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Full text of "Evidence study"

BOSTON PUBLIC LIBRARY 



BOSTON PUBLIC LIBRARY 

3 9999 06317 543 2 



NATIONAL RECOVERY ADMINISTRATION 






DIVISION OF REVIEW 



EVIDENCE STUDY 
NO. 25 



OF 



THE MOTION PICTURE INDUSTRY 



Prepared by 

DANIEL BERTRAND 



November, 1935 



PRELIMINARY DRAFT 
(NOT FOR RELEASE: FOR USE IN DIVISION ONLY) 



THE EVIDENCE STUDY SEMES 

The EVIDENCE STUDIES were originally jilanned as a means of gathering evidence 
tearing upon various legal issues which arose under the National Industrial .Re- 
covery Act. 

Those studios have value quite aside from the use for which they were originally 
intended. Accordingly, they are now made available for confidential use within the 
Division of Review, and for inclusion in Code Histories. 

The full list of the Evidence Studies is as follows: 



1. Automobile Manufacturing Ind, 23. 

2. Boot and Shoe Mfg. Ind. 24. 

3. Bottled Soft Drink Ind. 25. 

4. Builders' Supplies Ind. 26. 

5. Chemical Mfg. Ind. 27. 

6. Cigar Mfg. Industry 28. 

7. Construction Industry 29. 

8. Col; ton Carment Industry 30. 

9. Dress Mfg. Ind. 31. 

10. Electrical Contracting Ind. 32. 

11. Electrical Mfg. Ind. 33. 

12. Fab. Metal Prod. Mfg., etc. 34. 

13. Fishery Industry 35. 

14. Furniture Mfg. Ind. 36. 

15. General Contractors Ind. 37. 

16. Graphic Arts Ind. 38. 

17. Gray Iron Foundry Ind. 39. 

18. Hosier:/ Ind. 40. 

19. Infant's & Children's Wear Ind. 41. 

20. Iron and Steel Ind. 42. 
31. Leather 43. 
22. Lumber & Timber Prod. Ind. 



Mason Contractors Industry 

Men's Clothing Industry 

Motion Picture Industry 

Motor Bus Mfg. Industry (Dropped) 

Needlework Ind. of Puerto Rico 

Fainting & Paperhanging & Decorating 

Photo Engraving Industry 

Plumbing Contracting Industry 

Retail Food (See No. 42) 

Retail Lumber Industry 

Retail Solid Fuel (Dropped.) 

Retail Trade Industry 

Rubber Mfg. Ind. 

Rubber Tire Mfg. Ind. 

Silk Textile Ind. 

Structural Clay Froducts Ind. 

Throwing Industry 

Trucking Industry 

Waste Materials Ind. 

Wholesale & Retail Food Ind. (See No. SI) 

Wholesale Fresh Fruit & Veg. 



In addition to the studies brought to completion, certain materials have been 
assembled for other industries. These MATERIALS are included in the series and are 
also made available for confidential use within the Division of Review and for in- 
clusion in Code Histories, as follows: 



•44. Wool Textile Industry 

45. Automotive Parts & Equip. Ind. 

46. Baking Industry 

47. Canning Industry 

48. Coat and Suit Ind. 



49. Household Goods & Storage, etc. (Dropped) 

50. Motor Vehicle Retailing Trade Ind. 

51. Retail Tire & Battery Trade Ind. 

52. Ship & Boat Bldg. & Repairing Ind. 

53. Wholesaling or Distributing Trade 



L. C. Marshall 
Director, Division of Review 



OOMEEHTS 

Page 

Foreword 1 

PARI I: I1TTRODUCTION 

CHAPTER I ~ TIH HA.TURI OP THE IHDUSTRY 2 

Definitions of the Industry 2 

Description and Scope of the Industry 2 

Assets 3 

Capital Investment 4 

Interstate Character of the Industry 4 

PART II: PRODUCTION 

CHAPTER I - THE HATERS 01 THE DIVISIOH 6 

Total Hunter of Establishments 6 

number of Establishments by Principal States. ... 6 

Hunter of lienbers and Size of Concerns. ...... 7 

Gross and Het Incone 7 

Het Incone by Major Conpanies 8 

Total Cost of Production , 9 

Volume of Production 9 

Total Domestic and Foreign Releases 9 

Production of "Features ". 10 

Production of "Shorts" 11 

"Bo;c-0ffice Halting" of Producers 11 

CHAPTER II - LABOR STATISTICS 

Total Hunter of Employees 13 

Hunter of "E::tras" 15 

Seasonal Variation in Employment 14 

Total Annual Wages 15 

Annual Wages by Principal States 15 

Salaries and Wages as a Per Cent of Cost 

of Production 16 

Wages of Extras 17 

Average Hourly Wr.ge Rate 18 

Average Hours Worked per Week 18 

Child Lator 19 

Employees by Principal States 19 

Total Employees 19 

Wage Earners 20 

(Continued) 



8976 



CHAPTER 



CHAPTER 



CHAPTER 



CHAPTER 



CHAPTER 



8976 



CONTENTS (Continued) 

Pafce 

III - MATERIALS 21 

Cost of Principal Materials Used 21 

Source of Equipment and Supplies 21 

IV - UNFAIR TRADE PRACTICES 23 

Enticement of Talent and Activities of Agents ... 23 

V - GENERAL INFORMATION 24 

Exports 24 

Advertising .24 

Productive Capacity 24 

Trade Associations 24 

Motion Picture Producers and 

Distributors of America, Inc 24 

The Academy of Motion Picture 

Arts and Sciences ....... 24 

Trade Union Activity 25 

PART III: DISTRIBUTION 

I - THE FATURE OP THE DIVISIOIT 26 

History and Scope of Division 26 

Origin of Film Exchange .26 

Developments in Film Distribution 26 

national and "State Right" 

Distribution .26 

Producers as Film Distributors 27 

Present— Day Film Distribution 27 

Total l T umber of Exchange Establishments 28 

lumber of Exchange Establishments by 

Principal States 28 

Volume of Business ^j Principal States 28 

Number of Establishments by Type of 

Exchange 29 

Volume of Business by Type of Exchange 29 

II - LA30R STATISTICS 31 

Average Annual Number of Employees. ... 31 

Total Number of Employees oi r Types 

of Exchanges , 31 

Average Annual Payrolls 31 

Per Cent Salaries and Wages are of 

Total Expense 31 

( Continued) 
— ii~ 



COiTTElTTS (Continued) 

Page 

CHAPTER III - IMPAIR TRADE PRACTICES 32 

Block Booking and Blind Booking 32 

Forcing Snort Subjects with Features 53 

Overbuying 33 

CHAPTER IV - GENERAL INFORMATION 34 

Trade Association Activity 34 

PART IV: EXHIBITION 

CHAPTER I - THE NATURE OE THE DIVISION 35 

History and Description of Division. ....... 35 

The Development of notion Picture 

Theatres . 35 

The Development of the Entertainment 

Program 35 

Entrance of Producers into the 

Exhibition Division ,35 

Classes of Exhibitors 35 

Total Number of Theatres 36 

Number of Theatres by Principal States 36 

Number of Theatres Open and Closed 37 

Seating Capacity 37 

Number of Theatres and Number of Seats 

Classified by Type of Ownership 39 

Total Theatre Receipts and Attendance 40 

Theatre Receipts by Principal States ....... 41 

Competition nith Other Industries 41 

Expenditures for Theatre Construction 41 

Financial Condition 42 

CHAPTER II - LABOR STATISTICS 43 

Number of Employees 43 

Total Annual Payrolls 45 

Total Annual Payrolls as a Per Cent of 

Total Receipts 44 

Number of Wage Earners and Total Annual 

Wages by Principal States 44 

Wages and Hours 45 

In Principal Cities 45 

In Washington, D. C 46 

(Continued) 



8976 



C01TTEITTS (Concluded) 

Page 

CHAPTER III - MATERIALS 49 

Number of Films Used, 49 

Per Cent of Consumer's Motion Picture Dollar 

Spent on Film Rental 49 

CHAPTER IV - UNFAIR TRADE PRACTICES 51 

Clearance and Zoning .51 

Other Unfair Trade Practices 51 

Trade Associations 52 

The Motion Picture Theatre Comers 

of America. 52 

Allied States Association of 

Motion Picture Exhibitors .52 

Trade Union Activity 52 

International Alliance of Theatrical 
State Employees and Motion Picture 
Machine Operators of the United States 

and Canada 52 

APPENDIX 53 

Exhibit A - Persons Qualified as Experts on the Entire Industry . 53 

Exhibit 3 - The Advent of Sound in Motion Pictures 55 

Sound in Exhibition 55 

Sound in Production 56 



3976 



—IV- 



TABLE I - 

TA3LE I A - 

TABLE II - 

TABLE III - 

TABLE IV - 

IABLE V - 

TABLE VI - 

TABLE VII - 

TABLE VIII « 

TABLE IX - 

TABLE X - 

TABLE XI - 

table xii - 

table xiii - 

table: xiv - 

TABLE XV - 



LIST OF 
TABLES 

Page 

Assets of llotion Picture Producers, 1930-1953. ... 3 

Assets of Llotion Picture Theatres, 1930-1935 .... 4 

Total Hunter of Establishments, for Census 

Yoars, 1921-1935 6 

Wumber of Establishments, "07 Si:; Principal 

States 7 

Gross Income and ITet Profit or Loss, 1927-1932 ... 8 

Consolidated !Tet Income or Loss for Six 

Major Motion Picttire Companies, 1932-1934 8 

Total Cost of Production, for Census Years, 

1921-1933 9 

Humber of Domestic and Foreign Llotion Picture 

Features Released in the United States, 

1927-1934 10 

Features Released "by l.Iajor and Independent 

Domestic Companies 10 

Total Ilumber of Shorts Produced, 1930-1931 

to 1954-1935 11 

Estimate of Bo:: Office Strength of Feature 

Pictures, for each of Eight l.Iajor Companies 

and All Independents, 1933 and 1954 12 

Average Annual ITumber of Salaried Employees 

and of Wage Earners 13 

ITumber of Placements and Wages of "Extras" 
Registered with the Central Casting Corporation, 
1926-1934 \ 14 

Number of Wage Earners, "02 r Months, 1929 and 1935 . . 15 

Total Annual Salaries and Wages, 1929 and 1933 ... 16 

Annual Wages, by Three Principal States, 

1929 and 1933 ' 16 

(Continued) 



8976 






TABLES (Continued) 

Page 

TABLE XVI ~ Total Coat of Production, Annual Salaries 

and Annual Uages, 1929 and 1933 17 

TABLE XVII - Distribution of Placements of Extras by 
the Central Casting Corporation at 
Specified Daily Wage Hates, 1930 and 1933 18 

TABLE XVIII - lumber of Establishments and Number of 
Uage Earners, Classified by Number of 
Full-Time Hours ITorked ~>er Week, 1929 19 

TABLE XIX - Average Annual Number of Employees, by 

Three Principal States, 1929 and 1933 19 

TABLE XX - Average Annual number of TTage Earners, 

by Three Principal States, 1929 and 1933 20 

TABLE XXI - Total Cost of Production and Cost of 

Materials, Fuel, and Purchased Electric 

Energy .21 

TABLE XXII - Number of Establishments Producing Photo- 
graphic Apparatus and Supplies, by 
Principal States 22 

TABLE XXIII - Exports of Motion Picture Films, 1929 and 1934 . . 24 

TABLE XXIV - Number of Exchanges and Volume of Business 

Handled, by Six Principal States, 1929 23 

TABLE XXV - Number of Exchanges, and Number of Employees, 

by Principal Types of Exchanges, 1929 29 

TABLE XXVI - Volume of Business, Salaries, Wages and 
Total Expenses, by Principal Types 
of Exchanges, 1929 30 

TABLE XXVII - Average Annual Number of Employees 

and Average Annual Payrolls, 1929 31 

TABLE XXVIII- Number of Motion Picture Theatres, 

by Principal States 55 

TABLE XXIX - Sound and Silent Motion Pictiu-e Theatres, 
Classified as to Whether Open or 
Closed, 1929-1935 '38 



(Continued) 



3976 



-vi- 



TABLES (Concluded) 



Pa f <?e 



TABLE XXX - Total Number of Seats in Motion 

Picture Theatres, 1931-1955 39 

TABLE XXXI - Humber of Motion Picture Theatres, 

Classified by Type of Ownership, 1933-1955. . . 40 

TABLE XXXI I - lumber of Lotion Picture Theatre Seats, 

Classified by Type of Ormership, 1933-1935. . . 40 

TABLE XXXIII - Estimated Total Bo:;-0ffice Receipts, Average 

Admission Prices, and Attendance, 1929-1934 . . 41 

Annual Expenditure in Theatre Construction, 

1929 - March, 1955 42 

Cross Income, Het Profit or Loss, 1927-1932 . . 42 

TABLE XXXVI - Annual Average ITuaber Employed, Full and 

Part-Time, "by Types of Theatres, 1933 43 

TABLE XXXVII - Total Payrolls, Full and Part-time, 

by Types of Theatres, 1933 44 

TABLE XXXVIII - Total Receipts, Number of Full-Time Employees 
and Payrolls, Classified "by 10 Principal 
States, 1933 45 

TABLE XXXIX - Wage Scales and Hours Worked per Week "by 
Unionized Projectionists, Classified "by 
Number of Cities, 1933 46 

TABLE XL - Average Weekly Hours and Wages of Employees 
in 11 neighborhood Motion Pictiire Theatres 
of Washington, D. C. , by Branch of Work 
and Occupation, 1951 47 

TABLE XLI - Average Weekly Wages in Different Types of 

Motion Picture Theatres of Washington, B. C. , 

by Branch of Work and Occupation, 1951 48 

TABLE XLII - Per Cent of the Consumer's Motion Picture 

Dollar Accounted for by the Chief Divisions 

of the Industry, 1933 50 



897f 



-VI 1- 



_1_ 

MOTION PICTURE INDUSTRY 

Foreword 

The do.tr. -presented in this report hrve been assembled from both government 
and private sources. Most of the governnent data used have been taken from 
publications of the Bureau of the Census, but data have also been taken from 
reports of the Bureau of Labor Statistics and the Bureau of Internal Revenue. 
Among the private sources, the most important arc the Motion Picture Alnanac , 
the Pi In Daily Yearbook , reports of 'he Standard Statistics Company, and the 
trade o-ssociation, the Motion Picture Producers and Distributors of America, 
Inc . 

