Moving Picture World (Feb 1917)

February 10, 1917 THE MOVING PICTURE WORLD 823 Films Cannot Stand Tax, is Testimony * a a h a W. A. Brady, P. A. Powers and Adolf Zukor Tell Legislative Investigators Little Money is Being Made WILLIAM A. BRADY, president of the National Association of the Motion Picture Industry, and head of the World Film Corporation; P. A. Powers, treasurer of the Universal Film Manufacturing Company, and Adolf Zukor, president of the Famous Players-Lasky Corporation, were witnesses last week before the committee appointed by the New York State Legislature to ascertain whether the motion picture industry is a proper subject for a State tax. The sessions were held in the Murray Hill Hotel, New York, on Wednesday, Thursday and Friday, January 24, 25 and 26. Much of interest was told the committee, which consists of Senators Parsons, Walker and Yelverton, and Assemblymen Wheeler, Flamman, Marsh, Brereton and Schimmel. Harvey D. Hinman is counsel for the committee, and the motion picture interests were represented by William L. Seabury and J. Robert Rubin. Wednesday's Session. P. A. Powers was the only witness on Wednesday. Following up previous testimony, he again stated that the trade was being run practically at a loss. "There is just so much money spent by the public each week for amusements," he said. "The problem of the amusement provider is the expense of getting that money out. At present the expense of getting our portion is greater than that portion. I know, for instance, of three stars who will this year mak'e more money than will be split up by the entire motion picture industry." The witness, in answer to a question, said that the stars were not sharing profits — that they were getting all the profit. He told the investigators that his company was endeavoring to fight the star system by playing up the story and quality of the pictures rather than the names of the stars. Poor headway was being made in this attempt, he said. His opinion was that the company would eventually have to give in to the stars. He defined a star as an actor or actress for whose appearance at a theater the seats of the musicians in the orchestra had to be used to accommodate the overflow patronage. Mr. Powers told the committee that producing was a highly speculative venture, and stated that no forecast as to how a picture was going to go could be made with any degree-of accuracy. "In other words, you think production so speculative that a tax placed on productions would be a tax placed on profit as well as loss?" Senator Walker asked. "I do," answered Mr. Powers. The subject of the purchase of raw stock was brought up again by Senator Walker. Several witnesses have, in previous hearings, testified that the Eastman Kodak Company, of Rochester, furnished approximately 99 per cent, of the negative and positive film used. It has been the general belief of the witnesses that the fact that 99 per cent, of the film used was Eastman film was due to the superiority of that brand, and not to any patents which it held or combination which it had formed. In an effort on the part of the investigators to learn the details of the business, the witness was closely questioned as to the Universal Film Manufacturing Company's methods of business. Mr. Powers described in detail the affairs of Universal. He told the committee that the first property of the firm in California consisted of a lot, a few cowboy hats, and some horses. Since that time, he said, the company has invested $750,000 in the plant. The witness also explained the reason for the establishment of exchanges in foreign countries in most cases as "feelers." Senator Hinman remarked that the Standard Oil Company started in much the same manner. "Yes," replied Mr. Powers, "I know that. But they got theirs out of the ground, while we've got to give ours to the actors." Thursday's Session. William A. Brady occupied the witness chair during the entire Thursday morning session. The tone of his testimony was in general pessimistic. He said he believed that the motion picture had a "tremendous" future. He declared that the World Film Corporation had put about $1,000,000 cash into production in the past year. "Much of that money," Chairman Wheeler asked, "was your own, wasn't it?" "No, Siree," was the prompt answer. I've been too wise to buy motion picture stock." Answering the questions of the chairman and Mr. Hinman, Mr. Brady gave it as his belief that at the present time the motion picture industry was suffering from overproduction. He said that as a rule showmen were poor business men, and that this was proved in no more graphic way than the manner in which the motion picture business is being conducted. "Is there not at the present time," he was asked, "a tendency for the motion picture theaters to crowd out the legitimate houses?" n'Yes, in some cities," he answered. "It is especially noticeable in the smaller cities and towns." Mr. Brady explained why this was true and went on: "Motion pictures are overdone in most small cities. There are too many theaters. Five or six years ago, say, a man conducted a small show and made money. In those days there was little needed to make a successful show. A second man, attracted by the profits of the first, started another show, a third man did likewise, until to-day there are four times the theaters needed. "Isn't there a tendency just now toward larger theaters?" was asked. "Yes, the tendency is toward larger houses." Mr. Brady stated that the motion picture has a wonderful future — that in time its tremendous possibilities would be taken advantage of to their fullest extent, but that at present there was no money being made. "Before there is any money made," he continued, "there must be a period of reorganization in the industry." "I believe that the motion picture has merely scratched the surface when it is used only for entertainment. Why, it is cruel to use it only for entertainment. It is when education is carried on by means of the motion picture that the real money will come — when the motion picture gets down to legitimate uses there will be much money made." In this connection the witness cited the cases of the phonograph, automobile and other industries which had to go through a process of reorganization before they became established soundly. Further questions brought Mr. Brady back to the money question. "There is no new money going into the motion picture industry at present," he said. "It is a dangerous proposition just now. The only money being put in is being put in to save that already invested." "But aren't there new companies forming almost every day? Isn't there being money put into these new concerns?" "Most of them are started on shoe strings — some money and lots of conversation." The witness informed the investigators that producers were being forced to put more money into production all the time. "The entertainment business," he said, "is the only business in the United States whose production cost has increased anywhere from twenty to two hundred and more per cent. without an increase in cost to the consumer — the public." The line of examination turned to big features, and Mr. Brady was asked if he did not believe that there were more big pictures being made now than ever before, and if there was not more money being spent on them. He said that that was true, but explained that something had to be done to make money — to save the investors from utter annihilation. "But aren't there larger pictures being made today than there were six months ago?" "No. We have a certain percentage of large productions every year." "Is there not a much larger amount of money being put into these big productions than there was ever before?" "Not proportionately. The pictures didn't cost so much to produce six months ago as they do now." At this juncture questions were asked Mr. Brady regarding his early connection with the theatrical business and with motion pictures. He said that he had been in the theatrical business all his life. He told the committee that he had participated in the making of the first motion picture made for public exhibition. That was made by Edison, he said.