1942: Motion Picture Industry

As 1943 dawns, the whole film industry fairly bristles with questions. What will be the effect of the salary ceiling? Will money cease to be an incentive to stars, writers, directors and executives as they approach their $67,200 maximum? Will the whole scale of values in Hollywood change? Will there be more emphasis on careful story preparation and less on stars? Will youngsters and capable but hitherto obscure character actors get a chance? Will the public, final arbiter in show business, accept substitutes for its favorites any more than it did in the past?

Men in Service.

Of the 18,000 men employed in production, more than 4,000 have joined the armed services. Among them are Lieut. Comdr. Robert Montgomery, Lieut. Douglas Fairbanks, Jr., Lieut. James Stewart, Pvt. Melvyn Douglas, Lieut. Clark Gable and Lieut. Burgess Meredith. Many directors are in the service, including Lieut. Col. Frank Capra, Comdr. John Ford, Pvt. Garson Kanin and Major William Wyler. Names of film pioneers appear in the persons of Lieut. Comdr. Eugene J. Zukor, Major Arthur Loew and Pvt. Carl Laemmle. Many cameramen and technicians are serving in the U. S. Signal Corps or in other services; so many that the studios have asked and received essential ratings for those who remain.

Priorities.

Priorities in general and the film shortage in particular are other unsolved problems. Conservation is being tried on a voluntary basis in consultation with the WPB, with cuts of 10 per cent to 24 per cent on the 1941 quotas of various companies. But demands on the available supply of raw stock are enormous, and training films come ahead of films for the public.

Government Approval.

Both Franklin Roosevelt and Winston Churchill know from personal experience the therapeutic value of film entertainment. For example, exhausted by hours of planning United Nations strategy together, they sought relaxation at a movie in the White House projection room. After the bombing of Pearl Harbor, President Roosevelt wrote to Lowell Mellett, Chief of the Bureau of Moving Pictures:

'The American motion picture is one of our most effective media in informing and entertaining our citizens. The motion picture must remain free insofar as national security will permit. I want no censorship of the motion pictures; I want no restrictions placed thereon which will impair the usefulness of the film other than those very necessary restrictions which the dictates of safety make imperative.'

That letter has remained the industry's Magna Charta against bureaucratic encroachment. 'Those very necessary restrictions' apply to export censorship imposed under the Trading with the Enemy Act, which went into effect automatically when it was officially recognized that an active state of war existed. The industry has voluntarily policed itself through the Production Code Administration to eliminate any scene or dialogue that would give the enemy useful information.

The British, too, have recognized the importance of motion pictures in a wartorn world. When Hitler launched the Battle of Britain, bombing London and other cities, film theaters were closed as a matter of safety. Within a month they were reopened by the government because it became abundantly clear that movies were essential to the maintenance of both civilian and military morale. The industry responded wholeheartedly and kept up a steady flow of pictures.

Motion Picture Producers and Distributors of America.

Substantial recognition came in the autumn of 1942 after negotiations for release of the frozen funds were opened through the State Department by Will H. Hays on behalf of members of the MPPDA of which he is president. In due course funds accumulated over the three years were thawed, and checks totalling $42,500,000 were sent to Mr. Hays for delivery to the eight distributing companies in the MPPDA. Similar arrangements were also made for non-member companies. One producing and distributing organization had been threatened with serious financial difficulties until it was rescued by this, the most dramatic fiscal event of the year.

Public Opinion.

Earnings generally, however, were higher in 1942 than in 1941. In the United States, as in Great Britain, civilians and service men alike turn to the screen for relaxation. Increased attendance at motion picture theaters has more than offset the combined effects of wartime taxes and the loss of markets in countries now dominated by the Axis powers.

War has brought an interesting change in the emphasis of thematic material. It is the public which determines production trends, and the public was slow to manifest enthusiasm for pictures with serious war themes. In 1938-39, for example, Confessions of a Nazi Spy did not achieve great popular success. Nor was The Mortal Storm notably successful in the following season. Even as late as 1940-41, two films entirely unrelated to the war headed the list. Third and fifth places in terms of box-office popularity went to slapstick comedies with a background of American training camp activities. Serious war films ranked further down the list. Nine out of the top-ranking fifty-three dealt with the war.