The organization of this study is somewhat different fron that called for 
in the Outline for Evidence Studies. Hie Industry as codified included the 
production, distribution, and exhibition of moving pictures, and it has "oeen 
considered advisable to follow the Outline through separately for each of these 
divisions. The present study therefore consists of four parts: Part I, Intro- 
duction, in which certain material pertaining to the Industry as a whole is 
presented; and Part II, Production; Part III, Distribution; and finally, Part 
III, Exhibition. The particular Census oublieations used in describing each of 
the three nain divisions of the Industry are as follows: Production, Census 

of Manufactures ; Distribution, Census o f "Thole sale Dist ribution; and 

Exhibition, Cen sus of Ame rican "Business , "Services", Amusements, and Hotels". 

The Census data are considered roughly applicable to the appropriate 
division of the Industry as codified. The fact tha.t the Census coverage foes 
not include the smaller establishments is not held significant in this Industr; 
As pointed out in the text, however, Census data and those from private sovrcei 
often indicate large discrepancies which are presumably due to the fact that 
the latter are frequently estimates and to difference in the coverage of the 
two sets of data. 



8976 



FART I: INTRODUCTION 
Chapter I. The Nature of the Industry 

Definitions of the Industry 

The Motion Picture Industry, as defined hy the Code of Fair Competition 
for the Industry, includes, 

".... without limitation, the production, distribution, or 
exhibition of motion pictures and all activities normally related ^ 
thereto, except as s-necif ically excepted from the operation of the Code. 

The limitations in the sco"oe of the Code are as follow: 

"Nothing in this Code shall be deemed to a-only to the pro- 
duction, distribution, or exhibition of motion pictures on film 
of recognized substandard widths, or to slide films, or to non- 
theatrical motion pictures designed primarily for educational, 
scientific, industrial, commercial, advertising, selling, or other 
non- theatrical purposes, or to television of motion pictures, 
provided that the commercial production, distribution, or exhibi- 
tion of such films shall be subject to investigation by the Code 
Authority to determine whether such production, distribution, or 
exhibition of such films is unfair competition to an established 
motion picture theatre or theatres. If found to be unfair com- 
petition, the Code Authority shall promulgate rules and regulations 
governing such unfair competition." 

The Code covered "actor employees in vaudeville and presentation motion 
picture theatres" in "both permanent and traveling companies of artists play- 
ing presentation and vaudeville houses," but it did not cover "amateur" shows, 
"rep," "tab," "tent," "wagon," "truck" and "medicine" shows, "show-boat" or 
"burlesque," as these terms are understood in the theatre. 

The Industry as defined by the Census of Manufactures embraces, 

".... all processes and activities connected with the pro- 
duction of motion pictures, such as the photography of scenes, the 
development of exposed films, the printing of projection films, and 
other studio and laboratory work necessary in connection with the 
preparation of projection films for use." 

Since Census of Manufactures data thus cover only motion picture pro- 
duction, they are not applicable to the entire Industry as defined by the 
Code, but only to the production branch of the Industry which is described in 
Part II of this study. The remaining branches of the Industry, distribution, 
and exhibition, are covered by the Wholesale Census and the Census of Service, 
Amusements, and Hotels. 

Description and Sco-oe of the Industry 

The Industry as codified is composed of three major divisions of activity; 
production, distribution, and exhibition. These three economic divisions of 
this Industry are closely inter-related with and dependent upon each other. 
The production division covers all of the processes and activities involved in 

8976 



-3- 

the making of motion pictures. It includes the preparation and photography of 
scenes; the developing of exposed films; the printing of projection films; and 
other studio and laboratory work required in the preparation of positive films 
for use. The distribution division involves the "renting" or "leasing" of 
films to exhibitors; the maintenance and physical distribution of the films, 
and the collection of due accounts. It also includes the outright sale of 
finished films and the sale of advertising materials. The exhibition division 
includes the commercial exhibiting of the finished films in the theatres; and 
also vaudeville and presentations given in conjunction with motion pictures. 

This Industry, which has assumed a position of unusual importance because 
of its far-reaching influence upon social and economic standards and conduct, 
is characterized by rapid growth by the possibility of radical changes through 
technical developments in the film -nd related industries by the geographical 
concentration of production. It's further characterized by the large degree 
of integration of its three main divisions, and the individuality in the in- 
dustrial practices which it follows. 

Production, distribution, and exhibition are both horizontally and verti- 
cally integrated and the concentration of corporate ownership in the hands of 
a few large companies provides an economic division of the Industry between 
what are known as "major" and "independent" interests. The economic conse- 
quences of this concentration are reflected in nearly all problems of the 
Industry. 

Assets 

Tables I and IA show the assets of motion nicture producers and. exhibitor: 
for the years 1930 through 1935. Fixed assets constitute the largest type in 
both the production and exhibition divisions. Total assets of -oroducers drop- 
ped from $934,000,000 in 1930 to $249,000,000 in 1933, while in the exhibition 
division total assets rose during the same period from $619,000,000 to $1,- 
076,000,000. The number of concerns reporting in the production division 
averaged around 175 ea.ch year, whereas in the exhibition group the number 
rose steadily from 1,889 in 1931 to 2,368 in 1933. 

TA3LS I 

Assets of Motion Picture Producers, 1930-1933 
(Dollars In Thousands) 

1930 1931 1932 1933 



Number Reporting 



182 170 177 131 



Total Assets $933,847 $849,916 $411,622 $248,824 

Current 228,871 192,911 54,015 42,057 

Investments 251,320 220,408 109,593 18,543 

Fixed 334,421 571,765 213,629 163.^40 

Miscellaneous 59,255 H4.P51 29,335 24', 504 

Source; Bureau of Internal Revenue, tabulation sheets and published reports 
(Statistics of Income). 



8976 



-4- 



TABLE I A 



Assets of notion Picture Theatres, 1S30-1933 
(Dollars In thousands) 



1930 1331 1932 1933 



Number Reporting 1,689 1,309 3,132 2,368 

Total Assets $618,792 $717,307 35,684 $1,076,486 

Current 102,404 113,728 205,919 265,927 

Investments 53,540 68,143 173,753 244,684 

Fixed 389,494 470,433 523,241 490,536 

Miscellaneous 73,554 59,003 83,771 75,339 



Source: Bureau of Internal Revenue, tabulation sheets and published reports 
(Statistics of Income). 

Capital Investment 

According to the Motion Picture Almanac the capital investment of the 
Industry stood at $2,000,000,000 in each of the years from 1929 to 1935, with 
the exception of 1934 when the figure was placed at $1,750,000,000. The invest- 
ment in studios is roughly $100,000,000; the investment in the distribution 
branch of the Industry is something between $10,000,000 and $20,000,000; while 
that for the exhibition branch of the Industry lies between $1,630,000,000 and 
$1,380,000,000. In other words, the investments in production or distribution 
are insignificant in comparison vith the investment in exhibition. In a study 
made recently by a group of architects, Messrs. Lamb, Rapp, Alschlager, Eberson 
and Schultz, it was estimate . that $1,460,000,000 has been spent to date in the 
building of theatres exclusive of those parts of theatre buildings given over 
to office space. 1/ 

Interstate Character of the Industry 

In the making of films, numerous writers, actors, actresses, directors, 
cameramen, and other artists and artisans, are assembled from many different 
states and foreign countries. Great quantities of unexposed films and large 
quantities of scenery, costumes, paraphernalia, and wro-nerties are transported 
from many different states to the studios located in those few where motion 
pictures are -produced. 

The distributors enter into contracts for leases with exhibitors for the 
exhibition of films throughout the United States through the media of corres- 
pondence, branch offices, and salesmen. Thus film contracts which are entered 
into between residents of different states, involve the leasing of a commodity 
manufactured in one state and transported to and used in another state. 

1/ Verbal statement by Mr. David palfreyman of the Theatre Service Division of 
the Motion Picture Producers and Distributors of America (June, 1935). 

8976 



-5- 



After the films are produced, they are packed into metal containers, and 
are transported by parcel post, express trucks and other common carriers, from 
the studios and laboratories to exchanges, then to the theatres in cities and 
towns of the country. After display to the public, the films are returned to 
the exchanges for redistribution to other theatres, or are forwarded to other 
exhibitors. Thus, there is a constant current of trade and commerce in films 
through the states. 



8976 



-6- 

PAET II: PHODUCTION 

/ 
Chapter I. The Nature of the Division 

Total Uumber of Establishments 

Table II indicates the number of establishments engaged in the produc- 
tion of notion pictures. It '-/ill be noted that in the first Census taken 
after the depression years of 1921 and 1933, the number of establishments 
showed a marked decrease in each instance. 

TABLE II 

Total Number of Establishments, for 
Census Years, 1921-1933 



Year Number Per Cent Change 

from Preceding Year 

-23.6 

+36.1 

f 7.6 

no change 

- 1.4 

-34.3 

of Manufactures , 1929 and 1933 , 
"Motion Pictures, not Including Pro- 
jection in Theatres." 

Number of Establishments by Principal States 

An examination of Table III shows that more than 80 per cent of all 
motion picture establishments are located in six states. In 1929 California, 
the leading state, accounted for 41 per cent of all establishments and New 
York accounted for 21 per cent. By 1931 California had gained relatively 
and New York had lost, while in 1933 the reverse was true. The concentra- 
tion in the six states was more marked in 1931 and also in 1933 than in 1929. 



1921 


127 


1923 


97 


1925 


132 


1927 


142 


1929 


142 


1931 


140 


1933 


92 


Source: 


Census i 



8976 



_7~ 

TABLE III 
Number of Establishments, "by Six Principal States 



1929 1931 1933 



State Number Per Cent Number Per Cent Number per Cent 

of Total of Total of Total 



U. S. Total 142 100.0 140 100.0 92 100.0 

California 58 40.9 71 50.7 

Illinois 8 5.G 7 5.0 

New Jersey 6 4.2 5 3.6 

New York 30 21.1 26 18.5 



Ohio 8 5.6 6 4.3 

Pennsylvania 5 3.6 6 4.3 

Total, 6 States 115 81.0 121 86.4 

Total, Other States 27 19.0 19 13.6 



40.9 


71 


5.G 


7 


4.2 


5 


21.1 


26 


5.6 


6 


3.6 


6 


81.0 


121 


19.0 


19 



39 


42.4 


8 


8.7 


3 


5.3 


24 


26.0 


3 


3.3 


1 


1.1 


78 


84.8 


14 


15.2 



Source: Census of Manufactures . 1929 . 1931 . and 1933 , "Motion Pictures, not 
Including Projection in Theatres." 

Number of Members and Size of Concerns 

The members of the production division of the Industry fall into two 
groups. There are eight large companies which produce approximately 80 per 
cent of the total value of production as valued on a cost-of-production 
basis and approximately 65 per cent by number of features produced. 1/ Five 
of the major companies supply nearly 100 per cent of the newsreels produced. 

The remaining pictures are produced by approximately 30 independent com- 
panies having sufficient importance to have the names of their production 
staffs listed in the Motion Picture Almanac . Most of these minor producing 
firms contribute their portion of the product under a "unit" system which 
fits into and becomes a part of the production schedules of the major pro- 
ducers. In addition to the above, there are many other small producers who 
make tme or two motion pictures intermittently over a period of years. 

Gross end Net Income 

Table IV shows the gross income and the net profit or loss of motion 
picture producers from 1927 through 1932. In 1930 gross income increased al- 
most 70 million dollars over the 1929 level of $343,445,000 and the producers 
reported a profit of more than $40,000,000 annually in each of these years. 
Although in 1931 gross income was almost 100 million dollars greater than in 
1929, there was a net loss of $8,674,000. In 1932 gross income fell to less 
than one-half the 1931 level and the producers suffered a net loss of over 
$30,000,000. 

1/ Motion Picture Producers and Distributors of America. 



8976 



The decrease in the profitability of the Industry has "been attributed 
to a number of factors, including over-expansion in the direction of seating 
capacity, erection of theatres at an excessive cost per seat, mismanagement 
within the Industry, payment of inordinately large compensation for services, 
and the effect of the depression upon the demand for entertainment. 

TABLE IV 

Gross Income and Net Profit or Loss, 1927-1933 
(in thousands) 

Year Gross Income Net Profit or Loss 



1927 


$239,426 


1928 


230,266 


1929 


343,445 


1930 


410 , 700 


1931 


441,948 


1932 


190,795 



$8,032 
17,109 
44,400 
40,282 
-8,674 
-30,199 



Source: Bureau of Internal Revenue, Statistics of Income , 
Net Income by Major Companies 

Table V shows the consolidated net income of six major companies for 
1932, 1933, and 1934. Attention is directed to the recovery made by the 
three companies, namely, Fox, Warner, and Paramount, which had the largest 
net "bases in 1932. The totals show that the group loss of $36,519,000 in 
1932 had "by 1934 been turned into a net income of $14,371,000. 

TABLE V 

Consolidated Net Income or Loss for Six Major Motion Picture 

Companies, 1932-1934 
(in thousands) 



Company 1932 1933 1934 

Group Total 

Columbia Pictures Corporation 

Fox Film Corporation 

Loew' s Incorporated 

Warner Brothers Pictures, Inc. 

