Variety (December 1920)

'. Friday, December 31, 19~3 VARIETY 37 HOW THE TRUST L03T. an engineer and promoter named Jeremiah Kennedy, who bought into the Biograph company and formed a pool of the three patents, the Kdi- son and Biograph camera rights and the Latham loop and shutter, un- der the name of the Motion Picture 1 "atents Co. The Motion Picture Patents Co. This concern thereupon distrib- uted 'licenses" to 10 producing firms under an agreement that the pro- ducing concerns should pay to tho Patents company a certain royalty upon nil /*>ot«*ge it turned out. These firms were the lOdison Co., Biograph. Vitagraph, Kalem. Es- sanay. Selig, Melies, Pathe. Lubin and George Kleine. This was the first layout. The producers marie returns of the prints it furnished to the two-score or more independent exchanges throughout the country and paid the patents company-on the basis of Its sales (although the system of ex- change between producer and ex- change, was more in the form of a lease.), and there the transaction ended. Out of this rather primitive sys- tem new • omplications were evolved. For example the General Fllnj Co. resulted as a centralized exchange system. For this purpose a $2,000.- 0U0 corporation was formed In New Jersi y. and the old Independent < x- changs men were either bought or forced out of business, and the (Ion- « i a! Film Co. took over the entire activity of film distribution in the I'nited States. The General Film Co.'s Tax. In addition a tax or royalty was fixed upon each owner of a project- ing niarhinc. (made possible by ownership of the loop and shutter patent), and the agreement to pay this tax or royalty was made the excuse for the understanding that no exhibitor who used a projecting machine containing the Latham de- vice would use any other film ex- cept that put out by the General Film Co. Thus a complex organization to nil intents and purposes had the film business of the United states tied up under what looked like a foolproof monopoly. Nobody who could not coax his way into the combination could do business in the film producing or distributing fields. One of the few old time exchange men who gave the company a fight was William Fox, trading as the Greater New York Film Exchange. He had partial. success, after long and expensive litigation. The strength of his position however, was that he had done business with Patents Co., licensees and had been forced out under the squeeze when the General Film Co. was formed. Nobody else could get a look In nnd this elemenf was what finally broke the trust. It Is said that Adolph Zukor and Marcus Loew both made overtures to the Patents Co. for lieenses, expressing readi- ness to meet almost any terms to get a hand- in what already was a tremendoid§»buslness and promised to become more and more a bon- anza as time went on. The plea of neither nor the pleas of countless others to the same effect, received consideration, because none of the ten licensees was willing to let any- body else have any of their good thing. They thought they were in too strong a position to be attacked. In addition there was a good deal of jealousy and rivalry among the ten licensees. An example of this was in the futile effort to concen- trate the laboratories of the ten licensees in a single plant or series of plants under central' administra- tion. The ten were doing their own laboratory w;ork, each in his own plant, and feared if a centralized es- tablishment were put in operation, some rival licensees would work out an advantage for himself. The recital of this detail ought to be worth study to any of the many modern film Napoleons who dreams of developing the i»esent diffuse in- dustry i .to a central monopoly. The conviction of most shrewd thinkers In the business is that the thing, cannot be done because there are so many factors in the producing and distribution field that conflicting personalties and interests would de- feat any scheme for a wholesale Hmalgamation. Independents^ 19A2. Along about 1912 a group of in- dependents who had tried to sit in on the General Film Co. and had failed, carried their plaints to the government and the whole question was pretty well canvassed in the Department of Justice. These were the days when the Administration in Washington was still active in its anti-trust activities and Theo- dore Kooscvelt's exploits :us a trust- buster still gave big business the cold chills when they were men- tioned. The anti-trust action against the Patents Co. never went through the federal courts to a decision but the officials of the film trust were more or leas gently "nudged" to go slow in their arrogance toward the pro- ducer and exhibitors. By way of making some concession the Pat- ents Co. called off to a great extent its collection of royalty on projec- tion machines used by exhibitors, and also brofre the former rule that exhibitors who used other than Patents Co. pictures would not be supplied with "trust" pictures. This was around 1913. One of the Erst manifost-ations that came to tSw attention of the trade was the open- ing of an exchange system dealing in Patents Co. productions without reference to the General Film Co. It was understood at the time that Jeremiah Kennedy was concerned in this outside exchange, while Percy Ij. Wuters, who had formerly been with the General Film Co., was the executive of the new ex- change. This new exchange deliv- ered Patents Co. product to exhibi- tors without reference as to whether the exhibitors dealt in "outlaw" film or not. Beginning of the End. That was the beginning of the end. Since the independent films could get entrance into the thea- tres and the threat of holding out "trust" films no 4ongcr availed, the Patents Co. loosened its lines in other directions. Meanwhile the Patents Co. and the General Film Co. had alienated all other potential p'rturc mrJc?rs. Tho nftmt ?*?.d been to throw them together in a consolidated opposition. To put it another way, the bankrolls of all the Patent Co.'s enemlee were con- solidated into one big bank roll as against a scattered financial intereat made up of a few big bankrolls and a lot of smaller ones. Here mas a well financed enemy which had to fight it way every step forward opposed to a contented, self-satisfied coterie of men who had theirs and were not disposed to exert themselves to advance. The longer feature had been gaining in favor all this time and the indepen- dents were immeasurably superior in this department, tho "trust" people having contented themselves for the most part with regular pro- gram releases of short subjects, with only an occasional experiment into the longer multi-reel feature. Old Timers Too Conceited. The breach already had been made in the "trust's" strong front. The reel! SutMttjsV.independents. ,irn,me- diately began to take advantage of their gains. The best directors, tho best artistic talent in the employ of ''trust" companies began to receive h.gher bids for their services. The old "trust" companies, because of their mistaken belief that their po- sition was impregnable, and perhaps because they were more or less con- ceited by their old easy successes, let-lined to meet competitive l.i ' < for their b«_»t;t talent which was lured away bv better pay and more profit- able contracts. D. W. Griffith was a shining ex- amplo of the short-sightedness of the Patents Co. regime. Griffith broke away to take advantage of a very favorable contract with an in- dependent company because Bio- graph would not meet the rival's advance terms. It was this new contract with Griffith, by the way, which ultimately brought out "The Birth of a Nation." an independent venture ef Griffith's which turned oyer a profit of something like 700 per cent. These general observations bring us up to the point where the inde- pendents beg^n to wage a winning war against the old "trust." Since then the story has been one of pro- gress in the art on the part of the old independents and the dying off and gradual retirement of the old masters of the situation. / DIRECTING for GOLDWYN Recent Productions • "THE PENALTY" "THE SHEPHERD OF KINGDOM COME" Just Completed "NOBLESSE OBLIGE" (Woiking Title) THE GERTRUDE ATHERTON STORY. .