywood. For several years prior to 1935, legislation to abolish these two trade practices had been proposed to Congress. The first of these was the Brookhart bill in the Seventieth Congress and the second the Brookhart bill in the Seventy-second Congress. The third was that introduced by Mr. Patman in the second session of the Seventy-third Congress in 1934. That bill received the first hearing March 19, 1934, given by this committee to an anticompulsory block-booking and blind selling measure. But until the present legislation was introduced in the Seventy-fourth Congress in 1935 the opposition to these bills was able to prevent a vote being reached on the floor at either end of the Capitol at any time. The bill before you, S. 280, is designed to remedy the abuses I have described in as simple and effective a manner with as little disturbance of present methods of motion picture distribution as possible. It was drafted in 1935 by Hon. Samuel B. Pettingill of Indiana former member of this committee and a special committee of the Motion Picture Research Council headed by Prof. Joseph P. Chamberlain of the Columbia Legislative Drafting Service assisted by Prof. Noel T. Dowling of Columbia-other members included Judge Walcott of Cambridge, Mass., and H. R. Atkinson of Boston, who will speak later. A detailed analysis of the bill will be shortly submitted, but in lay language the seven sections of the bill can be briefly described thus. Section 1 describes the purpose and reasons of the bill and contains a finding of fact by Congress. Section 2 contains definitions, the most important of which is that which excludes short subjects of less than 2,000 feet and newsreels from the operation of the bill. Section 3 prohibits compulsory block booking. Section 4 requires a written synopsis at the time of leasing. In the Senate the definition of a synopsis was considerably liberalized in order to meet certain technical objections of the opponents. Section 5 provides for most of the penalties contained in the Sherman Antitrust Law. Section 6 provides that unconstitutionality of part of the act should not affect the remainder. Section 7 sets the effective date 1 year after enactment. Mr. Atkinson will furnish more detailed description later. This bill, introduced in March 1935, as H. R. 6472, by former Congressman Samuel B. Pettengill of Indiana shortly before an identical bill was introduced in the Senate by Senator Neely, was heard by a subcommittee of your committee. Congressman Holmes, the senior member from New England, is the only member of that subcommittee who is now on this committee. I am sure he will bear with the proponents if some of their remarks sound familiar. A brief word as to legislative history of this bill since 1936: In 1937 no hearings were held in either the House or Senate due to the battle over the United States Supreme Court. The Senate, however, had moved faster on this matter than had the House. The full Senate Committee on Interstate Commerce had reported the bill favorably without any amendment in June 1936. In February 1938 it reported it a second time, and printed its 1936 committee hearing. I hand the chairman herewith several copies both of these hearings and of both Senate Committee Reports for the use of the committee. On May 17, 1938, the Senate passed the bill with minor amendments, striking out the last paragraph of section 4 of H. R. 6472 relative to cancellation of the contract for failure to conform with the synopsis, and amplifying the definitions so as to exclude short subjects under 2,000 feet in accordance with the general intent of the original bill. In 1938, however, there was not time for your committee to hear and act on the bill between May 17 and adjournment of Congress. Last year, therefore, the bill had to be reintroduced in the Senate. Extensive hearings were held, a copy of which I hand you, with the Committee Majority and Minority Reports, and on July 17 the Senate passed the bill by a vote of 46 to 28 in the form in which it is now before you. I submit for the convenience of the committee several copies of the refutation of the points attempted to be made in the minority report. |