Universal Pictures 

Paramount-Publi.c Corporation 



-$36,519 


$4,568 




$14,371 


574 


740 




1,009 


- 16,151 


1,411 




3,000 a/ 


7,961 


4,034 




7,480 


- 14,095 


-6,292 




-2,530 


- 1,250 


-1,017 




- 500 a/ 


- 13,558 


5,692 


»/ 


5,912 a/ 



Source: Standard Statistics Company, Standard Trade and Securities , 

''Theatres and Motion Pictures, " Vol. 75, No. 22 (February 20, 1935), 



a/ Estimated. 



8976 



-Si- 
Total Cost of Production 

The production of motion picture films is not a manufacturing activity 
in the sense in which the term is generally used to designate the factory 
production of commodities. Furthermore, since the Motion Picture Industry 
does not usually sell, "but leases or rents its product, it is impossible to 
determine the actual value of the output of a given year until a long time 
after its close. It is therefore necessary to substitute "cost of produc- 
tion" for "value of product" in presenting data for this Industry. 

An examination of Table VI indicates that the cost of production increased 
each year from 1921, until it reached a peak of $184,102,000 in 1929 when 
the introduction of equipment for sound production caused a large increase in 
cost of production. In 1931, the Industry's decreased production costs can 
probably be attributed in part to better adjustment to the innovation of 
sound, but the impact of the depression was probably beginning to be felt. 

TABLE VI 

Total Cost of Production, for Census Years, 1921-1933 

(In thousands) 



Year 


Cost of 


Per 


Cent Change 




Production 


from Preceding 


Year 


1921 


$77,397 









1923 


8G,418 




+ 11.7 




1925 


93,636 




+ 8.4 




1927 


134,343 




+ 43.5 




1929 


184,102 




«■ 37.0 




1931 


154,436 




- 16.1 




1933 


119,343 




- 22.7 




Source: 


Census of Manufactures, 


1929 


and 1933, 


"Moti< 



Pictures, not Including Projection in Theatres." 
Volume of Production 

Total Domestic and Foreign Releases . - Table VII shows the total number 
of features released in the United States for the years 1927 to 1934. Data 
are presented to show how many of the total releases were foreign features and 
how many were made by American producers. During the years 1932, 1933, and 
1934, the proportion of foreign pictures releases was greater than in most of 
the prior years. In 1934 the number of foreign features shown in this country 
amounted to 27,5 per cent of the total. 



8976 



-10- 



TABL3 VII 



Number of Domestic and Foreign Motion Picture Feature; 
In the United States, 1927-1934 



Released 





Total 


Domestic ! 


features 


Foreign 


Features 




Year 


Number 


Per Cent 
of Total 


number 


Per Cent 
of Total 


Number 


Per Cent 
of Total 




1927 


743 


100.0 


663 


89.9 


75 


10.1 




1929 


820 


100.0 


62V 


76.5 


193 


23.5 




1929 


850 


100.0 


705 


82.9 


145 


17.1 




1930 


600 


100.0 


514 


85.7 


86 


14.3 




1931 


627 


100.0 


505 


80.5 


122 


19.5 




1932 


685 


100.0 


489 


71.4 


196 


28.6 




1933 


644 


100.0 


507 


78.7 


137 


21.3 




1934 


662 


100.0 


480 


72.5 


182 


27.5 




Source: 


Film Daily Yearbool/ of Motion 


Pictures, 


1935. 







i-Toduction of "Features." - Table VIII shows the number of features 
produced from 1927 through 1934. Attention is directed to the high number 
of releases by major companies in 1927 and the gradual decline through 1932, 
with the subsequent moderate rise. During these years the major companies 
averaged almost 70 per cent of the total number of feature pictures released. 

TABLE VIII 

Features Released by Major and Independent Domestic 

Companies a/ 





Total 






Kind c 


if 


Company 




Year 


Ma: 


ior 




Independent 




Number 


P< 


iT Cent 


Number 


Per Cent 


Number 


Per uent 






o: 


F Total 




of Total 






of Total 


1927 


668 




100 cO 


510 


76.3 




158 


23.7 


1928 


627 




100.0 


462 


73.7 




165 


26.3 


1929 


705 




100.0 


393 


55,7 




312 


44.3 


1930 


514 




100.0 


362 


70.4 




152 


29.6 


1931 


505 




100.0 


324 


64.1 




181 


35.9 


1932 


489 




100.0 


318 


65,0 




171 


35.0 


1933 


507 




100.0 


338 


66.7 




169 


33.3 


1934 


480 




100.0 


361 


75.2 




119 


24.8 


Source: 


Film Daily 


Yearbook 


of Motion 


Pictures, 


1935. 





a/ During 1927-1931, ten companies listed; during 1932-1934, eight 

companies listed. 



8976 



-11- 



Produc tion of "Shorts." - Table IX shows the estimated number of 
"Short Subjects," of one or two-reel length, produced for the years 1930- 
1931 through 1934-1935. The table does not include newsreels produced 
annually "by each of the five major companies, or approximately 20 reels. 



TABLE IX 

Total number of Shorts Produced, 
1930-1931 to 193-1-1935 

Season Number 

1930-1931 1,286 

1931-1932 1,372 

1932-1933 1,297 

1933-1934 1,062 a/ 

1934-1935 956 a/ 



Source: Compiled from data in the ivlotion 
Ficture Almanac. 

a/ Estimated on basis of announced 

plans of companies. 

"3ox-Office Rating" of Producers 

The relative quality and importance of the production of the eight 
major producers may be ascertained from an examination of Table X, which 
shows the estimated "box-office strength" of feature pictures produced by 
the major -producers in comparison with the feature pictures produced by the 
independent producers. 

Each feature release is assigned a weight, according to indicated box- 
office potency, and a weighted average for the entire year is then computed. 
A perfect score of 1,000 would result only if every film of a producer were 
given a. "Hit" rating. 

It will be seen from the table that United Artists and Loew' s (lIGU) re- 
ceived the highest box-office ratings in both 1933 and 1934. In 1934 they 
received 762 and 552 respectively. In the same year, independent companies 
received an average rating of 164. 



8976 



-12- 

TABLE X 

Estimate of Box Office Strength of Feature Pictures, 
for Each of Eight Major Companies and All Independents, 

1933 and 1934 

Company 1933 1934 

United Artists 583 762 

Loev;' s (MGLi) 582 552 

tfarner Brothers 486 429 

R.Z.O. 395 433 

Paramount 380 508 

Pox Film 368 446 

Universal 362 366 

Columbia 260 302 

Average 424 453 

Independents 175 164 

Source: Standard Statistics Company, Standard Trade and 
Securities , "Theatre and Motion Pictures," Vol. 
75, No. 22 (February 20, 1935) p. TH-48. 



8976 



-13- 

PART II: PRODUCTION 

Chapter II. Labor Statistics 

Total Number of Employee s 

Table XI shows the average annual number of employees, in the produc- 
tion division as reported by the Census of Manufactures. The Motion Picture 
Almanac has estimated the total employment as 30,000 in 1933, compared with 
the Census figure of 19,037 for the same year. 

TABLE XI 

Average Annual Number of Salaried Employees and of 

Wage Earners 



1929 1931 1933 



Salaried Employees 8,818 — 8,260 

Wage Earners 10,784 — 10,777 

Total 19,602 14,839 a/ 19,037 

Source: Cens us of Manufactures, 1935 , "Motion Pictures, Hot 
Including Projection in Theatres." 

a/ Figures for 1931 are incomplete and not comparable 
with figures for other years. 



Number of "-hxtras " 

There are no accurate data as to the total number of "extras" employed 
in the Industry. Mr. Allen Garcia, representing extras, stated at the 
hearing on the proposed Code that the total number of this type of employee 
registered and available has been variously estimated as between 8,000 and 
14,000 annually. 1/ 

In addition, complete data are not available as to the total number 
of placements of extras, but Table XII shows the number of such placements 
made by the Central Casting Corporation, the leading employment agency for 
obtaining jobs for this type of employee. The number reported by this 
agency is considered to represent a great majority of the total number of 
placements. 



1/ Transcript of NRA Hearing, Motion Picture Industry, September 12, 1933. 



8976 



-14- 

TABLE XII 

Number of Placements and Wages 
of "Extras" Registered with the 
Central Casting Corporation 
1926-1934 



Year 




Placements 






Wage s 






















Total Number 


Average Da 


Liy 


Total Annual 


Average Wage 








Number 


a/ 


(000 's) 


per Placement 


1926 




259,259 




710 




$2,195 


$8.46 


1927 




330,397 




905 




2,838 


8.59 


1928 




276,155 




758 




2,470 


8.94 


1929 




262,958 




840 




2,401 


9.13 


1930 




252,446 




807 




2,460 


9.74 


1931 


V 


177,523 




621 




1,658 


9.34 


1932 


o/ 


176,785 




677 




1,545 


8.74 


1933 




251,914 




805 




2,049 


8.14 


1934 




219,857 




705 




1,985 


9.03 


Source: 


Motion Picture 


Almanac 


, "An 


aual 


Report of the Central Casting 



Corporation." 

a/ Total number of placements divided by total number of days, 
exclusive of Sundays. 

b/ Data for 1931 are for the first eleven months of the year. 

c/ Data for 1932 are for the first ten months of the year. 



Seasonal Variation in Employment 

Data on seasonal variation of employment in the production division 
of the Industry, which are presented for the years 1929 and 1933 in Table 
XIII, show relatively low employment in the first four months of each year. 
Production for the summer selling season begins around May, and -oroducers 
usually attempt to start work on special features at that time in order 
to further their sales efforts. In 1929 and 1933 employment was higher in 
the last six months of the year, with maximum employment occurring in 
September. 

Table XIII also shows that during the last four months of 1933, deploy- 
ment was generally about 15 oer cent higher than in 1929. This increase 
may be partially attributed to a decrease in hours and subsequent increa.se 
in the number of wage earners under the "President's Re-employment Agreement." 



E976 



-15- 

TABLE XIII 
Number of Wage Earners, "by lionths, 1929 and 1933 



1S29 



1933 



Month 



Number 



Index 
(Annual av- 
erage=100) 



Number 



Index 
(Annual av- 
er age= 100 ) 



January 

February 

March 

April 

May 

June 

July 

August 

September 

Cctober 

November 

December 

Average 



9,929 

9,694 

9,113 

9,560 

10,722 

10,805 

11,422 

11,616 

11,938 

11,506 

11,690 

11,407 

10,784 



92 

90 

84 

89 

99 

100 

106 

108 

111 

107 

108 

106 

100 



9,592 

9,567 

8,592 

8,547 

7,880 

9,212 

10,491 

11,821 

13,734 

13,627 

13,310 

12,947 

10,777 



89 

89 

80 

79 

73 

85 

97 

110 

127 

126 

124 

120 

100 



Source: Census of Manufactures , 1929 and 1933 , "Motion Pictures, 
not Inclxiding Projection in Theatres." 



Total Annual Wages 

Table XIV shows the total salaries and wages paid in 1929 and 1933 
as reported by the Census of Manufactures. Comparison of the years 1929 
and 1933 indicates that the reported total compensation decreased from 
$85,028,000 to $71,343,000, or 16 per cent, salaries decreased approximate- 
ly 12 per cent, and wages dropped about 26 per cent. The decline in total 
salaries was accompanied by a somewhat smaller decrease in the number of 
salaried emoloyees, but since the 26 per cent decline in total wages was 
accompanied by practically no change in the number of wage earners, there 
must have occurred marked cuts in wage rates and/or a considerable substi- 
tution of part-time for full-time workers. (See Table XI, above.) 

It may also be seen from Table XIV that salaried employees enjoyed 
a larger proportion of the total compensation in 1933 than in 1929. Salaries 
represented approximately 71 per cent of the total compensation in 1929 and 
about 74 per cent in 1933, while wages as a percentage of total compensation 
decreased from about 29 per cent to approximately 26 per cent. 



8976 



-16- 

TABLE XIV 
Total Annual Salaries and Wages, 1929 and 1933 



1929 1933 Per Cent 



_ n Kind Amount Per Cent Amount Per Cent XS 6 ?,*,., 

or Compensation / nnn , \ - m j. -, ^nnm > ^ n j. -\ 192y-iy<5<5 

(000's) oi Total (OOO's) of Total 

Total $85,328 100.0 $71,343 100.0 - 16.1 

Salaries 60,168 70.8 52,948 74.2 - 12.0 

Wages 24,860 29.2 16,395 25. S - 26.0 

Source: Census of Hanufactures, 1933 , "Motion Pictures, not Including 
Projection in Theatres." 



Annual Wages "by Principal States 

Table XV shows the annual wages paid in 1929 and 1933 in the three 
principal producing states. California acco\inted for 79 per cent of the 
total in 1929 and 34 per cent in 1933. New York declined in importance 
from 1929 to 1933, for it accounted for 15 per cent of the total in 1929 
"but only 11.5 per cent in 1933. 

TABLE XV 

Annual Wages, "by Three Principal States, 
1929 and 1933 











1929 






193 


o 


State 


Wage s 




Per Cent 


Wages 


Per Cent 








(OOO's) 




of 


Total 


(OOO's) 


of Total 


U. S. Total 






$24,860 






100. 


$18,395 


100.0 


California 






19,584 






78.8 


15,460 


84.0 


New York 






3,649 






14.7 


2,111 


11.5 


Illinois 






216 






.9 


185 


1.0 


Total, 3 Stat 


es 




23,449 






94.4 


17,756 


96.5 


Total, Other 


Stat 


,es 


1,411 






5.6 


639 


3.5 


Source: Census 


of 


Manufactures 


, 1929 


and 1933, 


"Motion Pic 


tures, 



Not Including Projection in Theatres." 



