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Background of the Industry ^> ^> ^> ^> 13
lowing legitimate exhibitions, this form of unfair practice became quite common. Since the producer could not police each exchange territory for violations of this type, he was entirely dependent upon the integrity of the exhibitor. A final disadvantage of state right distribution to the producer arose from the fact that no adequate testing of the local exhibition market could be made until the process of distribution had partially run its course. Consequently, the realization that a particular picture was receiving exceptional public patronage came too late for the producer to capitalize fully on it.
It is of interest to note that according to a study made by the United States Bureau of the Census (Census of Distribution) the cost of operating independent exchanges in 1929 was 35% of the total volume of business done, whereas producers' exchanges operated at an expense ratio of 15.16%. In 1929, out of 533 exchanges, there were 444 producers' exchanges as against 75 independent exchanges (exclusive of 14 export exchanges) ; the former, representing 83. 3%. of the total, handled 94.67% of the business. The remaining business was divided between the independent exchanges which did 2.2% and the export exchanges which did 3.1%.
The difficulties indicated above resulted in the establishment of various types of affiliations which would yield to the producer a definite amount of control in the distribution of the copyrighted positive films to which he had always maintained title. In addition to this increase in control, there were other positive advantages to be gained from such affiliations. It was possible that a somewhat higher level of rentals might be obtained than formerly. The price bargain with the exhibitor might be made more shrewdly. On the other hand, so long as the producer sold his pictures to the independent exchange, the price which he received was in no small measure a reflection of what that intermediary told him his picture was worth and of what that particular exchange was able to pay. Owning his distributive organiza