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In a leaflet published by the National Congress of Parents and Teachers, I have discussed more fully differing ideological patterns in their relationship to government, education, citizenship, and the home. This I am submitting without reading. Motion pictures are not mentioned specifically in this leaflet, but as one of the most powerful educational media of modern times, the implications as to control of such media in a democracy are self-evident.

"The child first" has long been a familiar expression in parentteacher associations. This is not a modern idea. More than 26 centuries ago the Prophet Isaiah, envisioning a time when peace should come to the world, said, "And a little child shall lead them." Conversely, it must be completely evident that until such time as men and nations place higher value on human personalities than on their own materialistic, dictatorial objectives there can be no peace. If the full implication of "The child first" were universally acknowledged and accepted today, the frightful carnage of war would cease in less than 24 hours.

So convinced, and at the same time recognizing the immediate need for defending democracy against external aggression, may not America make an even greater contribution toward permanent peace by bringing its industrial ideological patterns into harmony with the political ideology of government of, by, and for the people. Passage of the Neely bill, we believe, will be a long step in this direction.

Twenty years ago when first I joined the Parent-Teacher Association, I frequently visited the school which my children attended. Vividly as if it were yesterday I recall standing often with the principal of that school in the long corridor as hundreds of children at midmorning and mid-afternoon passed from their home-room classes to special activity rooms. This long line of happy, bright, young faces looked up into ours with perfect trust, perfect confidence. Believing as I do that the parents and teachers and citizens of that community, and of every such community, are more vitally interested in the environment which affects the lives of their children than is any faraway commercial monopoly, I should not only betray the confidence of those children but of all children did I not with all the earnestness I possess urge the passage of this legislation.

That concludes my statement, Mr. Chairman.

I have a statement and a memorandum which Mr. Atkinson asked me to include in the record. I should like to read the statementMr. KENNEDY. Mr. Chairman.

The CHAIRMAN. Mr. Kennedy.

Mr. KENNEDY. Madam witness, I understood in your opening remarks that you said you had been charged with being Communists, because you were supporting this bill. I believe you made that statement in the first part of your remarks.

Mrs. BANNERMAN. You will find in Boxoffice of October 28, 1939, and also in The Film Daily of October 20, 1939, where Mr. Pettijohn, in his endeavor to persuade the Nebraska Federation of Women's Clubs to "ditch the Neely bill," thus characterized its supporters.

Mr. KENNEDY. Those things were not said in this committee? Mrs. BANNERMAN. No. They were made by persons connected with the motion-picture industry in their efforts to influence organizations to oppose the Neely bill.

Mr. KENNEDY. I thought that you were referring to testimony at these hearings when you made that statement.

Mr. Atkinson asked me to read this:

It was broadly hinted yesterday by Mr. Keough in his closing argument that the proponents believed that the bill contemplated the use of the threat of criminal complaints to extort favorable cash adjustments in disputes between exhibitors and distributors. It is obvious that no such vicious implication exists in the bill nor was contained in Mr. Atkinson's comments on May 14 on the subject of adjustments. He simply referred to out-of-court settlements in civil suits for damages for alleged breaches of contract under section 4.

Then I also have for Mr. Atkinson some comments on Mr. Werne's pamphlet which I think was inserted in the hearings.

I will offer this for the record.

(The matter referred to is as follows:)

A CRITICISM OF THE ANALYSIS OF THE NEELY ANTI-BLOCK-BOOKING AND BLIND SELLING BILL BY BENJAMIN WERNE APPEARING IN PENDING LEGISLATION SERIES OF CONTEMPORARY LAW PAMPHLETS PUBLISHED BY THE NEW YORK UNIVERSITY OF LAW

By H. R. Atkinson, of the Motion Picture Research Council

This article as illustrated in the following criticism was written either in haste or somewhat carelessly. It appeared undated, except for the year, not long before the hearing. Was the author overanxious to get it in print in time for the use of the Committee on Interstate and Foreign Commerce?

