HC Deb 17 June 1948 vol 452 cc737-78

Original Question again proposed.

7.48 p.m.

Mr. Lyttelton

I apologise to the Committee for inflicting upon them two speeches in one afternoon. If it be true that absence makes the heart grow fonder, I very much hope that the reverse of that old adage is not equally true. I think, however, that it is opportune to have a discussion on the Anglo-American Films Agreement which has been reached by the right hon. Gentleman with the American film interests, represented in this country by Mr. Eric Johnston. For one thing, the subject has a close bearing on the matter of the quota which we shall discuss later in the evening.

Before I go any further, I must condemn wholeheartedly the delay which has occurred in making the terms of the Agreement known to this Committee, and the manner in which the information has been dribbled out. It has certainly been unfortunate from the Government point of view that they have given the impression that they are thoroughly ashamed of the terms. Upon this occasion it would be ungenerous to criticise this or that part of the Agreement—as I shall have to do—without recognising as fully and frankly as I can that the situation in which the President of the Board of Trade and his Department found themselves was not an easy one. The background against which he had to carry on his negotiations might have been described in this way—that Great Britain feels that it cannot afford to do without American films, but cannot afford to pay for them.

The situation had arisen where the American film companies had stopped sending films to Britain because of the penal tax which had been imposed upon these exports. The production of British films in this country was not sufficient to make up the gap, and a deadlock, which was doing no good to the industry on either side of the Atlantic, was gripping the whole trade. I consider that the right hon. Gentleman under-rated the negotiating position in which the British industry and His Majesty's Government found themselves. If we could not afford to do without American films it is quite certain that the American industry could not afford to do without the British market for the American companies. I believe it is a fact that the profit margin—if I may introduce so sordid a subject, the mention of which is so universally despised on the other side of the Committee; some American companies are actually in the business to make profits—was equivalent only to about the gross takings of those companies in this country.

I must say frankly that the Agreement bears many signs of imprecision and unnecessary haste. I think a better Agreement could have been made if it had been a little less hurried, and if there had been a great deal more precision. In the Debate on 21st January, I think it was, on the Cinematograph Films Bill, I touched on this subject, and assuming—which we have no right to do—that this country can afford to change £4½ million sterling into dollars to pay for American films, I suggested that the American companies should have the right to remit sums over this £4½ million equivalent to the extra dollar earnings of British films in the United States above the present level.

It will be quite obvious to the Committee that even such an arrangement is open to serious objection. First, there is something frustrating in the industry knowing that on no account can it earn one net dollar for the country, which is so sadly in need of dollars. I should find it a very depressing provision in my daily life, when we are striving in industry to work up the export of British capital goods. Nevertheless, for a limited period, at least, to proceed on these lines would have been sound.

There are some arguments which may not at once present themselves, but which have to be taken into consideration. I think we are all agreed that there must be, if possible, strong financial inducements at first to make the American exhibitor willing to accept British films. One of the reasons why these inducements are necessary—and I hope the Committee will not think I am making a joke, because I am not—is language. The British film public have now become accustomed to American phraseology and turn of phrase. Everyone here knows that "homely" is a term of disparagement in America, whereas it is used as a term of praise in this country. Everyone knows what can be obtained in a drug store, and of the various metamorphoses through which drug stores have passed in America since they were originally instituted.

The other day I happened to make what I thought a very good shot at golf. I turned to a fisherman, whom I have known for many years, who wore a blue jersey and sea boots, and said to him, "That is a good shot," and he replied, "I'll say that is a good shot." That shows how much the American turn of phrase has got into the minds of our own people. I believe that any British audience would recognise the New York water front or even Wall Street, especially when it is showered with ticker tape, but I doubt whether any American audience would recognise Lombard Street, any more than the hon. Lady the Member for the Exchange Division of Liverpool (Mrs. Braddock) likes to recognise it, or the Surrey Docks.

In America, a great many people cannot understand the language of British films. I sometimes find it difficult to understand them myself. It is not only the Oxford accent, which is "so refined"; the accent of British actors and actresses is often far above my head. It is quite possible that the American public will one day have a clear knowledge of British phraseology, just as we have now of American phraseology, but the dead centre must be overcome. Again, the showing of foreign films in any country is bound to meet with a good deal of resistance from the domestic producer, for obvious reasons. I think we should all agree that inducements to American exhibitors to show British films and spend time in spreading the knowledge of our vocabulary are necessary if the British film is to gain a place in the American market. To the extent that the President based his agreement on the idea of increasing the amount which can be remitted by American companies—the amount of dollars earned by British companies in the United States—I think he was on sound ground. But I think that many of the other provisions put a gloss on the main Agreement which are unfortunate, and which bear no sign of skilful or expert negotiation.