Salaries and Wages as a Per Cent of Cost of Production 

Table XVI shows the -oer cent of total cost of production spent for 
wages in 1929 and 1933. The 1929 wage cost of $24,860,000 dropped to 
$18,395,000 in 1933, "but as a per cent of total cost of production, it 

8976 



-17- 



increased fron 13.5 per cent in 1929 to 15.4 per cent in 1933, or a gain 
of 14 per cent. While the annual salaries paid in 1929 decreased from 
$60,168,000 to $52,948,000, the -oer cent of total cost of production which 
these figures represent rose fron 32.7 per cent in 1929 to 44.4 per cent 
in 1933 or a gain of 36 per cent. 

TABLE XVI 

Total Cost of Production, Annual Salaries and Annual Wages 

1929 and 1933 



Year 


Total Cost 

Production 

(000 's) 


of 


Total Salaries and Salaries 
Wages 


Wages 




Amount Per Cent of Amount Per Cent 
Total Cost (000's) of Total 

Cost 


Amount Per Cent o: 
(000' s) Total Cos' 


1929 
1933 


$184,102 
119,343 




$85,028 46.2 $60,168 32.7 
71,343 59.8 52,948 44.4 


$24,860 13.5 
18,395 15.4 


Source: 


Census of 


Manufactures, 1933, "Motion Pictures, Not 


Including 



Projection in Theatres". 



Wages of Extras 

Table XII above indicates the average wage per extras placed by the 
Central Casting Corporation. These figures were derived by dividing the 
total annual wages by the total number of placements. It must be understood 
that the average wage per placement as shown does not represent the average 
wage of all registered extras, but merely of those placed by this particular 
agency. 

Table XVII indicates the reduction between 1930 and 1933 in the nuiaber 
of extras, as placed by the Central Casting Corporation who received high 
daily wage rates. In the former year three-fourths of the placements re- 
ported in the table received $10.00 per day while in 1933 only one- third were 
placed at this rate. The number receiving daily wages of $5.00 increased 
from 24 per cent to 40 per cent while the number in the $3.00 wage class in- 
creased from .1 of one per cent in 1930 to 27 per cent in 1933. 



8976 



-IP- 



TA7-LE XVII 



Distribution of Placements of Extras by the Central Casting Corporation 
at Specified Daily Wage Hates, 1930 and 1933 a/ 





Liy 


Wage 






1930 








1933 


• 


Da 


Humber 




Per C 


ant 


lTui.iber b/ 


Per Cent 


Ra- 


fce 










of To 


bal 






of Total 


Total 




143, 


209 




100 


.0 


126, 


934 


100.0 


$3 


00 






206 






.1 


34, 


386 


27,0 


5 


00 




34 


075 




23 


.3 


51 


102 


40.3 


10 


00 




109 


128 




76 


.1 


41 


446 


32.7 



Source: Transcript of 1JRA Hearing, Liotion Picture Industry, September 12, 1933. 

a/ The number of placements does not represent the total number of 
extras placed, but covers only those placements made at the wage 
rates shown. 



U 



Estimated by -prorating the placements for the first half of 1933. 



Average Hourly T, r age Rat e 

There are no accurate average figures available which represent the 
composite hourly wage rate for all classes of wage earners in the production 
division of the Industry. The minimum hourly v/age rate specified in the Code 
for all classes of employees was 40 cents. The range in minimum rates for 
various classes of studio mechanics and laboratory workers was from 60 cents 
to $2.25 per hour. Reports of the Research and Planning Division of HRA 
and from the Division Administrator's Office have indicated that the Code 
rates represented an estimated increase of approximately 15 per cent over the 
1929 rates. It is believed that the increases applied mainly in the lower 
wage brackets, where labor is largely unorganized.. 



Average Ho\irs Worked per Week 

Table XVIII gives the prevailing hours of labor ~>er week in the pro- 
duction division of the Industry for the year 1929. Lore than 60 per cent 
of the total number of establishments worked their employees between 45 and 
48 hours per week. The total number of wage earners in this group amounted 
to 86 per cent of the total number of wage earners. Only .1 of one per cent 
of the wage earners worked 48 hours or more per week. 



8976 



-19- 



TABLE XVIII 



Ifeitier of Establishments and Number of Wage Earners, 
Classified by Number of Full-Tirae Hours Worked 
per Week, 1929 



Number of Hours 
per Week 



Es tabl i shrnent s 
Per Cent 
Number of Total 



Wage Earners 



Number 



Per Cent 
of Total 



Total 

40 hours or less 
40 - 45 hours 
45 - 48 hours 
48 hours or more 



135 



100.0 



5 


3.7 


41 


30.4 


82 


60.7 


7 


5.2 



10,742 



100.0 



100 


.9 


1,357 


12.6 


9,278 


86.4 


7 


.1 



Source: Conroiled from Census of Manufactures, 1929, Vol. I, Table VI , 
"Liotion Pictures, not Including Projection in Theatres". 



Child Labor 

Child labor is not an important problem in the Industry. In 1930, 
2,213 helpers in motion picture production were reported by the occupation 
statistics of the Census of Population, but only 93 of these helpers were 
between the ages of 10 and 17 years. It must be borne in mind that these 
data refer not to the number actually emroloyed, but rather to the number 
reporting themselves as belonging, "by occupation, to this Industry. 

Employees by Principal States 

Total Em-ployees . - Table XIX shows the average annual number of salaried 

employees and wage earners by three principal states for 1929 and 1933. There 

was an increase in California from 77.4 per cent of the total in 1929 to 86.2 

per cent in 1933, a ain of 11 per cent. New York showed a large decrease, 

from 14.5 per cent of the total to 9.2 per cent, or a loss of 36 per cent. 

These two states alone employed over 90 per cent of the workers in each of 
these years. 

TABLE XIX 
Average Annual Number of Employees, by Three Principal 

States, 1929 and 1933 a/ 



L929 



193: 



State 



Number 



Per Cent 
of Total 



Number 



Per Cent 
of Total 



U. S. Total 



California 
New York 
Illinois 



Total, 3 States 
Total, Other States 



19,602 

15,167 

2,250 

202 

15,219 
1,323 



100. a 

77.4 

14.5 

1.0 

92.9 
7.1 



19,037 

16,417 

1 , 748 

162 

19,037 
710 



100.0 

86.2 

9.2 

.9 

96.3 
3.7 



Source ; 



a/ 
5976 



Census of uanufac tares , 1929 and 1933 , "Liotion pictures, 
not Including Projection in Theatres". 
Includes wage earners and salaried employees. 



-30- 

Wage Earners. - Table XX shows wage earners, "by principal states, 
for 192S and 1933. In 1929 California accounted for 74.6 per cent of total 
wage earners; in 1933, 83.7 per cent, representing a gain of 12 per cent. 
New York again showed a large decline fron 15.7 per cent of the total to 
10.7 per cent, or a loss of about one-third. These two states alone employ- 
ed more than 90 -per cent of the wage earners in 1929 and 1933. 



TABLE XX 

Average Animal llumber of Wage Earners, by Three 
Principal States, 1929 and 1933 



State 



Number of 
Wage Earners 



1929 



1933 



Per Cent Number of Per Cent 
of Total Wage Earners of Total 



U. S. Total 



10,784 



100.0 



10,777 



100.0 



California 
New York 
Illinois 



8,052 

1,695 

82 



74.6 
15.7 

«8 



9,022 

1,149 

108 



83.7 

10.7 

1.0 



Total, 3 States 9,839 
Total Other States 955 



91.1 
8.9 



10,279 
498 



95.4 
4.6 



Source: C ensus of Manufactures , 1929 and 1935 , "Motion Pictures, 
not Including Projection in Theatres." 



8976 



-21- 

PART II: PRODUCTION 

Chap t e r III. Mat e rial s 

Cost of principal Materials Used 

The principal material used in the production division of the 
Industry is raw film, purchased from the Eastman Kodak Company, the 
Dupont Film Manufacturing Corporation, and from a few foreign countries, 
principally Germany, France, and England. 

Table XXI shows the total cost of materials, fuel, and purchased 
electric energy used by the production division of the Industry in 1929, 
1931, and 1935. This cost averaged abotit 21 per cent of the total cost 
of production in each of the year?, shown. 

TABLE XXI 

Total Cost of Production and Cost of Materials, 
Fuel, and purchased Electric Energy 



Year 



Total Cost of 
Production 
(000's) 



Cost of Materials, £/ Fuel, 
and Purchased Electric Energy 

Amount Per Cent of 
(000' s) Total Cost 



1929 
1931 
1933 



$184,102 

151,436 
119,343 



$38,441 
32,222 
26,153 



20.9 
20.9 

21.9 



Source; Census of ^Manufactures, 1933 , "Motion Pictures, not Including 
Projection in Theatres." 

a/ Materials consist of miscellaneous studio supplies and 

containers for films. 

Source of Equipment and Supplies 

Table XXII snows the number of establishments producing photographic 
apparatus and supplies by states for 1929, 1931, and 1933. It must be 
understood that these data pertain to the entire production of such material 
and not just to that used by the Motion Picture Industry. 



8976 



-22- 
TA3LE XXII 

NumDer of Establishments Producing photographic 
Apparatus and Supplies, "by principal States 



States 



1929 



1931 



1933 



U. S. Total 

California 

Illinois 

Indiana 

Massachusetts 

iiichigan 

Minnesota 

Ilissouri 

Hew York 

Ohio 

Pennsylvania 

Total, 10 States 



115 



110 



84 



11 


8 


5 


21 


24 


17 


3 


4 


3 


4 


3 




3 


2 


3 


4 


3 




8 


7 


5 


35 


32 




5 


3 


3 


14 


14 


7 


108 


100 


43 


7 


10 


41 



sJ 
a/ 

a/ 



Source: Census of Manufactures , 1929 , 1931 , and 1933, "photographic 
Apparatus and Supplies." Census data do not include estab- 
lishments having an annual production of less than $5,000. 

a/ "~ot reported separately in 1933. 



8976 



- L'O - 



PART II: PI10DUCTI01" 
Chapter IV. Unfair Trade Practices 

Enticement of Talent and Activities of Agents 

The problem of salaries of stars and the activities of agents are the 
only two significant trade practice problems which nay he clearly allocated 
to the production division of the Industry. 

This division centers about a relatively snail group of personalities 
— such as actors, directors, writers, and technicians — who have becone 
known through advertising, publicity, and other methods. The renoval of a 
personality often seriously disrupted production until a suitable replace- 
ment could be found or developed. 

Hew companies usually found it more profitable to employ talent 
already developed and secured such individuals by offers of higher salaries. 
Long-tern contracts did not solve the problem of "star-raiding, " because 
competing exhibitors, desirous of acquiring the services of such talent, 
induced the breaking of existing contracts. lioreover, offers of higher 
salaries from competitors unquestionably produced psychological effects 
which tended to decrease the quality of the stars' work and in extreme 
cases rendered them worthless. Complete contentment necessary for quality 
work was usually reestablished only when the employer equalled the com- 
petitive offer which, in some cases was not definite enough properly to 
be called an offer. 



8976 



- 24 ~ 
PART II: PHODUCTIOE 

Chanter V. General Information 



EiCDOi-ts 



Table IIXIII shows the erqports of total linear feet of film for the 
years 19.C9 through 1934. ilo figures are available on the value of such 
films other than the declared value, which is "based largely on quantity 
rather than on exhibition value. 



TABLE XXIII 

Ercoorts of I lotion Picture Films, 1929-1934 vj 
( In thousands ) 



Total Linear Feet 



1929 282,213 

1930 274,251 

1931 199,690 

1932 160,773 

1933 164, 537 

1934 194,434 



Source: h ot ion Picture Almanac ; as prepared "by the Bureau of Poreign 
and Donestic Commerce. 

a/ Includes negative and positive sound and silent films. 

Advertis ing 

The i.fotion Picture Almanac has estimated that the Industry as a 
whole spends 070,000,000 annually for advertising in newspaper, magazines, 
billboards, radio, and other media, ho fig-ores are available relative to 
the amount spent by the producers. 

Productive Capacity 

Ho adequate measures of the- productive capacity of the Industry 
exist. Production schedules are determined largely by the demand from 
the exhibition division. 

Trade Associations 

ii otion Picture Producers and Distributors of America. Inc. (I PPBA). - 
This organization, of which Will H. Hays is President, was formed in 1922. 
It is composed of more than twenty companies, including the so-called 
"Big 8" producers and distributors. It furnishes information on all Industry 
8976 



— . D — 

matters and serves as a coordinating agency in industrial relationships 
and functions as interpreter of problems and policies of public interest. 
It also represents the Industry in connection with all sorts of "anti" 
legislative measures which are a constantly recurring plague to the Indus- 
try. Its members fine it an economical means of gathering useful infor- 
mation, and of securing necessary services and facilities. 

The Academy of notion Pictu.- e Arts .and_ Sciences . - This organization 
which is a guild-like association of the production branch of the Industry> 
was organized in 1927 to deal with production problems. The Academy is 
controlled and financed "by the producers. It has provided methods of 
adjustment and reconciliation among producers as well as "between producers 
and their various classes of employees. It has attempted to "bring about 
industry-wide technical coordination by educational campaigns designed to 
reach all concerned therein, and has served as a clearing house for the 
collection of technical data in production. Its public-relations efforts 
have been focused towards contacting survey experts, special organizations, 
and manufacturing and research concerns, rather than the press and the 
public. 

Trade Union Activity 

The Actor's Equity Association which is chartered by the Associated 
Actors and Artists of America and affiliated with the American Federation 
of Labor has jurisdiction in the motion picture field. Its offices are 
located in Hew York, Chicago and Hollywood. In 1933, the Association had 
1,418 members. These consist of both actors and actresses who had received 
screen credit (i.e. listing in cast of pictures) or professional recognition. 



