lawsuits brought under the Sherman and Clayton Acts by private individuals. Some of them antedated the Government suit but most of them followed it. These suits have not stood still. We are constantly engaged in defending them. A few days ago I was advised by our counsel in New England that plaintiff's counsel in some of these suits insisted on going to trial in July. We have recently tried in the Federal courts two antitrust suits, Westway v. Twentieth Century-Fox, et al. at Baltimore and Gary Theater Co. v. Columbia Pictures Corporation, et al. at Chicago. We are collectively charged in those suits with conspiracy and vilation of the Sherman Act. Block booking, blind buying, unfair clearance, discrimination, and the other things you have heard about here were involved in those suits. They were tried on their merits and the courts found for the defendants. But nothing was said to you about those suits.

Perhaps it is a little thing but it shows the way the wind of argument blows. Mrs. Bushnell told you that an M-G-M release had Mr. Joseph Breen's Certificate of Approval No. 395 and that the magazine Time, said that the picture "can be considered an advertisement for adultery as a matrimonial cure-all. The wife is revealed sinning with young men and the wife is one of the greatest heroines of the stage." This aroused by curiosity. I found that the picture in question was M-G-M's "The Painted Veil" released in 1934 with Greta Garbo playing the star role. The Legion of Decency listed this picture as "suitable for adults" and in its issue of November 30, 1934, commented:

The Painted Veil (Metro) Greta Garbo, Herbert Marshall, George Brant, Jean Hersholt. Garbo, with a surprisingly perfect English accent, in a typically sophisticated vehicle. Though at first attempting self-justification for marital infidelity, she at length expiates her sin, rather because gratitude inspires love for her husband than repentance for the sin itself. However, her regeneration is really genuine in the face of renewed temptation.

The Catholic magazine, America under date of December 15, 1934, stated that it was "not content merely to say The Painted Veil is unobjectionable." It recognizes "the film as splendid, intelligent adult entertainment with high moral values, exactly the kind of picture this review has asked for for many months." Čan both Time and the Legion of Decency writers and America be right? Maybe. Mark Twain said that differences of opinion make horse races.

Colonel Coles told you that one of the troubles that the independent producer has is that he cannot get the services of the stars who are for the most part tied up in contracts among the Big Eight, who swap them among themselves. Mr. Frank Freeman, in charge of Paramount's production at Hollywood, listed for you the names of some of the stars who are not tied up under contracts and who are perfectly free to work for anyone they choose. In addition to this, I think he indicated that some of the stars who are under contract have reserved the right in such contract to make pictures for others than the principal employer. This, again, is of their own choosing. These important personalities are of their own free will available to any independent producer who can meet their requirements of pay and importance of vehicle, as well as surrounding cast.

Now, Colonel Coles is not a producer and never has been. He could not go on the stand in the suit in New York in which the Government has made a similar allegation and be a competent witness to this charge of swapping stars among the big producers, but he can come

here and tell this committee that it is a fact. It is not a fact as will be amply demonstrated in the trial of that case.

He mentioned the Monogram picture Boys of the Streets, praised it greatly and compared it with Warner Bros. picture Golddiggers of Paris to the great disparagement of the latter. Now I did not see either one of these pictures. He guesses for you that the Golddiggers received a film rental of from $1,500 to $2,000 and that Boys of the Streets got $500.

Let us assume that Boys of the Streets was a good exploitation picture. What personalities were in it? What kind of production. did it receive? How much money was spent on it? What did the simonpure independent exhibitor do for this picture Golddiggers of Paris? What was the relative box office draw of the two?

Mr. Samuelson told you the pictures which are bad or are criticised by the alert public groups do not do the best business, or are not the best box office throughout the country. I should hope that this would normally be true, but it goes on to say that the producers get their reflection of box office from their own theaters located in downtown sections, principally in downtown sections of big cities, and he says this is not typical of the general demand. He is quite mistaken there.

Distributors get their information about the box office value of pictures not from what they do in the big downtown theaters owned by producers, but from theaters of all kinds throughout the length and breadth of this land. Big downtown theaters are owned and controlled in many instances by exhibitors who have no connection with producers or distributors other than being their customers and circuits like those in which Paramount is interested have theaters of almost infinite variety in large communities and fairly small ones, and we make our reckoning of whether the public likes a particular picture or a particular type of picture or personality by reference to the box office of all these theaters, as well as of the theaters of our customers generally. As theater operators we are as much interested in the success of the small theater as we are of the large. Mr. Samuelson says that the public wants clean pictures. I believe he is right. I believe that the public taste for clean and better pictures has steadily improved and is steadily improving and that all producers are earnestly trying to cater to that demand.