In the season of 1941-42, which ended Aug. 31, first honors at the box office went to Mrs. Miniver and Sergeant York. Among the first 53 box-office favorites were ten war pictures. It is significant of the changed attitude of movie-goers that the first eight of the ten war pictures were serious. It is also significant that, even in wartime, the public continues to diversify its entertainment investment.

War Activities.

Of course, war activities of the industry have expanded enormously. As indicated by the quotation from President Roosevelt cited above, the service of entertainment continues to be of first importance. This has been extended to troops in combat areas by the donation of 16 mm. prints of feature pictures to the armed services.

The War Activities Committee is the industry's organization to marshal all branches of filmdom, production, distribution and exhibition, in support of the war. It includes presidents of 33 companies and organizations, and its ramifications extend into nearly every community with a film theater. The nationwide war bond drive in September was typical of its patriotic activity. More than 15,000 theaters are cooperating with the government by exhibiting films released under the aegis of the War Activities Committee. Since the organization of the Hollywood Victory Committee three days after Pearl Harbor, more than 1,100 players have made one or more appearances in Army camps and Navy bases through USO Camp Shows, Inc., and on bond-selling tours for the United States Treasury Department. Through this committee all requests for star appearances for patriotic or charity purposes are cleared.

Screen personalities, recorded on film and radio transcriptions, have also participated in the Australian Austerity Campaign. Arrangements for the screen and radio appearances 'down under' were made at the request of the Commonwealth Government through the International Film Relations Committee and the Hollywood Foreign Department Committee. Production of army training films in Hollywood continues on an increased scale.

Production Code Administration.

As the year ended, two appeals from Production Code Administration rulings added to the gaiety of nations and also pointed up the fact that appeals from PCA rulings are rare indeed. In fact the Code, adopted by the Motion Picture Producers and Distributors of America in 1930, has now come to be taken for granted. More than 99 per cent of the interpretations by the PCA go unchallenged.

When there are appeals, for example, in re the use of sailor and marine expletives in the cases of In Which We Serve and We Are the Marines, they go to the board of directors of the Motion Picture Producers and Distributors of America. This is made up of the heads of the various member companies, presided over by Mr. Hays, and has continued since March 1922, as the central policy-making body of the industry. The brief for upholding the Code was prepared by Charles Francis Coe, author and lawyer, who is vice president and general counsel of the MPPDA. The board agreed that, even in wartime, morality and good taste must be served; so the offensive words were eliminated.

Movies in War Areas.

Meanwhile, the shape of things to come in the post-war world has begun to appear in North Africa. One of the first commodities that followed General Eisenhower's army into the reconquered area was a supply of American movies. The populace was starved for entertainment and the general staff shrewdly included movies in its arsenal of ideological weapons. The films need not be laden with propaganda, merely a background that reveals life in a democracy is sufficient. China, too, has been asking for more American movies. In response to a request from friends in her former home, Pearl Buck has made up a list of motion pictures that will give them a better idea of life in the United States.

In contrast, it will be remembered that among the first commodities banned by Hitler in conquered territories were American movies, lest they remind the enslaved populace of the freedom that continued in the democracies.

Both acts, encouragement by the democracies and banning by the Axis, are indications of the new importance movies have achieved as a medium of mass communication in war and in peace.

1941: Motion Picture Industry

Influence of the War.

When the United States was drawn into the war, the motion picture industry was organized and ready to meet President Roosevelt's challenge by helping to maintain civilian and military morale.

The War Activities Committee of the Motion Picture Industry has wide ramifications in production, distribution and exhibition. Producers are making films for training army personnel. About a hundred reels had been completed by the year end and forty more were in production. More than 12,000 theatres are voluntarily cooperating by exhibiting defense films released under the aegis of the committee.

The war is, of course, an old story to the industry. It had been hit when the Nazi invasion of Czechoslovakia started the march that cut off most of the Continent from all save Axis commerce. After the first bombing of London, the motion picture theatres were blacked out because it was considered unwise to permit crowds to gather. George Bernard Shaw protested that the cinema was necessary to maintain morale. Someone high in government circles evidently agreed, because the ban was lifted within a month.

Ever since, the American motion picture industry has supplied the United Kingdom with the best of its entertainment. This has entailed some sacrifice on the part of American companies because England, faced with the necessity of using all available foreign exchange to buy food and munitions, impounded part of their profits. At the end of the fiscal year in October 1941, it was estimated that the American industry had something like $40,000,000 tied up. But successful negotiations have been completed for release of $15,950,000 of the impounded profits in the current fiscal year. As a matter of fact, the first half of the payment had already been delivered in New York, and the remainder is due in April 1942.

