Motion Picture News (Nov-Dec 1923)

2106 Motion Picture News AFTER a recess of several weeks, hearings were resumed October 22 in New York on the Federal Trade Commission charges against the Famous PlayersLa^kv group. The sessions were conducted before Examiner E. C. Alvord at the offices of the Commission, No. 105 West Fortieth street. A complete array of counsel was on hand, the following appearing for Famous Players: Kouert T. Swain, chief counsel; E. J. Ludvi£ii, C. Frank Reavis, Bruce Bromley and Raiph A. Kohn. W. H. Fuller and Gaylord Hawkins represented the Government. Witnesses who testified up to Thursday morning were: Marcus Loew, AY. AY. Hodkinson; H. 0. Schwalbe, of First National; Al Lichtman; Leopold Friedman, counsel for Loew, Inc.; S. E. Appelgate, United Artists Philadelphia manager; Harold B. Franklin, John E. Fames, of Littleton, N. H., and Mr. Ludvigh. It was expected the hearings would be concluded this week, so far as the Government side is concerned. A recess of about a month will be taken, after which Famous Players will probably occupy two weeks in presenting defense testimony. Both sides will then prepare their briefs, which, together with the voluminous recoid in the case, will go to the Federal Trade Commission at AA'ashington for final decision. Loew Gives Testimony Marcus Loew, chief witness Monday, declared that neither Adolph Zukor personally, nor Famous Players-Lasky, had any control over or made any attempt to dictate the policy of Metro or Loew, Inc. The examination of Mr. Loew followed the testimony of Leopold Friedman, secretary and counsel for Loew, Inc., by whom the Government brought out that several members of the Zukor family owned stock in Loew, Inc. AA'hen Mr. Friedman had produced the stock record of Loew, Inc., Mr. Fuller brought out by questions that the following owned Loew stock as of April 4, 1923, according to the list: Jay Mastbaum, Joseph A. Mastbaum, Jules E. Mastbaum (1,500 shares), Mrs. Sadie Sablosky (1,900), George H. Earle (2,400), Abram D. Saenger (150), Julian H. Saenger (150), E. H. Hulsey (46). Eugene J. Zukor (6,000), Mrs. Adolph Zukor (6,392), E. J. Ludvi?h (500), Mrs. Ludvigh (800), C. J. Ludvigh (144), J. E. Brulatour (672), W. H. English (1,931), W. H. English, Executor (5,480), Richard A. Rowland (58), Arthur M. Loew (47,911), Mildred Zukor Loew (6,000), Mrs. Marcus Loew (35,481), Marcus Loew himself (5,929) and David Loew T47,964). Mr. Swain prepared to cross-examine, declaring that the implication of what had just been put into the record was " subversive of the truth." There was a tilt between Mr. Swain and Mr. Fuller, at the end of which the latter said he had no objection to finding out how many shares total were outstanding and how many stockholders there were. He then asked the witness these questions, to which Friedman answered there were ], 060,780 shares outstanding divided among 8.000 stockholders. AYhen Mr. Loew took the stand, Government counsel went through the entire list of Loew theatres, as furnished by the witness, and inquired as to their policy and whether they were first, second or third run. In the instance of the Aldine, Pittsburgh, HEARINGS a new house, Mr. Fuller asked : " Is that a picture theatre?" " It is," the witness answered, " and it will be as long as we can get the pictures. We are having a great deal of difficulty in doing so." He declared the same thing was true in the case of other Loew houses. Mr. Loew then traced the history of his acquaintance with Mr. Zukor. They met, he said, some twenty-five years ago, when they were both in the fur business, and later were partners in the penny arcade proposition on Fourteenth street. Then Zukor became interested financially in some of the Loew theatres, but " neither thought much of the other's ability," according to the witness. At one time, he said, Zukor voted against Loew getting $2,500 salary. Mr. Fuller then brought out, by reference to exhibits introduced some time ago, that Jane Constance Loew, Mr. Loew's grandaughter, owned 100 shares of F. P.-L. stock and Mildred Zukor Loew, 900 shares. On cross-examination, Mr. Swain pointed out that the Zukor family owned about one per cent of the stock of Loew, Inc., and then it was the witness stated there was no attempt to dictate the policy of either Metro or Loew, Inc., by the Zukors. " Since Zukor and I parted company as business associates thirteen years ago, neither has had anything to say about running the other's business," summed up the attitude of the witness. No Favoritism Shown No favoritism had been shown him in booking F. P.