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64 MONEY BEHIND THE SCREEN
5,895 or 30.5 per cent, in 1933). That the majority of these halls are small ones, is shown by the fact that the 16.9 per cent, closed houses included onlj' 10.7 per cent, of the tot-al seating capa<;ity.
A BRIEF HISTORY OF THE AMERICAN FILM INDUSTRY
The FmsT Phase, 1908-12.
The period lasting approximately from 1896 to 1908 constitutes the pre-history of the American movie industry. It was an era of primaeval chaos, marked by the mushroom-growth of " nickelodeons " in all parts of the country and by the frantic eJBForts of the Edison interests to protect and of all other production groups to pirate the basic camera and projector patents controlled by the former.
With the formation of the Motion Picture Patents Company in January, 1909, the history of American film finance on a large scale can be said to have commenced. That company, sponsored by George Kleine, the leading importer of foreign films and equipment, was a combine of the nine most important manufacturers then existing, including the Edison, Vitagraph and Biograph companies, and of the Kleine firm. All these enterprises agreed to pool their numerous patent rights (most of them having made important additions to the original Edison patents) and to acknowledge the priority of the basic Edison rights, pajdng royalties for their use. Licences for all these patents were issued to all the members of the combine, but strictly withheld from all other producers and equipment manufacturers. By forming the Greneral Film Company (the first national distributing organisation in the country) during the following year, this powerful monopoly rapidly obtained complete control of the distribution sphere, absorbing 57 out of the 58 film exchanges then existing. In addition, the company attempted to enforce the complete exclusion of all films except their own from the American screens. They issued licences, against a weekly S2 fee, for the use of their projectors to all cinemas and threatened to prosecute under the patent laws any exhibitor who used the company's projectors to display films made by outsiders. Finally, the trust made a contract with the Eastman Kodak Company, according to which the latter agreed to supply film base only to the firms who were members of the pool. Fears of an anti-trust prosecution however, led to the abandonment of this monopoly arrangement in 1911.
The trust immediately proceeded to standardise the whole business of producing and distributing films by confining themselves exclusively to the production of the one or two-reel shorts in vogue when the merger was formed and by charging uniform rentals for standard programmes composed of such films. The stranglehold of this monopoly, protected by the patent laws and