3976 



-26- 

PART III: DISTRIBUTION 

Chroter I. The Fature of the Division 

History and Scope of Division 

Origin of Film Exchange. - During the Industry's fornative stages, films 
were purchase d outright from producers and exhibited until worn out or until 
they ceased to be nrofi table. This sjrsten later gave way to a nore efficient 
and econcnical r.ethod of distribution known as the film exchange, which was 
introduced in 1502 by Harry J. Miles of San Francisco. This system originated 
in the functions of maintaining film stocks, which requires the suoervising 
and physical transportation of film, and the inspection and repair of damaged 
film. The film exchange is in essence a licensing system whereby the films 
remain the property of the exchange, and the exhibitor merely obtains a license 
to show a particular film in a designated theatre for a stipulated period of 
time, at a charge equal to about half the purchase price. 

Developments in Film Distribution. - In the early stages, positive films 
were sold by length on a flat footage basis regardless of the individual pic- 
ture, actor, or director. IIo consideration was given to the number of "Dicture 
leased, character and size of theatre, and the population of the town or cit Tr . 
There were no distinctions made between first or subsequent runs. 

The distributors developed what was known as the "program system," supply- 
ing the exhibitor with a constant flow of two or three-real pictures, two or 
three time per week, The public appreciation for better-quality films gave 
rise to the "star" system, and demands for longer programs featuring such star 
Pickford, Hart, and Sermett. • The exploitation of stars and concomitant effort' 
to attain quality by purchases of e:rpensive scenarios and production extrava- 
ganda brought on the full-length feature, absorbing the greater part of the 
entertainment program. Rising production costs led to an upward revision of 
leasing charges and eventually to the general adoption of a policy of block 
booking by the distributors. 

Another development was the construction of theatres exclusively for the 
showing of notion pictures, displacing arcades, shooting galleries, and empty 
stores as well as legitimate and vaudeville theatres. 

~ith the development of the "star" and the "feature" system which gave th 
pictures individuality, and the construction of theatres exclusively for m.otio - 
pictures which resulted in more efficient and economical presentation, distri- 
butors began to vary the prices of pictures according to their estimated value 
Pictures were no longer sold at random on a flat footage basis. T/idcr geor 
graphical distribution came to be considered necessary since it 'was found that 
first showings usually exhausted considerable e:diibition value of a picture 
in localized areas. Thus nation-wide facilities for merchandising, rehandlin 
and servicing a product, which varied in price and quality, became necessary. 

National and "State Right" Distribution. - The first effort to attain 
effective national distribution was made by the formation in 1910 of the G-ener- 
al Film Company, controlled '^y the hotion Picture Patents Company. Independent 
producers, who were not permitted to use these facilities, distributed chiefly 
through independent distributor:-;. These distributors, who were scattered 

8976 



-27- 

throu hout the country, operated on a "state right" basis. The state right ex- 
changes bought films outright or "ore conmonly leased films with the exclusive 
right of redistributing then to exhibitors within certain geographical areas. 

Most state right distributors were also exhibitors '/hose original purposes 
'■ere to obtain films for their own theatres, their interest in complete distri- 
bution being often less than casual. Moreover, since no producer could supply 
sufficient product to furnish the entire requirements of the average exhibitor, 
state right distributors were naturally interested in obtaining films from more 
than one producer, and this diversity of interest usually resulted in mediocre 
sales, service and maintenance efforts from the point of viev; of the producers. 
Aggressive selling efforts necessary for intensive distribution were lacking* 
Rentals received fron films were not believed to be commensurate with their 
earning power. The producer, on the other hand, could not set prices for the 
distributors' subleasing of film but received what the latter would pay for it. 
He usually found out a nic tore's value in a given territory after it was too 
late to capitalize on it. 

Producers as Film Distributors . - Unlike conditions in the manufacturing 
industries, the cost of the production of a notion picture has usually little 
direct relation to its sales value. Consequently the producer soon realized 
the gre; t importance of obtaining proper control of distribution. Integration 
with production was inevitable since producers were olaced in the position of 
having the value of their product determined to a. large extent by distributors. 
Consequent 1;-, producers with sufficient financial resources generally pursued 
the policy of obtaining control of distribution. 

Present-Day Film Distribution . - The actual process of distribution in- 
volves the licensing of the exhibitor to show copy-righted film, assigning play- 
ing dates, physical distribution of films to theatres, and the collection of 
accounts. Advertising material for the pictures to be shown is usually sold in 
conjunction with the licensing of films. Exchanges are located in key cities 
throughout the United States. Hie 50 to 250 positive prints made iron the ex- 
posed negative are distributed to first-run, second-run, and subsequent-run 
theatres in proper order and point of tine according to contractual specifica- 
tions. Rental variations extend from as low as $5 per day to several thousand 
dollar ! i reek, while percentage agreements may call for 10 per cent to 50 
per cent of the box office receipts. Combinations of both forms are not un- 
common. Another arrangement sometimes used allows the exhibitor a sum to de- 
fray current operating exoenses and the surplus is then split according to 
agreement. The rental charge is governed primarily by the exhibitor'-; ability 
to pay, which, in turn, depends upon a variety of factors, chief among which is 
the estimated box-office receipts, based upon previous experiences with the 
star and cast in sok comparable vehicle. Other factors are seating capacity, 
number of performances per day, price of admission, character of accompanying 
presentation, prestige of the theatre, and efforts made for exploitation. 

All the "maj or" companies maintain distributing establishments in "key" 
centers throughout the United States. Snail independent producers often dis- 
tribute their "films through the facilities of the large producer-distributors. 

Total Ilumber of Exchange Establishments 

Tie total number of exchange establishments in 1929 was reported by the 
Census as 555. (See Table XXIV, Below). 
8976 



N umber of Ikxh: na'e Establishments "b:~ P r incipal States 

Table XXIV shows the distribution of the 533 exchanges by si': principal 
states in 1929, Fe-j York accounted for :ilnost 1G ->er cent of the total nunber, 
California ant". Penns2 r lvania each had nore than 6 per cent. Ohio, Massachusetts 
and Illinois follow in the order mentioned, each having about 4 "oer cent of the 
total nunber of exchanges within their borders. The six states accounted for 
42 -oer cent of the total nunber for the country. 

TABLE XXI V 

Number of Exchanges and Volume of Business Handled, by 

Six Principal States, 1929 



Sxchar/res Volurie of Business , 

State Number Per Cent An unt Per Cent 

of Total (000's) of Total 



6.8 


16,057 


7.3 


3.9 


14,962 


6.S 


4.3 


13,283 


6.0 


15.9 


51,581 


23.4 


4.9 


13,326 


6.0 


6.4 


25,097 


11.4 


42.2 


134,306 


50.9 


57.8 


86,299 


39,1 



U. S. Total 533 100.0 $220,605 100.0 

California 36 

Illinois 21 

lia s sachus e 1 1 s 23 

New York 85 a/ 

Onio 26 

Pennsylvania 34 

Total, 6 states 225 

Total, Other States 308 

Source: Censu s of Distribution, 1929 "iiotion Picture Films" (Trade Series, 
Distribution No. 7-201). 

a/ Includes 14 export exchanges. 

Voluue of Business b" Principal States 

Table XXIV, above also shows the volune of business done by these six 
principal states in 1929. New York, which had the largest number of exchanges 
accounted for nore than 23 per cent of the total exchange business (including 
exports "oy the 14 New York City exchanges which engaged in export business 
exclusively.) Pennsylvania was the second nost important state: in 1929, ac- 
counting for about 11 per cent of tiie total business; California accounted foi 
7 per cent of the bush--,..; and Illinois, Massachusetts, and Ohio, averaged a 
little nore than- 6 per cent each. 

It is noteworthy that thesi si:: states containing "less than 38 per cent 
of total Population of United' States accounted for more than 60 per cent of tin 
total volune of the notion -oicture distributing business. 



8976 



-29- 

Il umber of Establishments by Tyoe of Exchang e 

ulth the development of large chain theatres, the vertical integration of 
producers with theatre chains, and the growing financial strength of producing 
conaanies, the independent distributor has become less significant. Producers 
nor either associate with existing distributors or nore often establish their 
own distinct exchanges. In 1929, recording to Trble XXV, producers exchanges 
totalled 444 in number or 83 per cent of the total. Ucxt in iEiportar^.e to the 
exchanges owned ''oy producers were the inde pendent" exchanges , comprising 14 per 
cent of the total. The export exchanges numbered 14, or less than 3 per cent 
of the aggregate, and 4 of these were owned by producers. 

TABLE XXV 

lumber of Exchanges, and Ilunber of Emmlo^ees, by 
Principal Types of Exchanges, 1929 



T^rpe of Exchange 



I ten Tpt_uL pr oducer _ Independent Export 

Efunbcr Per Cent Euriber per Cent Totcl Per Cent Total Per Cent 

of Total of Total Amount of Total Anour.t of Total 

llunbei of 
Exchanges 533 100.0 444 33.3 75 14.1 14 2.6 

Number of 
Employees 9342 100.0 8797 94.2 393 4.2 152 1.6 

Source: Census, o f Distribution. 1929, "'notion Picture Films" (Trade Series, 
Distribution No. CT-201.) 

Volume of Business b" Tye o f Exchange 

Table XTVI shows that in 1929 the -reducers exchanges did most of the 
business, for they accounted for 95 re: cent of the total. Furthermore, the 
4 export exchanges ovnaed by the latter contributed an additional $5,318,000 
worth of business or almost 2.5 per cent of the total volume, 

llext in importance to the exchanges owned by producers were the exoort 
exchanges which carried on a business amounting to 3 ;oer cent, 2-j per cent of 
which, as mentioned above, was done by the 4 exchanges owned by the producers. 
The independents accounted for only about 2 per cent of the total. 



8976 



-30- 





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S37& 



-31- 

PART III; DISTRIBUTION 

Chapter II. Labor Statistics 

Average Annual Number of Employees 

Census data as presented in Table XXVII place the average annual em- 
ployment of all exchanges at 9,342 in 1929. Of these, about 20 per cent 
were executives or salesmen. 

Total Number of Employees by Types of Exchanges 

As shovm in Table XXV, above, producers' exchanges reported 8,797, 
or O'i per cent of the total number of employees. Independent exchanges 
employed 4 per cent, and the export group accounted for less than 2 per 
cent of the total. 

Average Annual Payroll s 

According to Table XXVII, the average annual payroll covering all 
employees was $17,978,000 in 1929.. Executives, who constituted less than 
4 per cent of total employees, received almost 14 per cent, while the 
salesmen, amounting to 17 per cent of the total number, received 35 per cent 
of the total payroll. The remaining employees, who constituted almost 80 
per cent of the total employees, received 51 per cent of the total payroll, 

TABLE XXVII 

Average Annual Number of Employees and Average Annual 
Payrolls, 1929 



Kind of 
Employee 



Employees 



Number 



Per Cent 
of Total 



Payrolls 



Amount 
(OOO's) 



Per Cent 
of Total 



Total 9,342 100.0 

Executives 335 3.6 

Salesmen 1,562 16.7 

Other Employees 7,445 79.7 



$17,978 

2,468 
6 , 253 

9,257 



100.0 

13.7 

34.8 

51.5 



Source: Census of Distribution, 1929 , "Motion Picture Films" (Trade 
Series, Distribution No. W-201). 

Per Cent Salaries and Wages are of Total Expense 

In 1929 salaries and wages constituted the largest single item of 
expense, amounting to about one-half of total expenses for all types of 
exchanges. In both the producer and independent type of exchange, total 
salaries and wages accounted for about one-half the total expenses, but 
in the export exchanges, this percentage was somewhat less. (See Table 
XXVI, above.) 



8976 



-32- 

PART III: DISTRIBUTION 

Chapter III. Unfair Trade Practices 

Block Booking and Blind Booking . 

"Block "booking" and "blind booking", which involve the purchase of films 
sight unseen, has long been existent in the Industry. Producer-distributors 
have maintained that this method is economically sound, inasmuch as it assures 
exhibitors a continuous supply of films while at the same time stabilizing 
-production. Individual selections, it has been claimed, would result in 
prohibitive license fees, since all pictures are not box-office successes. 
The impossibility of pre- judging box-office attractions has also been pointed 
out. 

The opponents of block booking and blind booking, who are mostly indepen- 
dents, have claimed that these practices have forced them to show undesirable 
pictures These independents have had the support of social, religious, and 
educational organizations which have realized that independents would probably 
be ruined financially if they were to refrain from showing, yet be forced to 
pay, for all unendorsed pictures. 

The "right to buy" controversy appears to have been concerned primarily 
with preferential master contracts existing between producer-exhibitors. 
It has bean alleged by independents that certain producer-exhibitors having 
competition in a specified area are given unfair advantage by being permitted 
to purchase films of other producer-exhibitors at lower prices than those 
at which the former's competitors are permitted to buy — if they are permitted 
to bay at all. In return the latter producer- exhibitors received this low 
rate preference from the former when they have competition from independents 
in their areas. 

Independents who have thus been unable to compete with the large circuit 
and producer-affiliated theatres for the purchase of first-run pictures 
have been at a further disadvantage because of the fact that these producer- 
affiliated theatres have exchanged their playing time among themselves. This 
has resulted in forcing the independents to show subsequent run pictures, 

Hhile exhibitors have sought the "right to buy" first runs irrespective 
of the character of theatre, location, size, quality of accompanying presen- 
tations, or prestige and standing enjoyed in the community, producer-distrib- 
utors have claimed the "right to choose" their customers. They have sought 
to bring out their features under the most favorable auspices in theatres 
having established reputations and the best and finest quality presentation 
in the country. They claimed the right to determine the factors that go into 
a bargain, such as the financial responsibility of the buyer. 