In addition, American companies will be permitted to withdraw up to $20,000,000 in profits for the current fiscal year, as compared with $12,900,000 for the previous year and $17,500,000 the year before that. The $20,000,000 of current profits and $15,950,000 of profits impounded earlier add up to the tidy sum of $35,950,000 that will be coming over to the American industry in the course of the fiscal year ending in October 1942.

Elsewhere abroad the picture is not so bright. Twenty-seven countries have been cut off from the American film market by the wars in various parts of the world.

Results of the Antitrust Suit.

Altogether, 1941 was an eventful year. The first eight months were taken up with preparations for a pretty thoroughgoing revision of industry trade practices under the terms of a consent decree signed by five theatre-owning companies — Loew's, Paramount, RKO-Radio, Twentieth Century-Fox and Warner Brothers.

Although the original antitrust suit was hotly contested, once the consent decree had been signed, the five companies conscientiously met its terms. Sales managers were, naturally, reluctant to disturb trade practices that had taken on a 'cake of custom.' Once they got to work, however, they saw that salesmen who had been getting lazy under the old routine were spurred on to better results.

Selling costs have been somewhat heavier. Hitherto, it was possible for a salesman to dispose of his studio's entire product on a single visit to a customer. This was no longer permitted after Sept. 1, 1941. Blocks of no more than five films could be sold at one time by the consenting companies and buyers must be given an opportunity to see them. Blind buying is legally out. This necessitated making blocks of five films in advance of sale, and the studios produced overtime early in the year to build up a backlog of product. At first, this put somewhat of a strain on financing, but now most of the studios have settled down to a regular routine under the decree.

The decree also set up an arbitration system administered by the American Arbitration Association under the supervision of one of Thurman Arnold's men in the Antitrust Division of the Department of Justice. This new system was available beginning in January, and by December some 160 cases had been handled.

Independent exhibitors under the aegis of the Allied States Association of Motion Picture Theatre Exhibitors were generally supposed to have filed the complaints with the Department of Justice which caused the suit to be brought. Now they are dissatisfied with sales practices under the consent decree, and they have taken the lead in an 'Industry Unity' movement looking toward a trade practice code similar to the one industry leaders were working on when the Department of Justice filed its antitrust suit.

The original suit named eight major producer-distributors, but three producer-distributors without theatres — Universal, United Artists and Columbia — refused to sign the consent decree. So an escape clause was attached which provided that, if the Little Three were not brought under the decree within a year, the Big Five would also escape its provisions.

Meanwhile, in a case brought against the Crescent Amusement Co. circuit of theatres, the government has charged certain monopolistic practices designed to eliminate local, independent competition, as government counsel put it in their argument before Judge Elmer Davies in the United States District Court for the southern district of Tennessee. Other cases are pending against the Schine circuit of theatres and against the Little Three. On the outcome of these will depend whether the escape clause is to be exercised.

Meanwhile, the net result of the peace and harmony meeting held in Chicago in December was the program adopted by the newly formed Motion Picture Industry Conference Committee, comprising representatives of the distributing companies and all exhibitor organizations. The program of the new organization calls for coordination of policy and action with regard to such matters as taxation, 'protecting the good name and integrity of the industry as a whole,' priorities and 'formulation of a program providing, if possible, for the adjustment or modification of the policies or practices of one branch or member thereof which are opposed by any other branch or a substantial portion thereof.' On paper, at least, the hatchet had been buried.

The Nye-Wheeler Senate Investigation.

In the realm of government relations, life in the industry during 1941 was made up of marble and mud. Happily it was mostly marble, and even the mud-slinging had its constructive aspects. The governmental mud-slinging came first when Senators Wheeler and Nye launched successive attacks on the industry for what they termed warmongering. In due course Senators Nye and Bennett Clark jointly introduced a resolution asking for an investigation of war propaganda in the movies. The resolution was referred to the Senate committee on Interstate Commerce, of which Senator Wheeler is chairman. He appointed a subcommittee consisting of Senators D. Worth Clark, Tobey, Brooks, Bone and McFarland. Of the five, only Senator McFarland had consistently supported the President's foreign policy, and he was to prove a tower of strength in securing a fair hearing for the industry's side.