Mr. Samuelson gave his opinion that the most recent picture in which Mae West appeared with W. C. Fields was not a good, moral picture. He thought it was fair entertainment, and then he said: "I did not see the picture at all. All I know about the picture is what I read about it." Referring to the distributors, he said: "They can all get together. I understand that the distributors select certain customers in certain localities." Well, I deny it categorically. Distributors undoubtedly select their customers as their customers select them, but it is the result of competition and not of arranged allotment.

Mr. Samuelson stated that some of the best productions so far as the community is concerned come from the small producer, some of the best box-office pictures. Now what does he mean? What small producer? If he means that United Artists, which is small in the number of pictures it annually delivers, or Columbia and Universal which may be small in respect to their financial size, that these com

panies turn out some of the best pictures, both esthetically and in entertainment value translated into money at the box office, he is right, and these fine pictures have wide circulation in the theaters of affiliated exhibitors, unaffiliated circuits, and of single theater proprietors.

He told you he knew noting about production, that he does not know what the producers are faced with, but when asked if a producer knows whether he is going to produce a good picture, he answered, "I think so," and gave the same answer to the question, "Do you think when a producer casts a picture he knows exactly what category it will probably fall in?"

I submit that this shows the value of his testimony and opinion. We had a very interesting witness before this committee, Mrs. Daniel M. Shaver, of Shavertown, Pa. She was inexperienced, timid. and a bit frightened. She was appealing and attractive and she told a remarkable story. She told how she and her husband built and opened a theater in their little town about 2 years ago; that she bought the pictures of Paramount, RKO, and Universal-features, shorts, and news. She bought all of them. She found that her little town had to play the pictures a considerable time behind the neighboring and much larger communities of Wilkes-Barre, Plymouth, and Forty Fort and that she even had to play behind the theater some 2 miles away in the little town of Dallas. I am not sure whether she told you that Paramount pictures were sold to her with clearance over Dallas. She later on found that her customers wanted to see Mickey Rooney and she found that to get his pictures she would have to buy product from Metro on Metro's terms, which she did. She then told a story about an interview with a salesman from Warner Bros. The general counsel of Warner Bros. learned of Mrs. Shaver's testimony and forthwith interrogated their salesman. The salesman made an affidavit in the form of a letter addressed to the chairman of your committee but sworn to before a notary public and the general counsel, unable to be here himself, asked me to present that letter to the committee and request the privilege of making it part of your record. Here is the letter and I make that request.

The CHAIRMAN. Very well; that will be received.

Mr. YOUNGDAHL. May we have the letter read, Mr. Chairman? Mr. KEOUGH. I will be glad to read it for you.

The CHAIRMAN. Is it very long?

Mr. KEOUGH. No, sir. The letter reads:

Hon. CLARENCE F. LEA,

NEW HAVEN, CONN., May 27, 1940.

Chairman, Committee on Interstate and Foreign_Commerce,

House of Representatives, Washington, D. C.

DEAR SIR: I have been shown a copy of that portion of the testimony of Mrs. Daniel M. Shaver, of Shavertown, Pa., relating to the first visit of a representative of the Warner companies after she opened the Shaver Theatre. I was the first representative of the Warner companies that called on Mrs. Shaver after her theater was opened. At that time I was a salesman for Vitagraph, Inc., the distributing subsidiary of Warner Bros. Pictures, Inc., with offices in Philadelphia. In her testimony Mrs. Shaver refers to Warners "coming around," and relates what "they" said. I am informed that on page 492 of the record the following appears with respect to this conversation:

"Then Warners came around. We did not go to them. We had Mickey Rooney. We thought that would be all right. But our contracts were expiring for these other companies' films and we thought we would not resign with them. So Warners came around and said that they would sell us; that they had; that

they were able now to sell us and I said "Why didn't you come around when we first built?" They said, "Why didn't you get in touch with us before you built?" I said, "We did not know anything about it."

They said, "Who invited you in this business?" And he says, "What right have you to make money off of our pictures. They are our pictures. We should make the money."

Mrs. Shaver's version of this conversation is not only highly colored, but it is entirely inaccurate. Nothing like this transpired in our conversation. I called on her in an effort to sell her my company's pictures, and it is not likely that I would have asked, as she says I did, "Who invited you in this business?" I made no such remark, nor the other remarks attributed to me. On my first visit with Mrs. Shaver we had a very friendly discussion with respect to the sale of my company's pictures. I tried to sell her my company's pictures and she told me she would like to play my company's pictures, but that she had sufficient product from other companies. She asked me to call again at a later date. I called on her and Mr. Shaver several times after that and assisted them in every way possible in arriving at a satisfactory deal. Ultimately Mr. Shaver signed applications for my company's pictures which were subsequently approved after there had been reductions in prices.