It is generally understood ^y the independents that the "right to choose" 
customers, provided no collusion exists, has been found justified by the 
Federal Trc.de Commission, as shown by the following quotation from federal 
Trade Conmi -ion versus Paramount Famous Players Corporation, 57 Ped, 152: 

"A distributor of films by lease or sale has the 
right to select his own customers and sell such 

8976 



-33- 

quantities at given prices, or to refuse to sell at all 
to any particular person for reasons of his own. 
Federal Trade Commission versus Raymond Bros. -Clark Co., 
263 U. S., 565; U. S. versus Colgate, 250 U. S., 30; 
Great A L P versus Cream O'^Theat, 227 Fed. 46 (CCA. 2)." 

Forcing Short Subjects with Feature s 

Forcing the purchase of short sxibjects as a condition for contracting 
of features has "been a long- established practice in the Industry. Exhibitors 
have claimed that in some instances requirements were exacted which forced 
them to "buy more shorts than the:" could reasonably he expected to show. Dis- 
tributors have contended that this was a long-established selling method and 
that their investment was based unon the "tying in" of the sale of short 
subjects. They have claimed further that the cost of features was directly 
related to the total sales made and that interference with the usual -practice 
would result in an increase in the cost of features. Distributors claimed 
moreover, that they were providing the exhibitors with a well-balanced program. 

Overbuying 

It has been generally admitted that certain financially well- entrenched 
exhibitors have sometimes contracted for more motion pictures than they 
reasonably required for exhibition in their own theatres with the intent of 
depriving a competing exhibitor from securing sufficient pictures for exhibi- 
tion in his theatre. This practice has been generally recognized by the 
Industry as unfair. 



8S76 



PA2? III: DISTRIBUTIOI! 
Chanter IV. General Information 



Trade Association Activity 

Film Boards of Trade, which constitute local distributor trade 
association, were established in 1922 as the field organization of the 
Motion Picture Producers and Distributors of America. These hoards exist 
in 32 key city exchange centers. 

The Film Eoards keep sales managers advised of changes in theatre 
ownership. During the transition period from the silent to the sound 
pictures, the Boards supplied distributors with, information relative to 
the equipment used "by various exhibitors. The Boards also locate lost 
and stolen films, check up on "nissouts," determine responsibility for 
film mutilations and delated returns of prints, and attend to various 
other routine matters in the interest of their members. 



8976 



-33* 

PART IV: EXHIBITION 

Chapter I. The Nature of the Division 

History and Description of Division 

The Development of Motion Pir.ture Theatres . - The exibition division of the 
Motion Picture Industry corresponds to the retail branch of manufacturing in- 
dustries. It started with the "store-room" show, composed of short-reel en- 
tertainment with 5 cents as an admission charge. The seating capacity of 
these "store-rooms" was anywhere from 100 to 200. At a later date the seating 
capacity at "store-room" shows was enlarged from 200 to 300, and the enter- 
tainment program was lengthened. The priee of admission was then raised to 
10 cents. 

Construction of buildings in great numbers, for the exclusive purpose of 
showing moving pictures soon followed. The seating capacities of these movie 
houses ranged from 300 to 600, and again the entertainment was lengthened and 
the price of admission increased, this time to 20 cents. 

At this point, promoters entered into the business and adopted various 
methods of obtaining capital with which to build lavish theatres, some of which 
had seating capacities ranging up to 5,000 seats. The building of these large 
"de luxe" theatres on a grand scale required substantial public financing, 
which meant that the promoters had to turn to bond issues and eventually to 
Wall Street for the necessary financing. 

The Development of th e Entertainment Program . - The construction of de 
luxe theatres required more lavish motion pictures in order to operate the 
picture houses profitably, and it thus became necessary for theatre omers from 
different parts of the country to combine into operating units so as to obtain 
high-class entertainment to which they hoped to attract capacity audiences. 
As the size of the theatres was increased, programs were expanded to include 
additional entertainment, such as '•presentations" consisting of symphony 
orchestras, ballets, and headline vaudeville acts. At the same time, the price 
of admission was increased to offset the added expense involved. 

Entrance of Producers into the Exhibition Division . - The motion picture 
theatre owners almost from the beginning, formed cooperative buying groups in 
order to buy picture films for their theatres and to control if possible, 
prices and playing time. The producers were sometimes required to sell at 
prices which these groups were willing to pay or else not sell at all. Finally 
to meet this situation, producers of motion pictures entered into the exhibi- 
tion field. While the great majority of the theatres are operated b~- indivi- 
duals and by independent chains a large proportion of the most important 
theatres is controlled by the producer-distributors. 

Classes of Exhibitors . - The exhibition division of the Industry today is 
composed of three classes of exhibitors; namely affiliated, unaffiliated, and 
independent. Affilitated exhibitors include those operating a number of 
theatres, commonly called circuits, which are owned or controlled by the pro- 
ducer-distributors. Unaffiliated exhibitors include those who operate a cir- 
cuit of theatres but have no connection with producer-distributors. The re- 
maining exhibitors are called independents. (See Table XXXI, below.) 

8976 



-36- 



Total Number of Theatres . 

As shown in Table XXVIII, the Film Daily Yearbook reooited 16,885 motion 
picture theatres in the United States in 1934. 

Number of Theatres by Principal States 

While production of motion pictures is highly concentrated in a feu states, 
the market for films, which consists of all exhibiting theatres in the United 
States, is widely scattered. Table XXVIII indicates the distribution of 
theatres by principal states in 1934. The state of New York was the most im- 
portant in 1934, for it reported 9 per cent of the total number of theatres. 
Pennsylvania and Ohio followed in close order having 6.6 per cent and 5.7 per 
cent respectively. California, which is the principal producing state, con- 
tained about 5 per cent of all theatres. 

TABLE XXVIII 

Number of Motion Picture Theatres, by Principal 

States, 1934 



State Number of Theatres Per Cent of Total 

U. S. Total a/ 16,885 100.0 

California 375 5.2 

Illinois 965 5.7 

Indiana 573 3.4 

Iowa 458 2.7 

Kentucky 420 2.5 

Massachusetts 499 3.0 

Michigan 570 3.4 

Minnesota 421 2.5 

Missouri 523 3.1 

New Jersey 427 2.5 

New York 1,539 9.1 

Ohio 985 5.8 

Pennsylvania 1,121 6.6 

Texas 930 5.5 

Wisconsin 484 2.9 

Total, 15 States 10,790 63.9 

Total, Other States 6,095 36.1 

Source; Film Daily Yearbook of Motion Pictures, 1934 . 

a/ This total figure does not agree with the total given by the Motion 

Picture Producers and Distributor;: of America which report 18,371 as 
shown in Table XXXI below. 



8976 



-37- 

N umber of Theatres Oven and Close d 

Table XXIX shows the total number of theatres from 1929 through 1935, and 
from 1932 on; the data are broken down to show the number open and closed. It 
will be noted that in 1352, 4,627 movie houses out of a total of 20,100, or al- 
most 25 per cent, rere closed. However, only 737, or 17 per cent, of those 
closed ' 7 ere sound-equipped theatres. In 1933, out cf a total of 13,311 
theatres, 5,895, or about 30 per cent, were closed, of which 2,170, or almost 
37 per cent, were equipped with sound. The over-e:toansion in the number of 
theatres, their construction in unsuitable locations as real e state promo- 
tions, anci the attendance by the public at the finer bheatres only, resulted 
in the closing of a large number that had become obsolete or should never have 
been built. 

Although the proportion of closed theatres decreased from 1332 to 1935, 
the relative number of closed sound-e qui raped theatres had increased. However, 
it roust be borne in mine" that the proportion of sound-equipped movie houses to 
the total has been increasing since 1929, until in 1935 these houses constitu- 
ted almost SO per cent of all theatres. 

Seating; Capacity 

Table XXX shows the total number of seats in motion picture theatres 
during the years 1931 through 1935. Since 1933, the number has remained re- 
latively constant at slightly more than 11 million. 

The potential seating capacity of the Industry may be obtained by com- 
bining with the actual number of seats the average number of shows per day. 
Since some theatres give at least two shows per day, and most of them probably 
three or four shows per day, the uotential daily capacity would be at least 
two or three times the actual number of seats. 



]376 



-38- 



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8976 



.39- 



TARLE XXX 



Total Number of Seats in Motion Picture 
Theatres, 1931-1935 a/ 



Date Number of Seats b/ 



1931 13,143,761 

1932 10,767,000 c/ 

1933 11,161,153 

1934 11,028,950 

1935 11,132,595 



Source; Data for 1231, 1932, and 193/. from Motion 
Picture Alr.gnac, 1953 , p. 6; for 1932 as 
indicated in footnote c / ; for 1933, 1934, 
and 1935 from Film Board of Trade Reports . 

a/ As of January 1, each year; includes open 
and closed theatres. 

b/ It -'ill "be noted that the total number of 
seats is not identical r;ith those given by 
the source cited in Table XXXII, below. 

c/ Standard Statistics Company, Standard Trade 

and Securitie s, "Theatres and Motion Pictures," 
Vol. 75, No. 22 (February 20, 1935), p. TE-46. 

Number of Theatres and Number of Seats Classified bv Type of Ownership 

Although, as shorn in Table XXXI, affiliated circuits owned on an average 
about 11 per cent of tne total number of theatres during the years 1933-1935, 
they owned, or controlled about 25 per cent of the total number of seats, as 
shown in Table XXXII. This indicates that this group owned large theatres. 
The unaffiliated circuits average about 16 per cent of the number of theatres, 
but they represent approximately 23 per cent of the total seating capacity. 
Theatres of large seating capacity are also found among the unaffiliated cir- 
cuits, but independents, who own or control approximately 72 per cent of the 
total number of theatres, account for a little more than 50 per cent of the 
total seating capacity. 

This is significant because of the competition within the Industry between 
these three groups. The unaffiliated circuits are usually well entrenched and. 
in a powerful bargaining position in the purchase of films. The independents, 
who are widely scattered, are usually in a relatively -ooor bargaining position 
when their theatres happen to be located in close proximity to the affiliated 
or unaffiliated circuits. Independents located in non-competitive areas, how- 
ever, are often in good bargaining positions in the purchase of films. 



8976 



-40- 

TABLE XXXI 

Number of Motion Picture Theatres, Classified by Type 
of Ownership, 1933-1935 





To tal 


Circuit ' 
Affiliated 
Num- Per Cent 
her of Total 


rhea.tres 
TJnaffi 
Num- 
ber 


liated 
Per Cent 
of Total 


Inde-oenden 
Number 


t Theatres 


Year 


Number 


Per Cent 
of Total 


Per Cent 
of Total 


1933 
1934 
1935 


19,251 

IS , 371 
1 ,263 


100.0 
100.0 

100.0 


2,266 
1,954 
2,073 


11.8 
10.6 
11.4 


3,189 
2,346 
3,070 


16.6 
15.5 
16.8 


13,796 
13,571 
13,120 


71.6 
73.9 
71.8 



Source: Motion Picture Producers and Distributors of America, Inc., as of 
January 1, each year. 

TABLE XXXII 

Number of Motion Picture Theatre Seats, Classified by Type 
of Ownership, 1933-1935 



Year Total ^ Circuit Independent 

Number Per Cent Affiliated Unaffiliated Num- per Cent 

(OQO's) of Total Theatres Theatres ber of Total 

Num- Per Cent Num- Per Cent (000' s) 
ber of Total ber of Total 
(000' s) (000' s) 

1933 11,086 100.0 2,938 2S.5 2,562 23.1 5,586 50.4 

1934 11,029 100.0 2,537 23.5 2,493 22.6 5,949 53.9 

1935 11,032 100.0 2,719 24.4 2,539 22.8 5,874 52.8 



Source: Motion Picture Producers and Distributors of America, Inc., as of 
January 1, each year. 

a/ It -/ill be noted that the total numbers of seats is not identical with 

those given by the source cited in Table XXX above. 

Total Theatre Recej-nts and Attendance 

The total estimated box-office receipts from 1929 through 1934, inclusive, 
are shown in Table XXXIII. Receipts fell from $1,100,000,000 in 1929 and 1930 
to approximately half this amount in 1933. While average estimated admission 
prices fell from 30 cents in 1929 to 28 cents in 1930, the increased attendance 
was sufficient to keep the total estimated receipts at the 1929 level, namely, 
$1,100,000,000. The estimated average admission price fell from 30 cents in 
1929 to 20 cents in 1933 and 1934, or a dron of one-third. 

8976 



-CI- 
TABLE XXXIII 

Estimated Total Box-Office Receipts, Average Admission Price, 
and Attendance, 1929-1934 



Year Total Receipts Average Attendance a/ 

(in millions) Admission (in millions) 



Price 



1929 $1,100 .30 3,660 

1930 1,100 .28 3,920 

1931 880 .24 3,330 

1932 625 .22 2,840 

1933 560 .20 2,800 

1934 650 .20 3,250 



Source; Standard Statistics Company, Standard Tra.'.e and Securities , "Theatres 
and Motion Pictures," Vol. 75, No. 22 (February 20, 1935), p. TH-46. 

a/ These figures are not consistent with the average weekly attendance 

figures given by the Film Daily Year Book, 1935 , presumably because 
the latter source has a more complete coverage than that of the 
Standard Statistics Company. 

Theatre Receipts by principal States 

Receipts by ten principal states are shown below in Chapter II, Table 
XXXVIII, as reported by the Census of American 3usiness for the year 1933. 
New York State accounted for 23 per cent of the total receipts reported in 

1933, although, as shown in Table XXVIII, above, it contained only about 9 
per cent of the total number of theatres in 1934. The ten principal states 
together accounted for more than 70 per cent of the total receipts in 1933. 