Industry witnesses appeared under protest because, as Wendell L. Willkie of film counsel pointed out, of the dubious legality of the hearing. Although it was ostensibly an investigation to determine whether an investigation should be held, the subcommittee prepared to stage what appeared to be a full dress inquiry. The plan called for a week of isolationist witnesses; then the industry spokesmen could have their say. By that time the public would have the isolationist story and it would be difficult if not impossible for the industry version to catch up with it.

That was the plan. But the isolationists had not reckoned with the resourcefulness of Mr. Willkie in reaching the public through the press and radio. When Senator Nye began his charges of warmongering before the committee, Willkie made countercharges by means of press and radio releases. He charged that the committee was attacking freedom of the screen, and Washington correspondents generously interlarded their dispatches on the hearing with Willkie quotations. Questions from Senator McFarland brought out the fact that witnesses had not seen the pictures which they said contained war propaganda.

When it came to the industry's turn, its spokesmen were Nicholas M. Schenck, Harry M. Warner, Barney Balaban and Darryl F. Zanuck. After denying charges of concerted warmongering, they defended freedom of the screen and free enterprise in forthright terms. Before they had finished, public opinion had rallied to the support of a free screen and the hearing was pretty well discredited.

Twentieth Anniversary of the Industry.

In 1942 the organized industry observes the twentieth birthday of the Motion Picture Producers and Distributors with Will H. Hays as president. The anniversary is a good vantage point from which to survey the industry's development.

Edison's laboratory baby was born in 1889 and was first projected on a theatre screen in 1896. In the early 1900's small business men were taking up the novelty as a promising vehicle of business enterprise. When the restraints imposed by the old Film Trust were lifted by court decree in 1915, the independent film pioneers began to expand and integrate their holdings. Today the business of making, distributing and showing motion pictures is an industry with a capitalization of $2,050,000,000 in the United States alone. Of this, $1,900,000,000 is invested in theatres, $125,000,000 in studios and $25,000,000 in distribution facilities.

Statistics.

In the course of the year 1941, moviegoers paid $1,000,000,000 — plus $100,000,000 amusement tax — into the box-offices of more than 18,000 film theatres of the country. It is estimated that some 85,000,000 tickets are sold in the United States in an average week. In order to supply entertainment for this vast audience, the industry employs 193,600 workers of hand and brain on an annual payroll of $322,500,000. Theatres alone employ 145,600 projectionists, ushers, managers, janitors, charwomen, cashiers and doormen. Selling and distribution account for 14,300 persons, and 33,700 more are employed in the studios. This does not take in others outside the industry who contribute of their skill, including some 276 arts and crafts inside and outside the studios.

The film industry is in essence a service industry which sells shadows on a screen. A drama enacted on a studio stage in Hollywood is recorded on film and later reenacted in a theatre by the magic of the movies. This requires expensive equipment in each theatre, and the patron must be provided with a seat in a comfortable auditorium. All of which adds up to about 65 per cent of the price of the ticket, which is retained in the community as local theatre expense and profit. That accounts for the large spread between the gross income of theatres and the gross income of producers and distributors, whose 35 per cent of the patron's admission gives them an estimated gross income of $350,000,000 in the United States.

With the world war going on, the domestic revenue is all that the management of the industry can count on with any degree of certainty in planning production. Despite the sharp curtailment of foreign markets, however, the industry is making money. That is a practical tribute to the ingenuity of management in solving the difficult problem of maintaining the quality of pictures in a shrinking world market. This feat has been accomplished by greater efficiency all around, combined with the creative art known as showmanship.

One company rose from a loss of a $1,000,000 in 39 weeks in 1940 to a net profit of $1,500,000 in the same period in 1941. Another doubled its earnings over the previous year. Net incomes of $4,000,000, $5,430,000, $6,000,000, $8,500,000 and $11,000,000 without benefit of frozen funds that have been released, were announced by other companies.

So despite the fact that the country has been drawn into the war, the industry is reasonably optimistic. See also MOTION PICTURES.

1940: Motion Picture Industry

Whenever American film executives meet these days, two topics come up sooner or later: the war and the consent decree. The one has made serious inroads on foreign business; the other is reshaping domestic production and sales policies.

