Variety (December 1914)

VARIETY 25 ARGUING CASE TO DISSOLVE THE MOTION PICTURE "TRUST" Government's Suit to Prove The Motion Picture Patents Co. and Its Distributing Exchange, The General Film Co. A Combination in Restraint of Trade Argued in Philadelphia. Philadelphia, Dec 9. With several large stacks of testi- mony which has been taken daring the past two years Edwin P. Grosvcnor, ipecial Militant to Attorney General Gregory, and a truit-bttiter of note, began hii argument yciterday on behalf of the government in its suit which was filed August 15, 1912, to dissolve the so-called "motion picture trust'" Thii "trust," the government alleges, hai io gained control of the manu- facture and distribution of picture filmi and apparatus that independent manu- facturer*, jobbers and theatres have been forced out of business. The argu- ment, which, it is believed, will last three days, is being heard by Judge Dickinson, in the United States Dis- trict Court here. Opposed to Mr. Grosvcnor are Charles F. Kingsiey, James H. Cald- well, Henry Melville, Charles K. Zug, Samuel C. Edmonds, James J. Allen, H. K. Stockton, George F. Scull and Archibald R. Watson, all of New York; Melville Church, of Washing- ton, D. C; George Willis and Fred R. Williams, of Baltimore; former Con- gressman R. O, Moon and David J. Myers, of this city. There are 13 corporation defendants and 11 individual defendants named in the government's suit These are the Motion Picture Patents Ccs principal defendant; General Film Co., Biograph Co., Thomas A. Edison, Inc. Essanay Film Manufacturing Co., Kalem Co, Inc., George Kleine, Lubin Manufac- turing Co., Melies Manufacturing Co* Pathe Freres, Selig Polyscope Co* Vitagraph Co. of America, Armat Mov- ing Picture Co* Frank L. Dyer, Harry N. Marvin, J. J. Kennedy, Samuel Long, J. A. Borst, Siegmund Lubin, Gaston Melies, George K. Spohr, W. H. Selig, Albert E. Smith and William Pelzer. Mr. Grosvenor opened his argument with a history of a recital of the alle- gation! of the government The com- merce alleged to be restrained by the trust, according to the government, is a commerce in positive motion films, and, to a less extent in motion pic- tare appliances and apparatus. Com- merce in positive films constitutes about 95 per cent of the total com- merce relating to the art It is alleged that the combination was formed in the latter part of 1908 by practically all the manufacturers in Picture films at that time doing busi- ness in the United States and that it •till continues. About January, 1909, according to the government's conten- tion, all the manufacturers after long negotiations with each other, adopted uniform methods of doing business and uniform non-competitive prices. This *as accomplished, the government al- leges, by all entering uniform agree- ments with one company, the Patents Co., which controls every patent ever sent to the Patent Office at Washing- ton relating to the picture business. Following the combining of the dif- ferent concerns, according to the gov- ernment, a list of theatres was pre- pared and no film exchange was al- lowed to distribute films to any the- atres except those named on the list All the others were blacklisted and dis- criminated against, it is averred. Mr. Grosvenor continued by declar- ing that the trust declared enormous dividends on royalties illegally demand- ed and obtained from theatre owners and lessees. The exacting of royalties was not limited to films, according to the government attorney, but the man- ufacturers of projecting machines who are also in the monopoly forced $2 weekly payments on all machines, de- spite the fact that many were bought and paid for before the combine was formed. He quoted at length from the testimony taken at previous hearing describing the methods which were used by the trust in forcing exchange men out of business. Mr. Grosvenor, at the outset of his argument, related to the court the prin- ciples of the Sherman Anti-Trust Law, under which the suit was brought, as they had been interpreted by the Su- preme Court in the Standard Oil case, tobacco case and others, and briefly pointed out how the alleged unlawful acts of the defendants come within the scope of that law. The government's lawyer said that the restraint of trade could be objective or subjective. Objective restraint, he said, imposes restrictions upon the third party, while subjective restraint is brought about by conspirators who eliminate competition among them- selves. In the present case, both ob- jective and subjective restraint was re- sorted to, he argued, as the defendants not only suppressed competition among themselves, but interfered with the busi- ness of third parties—the middleman, or film exchange operator, and the pic- ture theatres. In support of the gov- ernments' allegation that the restraint of trade along the lines above men- tioned is lawful, Mr. Grosvenor cited seventy-five decisions of the Supreme Court in other cases. Mr. Grosvenor said the directors of the General Film Co., the distributing agent for the trust, unanimously voted over $3,000,000 out of the earnings of the company to be used in buying up all exchanges. In giving the court an estimate of the value of business con- trolled by the General Film Co., Mr. Grosvenor told the sourt that it paid 7 per cent dividends on its preferred stock and 12 per cent on its common stock. In addition to that, he said, it never borrowed a dollar for the pur- poses of acquiring the other exchanges, but in so doing used money that it had already earned. Within a few monthi after the for- mation of the General Film Co* Mr. Grosvenor said, it became and now remains the sole diitributing agency of the defendants. The