The following criticism is arranged according to the table of contents of the article.

I. ECONOMIC ASPECTS OF THE BILL

1. Background of bill.—The author states that the bill raises the question of whether "Federal control" of this phase of the motion-picture industry is desirable. "Control" is hardly the word to use. It implies management, whereas the bill simply regulates the selling of pictures in such a way as to require informational labeling and prohibit the forcing of individual pictures by unreasonable price differentials or refusal to sell singly. There is no specific price fixing or censorship of content.

The author describes the purpose of the bill as to "control the industry at the point of production by directing the quality of pictures through curbs upon the selling in blocks and in advance of actual production," page 5. This general statement is not only misleading and inaccurate but it is contradicted by Mr. Werne later in his article. There is no curb upon the voluntary selling in blocks and there is no expressed curb on advance sales. Whatever the effect of the bill such a purpose cannot be ascribed to it. Thus Mr. Werne's statement on pages 24 and 25 is more nearly correct: "This would delay the leasing of the pictures until after completion. That this result was not found desirable by the proponents of the bill itself is clear from its terms."

2. Objectives of Neely bill.-The description of block-booking and blind selling contained in the second paragraph completely omits the essence of the bill, namely, that it is attacking compulsory block-booking, not block-booking, and not "the licensing of motion pictures in groups," and that it is attacking the selling of pictures without adequate information and not "the selling of pictures in advance of production." Mr. Werne protects himself by his next paragraph, which gives the terms of the prohibitions but is quite misleading in his introductory phrase which states, "Both these practices are condemned."

3. Proposed benefits of the Neely bill.—Again Mr. Werne seems to have rather carelessly analyzed the bill when he speaks of the elimination of "improper emphasis on love, sex, and crime.' There is not a word about love in the bill. Yet Mr. Werne puts it in and pays no attention whatever to the mention of vice, which is clearly printed in section 4. He is correct in implying that one of the benefits of community selection will be the nonselection of pictures which treat vice, crime, and sexual passion in a way which is undesirable, but this is hardly what he says.

On page 9 he misses the point, which has been well brought out in the House hearings, that box-office receipts in a community which is alive to its opportunities of selection will tend to result in pictures of a good moral standard. As a measure of moral improvement, the bill is simply one to build the pictures up to the level of the community which wants to see them and to prevent the community from

being pulled down by forcibly sold substandard pictures. Indirectly it will allow the community to raise its standards if the community wishes, but the community's only power to reflect these standards in the theater will be through the box office. 4. Community freedom of selection. Without going into whether or not Mr. Werne is a little tender of the industry in not pointing out the "stringent selfregulation" was in fact forced upon the producers by a national boycott, it is significant to note that he admits on page 12, "After weighing all the considerations raised above it still may be stated that elimination of block-booking and blind selling may aid in the improvement of pictures."

5. Monopoly. Under this section it is stated as conclusive disproof of monopoly in production that the small independent producers have increased from 42 in 1926 to 96 in 1939. Nothing is said of the method of distribution or of the bottleneck described in the hearings by Mr. Samuelson, nor of the methods of pooling stars, featured players, directors and technicians described in the bill of complaint of United States v. Paramount, paragraph 199, following-pending in United States District Court for Southern New York.

6. Price determination.-On page 15 Mr. Werne states, "It appears that the draftsmen of this bill sought to prevent distributors from offering any of the usual discounts in prices to induce the prospective buyer to purchase films in quantity or groups." This it is submitted is an extreme interpretation by the author of which he was not entirely unconscious on page 22 when he said, "Even the sponsors of the bill concede that some price differential between group and single leasing is justifiable." The argument on page 16 that small exhibitors would be wiped out by price increase is apparently based on this misinterpretation. There is nothing in the bill to prevent subsequent-run pictures being sold at low prices.