Despite foreign losses and domestic reshuffling, however, there is a buoyant spirit in the industry. One reason is that providing entertainment to maintain morale in a war-torn world has actually paid dividends. Some companies report an increase in 1940 profits over the previous year. Others are down, of course, but the general level is not unduly discouraging. In the United States, 17,000 theaters of the 19,000 available show houses were in operation. According to a survey made early in 1940 by the United States Department of Commerce, approximately 65,000 of the 67,000 motion picture theatres in 98 countries of the world were equipped to show sound motion pictures.

Remnants of the foreign market still return revenue. Continental Europe has largely disappeared, but the United Kingdom remains. In the year ending October 31, 1940, the United Kingdom released $17,500,000 to American distributors; and, under the agreement for the current fiscal year, it will release some $12,800,000. It is reported that $20,000,000 will be frozen until after the war. Of the remaining foreign markets, the British dominions and Latin America are the most fruitful.

The buoyancy mentioned above is especially apparent in the studios. There is no faltering in the boldness of business men who underwrite creative activities. The upwards of $100,000 paid for Ernest Hemingway's latest, For Whom the Bell Tolls, may be cited as an example. Meanwhile Gone With the Wind, based on the best seller of another year, has completed a round of selected first run theatres at a reported gross rental of $15,000,000 before it goes into general release at popular prices. That's an exceptional record, but it indicates that spectacular showmanship yields spectacular results even in wartime. Rebecca and The Grapes of Wrath are two other best sellers that have yielded pay dirt to film producers.

Studios have been working at top speed over the year-end. Actual shooting continued throughout the holiday period, with the exception of Christmas Day and New Year's Day. Usually there is a two weeks' layoff. Shooting schedules are being extended on the bigger pictures, aiming for greater quality. One reason cited for the greater studio activity is the necessity for building up a backlog of completed pictures in order to comply with the terms of the consent decree.

And that brings up the subject which, second only to the war, has been of most absorbing interest to industry executives — not to mention lawyers — since Assistant United States Attorney General Thurman Arnold filed his anti-trust suit against eight film companies and their subsidiaries on July 20, 1938. The petition in equity asked that the defendants be enjoined from certain 'unfair trade practices' which, it was charged, violated the Sherman Anti-Trust Act. Among the most disturbing of the demands was that five distributors must dispose of their theatres, a total of some 2,300, including many desirable first runs. All five had started in show business as theatre operators, then branched out into production and distribution according to the logic of events; so they were naturally reluctant to part with their 'show windows.' The petition also objected, among other things, to block booking, protection, overbuying, forcing of shorts and newsreels and arbitrary designation of playdates.

After nearly two years of crossfiring interrogatories and other legal shenanigans, the trial opened before Judge Henry Warren Goddard in the United States District Court in New York City on June 3, 1940, with all the pomp and circumstance of a million dollars worth of legal talent, including John W. Davis, former Federal Judge Thomas D. Thacher and Colonel William (Wild Bill) Donavan. To all outward appearances, the defendants were prepared to fight to the last ditch.

Thurman Arnold opened for the Government with a statement of the broad policy of the anti-trust division. Then he turned the case over to an assistant, Paul Williams, who outlined it in detail. In the next two days there were answers by counsel for each of the eight companies. Before the first witness was called, however, court was adjourned. Other adjournments followed to allow conferences between defense counsel and the Department of Justice attorneys. On Oct. 22, final agreement was reached between counsel representing the five theatre-owning companies and the government; and, on Oct. 28, Attorney General Robert Jackson approved the consent decree that had resulted from lawyers' negotiations.

Despite objections raised by a dozen or more representatives of all shades of exhibitor opinion at an open hearing in Federal Court on Nov. 14, Judge Goddard signed the decree on Nov. 20. Counsel for the five theater-owning companies — Loew's, Inc., Paramount, RKO-Radio, Twentieth Century-Fox and Warner Brothers — also signed. But the three companies which own no theaters — Universal, United Artists and Columbia — refused. They are named in an amended complaint.

Under the terms of the consent decree, the five companies may retain their theaters for three years; then the subject may be brought up again. Block booking — that is, sale of an entire season's output of films in one block — is ended as of Sept. 1, 1941, in favor of selling blocks of five films at a time. Forcing of shorts and newsreels is banned. The number of days' protection that is provided between a given run of a picture and any subsequent run is subject to arbitration. Overbuying to keep pictures from a rival theater is covered indirectly by a ban on blind buying and the blocks-of-five rule.