Competition with Qtner Industries 

Aside from competition between various types of theatres within the In- 
dustry, motion picture theatres compete with radio broadcasting, sports, and 
other amusements, such as the burlesque industry and the legitimate theatre. 
Moreover, there exists a type of so-called non- theatrical convoetition wherein 
.schools, churches, lodges, and sometimes business concerns, display films to 
the disadvantage of local exhibitors. No figures are available as to the ex- 
tent of competition from these sources. 

Expenditures for Theatre Construction 

Table XXXIV shows the rapid decrease in annual theatre construction from 
$163,559,000 in 1929 to $13,500,000 for the 16 months covering 1933 and the 
first 4 months of 1934. The figure of $20,000,000 for the 11 months from May, 

1934, to April, 1935, indicates the beginning of more activity in theatre con- 
struction. The biggest decline came in 1932 when construction dropped 51 per 
cent. 

8976 



-42- 

IABLS XXXIV 

Annual Expenditure in Theatre Construction, 
1929-March, 1935 

























Per Cent 


Year 


















Arao\int 


Change from 




















(COO' 


s) 


Preceding 
Period 


1929 


















$163 


559 


, 


1930 


















97 


580 


-40.3 


1931 


















45 


000 


-55.9 


1932 


















17 


500 


-61.1 


1935, 


M 


Aor 


11, 


1954 l 


16 


mon 


ths) 


13 


,500 


-22.8 


May, 


19 


34 - 


Ma 


rch, 


19 


35 


(11 


months) 


20 


,000 


148.1 


Source: Mot 


ion 


Pic 


ture 


Al 


manac. 










Financial 


Condit 


ion 



















Table XXXV shows the latest available data concerning financial condi- 
tions of exhibiting corporations reporting to the Bureau of Internal Revenue 
for the years 1927 through 1932. The peak of earnings for all corporations was 
reached in 1930, when net profits amounted to almost $30,000,000. However, 
the year 1931 saw a decrease of about 87 per cent in nrofits from the 1930 
peak. In the year 1932 motion picture theatres operated at a loss of more 
than $59,000,000 

TABLL XXXV 

Gross Income, Net Profit or Loss, 

1927-1932 

(in thousands) 



Year Gross Income Net Profit or Loss 



1927 $345,771 $18,951 

1928 407,842 21,646 

1929 508,439 22,394 

1930 513,105 29,743 

1931 434,652 4,423 

1932 505,490 -59,336 



Source: Bureau of Internal Revenue, Statistics of Income . 



8976 



-43- 
PART IV: EXHIBITION 

Chapter II. Labor Statistics 

Number of Employees 

Census data for the years prior to 1933 are not available on employment 
and wages in the exhibition branch of the Industry. Table XXXVI , token from 
the Census of American Business, 1933, shows the total number of employees 
and the average number employed per motion picture theatre. The figure of 
6.9 for the average number employed per theatre is lower than that reported 
by the Bureau of Labor Statistics in a study made of eleven neighborhood 
theatres in Washington, D. C, in the latter part of 1931, when an average 
of 10.7 employees per theatre was reported (See Table XL, below). However, 
according to figures given in trade publications such as the Film Daily , 
Variety , and Motion Picture Almanac , theatres have been reported to average 
about 16 employees. It is considered that the average for the entire 
country approaches the latter figure as reported by the trade publications, 
especially since the higher figure is further supported by the fact that 
employees such as musicians, vaudeville talent, and office employees were 
omitted from the Washington survey. 

TABLE XXXVI 

Annual Average Number Employed, Full and Part-Time, 
by Types of Theatres, 1933 a/ 



Total 



Full-Time 



Part-Time Average 



Type of Theatre 



Num- 
ber 



Employees 
Per Cent Num- Per Cent Num- per Cent per 
of Total ber of Total ber of Total Theatre 



Motion Picture only 65,728 100.0 54,030 82.2 11,698 17.0 
Motion Picture and 

Vaudeville 8,635 100.0 7,924 91.8 711 8.2 

Total Theatres showing 

Motion Pictures 74,363 100.0 61,954 83.3 12,409 16.7 



6.9 

13.4 

7.3 



Source: Census of American Business. 1933 . "Service, Amusements, and Hotels." 
a/ Includes proprietors. 

Total Annual Payrolls 

Table XXXVII shows total payrolls for moving picture theatres in 1933. 
For all types of motion picture houses, full-time payrolls amounted to 94 
per cent of the total. 



8976 



-44- 

TABLE XXXVII 

Total Payrolls, Pull and Part-time, by Types of Theatres, 1933 



Type of Theatre 



Total 



Pull-Time 



Part-Time 



Amount Per Cent Amount Per Cent Amount Per Cent 
(000' s) of Total (OOO's) of Total (000' s) of Total 



Motion Picture 

only $71,451 

Motion Picture and 

Vaudeville 10,305 

Total Theatres Showing 

Motion Pictures 81,756 



100.0 $67,009 93.8 $4,442 6.2 

100.0 10,053 97.5 252 2.5 

100.0 77,062 94.2 4,694 5.8 



Source: Census of American Business. 1933 . "Service, Amusements, and Hotels." 

Total Annual Payrolls as a Per Cent of Total Receipts 

According to estimates of the Hot ion Picture Almanac for 1933, payrolls 
in the e:diibition division represent about 25 per cent of total theatre 
receipts. This figure is slightly higher than that derived from receipts 
and payroll data reported by the Census of American Business in 1933, which 
listed receipts as $415,153,000 (see Table XXXVIII, below) , and a total, full anc" 
part-time payroll of $81,756,000, which represents approximately 20 per cent 
of total receipts. (See Table XXXVII, above.) 

Number of Wage Earners and Total Annual Wages by Principal States 

Table XXXVIII shows the distribution of full-time employees and payrolls 
by ten principal states, as reported by the Census of American Business in 
1933. The ten states listed employed almost 67 per cent of all the full-time 
employees in that year and paid them 73 per cent of the total payroll. The 
state of Now York employed 18 per cent of all full-time workers, but reported 
26 per cent of the total full-time payroll, which indicates high average 
wages in that state. California was second with more than 8 per cent of 
total employees, who received 8 per cent of the total payroll. Hew York also 
received the largest share of theatre receipts, amounting to 23 per cent of 
the total. 



8976 



-45- 



TABLE XXXVIII 



Total Receipts, Number of Pull-Time Employees and Payrolls, 
Classified by 10 principal States, 1933 a/ 



State 



Tota l Receipts Full-Time Employ ees Full-Time Payroll 



Amount Per Cent Number 
(000's) of Total (000' s) 



Per Cent Amount Per Cent 
of Total (OOJ 1 s) of Total 



U. S. Total 

California 

Illinois 

Massachusetts 

Michigan 

Missouri 

New Jersey 

New York 

Ohio 

Pennsylvania 

Texas 

Total, 10 States 
Total, Other States 



$415,153 100.0 63,136 



35,223 


8.5 


5,220 


23,106 


8.0 


4,303 


22,809 


5.5 


3,678 


14,124 


3.4 


2,324 


10,256 


2.5 


1,601 


19,179 


4.6 


12,116 


93,907 


22.6 


11,463 


20,730 


5.0 


3,822 


30,891 


7.4 


4,889 


12,825 


3.1 


2,548 


293,050 


70.6 


41,969 


122,103 


29.4 


21,167 



100.0 $80,519 100.0 



8.3 


6,284 


8.3 


6.8 


6,695 


8.9 


5.8 


5,141 


6.8 


3.7 


2,925 


3.9 


2.5 


2,370 


3.1 


3.4 


3,647 


4.8 


18.2 


19,778 


26.1 


6.1 


4,223 


5.6 


7.7 


5,588 


7.4 


4.0 


2,200 


2.9 


66.5 


53,851 


73.1 


33.5 


21,668 


26.9 



Source: Census of American Business. 1933 . "Services, Amusements, and The- 
atres. " 

a/ The data include 122 legitimate theatres and operas which grossed 

$8,611,000 and employed 1,182 full-time workers with a payroll of 
$3,457,000. When allowance is made for the inclusion of these 
legitimate theatres and operas, the employee and payroll data in 
this table are identical with those given in Tables XXXVI and 
XXXVII, above. 

Wages and Hours 

In Principal Cities . - Reports on wages and hours of unionized projection- 
ists in 1933 were published oy the Bureau of Labor Statistics in the Monthly 
Labor Review for May, 1933. The report, which embraces almost 230 cities and 
5,494 operators, shows that average weekly wages ranged from $22.50 to $95.00. 
Prevailing hours ranged from 23 to 62 hours per week. 

An analysis of the report discloses the distribution of weekly union wage 
scales and hours worked per week shown in Table XXXIX. These ranges vary 
primarily with the strength of the union in particular localities rather than 
with the size and type of theatre, size of city, or section of the country. 
It is believed that wages and hours of work of other organized workers (stage 
hands and musicians) in the motion picture theatres would show a similar 
variation, depending upon the strength of the union. 



8976 



-46- 

TABLE XXXIX 

Wage Scales and Hours Worked per Week "by Unionized 
Projectionists, Classified by Number of Cities, 1933 



Item 



Number of Cities 



Wage Scale 

Under $35 per week 
Between $35 and $45 
Between $45 and $65 
Over $65 

Hours Worked -per Week 

Under 36 

Between 36 and 40 
Between 40 and 45 
Between 45 and 50 
Over 50 



25 

75 

111 

29 



45 
43 
35 
44 
25 



Source: Compiled from Bureau of Labor Statistics 
Monthly Labor Review , (May, 1933) p. 1111. 

In Washington. D. C. - Table XL shows the hourly wage rate and hours 
worked per week by the various classes of wage earners employed in eleven 
neighborhood theatres in Washington, D. C. in the latter part of 1931. 1/ 
The average weekly hours for all types of full-time employees ranged from 
32.5 to 49 hours per week; for all "types of part-time workers, from 8 to 24 
hours. In the service branch, weekly wages for full-time employees ranged 
from $9,28 to $18.40; for part-time employees, from $6.65 to $8.55. Tech- 
nicians such as operators, electricians and engineers were the highest paid 
help and averaged about 45 hours per week. 



1_/ The Bureau of Labor Statistics reports tnat the city of Washington was 

chosen for this survey "because of the belief that this city has been af- 
fected less than any other city of its size ~by the business depression, 
and it would therefore be possible to segregate the effects brought about 
by the changes in technology from those due to other causes, and especi- 
ally to the depression." 

8976 



-47- 

TABLE XL 

Average Weekly Hours and Wages of Employees in 11 
Neighborhood Motion Picture Theatres of Washington, D. C. 
by Branch of Work and Occupation, 1931 



Branch of work 


Num- 


Num- 


Aver- 


Aver- 


Aver- 


and Occupation 


ber 


ber 


age 


age 


age 




of 


Em- 


Hours 


Wages 


Wages 




Thea- 


ployed 


per 


per 


per 




ters 




Week 


Week 


Hour 


Service 












Cashiers 


11 


11 


38.6 


$14.61 


$0,378 


Relief Cashiers 


3 


3 


12.3 


6.65 


.540 


Doormen 


11 


13 


33.6 


10.11 


.300 


Full-time Ushers 


11 


31 


32.5 


9.28 


.285 


Part-time Ushers 


1 


3 


24.0 


8.55 


.356 


Matrons 


2 


2 


39.0 


13.53 


.346 


Porters 


11 


18 


54. S 


18.40 


.336 


Cleaners 


2 


3 


37.3 


12.66 


.339 


Elevator hoys 


1 


1 


44.0 


14.25 


.323 


Projection 












Operators 


11 


24 


40.0 


67.10 


1.677 


Relief operators 


2 


2 


CO 


17.00 


2.125 


Music Organists 


1 


1 


42.0 


75.00 


1.785 


Stage 












Electricians 


1 


2 


48.0 


70.00 


1.458 


Relief electricians 


1 


1 


16.0 


fiO.OO 


1.250 


Maintenance 












Engineers 


1 


1 


49.0 


33.25 


.678 


Watchmen 


1 


1 


56.0 


19.00 


.339 


Total Number Employed 




117 








Average per theater 




10-7/11 








Source: Bureau of Labor 


Statist 


ics Monthly 


Labor 


Review, (November, 1931) 



P. 5. 



8976 



-48- 

Table XII shows the average weekly wage of full-time projectionists and 
"service" employees in the various types of theatres in Washington, D. C, 
Cashiers in downtown de luxe picture houses, labelled Type 1, averaged 
$21.85 while in "other colored" theatres, Type 7, they averaged only $10.00 
per week. Projectionist operators in Type 1 theatres averaged $96.67, while 
in Type 7 they received $31.00. 

TABLE XLI 

Average Weekly Wages in Different Types of Motion 
Picture Theatres of Washington, D.C., "by Branch 
of Work and Occupation, 1931 



Branch of Work 
and Occupation 



Theatre T.ynes 3/ 



Service 



Cashiers 

Doormen 

Ushers 

Porters 

Matrons 



$21.85 


$19.08 


$14.57 


$14.61 


$10.70 


$14.33 


$10.00 


22.33 


21.15 


20.00 


10.11 


11.15 


16.08 


11.22 


17.18 


15.81 


— _ 


9.28 


8.85 


11.23 




19.57 


19.32 


11.70 


18.40 


13.63 


18.35 


18.12 


10.46 


11.70 





13.53 


9.00 





, 



Projection 
Operators 



96.67 83.55 50.00 67.10 41.47 47.33 31.01 



Source: Compiled from Bureau of Labor Statistics, Monthly Labor Review 
(November, 1931), pp. 4-6. 

a/ Theatre types are defined as follows: 

Type 1 - Down-town de-luxe presentation houses. 

2 - Down-town first-class straight-picture houses. 

3 - Other down straight-picture houses. 

4 - First-class neighborhood straigt-picturo houses., 

5 - Other neighborhood straight-picture houses. 

6 - Colored first-class picture houses. 

7 - Other colored picture houses. 



