Harrison's Reports (1946)

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 Reports Yearly Subscription Rates: 1270 AVENUE OF THE AMERICAS Published Weekly by United States $15.00 (Formerly Sixth Avenue) Harrison's Reports, Inc., U. S. Insular Possessions. 16.50 N y .,ft « v Publisher Canada 16.50 INew «o"£^u, «. i. P. S. HARRISON, Editor Mexico, Cuba, Spain 16.50 A Motion Picture Reviewing Service Great Britain 15.75 Devoted Chiefly to the Interests of the Exhibitors Established July 1, 1919 Australia, New Zealand, India, Europe, Asia .... 17.50 Jtg Editorial poljcy: No Problem Too Big for Its Editorial circle 7-4622 35c a Copy Columns, if It is to Benefit the Exhibitor. A REVIEWING SERVICE FREE FROM THE INFLUENCE OF FILM ADVERTISING Vol. XXVIII SATURDAY, NOVEMBER 23, 1946 No. 47 A Legal Analysis of the Statutory Court's Decision — No. 16 By George S. Ryan CONCLUSION For decades the trade practices in the motion picture industry have been a public reproach and a cause of great agitation and unrest. Apparently few opportunities to profit or to gain a business advantage have been ignored by the men directing the destinies of the great corporations that have dominated the industry. Independent exhibitors, through trade associations and in conventions, beginning as early as 1919, have protested against various practices, loudly but invariably in vain. Groups of publicspirited citizens, recognizing the value of the motion picture in the fields of entertainment and education, have intervened in an effort to improve conditions, but with little success. Approximately twenty-four years ago the Federal Trade Commission instituted proceedings for the purpose of eliminating block booking and the acquisition of theatres by producers-distributors with the intention of monopolizing and restraining trade. Its efforts were equally ineffectual.109 In 1927 a trade practice conference was held, in which producers-distributors and exhibitors participated, with the ostensible purpose of eliminating objectionable practices. Once more nothing of lasting benefit was accomplished. In the course of the clamor, bills and resolutions were introduced in the Congress for the investigation or regulation of prevalent trade practices, such as the Brookhart BilP0 and the Neely-Pettingill Bill,111 so-called, relating chiefly to block-booking and blind buying. For almost a score of years the Government has sought to eradicate specific evils resulting from conspiracy of the dominant companies, usually by means of suits in equity or criminal prosecutions in widely-separated sections of the country, such as New York, Chicago, California and Missouri.1" The industry itself has been a hot-bed of anti-trust litigation. But none of these proceedings has been effective to curb the abnormal business methods of the dominant corporations. Ten years ago, at the conclusion of an article in this magazine, which is quoted in the introduction to this paper,"3 the writer recommended an all-embracing action by the Government to determine the legality of all disputed practices. Some of the results of this action by the Government are shown in the decision of the Expediting Court. The ultimate lines will be drawn by the Supreme Court. Independent exhibitors and distributors alike, who for decades have dwelt within the shadow of dynastic monopoly, need have no further apprehension. Inexorably, point by point, the processes of justice have triumphed. Inevitably the Supreme Court will place the seal of doom upon all unlawful practices and combinations. When the ultimate word in this litigation has been written a new era of progress will begin, under clearly-defined law. Independent exhibitors will have an opportunity to conduct their business in a legitimate way, in a fairly competitive field. Independent producers and distributors will have a wide market in which they may offer their wares, upon a footing of equality with the most strongly intrenched organizations. No one can predict the heights which may be reached. For a while there will be a period of uncertainty, which may be awaited by some independents, as well as by the major companies, with dark misgivings. In all probability there will be changes not only in the challenged practices but also in the structure and position of many defendants. The ultimate event should be expected, however, not with apprehension, but with courage and confidence. The basic law of progress is change. Without it there can be no permanent improvement in human relations. The thanks of all independent operators should be given to the Statutory Court for their decision. In even greater measure, however, their whole-hearted thanks should be extended to the Attorney General, to the anti-trust division of the Department of Justice, under the direction of Hon. Wendell Berge, and particularly to the capable and courageous Special Assistant to the Attorney General, Hon. Robert L. Wright, who, with his corps of associate attorneys, has represented the Government in the conduct of the suit. For years they have borne the brunt of the struggle for law and justice, and have thereby performed a notable public service. The major distributors stand on slippery ground under dark skies. Wisdom should urge them to hasten to shelter and secure footing before the storm breaks upon them. If the decision of the Expediting Court is correct, they have entered into many thousands of illegal contracts; they have granted unlawful privileges; and they have in many other ways flouted the law. Every one of these violations is a "misdemeanor" under the anti-trust laws, punishable by a "fine not exceeding $5,000, or by imprisonment not exceeding one year, or by both said punishments, at the discretion of the Court."114 In the eyes of the law the executive officers of the defendants who directed or participated in these violations are not entirely without liability."6 Conceivably, after so many years of apparent immunity, the defendants do not now appreciate their peril. In the proceedings before the Statutory Court they have fought vigorously to retain their advantages. They have adopted an attitude that seems to betray a blindness to reality and a complete lack of cooperation with the Government. As already suggested, the Department of Justice has been extremely tolerant,"6 but by the time the decision of the Supreme Court is rendered its patience may be exhausted. Before that time it is hoped that corrective measures of a comprehensive nature will be voluntarily undertaken by the defendants, so that the Government may not find it necessary to invoke the sterner sanctions of the anti-trust laws. Meanwhile, the remainder of the industry may await the final judgment with confidence and security. The anti-trust laws, as applied to the motion picture industry, have been given the acid test, and have demonstrated that they actually (Continued on last page)