A number of items in the original petition are not mentioned in the decree, and a number of points have been added. It provides that the distributor must show a picture to exhibitors within an exchange district before it can be leased. That explains the rush to build up a backlog of products before the opening of the 1941-42 season. Films must be leased in the district where they will be exhibited. This will prevent leasing film for an entire circuit that overlaps exchange district lines. There may be cancellation of contracts for cause, and unreasonable withholding of prints is barred. Changes in theater holdings must be reported and no general expansion of theater holdings may be made within the three-year period.

It is obvious why the five companies gave their consent: they retain their theaters. The Hollywood talent pool, of which much was made in the petition, is not mentioned. No specific action was taken on the designation of playdates to secure the most desirable playing time, such as week-ends and holidays. 'Arbitrary, unconscionable and discriminatory film rentals' are subject to possible arbitration.

The two principal changes in selling practices have to do with blocks of five and showing pictures in advance of sale. Selling costs will be heavier, and the necessity of maintaining a backlog of product will call for longer-term financing of production.

The idea of arbitration is not new in the industry, but its form is new. One previous arbitration system was banned by Mr. Thacher when he was a Federal Court Judge. Repeal of the NIRA ended arbitration under the industry's NRA code.

The new form of arbitration will consist of local boards in each of the thirty-one exchange districts administered by the American Arbitration Association. Appeals may be taken from the arbitration boards to a central appeals board presided over by former Judge Van Vechten Veeder, appointed by Judge Goddard on the day he signed the decree. The post carries a salary of $20,000 a year. Local arbitrators are chosen from among reputable local citizens who have had no previous connection with the film industry. General administration of the boards' work will be supervised by the following central committee of the AAA:

Paul F. Warburg, chairman, a member of the banking family of that name; Herman Irion, vice chairman, general manager of Steinway and Sons; Evan E. Young, vice chairman, vice president of Pan American Airways, formerly chief of the Division of European Affairs for the State Department; Frances Kellor, first vice president of the AAA; P. M. Haight, secretary-treasurer, International General Electric Company; Sylvan Gotshal, attorney, a member of the AAA's board; Wesley A. Sturges, professor of law at Yale; Lucius R. Eastman, chairman of the AAA board; and C. V. Whitney, president of the AAA and chief executive of the Pan American Airways.

What the consent decree gives the industry is, in effect, a voluntary system of regulation of trade practices under the supervision of a unit of the Department of Justice. The industry had already drawn up a trade practice code of its own, but meanwhile the anti-trust suit was filed and it was never put into practice on an industry-wide scale. Thurman Arnold refused to accept it in lieu of a court decree. Both the Motion Picture Theater Owners of America, which includes the company-owned circuits, and Allied States Association of Motion Picture Exhibitors, which includes independent exhibitors, some of whom were said to have entered complaints that were the basis of the anti-trust suit, have objected to the terms of the consent decree. Harry Brandt, president of an independent exhibitors' organization, doesn't like the decree either, but he thinks that exhibitors should give it a trial.

Arbitration machinery is ready for them to use if they want to use it. The local boards have authority to make awards. Distributors which are found to have 'forced' products may have their contracts cancelled. There is provision for fines up to $500 to be paid into the arbitration fund. See also MUSIC; PHOTOGRAPHY.

1939: Motion Picture Industry

As the year 1939 ended, the motion picture industry was enjoying a period of comparative friendliness and optimism. Certainly the outlook for 1940 is hopeful when contrasted with the earlier pessimism induced by the war in Europe, the anti-trust suits, passage of the Neely Bill by the Senate and the attitude of the Department of Justice toward the distributors' attempt to establish a trade practice code.

Returning optimism is reflected in dividend statements and higher quotations of film stocks on the market. There is no doubt now that seasoned motion picture stocks were under-priced early in the autumn, due in large measure to the psychological effect of Premier Chamberlain's blackout of all film theaters in the United Kingdom. By scrimping, American producers might get their negative cost back in the domestic market. As for profits, however, they seemed to have vanished — at least for a time.