On page 16 Mr. Werne argues that prices would have to be increased to a substantial degree and yet on page 17 he says the bill would "insure retail selection at wholesale prices." It is hard to see how both these statements can be true. Again after discussion Mr. Werne states that "to some extent the small exhibitors are not without a grievance" and continuing his analysis says: "Admitting the entire absence of collusion among the larger producers, the fact remains that the almost universal practice of block-booking and blind selling may, and not infrequently does, place them at a competitive disadvantage but only if their competi tors are subject to block-booking." The Department of Justice apparently does not go so far as to admit the absence of collusion; see petition in United States v. Paramount.

7. Synopsis Requirement. This section together with Mr. Werne's remarks on page 30 under the legal aspects of the synopsis requirement indicate that he is dealing with section 4 before it was amended by the United States Senate, although on page 8 it is clear that he had the amended form at hand. Consequently his apprehensions in regard to the amount of detail required are bound to be unnecessarily magnified. However, in reaching the conclusion that the primary aim of the synopsis requirement is indirectly to force the motion-picture producer to complete the picture before it is licensed, he has again inferred a purpose which is not expressed in the bill. As was pointed out to the committee there is nothing to prevent the producer from making a substantial variation from the synopsis in the process of creating the picture and then to "resell" the picture by giving the holders of its synopsis contracts an option within a reasonable time to accept the variations or cancel the contract.

8. Results of Proposed Legislation.—On page 24 Mr. Werne again disregards the possibility of improvements in the course of production and, therefore, predicts that the production code would no longer be administered. This is an obvious non sequitur for the production code administrator could pass on the synopsis and then insist on a picture consistent with it.

In short, his analysis of the economic effects of the bill is largely based upon the prediction that pictures will be sold one at a time or else strait jacketed by an adherence to a more detailed synopsis than is required by the bill and a disregard of the possibility and probability of many producers improving their pictures in the course of production and confirming their original contracts by option.

II. CONSTITUTIONALITY OF THE NEELY BILL

Mr. Werne does not question the power of Congress to regulate the distribution of films in interstate commerce. He questions only the indefiniteness of the offense described in section 3, and of the requirements of section 4.

If the committee feels that any part of either of these two sections needs rephrasing it can be easily done. On the other hand it should be noted that the separability of the various provisions of the act under section 6 will preserve the

whole even though some clauses might be held too indefinite to be the basis of a criminal action.

Mr. Werne apparently forgets that section 5 provides for enforcement of sections 3 and 4 through proceedings in equity, and that such proceedings do not · require such an absolute standard as a criminal proceeding.

III. CONCLUSION

Here Mr. Werne misses the essence of the need for the legislation when he implies on page 32 that the exhibitor is a retailer who deals in goods for mass consumption and that the selection of a year's program is "an essentially wholesale transaction." The exhibitor is a retailer just as much as the housekeeper, who buys food for 52 weeks in the year. The exhibitor does not consume a mass of pictures. He consumes only what is necessary to fill his screen one at a time from week to week and it is his most vital interest to have the power to select from among pictures upon the market. The fact that he likes to have a store in advance does not alter his essential character as a retail buyer. The fact that his consumption of the article consists of exhibiting it to a mass of people does not make him a mass consumer. This inherent nature of the exhibitor must always always be borne in mind in dealing with his problems of acquiring film.

Finally, Mr. Werne on page 33 makes the same error that Mr. Hays does, who is so allergic to censorship. Mr. Werne says, "As a bid for private censorship through organized pressure groups, the measure is suggestive of numerous complications." As repeatedly pointed out in the hearings, there is no censorship provision in the bill whatever and the ultimate control of the public will be at the box office so that there will be no minority control possible. One cannot help wondering how Mr. Werne reconciles this apprehension with his apparent approval of the private censorship of the Big Eight at the source, which now exists. It thus would seem that Mr. Werne's analysis was rather carelessly done and that his apprehensions are often based upon the bugaboo of single selling. The CHAIRMAN. We thank you, Mrs. Bannerman.