8976 



-49- 

FAIIT IV: EXHIBITION 
Chaoter III. Materials 



Number ox Films Used 

De luxe theatres usually exhibit no nore than 50 feat-are pictures curing 
the year, while the better neighborhood theatres generally exhibit iron 100 to 
150 features. Eoth these types of theatre show each year approximately twice 
as many short subjects as features. These short subjects consist of conedies, 
cartoons, and travelogues, etc., but do not include news films. 

In other neighborhood theatres, where features are changed three times 
a week, approximately 150 are required annually. In recent years there has 
developed the practice of showing two features during a program, and this lias 
greatly increased the number of films used per year. 

Per Cent of Consumer ' s Motion Picture Dollar Spent on Film Rental 

l!o accurate data are available as to the total expenditures of exhibitors 
for film rentals. According to Table XLII, the cost of producing films ac- 
counts for' a little more than 18 per cent of the consumer's moving pictLU-e 
dollar, and distribution costs amount to almost 8 per cent. This makes a 
total of 26 per cent which may be taken as a rough indication of the proportion 
of the consumer's dollar spent on film rental. 



§976 



-50- 



TABLE XLII 



per Cent of the Consumer's Motion Picture Dollar 

Accounted for "by the Chief Divisions of the 

Industry, 1933 



Division Per Cent 

of Total 



Production 



Players 4.5 

Directors and Cameramen 2.4 

Sets 1.8 

Costumes .5 

Location .5 

Rav; Film 1.4 

Stories and Scripts 2.9 

Administration 4.2 



Distribution 



Exhibition 



Source: Motion Picture Almanac, 1933 - 
8976 



Total Production 18.2 



Branch Expenses 3.6 

Print Cost 1.6 

Home Office Exoense 2.6 



Total Distribution 7.8 



Payroll 24.7 

Advertising 8.2 

Depreciation and Maintenance 5.1 

Pent, Heal Estate, and Taxes 15.4 

Other Taxes and Insurance 2.1 

Electricity and Heat 5.1 

Other Expenses 8.3 

Interest and Profit 5.1 



Total Exhibition 74.0 

Total for Industry 100.0 



-51- 

FAST IV. EXHIBITION 

Chapter IV. Unfair Trade Practices 

Clearance and Zoning 

Equi table clearance and zoning has "been, and still remains, a most con- 
troversial problem within the Industry. Peature filns, which open in large 
cities for as much as $5,000 per week, may eventually return to those sane 
cities for $25.00 Eirst-run erhibitors, paying large license fees and charging 
hign. admission ■jricus, have comlained that insufficient tine elapses between 
the first-run of a feature picture at a large theatre and subsequent rxins in 
smaller theatres. Claims have been nade that the payment of large fees en- 
titles then to the -jrotection of showing pictures without the fear that smaller 
theatres nay present the same film so soon after the first showing, that pros- 
pective patrons would be inclined to wait for the lower admission prices on 
subsequent runs elsewhere. 

On the other hand, subsequent- run exhibitors have claimed that the major 
exhibitors receive unreasonable clearance of time between first and subseqx\ent 
showings, and alro that the large exhibitors have exacted rights over unreason- 
ably large areas. 

Other Unfair Trade Practices 

Host e:hibitor contracts with distributors contain provisions that the 
exhibitor will charge specified admission ;orices and the cost of the license 
to show the picture is based on these trices. Exhibitors, although publishing 
these -Trices, have often materially lowered then by offering gifts or premiums} 
by holding lotteries, or by instituting a policy of throw-awa.y tickets or twc- 
for-one admissions. Once started, these practices spread throughout an entire 
conoetitve area and exhibitors have vied with each other in making more ex- 
travagant offers. 

The 23ra.ctice of showing two feature filns for one adnission mrice was an 
extremely controversial subject during ore-Code discussion. Socia.l, religious, 
ana educational organizations protested that this policy of having a double- 
feature mrogram absorbed screen time which would otherwise be given over to the 
showing of trrvelogues and other educa.tional short subjects. Some independent 
exhibitors claimed that the elimination of this policy would deprive then of 
their only means of conpeting with the larger noving picture thea.tres. This 
Tractice, which spread raoidl3'- in a,ny territory where it was initiated, was 
soon adopted by the larger as well as the smaller thea.tres. 

E:;hibitors as a group have considered unfa.ir the leasing of films to non- 
theatrical aocounts, i. e., to social, religious, and educational organizations 
which exhibit motion aict-ores such as travelogues, religious pictures, comedies, 
and educa.tional short subjects. 

Exhibitor s have claimed that discrimination has been used in the applica- 
tion of "score" charges. These charges ar a hangover from the early days 
when "scored music" was sold in conjunction with pictures. Then sound record- 
ing was introduced the "score" charge was continued, being included in the 
cost of the disc or sound track. 

8976 



-52- 
Trade Associations 



!.S 



The Ilotion Picture Theatre Owners of America (V P T -'-.J.. - This 
_sociation was organized in 1320 "by independent theatre owners to combat the 
theatre expansion policy pursued by Famous Players Lasky Corporation. 

The organization is composed of several sisate and regional groups operat- 
ing as independent associations. The national organization attempts to coordj 
nate activities and provide uniform action on problems of major importance to 
exhibitors. It nay roughly he stated to represent at least 2,500 of the af- 
filiated theatres. 

In 1927, because of the expressed belief that more constructive accom- 
plishments could be secured by constructive cooperation rather than open 
hostility, producer-distributor theatre owners were granted membership. The 
organization immediately became financially dependent upon these new members 
and control passed from the hands of the independents to the new group. 

Allied States Association of Motion Picture Exhibitors . - This Associa- 
tion was originally formed in 1923 as a protest against some of the practices 
of the Motion Picture Theatre Owners of America.. It './as fashioned after the 
t£,P T A. and in many instances regional groups simply transferred their al- 
legiance from one organization to the other. In 1926, following a. promise "oj 
the L P T _=.. to serve the interests of the independent exhibitors primarily, 
Allied States voted to disband and affiliate with the former. Two ""ears late:! 
certain prominent independent exhibitor members of the original Allied grow") 
decided to reorganize. 

In 1932 Professor Lewis Howard reported that Allied States represented 
6,000 theatres. It is generally conceded by the Industry that the larger 
circuits are represented by the IvI ? T A, and the smaller theatres by Allied 
States. 

Trade Unior Activity 

International Alliance o f Theatrical Sta f vo Pa. doyees and Motion Picture 
Machine Operators o f the United States and Canada . - This union was composed 
of approximately 26,000 members in 1934, according to a. statement made in 
that yea.r by its Assistant President, Louis Krouse. It is affiliated with 
the American Federation of Labor and its members are the skilled employees in 
the Industry. The organization is composed of a number of local unions 
throughout the United States and Canada, 



8976 



-53- 
APPSNDIX 
Exhibit A. Persons Qualified as Experts on the Entire Industry 



Will H. Hays, President, Motion Picture Producers & 

Distributors of America, Inc., 
28 West 44th Street, New York, Hew York 

David Palfreyman, Theatre Service Division, Motion Picture 

Producers & Distributors of America, Inc., 
23 West 44th Street, Hew York New York 

Sol A. Rosenblatt, former Division Administrator, NRA, 

International Building, Radio City, New York 

John C. Elinn, former Secretary of the Code Authority, 

now connected with Variety, Inc., 
154 West 4eth Street, Hew York, New York 

Tyree Dillard, former Counsel for the Code Authority, 

now connected with Lietro-Goldwyn-Mayer, 

Legal Department, 
New York, New York 

Nathan Yamins, represented Independent Exhibitors on Code 

Authority, 
Fall River, Massachusetts 

Ed Kuykendall, President, Hot ion Picture Theatre Owners of 

America; also represented Independent 
Exhibitors on former Code Authority, 

1600 Broadway, Hew York, New York, and/ or 

Columbus, Mississippi 

Abram P. layers, Chairman of Board and General Counsel for 

Allied States Association of Motion 
Picture Exhibitors, 
729 15th Street, N.W., Washington, D. C. 

John P. Knight, Maintenance Executive, Paramount Theatres 

Service Corporation, 
Times Square, New York, New York 

Pat Casey, Producers' Representative for Studio Labor, 
1600 Broadway, New York, New York, and/or 
5504 Hollywood Blvd., Hollywood, California 

George Browne, President, International alliance of Theatrical 

Stage Employees and Motion Picture Machine 
Operators of the United States and Canada, 
Earle Theatre Building, Washington, D. C. 



8976 



-54- 



Lotiis Krouse, Assistant President, International Alliance 

of Theatrical Stage Employees and Motion 
Picture Machine Operators of the United States 
and Canada, 
Earle Theatre Building, Washington, D. C. 

Steven ITewman, International Peoresentative, International 

Alliance of Theatrical Stage Employees and 
Motion Picture Machine Operators of the 
United States and Canada, 
3671 Valley Brink Poad, Los Angeles, California 

Joseph Vleber, President, American Federation of Musicians, 
1450 Broadway, Uew York, Kew York 

Prank C-ilmore, President, Actors Equity Association and Chorus 

Equity Association, 
45 West 47th Street, Pew York, New York 

Professor Li. P. MclTair, Disinterested authority on the Industry, 

Harvard Bureau of Business Research, 
Cambridge, Massachusetts 

Professor Howard T. Lewis, Disinterested authority and historian 

on the Industry, 
Harvard Graduate School of Business, 
Cambridge, Massachusetts 

Terr;-- Pamsaye, Editor, Motion Picture Herald; Writer, historian 

and authority whose works have teen 
regarded by subsequent historians as 
original. 



-55- 
AEPEHDIX 

Exhibit B. The Advent of Sound in Motion Pictures 



Sound in Exhibition 

The advent of sound in 1926 caused a revolution in the Industry- 
comparable with the introduction of the feature picture in 1913. The 
development suddenly changed the entire business and revived a failing 
interest in motion picture entertainment. The tremendous influence of 
goo4 music later brought to sound- equipped theatres a large increase in 
patronage. At first only shorts were synchronized with sound reproduced 
from discs. Companies moved cautiously to make the transition to sound 
as gradual as possible, presumably because of the large technical changes 
involved. 

Warner Brothers' Vitaphone ushered in the present commercially 
successful innovation in August, 1926. Pox closed a contract with Western 
Electric for the development of Movietone in January, 1927, which led to 
a cross-licensing arrangement with Vitaphone. A simple attachment to the 
projectors was developed by which Vitaphone and Movietone equipment could 
be used interchangably. Subsequent cooperation of General Electric, 
R. C. A. and Western Electric with major producers brought quick progress. 
Cost of equipment for reproduction was constantly decreased, due to the 
Industry's Imowledge that small- theatre installations were necessary to 
the success of sound pictures. Fox "caught" the Lindbergh takeoff for the 
solo flight to Paris for the Movietone News. The "covering" of the 
Lindbergh reception in Washington with sound newsreel made history. How- 
ever, the distribution of the newsreel was restricted, due to the limited 
number of wired houses. 

Marketing of the Western Electric equipment by Electrical Research 
Products began in August, 1927, offering the systems which embraced sound- 
on-film, sound-on- disc, and no n- synchronous disc systems. Installation 
costs ranged from $8,000 to $15,000 in price, depending upon the theatre 
and its accoustical requirements. 

Meanwhile, Warner Brothers had secretly prepared an all-dialogue 
picture entitled "The Lights of New York." Experiments up to this time 
had included mostly sound, effects and music with only scatterings of 
dialogue. Vitaphone and Movietone News, as short "all talkers," had been 
tremendously successful. While successfully received throughout the 
country, "The Lights of New York" clearly demonstrated that the most rigid 
care had to be exercised in the selection of words given the characters to 
speak. Voices which would synchronize were necessary. Stars began to 
worry about lessons in elocution. 

Wired theatres prospered while unwired houses were not even given 
proper exploitation advantages. Exhibitors were fretful concerning the 
oft-arising question of interchangeability.cn which the patent holders 
refused clearly to commit themselves although well-informed sources had 
conceded it to be no problem, rrrovided reproduction standards and quality 
were satisfactory. 



8976 



The year 1929 found sound pictures off to mi suspicious start, due 
to the announcement of lower prices "by Western Electric for either the 
Vitaphone or Liovittone reproduction equipment for June 1st delivery at a 
price of $5,500 each, or $7,000 for both. At the end cf 192S, wired 
theatres numbered 9,350. 'Jill H. Hays estimated that theatre attendance 
increased 15,000,000 weekly during the year. 



Sound in productio n 

The introduction of sou.id in production caused a change in style 
of making pictures, the erection of mo^e than 100 sound stages, and the 
installation of rdllicnr. of dollars in equipment. Old talent was 
eliminated in numerous instaaces and new talent introduced. An addition 
of approximately 5,000 employees was reported at the end of 1930. It 
has been estimated that 99 per cent cf all pictures produced in 1930 were 
either sound or all-talking pictures. 

The cost of making a picture with round was sstiuiated to he from 
five to seven times the cost of making an all- silent picture. The 
increased overhead, less of cox-office names of players who had starred 
in silent pictures, employment of additional writers, loss of time through 
experimentation, and the use of more film were the major contributing 
factors. 

At the ent 1 if 1930, 60 per cent of the exhibitors were using the 
sound-track method of projection and the remainder were using the disc 
method. Until late 1930, Earner Brothers and First National were 
producing all pictures on discs, but in that year they began to \ise the 
sound-track method. The disc method has the disadvantage that the discs 
are cumbersome and hard to handle, and the method is also more expensive. 

According to the Motion Ficture Daily of July 39, 1935, 18 patent 
licenses for a new sound system have been issued. The invention is known 
as "the dynamic multiplier system," by which the undesirable character- 
istics of present sound apparatus are eliminated. More life-like quality 
is effected, which may again revolutionize the Industry. 



8976# 



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