Then theaters reopened in England and France. Someone high in Government councils evidently thought Bernard Shaw was right when he said the cinema was necessary to maintain military morale. 'Entertain soldiers on leave,' was the dramatist's phrase. Simultaneously, several hits reached the American screen, such as Garbo's laugh in Ninotchka, Mr. Smith Goes to Washington, Deanna Durbin's first kiss in First Love, Elizabeth and Essex and Drums Along the Mohawk, all of which brought the pleasant tinkle of coin at the box office. Various film firms declared their regular dividends and a few that had been considered marginal, at best, turned up with unexpected earnings.

So financial skies have brightened perceptibly, and predictions from West Coast pre-views point to continued fair weather. Gone with the Wind is outstanding. So are Pinocchio and Abe Lincoln in Illinois. There are others coming, such as The Grapes of Wrath and Dr. Ehrlich's Magic Bullet, which will reflect credit on the screen as well as company ledgers.

Conferences continue between the Government's attorneys and attorneys for major companies involved in the Department of Justice's petition in equity filed under the Sherman Anti-Trust Act on July 20, 1938. Each party to the suit has an interrogatory for the other.

Meanwhile refusal of Mr. Arnold, assistant attorney general, to countenance the industry's code of fair trade practice has proved discouraging to some of its proponents. The present committee to consider improvement of trade practices was formed in June 1938. That is, it antedates the Government suit. Sentiment for a more liberal cancellation clause, among others, was voiced by distribution leaders as early as 1936.

Despite this, a majority of leading distributors have put into practice the 20 per cent cancellation clause and other provisions of the code. Now the arbitration plan, devised to include settlement of both contract disputes and clearance problems, is being reconsidered.

'Reliable sources' are quoted by trade papers as indicating that leaders of Allied States Association of Motion Picture Exhibiters, a smaller group composed of customarily recalcitrant elements, are ready to listen to the arbitration proposal.

With permission to cancel 20 per cent of his pictures, the exhibitor no longer can complain of 'block booking,' distributors point out. As a matter of fact, few of them did. Support for the Neely Bill to prohibit 'block booking' was limited to the minority Allied group. The bill was passed by the United States Senate in July and is now in the hands of a House committee, with hearings scheduled in late winter.

The trade practice code was intended to establish for distribution a system of self-regulation comparable to the Production Code, which has been working efficiently for some years under the presidency of Will H. Hays of the Motion Picture Producers and Distributors of America. Since the Association's by-laws prevent it from entering competitive trade areas, Mr. Hays is not active in the trade practice code negotiations.

Celebration of the Fiftieth Anniversary of Motion Pictures in October — with a prelude of publicity in August and September and a postlude of school, club and library activities that extended well into December — brought impressive results in the way of friendly participation by all branches of the industry, ranging from independent theaters to major circuits and producers.

The observance not only focused attention on the remarkable progress of motion pictures in half a century; it also emphasized the importance of the theater as an institution in the community and the significance of the screen's contribution to American life. Newspapers, magazines, radio stations, clubs, schools, libraries, civic officials and business men joined in commemorating the anniversary. Analysis of voluminous press comment reveals an overwhelming proportion of editorials and columns — 96.7 per cent — favorable to the screen's accomplishments. Of the remaining 3.3 per cent of comment, 2.8 per cent was neutral and only one half of one per cent was adverse.

Obviously moviegoers are not concerned with internal business affairs of the industry. What they want is good pictures, and, if the current briskness at the box office is any criterion, they seem to be getting it. All of which seems hopeful for 1940.

1938: Motion Picture Industry

The motion picture industry is one of the leading industries of the United States, employed during the fiscal year ending July 1, 1938, an estimated total of 281,500 persons in the production, distribution and exhibition of pictures. A conservative estimate of the capital invested in the industry in the United States would be $2,000,000,000, apportioned as follows: theatres, $1,880,000,000; studios, $100,000,000; distribution, $20,000,000. Studios in Hollywood, California, the world center of the industry, regularly employed 25,000 persons during 1937, with a payroll of $91,000,000.

Pictures of feature length produced in the United States in 1938 totaled 588 (estimated). More than 30 per cent of the feature length pictures in 1937-38 consisted of the perennially popular Westerns and other action pictures. Over 10 per cent were musical films, and the remaining 60 per cent included current subjects, biography, history, drama, popular and classical literature.