Mrs. BANNERMAN. I thank you, Mr. Chairman.

STATEMENT OF KATHARINE VAN ETTEN LYFORD, EXECUTIVE SECRETARY OF THE MASSACHUSETTS CIVIC LEAGUE, BOSTON, MASS.-Resumed

The CHAIRMAN. Miss Lyford.

Miss LYFORD. Mr. Chairman and gentlemen of the committee, this morning in my rebuttal I expect to refute the following arguments given by the opponents:

I. That the motion picture can be marketed like an automobile or shoes or other product manufactured by the mass-production system. II. That the public taste is low and therefore that the public must be block booked in order to maintain the standards of pictures. III. That cheap theaters for salacious pictures will increase under the Neely bill.

IV. That the Neely bill involves censorship.

V. That the public can choose now what it wants to see.

VI. That the Breen board will be abolished.

VII. That the so-called morality exclusion clause is an adequate remedy.

VIII. That there will be unemployment if the Neely bill passes. IX. That a synopsis of a motion picture cannot be written.

X. The testimony of many of the witnesses, especially the women, whose opposition is based on a misunderstanding of the provisions of the bill.

XI. That American movies are marketed by the compulsory blockbooking system abroad.

Mr. Chairman, may I ask at the outset the privilege of reading my rebuttal without questions? I have timed it very carefully and I am afraid if there are questions I shall not be able to cover the points which I have listed here. It rests, of course, entirely with you and the members of your committee.

The CHAIRMAN. If there is not any objection, we will proceed without interruptions.

Mr. HINSHAW. Mr. Chairman, when the witness is rebutting one of these statements, will she refer to the point in the testimony where the statement was made?

The CHAIRMAN. I presume the intention is to submit questions after you have completed your statement.

Miss LYFORD. You are right, Mr. Chairman.

The CHAIRMAN. And then any member may ask the authority for the statement that you have made.

MISS LYFORD. Mr. Hinshaw, I am very glad to say now, in reading over very carefully my somewhat extensive notes of the opponents of the bill, I find such continuous repetition, that I might quote any of them on almost any of the points that I am making.

The opponents contend that the distribution of a motion picture is comparable to that of an automobile or a pair of factory-made shoes. The fallacy of this comparison arises from three facts

First. Every motion picture is unique. There is no other picture like it in the world, just as there are no two human beings alike; no two works of art; and furthermore these differences can be rather great, witness Five Little Peppers, a recent film inspiring the highest respect for happy home life, and Blackmail, a tawdry and uninspiring drama. Two others in great contrast I gave in my earlier testimony, Swiss Family Robinson and Reno.

Second. A motion picture is not mass produced. The opponents all agree to this. They say it is a single, creative production. It is the complete reverse of a machine-made shoe or machine-made automobile part. Neither is it mass distributed. Instead of being shipped in quantity to points all over the country by the hundreds of thousands like shoes or cars, only a few hundred prints are made of any one picture and each one of these is leased out first to one exhibitor, then another. The exhibitor is not the retailer, the exhibitor is the retail customer himself. This is well stated by the Department of Justice and already referred to by Mr. Atkinson.

Pet. U. S. v. Paramount (218). An analysis of the motion-picture industry, its component parts, and its methods of transacting business, demonstrates that the ultimate markets and the only market in which motion pictures produced for entertainment purposes may be distributed and licensed is made up solely of the motion-picture theaters of the United States.

The print of the picture is mass exhibited, and this takes place after the exhibitor has made his retail rental. He may show one picture to thousands of his patrons. This is the only mass operation involved in motion pictures.

Third. Each single picture has tremendous social power. Far more than almost any other unique work of art, a painting, a song, possibly even the speech of a Congressman, a motion picture shapes the attitudes, morals, and conduct of those who view it. Let me give a few examples.

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