Very truly yours,

Sworn to before me this 27th day of May 1940. [SEAL]

My commission expires February 1, 1945.

JAMES F. SMITH, Notary Public.

Mrs. Shaver told you that in her ignorance of the business, she and her husband had bought more features, short subjects, and news reels than they had room for but that she was told she would have to take her medicine. She made part of the record some correspondence exchanged between her and Paramount's Philadelphia manager and one of its bookers at the Philadelphia Exchange, some correspondence with Universal, Warner Bros., and Metro, as well as an exchange of letters between the Department of Justice and Loew's, Inc. But Mrs. Shaver did not tell you that in her dealings with Paramount at the outset she contracted for 22 features of the first season and voluntarily added on what is known as a "spot booking," six more, took and played four out of six of the Hopalong Cassidy series, one special Western, one-half of Paramount's news reels and 52 out of 101 of its shorts; that of the next season's product she contracted for 51 features, canceled out 12 and spot booked an additional three.

She took and played all six of the Hopalong Cassidys and one special and took and played one-half of the news reels and contracted for 102 shorts of which she canceled out 35. In the third season, she contracted for 47 features and spot booked one additional, took and played the six Hopalong Cassidys and the one special, took no Paramount news reel and all of Paramount's shorts. A misunderstanding appears to have arisen about her taking 46 features. After the exchange of letters between her and Paramount's manager, she came to the Philadelphia Exchange and the misunderstanding was resolved entirely in her favor by allowing her to cancel the full 20 percent of Paramount's entire feature output of the season as well as an additional 33 of the shorts for which she had contracted, reducing her commitment for the season to 52 shorts. All this she knew before she came here to testify and this arrangement was made by the Paramount manager without any knowledge whatsoever that she was to be a witness before your committee.

Prior to that time she had informed our salesman, Mr. Beatty, that she could not use a Paramount newsreel for which she had con

tracted because she had to use a Metro newsreel and the Metro Co. was insisting on having its newsreel start running in her theater, so Paramount canceled its newsreel in order that she might not be overburdened.

In her letter to the Attorney General she inquired why she could not play picture day and date with Dallas which was two miles away when, as she said, the Comerford Theater in Forty Fort played day and date with Wyoming, these two places being only 1 mile apart. She was mistaken in this assertion. If any of you gentlemen care to look at a map of the vicinity-I have one here you will find that Wyoming and Forty Fort are not 1 mile apart but many miles apart and the fact is that Forty Fort and Wyoming do not play day and date. Wyoming is near to the city of Pittston and plays behind it and there is no stipulation whatsoever that Forty Fort and Wyoming may play day and date.

Mrs. Shaver is an imaginative person. She told how "the little tots of 7 and 8" were frightened at the matinees; that they would come back to her and say "Don't let that person die." "Don't be cruel." "Don't let these things happen on the screen." The precocity of these little tots recalls the testimony in a British court of the little. girl not much older than they. It seems that her mother was ailing and needed a hot-water bag. The child was sent to the druggist's to buy one. When she returned with it and the bag was applied to the sick woman, it burst and its hot contents injured the victim. A suit followed and the child when asked what the druggist had said to her when she bought the bag, testified: "He said that it was 'reasonably fit for the purpose for which it was intended.'" The judge in astonishment remarked, "In Heaven's name the exact language of the Sale of Goods Act." Whereupon the child looked up at him and said, "Yes, my Lord, section 14."

The relationship between the Paramount Exchange and Mr. and Mrs. Shaver was really not as bad as has been described to you. It seems to have been a very friendly and human relationship. In July of 1938 Mr. Shaver wrote to the Paramount booker asking could he get Texas Rangers for them any time in September after Labor Day. He added "We (the Shavers) wish to announce the arrival of a baby girl July 19 at Nesbitt Hospital in Kingston. This is our second girl. Help us make some extra money to buy the baby some shoes. Locate a print of Texas Rangers. The booker, Mr. Malley, replied on July 28:

Cheer up; baby need not go barefooted. Have been successful in getting a print of Texas Rangers for your use September 16 and 17. Best regards and congratulations.

On August 22, Mr. Shaver wrote Mr. Malley asking him to take out the Texas Rangers for September 16 and 17, as they would like to play a picture The Texans first and would book the Texas Rangers later. He added a postscript in his own hand

P. S. Sorry about Texas Rangers but we will play it later. We just played Texas Trail and want to play Texans, Professor Beware, and Give Me a Sailor as soon as possible. We have overplayed our contract but as long as the pictures and prices are good, we will play plenty more.

DAN.

I believe Mrs. Shaver to be less inexperienced and timid and frightened but lots more human and likable than she made herself