Enforcement of the Motion Picture Production Code, a self-regulative process adopted by the members of the Association of Motion Picture Producers and Distributors, has brought about a definite advance in the moral and artistic quality of American motion pictures. This improvement has been particularly apparent since 1934, when reorganization of methods of enforcement of the Code resulted in the required submission of all stories for approval by the Code Administration before they go into production. For example, during 1937, seventy-five completed scripts were rejected by the Administration. Of these, 46 were rewritten and eventually approved and produced; the remaining twenty-nine, which were definitely discarded, contained highly suggestive dialogue, deals with easily imitated forms of crime, with venereal diseases or with the drug traffic.

Production costs climbed from $135,000,000 in 1935 to $165,000,000 for the 1937-38 season. The increase was due to more elaborate and expensive pictures, wage and salary increases, and greater tax burdens. Organized labor has made astonishing strides in unionizing the industry during the last three years. The crafts — painters, plumbers, cobweb makers, draftsmen, etc. — were first brought into the A. F. of L. Actors' and writers' unions were recognized by the studios in 1937. Directors are now in the process of organization.

There are 16,251 theaters in operation in the United States (1938) with a total seating capacity of 10,924,484. One hundred forty million feet of film per day are exchanged between these theaters and five hundred branch exchanges. Box office receipts for 1937 were in excess of one billion dollars with an average admission price of twenty-three cents. An average of 85,000,000 persons a week attended motion picture theaters in the United States in 1937, as against 80,000,000 in 1935 and 86,000,000 in 1936. Approximate world attendance would be close to 235,000,000 a week.

According to Nathan D. Golden, chief of the Motion Picture Division of the Federal Bureau of Foreign and Domestic Commerce there were 62,895 sound picture theaters in the world on Jan. 1, 1938, an increase of 7,332 over the number reported for Jan. 1, 1937. Of the 26,202 silent motion picture theaters still in existence, the majority are located in Russia. In the United States there is one theater for every 6,742 persons; in China, which has a total of 250 theaters, the average is one theater for about 1,600,000 persons.

There are 500 featured players in the industry. The office of Central Casting in Hollywood placed 15,936 extras in 1937 for a total of 294,307 days; a daily average of 963 extras were employed on working days throughout the year. Less than $500 a year was earned by 14,091 extras; 7 extras earned from $3,000 to $3,300. The average daily wage for extras was $10.03.

Recent advances in natural-color cinematography as well as laboratory processing of color film on prints were notable in such outstanding productions as Robin Hood, Marie Antoinette, Suez, A Star is Born, and The Adventures of Tom Sawyer. Color has also been extensively used in the making of shorts. However, cost and technical requirements of color photography are still a serious handicap, and until these can be reduced to approximately those of black and white photography, color cannot make great headway in the motion picture field.

Snow White and the Seven Dwarfs, a brilliant fantasy in color produced by Walt Disney, was the motion picture sensation of the 1937-38 season. It is expected to make an all-time world-wide box office record, having grossed $4,000,000 in the United States in the first ten months after its release.

According to a statement made by Nathan D. Golden on Feb. 14, 1938, 70 per cent of screen time in all foreign picture theaters is taken up by Hollywood films. Exports of American sound and silent films reached 215,721,956 feet during the past year, an increase of about six million feet over 1936. Argentina imported the greatest total footage in 1937, followed in succession by Great Britain, Brazil, the British West Indies, Panama and Mexico. Foreign markets bring in thirty to forty per cent of all revenues received by American producers.

During 1937 approximately 1,809 features were produced outside of the United States, as compared with 1,374 in 1936. The 1937 figure includes approximately 500 made in Japan, 350 in India and 225 in England. The Administration of the Motion Picture Production Code approved forty-one foreign-made pictures during 1937 for showing in the United States. Of these Mayerling, produced in France, and The Elephant Boy, produced in India by a British company, were outstanding.

In marked contrast to the situation a few years ago, the major studios are taking an active interest in the making of shorts — one-, two-, and three-reel pictures including serials, newsreels, and sport, music, science, and historical subjects. Slapstick is entirely out; the present trend is toward shorts which are informative as well as entertaining, and their production is increasingly regarded as training ground for future actors, directors and writers of feature length pictures. One nine-minute short, The Romance of Radium took thirteen months in production. Production of shorts is not confined exclusively to Hollywood, but is divided almost equally between the film capital and New York City.