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648 HARVARD BUSINESS REPORTS
association, the president of the Film Board of Trade requested the president of the local Chamber of Commerce to appoint the exhibitor representatives. If this plan failed, the same request was made to the mayor or other chief executive of that city. If this also failed, appeal was then made to the president of the American Arbitration Association. The Boards of Arbitration consisted of six persons, three of whom were members of the Film Boards of Trade and the other three, proprietors or managers of theaters not owned or controlled by producers or distributors. The term of office of the arbitrators was for one month or until their successors were appointed. In cases in which the six arbitrators could not reach a decision, a seventh arbitrator, not connected with the motion picture industry nor in any way interested in it, was called in. There were relatively few cases in which this procedure was necessary. No member of the Board of Arbitration might act in any controversy in which he had an interest. The maintenance cost of the boards was divided equally between the Film Board of Trade and the local exhibitors' association. As a matter of fact, these costs were almost negligible, since either the secretary of the Film Board of Trade or the secretary of a local exhibitors' association usually performed all the clerical work.
The procedure in trials before the Film Boards of Trade was extremely informal. In these trials the exhibitor was entitled to representation by attorney, should he so desire. In the event that he was unable to be present, he had the privilege of presenting a written statement and argument.
The question of penalties had particular significance. Speaking broadly, the following provision held. Should the exhibitor fail to submit to arbitration or to abide by any decision, any distributor might, at his option, demand as security for the performance by the exhibitor of all existing contracts between the two parties, payment of an additional sum not to exceed $500 under each contract. This sum might be retained by the distributor until all such contracts were completely performed, and then applied, at the option of the distributor, against any sums due for damage determined by the Board of Arbitration. Damages should not exceed the actual value of the print plus the rental contracted for, or in any case exceed $500. The remainder, if any, should be returned to the exhibitor. In the event of the exhibitor's failure to pay the additional sum within seven days