Harrison's Reports (1933)

Entered as second-class matter January 4, 1921, at the post office at New York, New York, under the act of March 3, 1879. Harrison’S Yearly Subscription Rates: United States $15.00 U. S. Insular Possessions. 16.50 Canada 16.50 Mexico, Cuba, Spain 16.50 Great Britain 16.00 Australia, New Zealand, India 17.50 35c a Copy 1440 BROADWAY New York, N. Y. A Motion Picture Reviewing Service Devoted Chiefly to the Interests of the Exhibitors Its Editorial Policy: No Problem Too Big for Its Editorial Columns, if It is to Benefit the Exhibitor. Published Weekly by P. S. HARRISON Editor and Publisher Established July 1, 1919 PEnnsylvania 6-6379 Cable Address: Harreports (Bentley Code) A REVIEWING SERVICE FREE FROM THE INFLUENCE OF FILM ADVERTISING Vol. XV SATURDAY, APRIL 22. 1933 No.^^ An Open Letter to U. S. Attorney General Cummings The Honorable Homer S. Cummings, Attorney General of the United States, Washington, D. C. Dear Sir: Immediately after the great Democratic victory last November, in which the independent theatre owners contributed a great share by their whole-hearted support of the Democratic ticket, I resolved to write this letter to the new Attorney General, no matter who he might be, with the object of calling his attention to the many injustices and abuses the moving picture producers and distributors have been practicing upon the independent theatre owners under the protection secured them by the political influence of a former Cabinet minister. Because the Department of Justice under the Hoover administration consistently refused to enforce the Sherman and the Oayton Acts against combinations in restraint of trade in the motion picture industry, when a few weeks after the elections the President-elect announced that he had appointed Senator Thomas J. Walsh to head the Department of Justice, the independent theatre owners were jubilant, for the fame of Mr. Walsh as a fearless prosecutor was well known to them and they felt that he would review the many complaints of anti-trust law violations made to the Department of Justice against the moving picture producers and distributors but ignored by it, and that he would uncover the mysterious forces that prevented action in most cases and delayed it in others. But now that the President has placed this responsibility upon your shoulders, the independent theatre owners, for whom I have the honor to speak, look to you to reverse the supine policy of your predecessor to the end that the law and sound government may be vindicated. And they are confident that you will not fail them, for they, like all other American citizens, have been inspired by the promise for a new deal our great President has made to the people of this nation. They feel that there has dawned on this nation a day in which equity and justice shall prevail in business, and that the “raw” deal is a thing of the past. As a first step towards aiding you in your investigation, I am referring you to a book just published entitled “Upton Sinclair Presents William Fox” ; m this book you will find evidence why the last administration did not enforce the law against the moving picture trust. As a further step, I am sending you a copy of an open letter I addressed to Senator Pat Harrison, in which I called his attention to the fact that the moving picture industry, with the exception of the independent theatre owners, is organized solidly for tlie benefit of the Republican party. William Fox, on page 87 of his book, corroborates this assertion, for he boldly admits that he employed the circulation of his Movietone News in the exclusive support of Presidential candidate Hoover, in violation of contractual obligations by his company with those exhibitors who had bouglit these newsreels for the recreation it offered to their picture patrons, and not for political propaganda. Some of the cases that require your investigation are, in my opinion, the following: I. UNITED STATES vs. WEST COAST THEATRES etal ; When the Hoover administration came in, there were pending criminal proceedings against FoxWest Coast Theatres and against most of the big companies, members of Motion Picture Producers & Distributors of America, Inc., better known as “The Hays Association” : About September, IQ29, criminal information was first filed in the District Court, in Los Angeles ; this was later converted into an equity suit, charging conspiracj' to violate the Anti-Trust Laws, chiefly by reason of “protection” clauses inserted in the contracts of the Fox-West Coast theatres, offering these theatres unreasonable protection against competitors, independent theatre owners. The suit was ended by the representative of the Government when the defendants asked for a “consent decree” ; they were adjudged guilty and were enjoined from further discriminatory practices. But the effect of Paragraphs 5, 6, and 7 of the decree destroyed its practical value in that the remaining “prohibitions” referred only to “unreasonable” protection. This in effect affirmed the principle of “protection” and of first-run theatre rights, both of which are, in the opinion of students of law, violations of the Anti-Trust Acts. Recently the defendants were sued in the same District Court for violation of the Court order, and the Court found them guilty, but the Department of Justice, so far as is known, took no action against them. For your information, “Protection” is a term used in the motion picture industry to denote the time that must elapse between the showing of a picture in one theatre and another. The effect of it is to induce the picture-goers to attend the showing of a picture at the first, called “first-run,” theatre, by making them understand that it will not be shown at another theatre for some time. It is a weapon employed by the “trust” theatres to reduce the business of the independent theatres, which are all subsequent-run (“second-run,” “third-run,” or “fourth-run,” as the case may be), not only by taking most customers away from them but also by destroying the publicity value of the pictures, wliich value they possess when shown close to their release date. In other words, it is protection against competition. 2. U. S. vs. BALABAN & KATZ : An equity suit filed in the Federal Court of Chicago, charged Balaban & Katz and all the big distributors, members of the Hays association, with Anti-Trust Law violations, arising chiefly out of the “protection” clauses incident to the operation of firstrun theatres operated by Balaban & Katz, and out of other unfair practices similar to those contained in the Government’s complaint against Fox-West Coast Theatres. This suit, too, resulted in a “consent decree,” rendered April 6, 1932, with the injunction that the defendants cease to demand “unreasonable” protection over their competitors or to impose on them other restrictions ; but since it did not define what “unreasonable protection” is, the decree was without value and served to benefit rather than to restrain the defendants, for it did not disturb the use of “protection” clauses, and did not interfere with the operation of the “first-run” protection system, which is detrimental to the business of competitors. 3. U. S. vs. FOX FILM CORPORATION : An equity suit brought in the Federal Court, Southern District of New York, about November 25, 1929, to set aside the purchase of stock control of Loew’s, Inc., by the Fox Film Corporation on the ground that it violated Section 7 of the Clayton Act resulted on April 15, 1931, in a “consent” decree, adjudging control of this stock illegal but sanctioning and authorizing the Film Securities Corporation to acquire control of this stock from the Fox Film Corporation. At about the same time, the Chase National Bank interests came into control of the insolvent General Theatres Equipment Corporation, which had previously acquired control of the Fox Film Coropration, both of which corporations had been financed largely by these interests. The consent decree referred to in the foregoing paragraph, therefore, sanctioned, in effect, the ownership of control of both Fox Film Corporation and Loew’s, Inc., by the Chase National Bank interests, directly or indirectly, even though the decree (Confiuucd on last pa.gc)