-L. pictures, or any preference given Metro pictures in the Famous Players houses, he went on. ' 'In fact," he declared, "Famou? Players does things to us they wouldn't dare do to others." Regarding the distribution of Metro pictures in Brazil and Australia by F. P.-L., to which he testified on direct examination, Mr. Loew told Mr. Swain the arrangement came about merely as a business transaction, because F. P.-L. was able to deliver the goods. On the subject of protection, Mr. Loew told the F. P.-L. counsel that the distributor always favored short protection, because it means a quick turnover, but the exhibitor wants long protection against the other fellow. The condition existed throughout the country, he declared. AY hen Mr. Friedman resumed the stand, Mr. Swain took up the Loew stock record again and read the names of a large number of people in the industry, who were 'recorded as owning Loew stock. He brought out that those whom Mr. Fuller had enumerated owned altogether about 26,000 shares out of 1,060,780, and that neither individually or collectively had they ever attempted to control the policy of Loew, Inc., or Metro. He read down through the list, and asked the witness if the fact that these people owned stock in Loew, Inc., enabled them to dictate policy or gave Metro or Loew, Inc., the right 1o dictate to them in a business way. The witness replied " No, there is no community of interest " in each case. " I see by your record that Hiram Abrams owns 100 shares of stock in Loew, Inc. Does that give him any voice in the affairs of your company or you in his?" Swain asked. The answer was " None whatever." " I also see that Sydney S. Cohen is put down as owning 100 shares. Does that give him a voice in running your company?" RESUMED Additional Testimony Is " No," Mr. Friedman answered. " Does it give vou control of the M. P. T. O. A.?" The answer was " No." Among the others whose names were read from the list as owning stock in Loew, Inc., were these : George Arliss, Ascher Bros., Hans Bertsch, playbroker ; Irving Berlin, A. C. Berman, Abraham Carlos, J. B. Clark, William Collier, Hugh Ford, John L. Golden, Heine Groh and Arthur Fletcher, Sam H. Harris, David P. Howells, John H. Kunsky, Carl Laemmle, June Mathis, the President and Fellows of Harvard University, Jake Ruppert, AVilliam Russell, Sig Samuels, Norma and Constance Talmadge, Victor M. Shapiro, Alfred AYeiss, and others. No Attempt at Dictation " Did the Mastbaums ever have anything to do with dictating the policy of Metro or Loew, Inc.?" Mr. Swain queried. The witness said they never did, and added, a minute later, that the Zukors never did, either. " In other words, all these people bought the stock merely as an investment, didn't they?" Mr. Swain pursued. He got an affirmative reply. On redirect examination, Mr. Fuller brought out that " it doesn't alienate a man's affections if he buys stock in your company," and Mr. Swain came back with a few more questions, chief among which resulted in the witness saying that the people on what Mr. Swain called " Mr. Fuller's two and a half per cent list " had never even attended a Loew stockholders' meeting. At the Monday morning session S. E. Appelgate, United Artists manager in Philadelphia, told in detail of the booking situation there. Questioned by Mr. Fuller, he went over a list of twenty-one theatres zones, describing the first-run situation in each, and specified the houses booked through the Stanley interests or controlled by them. It was shown that most of the key centers in the Quaker City were under Stanley control in some form or other. At the conclusion of his testimony the defense reserved the right to have Morris Wolf, counsel for Stanley, cross-examine at a later date if he so desired. H. O. Schwalbe, the next witness, sketched the organization of First National Exhibitors Circuit, Inc., in 1917, and its reorganization into Associated First National Pictures, Inc., in 1920. Examined by Mr. Hawkins, Mr. Schwalbe said he was the President of the Electric Theatre Supply Co., of Philadelphia and that he owned nearly all the capital stock. Mr. Schwalbe also stated that he owned theatres in Conshohoekon, Pa., and Cambridge, Md. Schwalbe Is Witness Participating in the organization of First National in 1917, the witness said the Peerless Feature Film Co., in which he had an interest, got the Philadelphia franchise, paying four and a half per cent of the negative cost of each picture. Practically all of the original twenty-six franchise holders had Tneatres, he went on, and all of them together were connected with " 500 or 600 theatres." Many of them, however, could not be classed at that time as first-class first-run houses, he explained, including those controlled by Turner & Dahnken, Frank Ferrandini and Ralph Craver, Tom Saxe, Harry Noland and Aaron Jones.