Motion Picture Herald (Apr-Jun 1933)

16 MOTION PICTURE HERALD June 3. 1933 BLUE-SKY SECURITIES LAW BARS WILDCAT ISSUES IN FILM AAARKET Chiefs of U. S. Motion Picture Bureau Prepare to Contact Filnn Business on Code to Meet Industry Control Bill by FRANCIS L. BURT Washington Correspondent Daniel C. Roper, Secretary of Commerce, this week suggested to President Roosevelt that the motion picture as well as other commodity divisions of the Department of Commerce be retained as a nucleus for the new government organization designed to control industry, which will probably be headed by Colonel Hugh S. Johnson. Mr. Johnson this week was assigned offices in the Commerce Department Building at Washington. The various commodity divisions, including the motion picture, previously were scheduled to be eliminated according to a reorganization plan under consideration at the Capital. The commodity divisions possess considerable data which will be necessary to the industrial recovery organization of the Administration, and the heads of the various divisions are acquainted with the practices and needs of the industries which they now serve, Mr. Roper indicated. A general upward trend in the nation's business activity was reported by the Department of Commerce late Wednesday. Employment, payrolls, prices and production in more than 25 industries were indicated to be on the increase. Will H. Hays, reporting to the Department on the motion picture industry, said : "The motion picture business, dependent on box office receipts, which in turn depend essentially on general employment, has not shown any marked nationwide -improvement. This is not especially discouraging, because we are moving into our usual seasonal decline." Mr. Hays told the Department that more than a seasonal upturn in the fall may be expected. Admission Tax Confinued Passage of the industrial recovery bill by the House of Representatives, enactment by Presidential signature of the "blue-sky" securities law and announcement by the Administration of its intention of legalizing suspension of the gold standard, were the high spots of the week in Washington. The passage of the industrial recovery bill by the House on May 26 brought closer federal control of all industry, expected to be an accomplished fact within another week. The recovery bill, as it passed the House, also provided for continuation for another year of the present 40-cent exemption on admission, which originally was to have expired on July 1, 1934, with other taxes in the present revenue law. The Administration's demand for legislation formally throwing the United States off the gold standard will mean little or nothing to the average citizen. The measure is designed to give legal standing to the already operative gold embargo, its most im portant effect being in the invalidation of the "gold payment" clause in Government and other bonds and contracts. The measure is aimed largely at averting litigation designed to' test the validity of the gold embargo under certain conditions. But of direct importance to the motion picture investor and the film industry as a user of public capital, approval by the President of the blue-sky securities act was easily the most important event of the week. Under this legislation, new issues of capital securities must be submitted to the Federal Trade Commission for approval before they can be sold to the public. All data relating to the issue itself and to the company which floats it must be provided. "Wildcat" and "fake" securities no longer will flood the market and, equally important, it no longer will be possible to throw issue after issue of stock on the market until a company is over-capitalized. All facts filed with the Commission will be made known to the investing public. Bar to "Wildcat" Securities The act is not an emergency measure, but is a permanent addition to the federal statutes and is considered by Administration officials as one of the most important pieces of legislation passed by the present Congress. Its operation, it is estimated, will save the public some $25,000,000,000 a year, heretofore lost in worthless securities. Flotation of numerous fraudulent motion-picture issues by "fly-by-night" promoters are on the records, although there has been little activity of this nature in recent months. With its work rapidly approaching completion. Congress is preparing to adjourn June 10, not to meet again until next January. On June 12 the center of recovery activity will shift from Washington to London, where the world economic conference will meet. The final piece of Administration emergency legislation, that relating to tariff, is expected to go to Congress this week. With this legislation. President Roosevelt hopes to accomplish what heretofore has been impossible, the negotiation of reciprocal treaties with other countries. From the standpoint of the film industry, reciprocal treaties would possibly accomplish much in tearing down tariff barriers to sales of American films abroad, but whether this would be accomplished depends entirely upon what America could afford to give for such a concession. It is the difficulty of obtaining enough without giving too much that has wrecked similar efforts in the past. With the passage of the industry control bill near, the motion picture business, like others, was preparing to discuss the nature of a code to govern the trade in keeping with the provisions of the bill. It was learned this week that the Department of Commerce in Washington, through its various trade divisions, already has begun contacting the nation's industries, offering possible aid in the drafting of codes, or establishing a contact between industry and Washington. Chiefs of the Motion Picture Bureau of the Department of Commerce were preparing to contact the film industry. Each Branch to Draw Up Own Control Code; Joint Meetings Called Likely on Exhibition and Distribution Drafts The motion picture business, because of its already established labor organizations and trade associations, is generally regarded as being in an excellent position to draft a competitive code. Each branch of the industry — production, distribution, exhibition and labor — will draw up its own code, the completed program of each comprising the industry's operating statutes for the coming two-year emergency period. Final drafts of exhibition and distribution codes will probably be drawn at joint meetings. The production code will be drafted in Hollywood and the labor code, already clearly defined, probably will not require much revision. Local and National Codes The problems of exhibition and distribution being the most complex, it is expected that exhibitors will find it necessary to draw local as well as national trade practice codes. Regional exhibitors' organizations will meet locally to draw up codes which may be incorporated in the national program. It is expected that the national exhibitors' committee will complete its program in joint session with a distributors' committee. Despite the fact that industry leaders are unwilling, at this time, to forecast ultimate results of the forthcoming conferences, they have said that many existing practices will be discontinued. They also feel that there will be many important changes in exhibition contracts next season. Hollywood already is making plans for participation in any possible readjustment. Cecil B. De Mille has been suggested as chairman of the production delegation. John B. Elliot, Roosevelt-McAdoo campaign leader in Southern California, is in Washington this week, and prior to his departure from the film capital was contacted by Academy representatives. The subject of producer-employee relations, in any code that may be adopted, was thoroughly discussed. The creative elements in Hollywood have been urged to safeguard their rights and the Academy is expected to play an important part in the conferences. Allied Plans Own Code Allied of New Jersey plans to evolve an industry code of its own. Among the practices expected to be covered in Allied's code are block-booking, protection, shut-out buying of film, rental price discrimination and the shelving of films which does not permit competitors of large circuits to purchase those pictures which they do not show. E. Van Hyning, president of the MPTO of Kansas and Missouri, asserted after a study of the President's bill that "it will place all factors on the same competitive basis and the government will be there to see that what they do is ethical. The bill will bring about what level-headed members of the industry have been wanting right along — regulation within and by the industry itself. In Seattle last week more than 1,000 official delegates to the National Congress of ParentTeacher associations were urged to support federal legislation to regulate block booking and other undesirable practices. Mrs. Robbins Gilrnan, chairman of the national committee on motion pictures, was the speaker. Individually, block and blind booking, if eliminated, will make for pictures produced on a higher plane, the delegates were told.