defendants ac- complished this result, it is stated, in part buying, in the name of the agency, sixty-eight of the exchanges, and in part by withholding supplies from other exchanges so that they were compelled to go out of business. Of the 116 ex- changes handling the products of the defendants in 1909, it was declared, only one survives. The sole survivor is the Greater New York Film Co. It has been permitted to exist it was stated, only through the persistent application to the courts for protection. Mr. Grosvenor said that 512 theatres throughout the United States were forced out of business by reason of the Patents Company cancelling the licenses so they could not get films. One hun- dred and forty-seven theatres were re- fused licenses to start exhibiting films controlled by the company because it was believed by the officers of the Patents Company that they would not adhere to the rules of the trust, he said. He argued that the combination granted no quarter when it cancelled the licenses of sixty-two theatres because they had loaned or sub-leased films leased to them by the General Film Company. To show the extent of the business at the present time, Mr. Grosvenor cited records which estimated that about 20,- 000 films are in transit daily between the manufacturers, the General Film Co. and the exhibitors. Attorney Charles F. Kingsiey, of New York, commenced the opening argument on behalf of the defendants. He first denied that the defendants were guilty of the alleged unlawful acts charged by the government, and then related to the history of the picture business from the defendant's point of view. Several picture machines were as- sembled in the courtroom as exhibits in the case and in explaining the useful- ness of the different patents involved in the case, demonstrations were given by the counsel for the benefit of the court The courtroom was not dark- ened, however, and no moving pictures were shown. COAST PICTURE NEWS. By GUY PRICK. The Btatlo olub bu plana completed for lta second annual ball Jan. 20. MRS. WILCOX THINKING. From the Kinephote comes the an- nouncement that Ella Wheeler Wilcox has secured as her collobrater, Jack Rose, made famous in the recent Becker case. They will collaborate on a series of scenarios for release in the United Film Service (Warner's Fea- tures, Inc.). On the subject of the partnership Mrs. Wilcox said: "I think there is more material for deep thought in one hour's talk with Jack Rose than in the best sermon I ever listened to." FAMOUS HAS MASON. Announcement from the Famous Players this week records the engage- ment of John Mason as a photoplay star. He will be featured in a produc- tion by the Famous Players of "Jim, the Penman." Adele Farrlngton (Mrs. Hobart Bosworth) played In her first ploiure the other daj. Blele Janls has completed her first picture at the Bosworth, and la now well into tne second. Charley Bvton Is now comfortably ensconced In his new office—the Moroeoo Feature Film company. Charley Van Loan Is writing scenarios ex- clusively for Bosworth. Dick Stanton has returned from Ban Fran- cisco and Is bach at lncovllle again. Marry Rattenbury Is playing leads for the Universal. Helen Holmes Is HI. bhe Is threatened with pneumonia. Stop—look—listen ! Louise Glaum of the N. Y. Motion Picture Co. has a new auto. Louise Is some dare-devlL Frank Montgomery and Mona Darkfeather have severed their associations with the Fea- ture Players. They are as yet unsigned. Charlie Ray took a day off recently and visited his friends at the other picture campe. Max Flgman denies that he will organise a film company of his own. He Is with the Mas- terpiece to stay, he says. Roy Stewart has been engaged with the Masterpiece. Charles Clary is receiving the Jibes and taunts of his friends these days. The other week he was driving a mule In a picture when the mule ran away and Charles was quits badly bruised. Linda Griffith Is playing with the David Miles, Inc. Bo Is Charles Fleming. George Rlsard has gone to the Sacramento river district to take pictures. ALCO TAKESALL STAR. The Alco Film Corporation has pur- chased outright the plant, good will and all other assets of the All Star Film Co., one of the manufacturers of feature pictures which has contributed to its program, and will operate it The first release of the All Star under the Alco regime will be "The Garden of Lies" featuring Jane Cowl, Jan. 4. The Alco has up to this time been purely a distributing concern. The asquisition of the All Star brings it. into the manufacturing field. Harry Reichenbach, publicity man of the Alco, will probably become manager of the All Star. The concern was un- der contract to turn its product over to the Alco, the agreement having more than a year still to run. It has a studio in Yonkers, N. Y., manufacturing plant in the same place and several feature productions in course of completion. The purchase of the property was but one of the announcements this week from the Alco headqupjfl***. The B. A. Rolfe Co., another manufacturer allied with the program will release 16 features a year instead of 10 as its old contract called for, and the Life Photo Film Corporation will release 12 instead of 18. CAUSE OF DIPHTHERIA. Binghamton, Dec 9. That old stores converted into pic- ture theatres have been the cause of the spread of diphtheria in this city is the charge made by Health Officer Daniel S. Burr, who is leading the fight to stem the threatened epidemic in this city. In many of the houses, the officer says the ventilation is bad and the space between the sloping and the old floors is pointed out as a possible breeding place for the germs. The public schools also are being thorough- ly examined.