What are my objections? First, there is no reason to suppose that the net outgoings from this country will be confined to the small value of 17 million dollars—and I am not ignoring any extra dollars earned by British films in America. I think it is undeniable that part of the permitted investments by American companies in this country will lead to deferred dollar claims. I do not want to spend much time on that part of the Agreement, or any time at all in pointing a way to anybody who wishes to find loopholes in the agreement on this point. But when we see that blocked sterling held for American film companies may be used to buy requisites for the production and distribution of films, for travel and transport; that American companies can acquire, with their blocked sterling, literary, dramatic and musical properties and rights; and that it would not be outside the spirit or the letter of the Agreement for American companies to pay very high retainers to British artists, some disadvantages begin to emerge. I consider that nearly all the permitted uses of the blocked sterling will have the effect of saving the American companies dollars which they would otherwise feel obliged to spend. These savings of dollars by the American companies are equivalent to invisible imports in this country, and I say without hesitation that very large sums must be added to the £4½ million sterling which, on the face of it, is the cost of American films to this country.

Now I turn to the effect on the British producer. We are agreed on all sides of the Committee that in this country, at least, film production carries most of the risk and film exhibition most of the profits. I believe we are all prepared to agree that the independent producer was finding it extremely difficult to finance his production. The situation got worse during the deadlock which took place over the import of American films, because it was destroying and undermining confidence and prosperity in the industry. The independent producer was always finding it difficult to get finance for his production, and this situation made it much worse. If there is to be a large fund of blocked sterling in this country, for which one of the permitted uses is financing independently produced films, it is clear that some independent producers may benefit and that some good may emerge from this Agreement on that score.

I ask the Committee to consider the other side of the question. The American film companies will be very keen competitors—I think it would be churlish to say they will be unfair competitors—but very keen competitors, within the meaning of the clause of the agreement, and they will be keen buyers of talent, studio space, technical improvements and so forth. We have to offset that against any advantage, perhaps temporary, which the independent producers may get from having access to this fund of blocked sterling.

The next point I want to make is that, under the present Cinematograph Films Act, it will be easily possible for British companies of which the shareholders are entirely American to qualify as British film producers in the quota for British films in this country and export the films as British to foreign markets. I think that here we come up against a question which is not financial or commercial, but which transcends both the commercial and financial aspects. One of the things which we expect and hope to get from British films is to keep the British mode before the eyes and ears of the world, to depict our way of life in a realistic and favourable light, and to show, for example, how kindly and courteous a people the British are when going about their lawful obligations, although not to be provoked beyond a certain point; that, although they are an extremely kindly and courteous people, one must not run into the back of a taxicab without expecting to be told something. It is a good thing that the world should be told about the way we live, about our full democracy in this country, how some of our institutions work, of the impartiality of British justice, and so forth.

So I say that it is not enough just to change Mr. Gary Cooper's name on a film to that of Sir Ralph Richardson, not enough that the cameraman, the scene-shifters and the carpenters should be British, but that Great Britain should get full value from British films. I remember a friend of mine seeing an advertisement in Hollywood about "Antony and Cleopatra" which read like this: "Antony and Cleopatra, by William Shakespeare; extra dialogue by Joe P. Dixon." That, to our eyes, is not the way to put a great British masterpiece in front of the world. The fact that some of this blocked sterling is to be used for British films may obscure the fact that many of them will be merely American transpositions, unless we are very careful. It is quite possible to make a Western in Ealing which will satisfy the hon. Member below the Gangway and be quite indistinguishable from the same article produced in Hollywood, but, having done that, I doubt whether we should regard cattle rustling and shooting the pip off the ace of spades as illustrating our way of life in Devonshire any more than it probably is of that in Arizona. It is probably a long way from both.

To return to my main argument, so long as the President bases his policy on giving inducements to American exhibitors to show British films by saying that American companies may withdraw from Britain £4,500,000 worth of dollars, plus such dollar earnings as American films make in Britain, he is on sound ground for at least the next two years. I think there might be an awkward period and some shortages on the circuits while the position of British films in America is being built up. I think the President would be on sound ground if he specified a certain sum which may be invested in British film production, in studio space or retention of artistes in this country, but I feel critical about an agreement which is so imprecise, the interpretation of which is still under discussion, which leaves so many loopholes for the withdrawal of sterling, and, while it gives the appearance of limiting the cost of American films to this country to the equivalent of £4,500,000 sterling, does not really do so at all, because the agreement saves the American companies dollars and permits them to spend sterling which they would otherwise have had to buy, those savings being exactly the equivalent of outgoings from this country.

Again, it is not really in our interests for American film companies to make films which are American in idea, presentation and character and label them as British films, and put them on the open market. On the other hand, to the extent that the Americans use blocked sterling to promote further genuine types of films by independent British producers, good will emerge from this part of the agreement. I am frankly concerned about the competition the British film industry may have to meet in this country from the purchase of literary, dramatic and musical properties and rights, to say nothing of the purchase of technical developments in the film world which we may achieve in this country.

To sum up, I give the Government the facts of the situation as it is, but I cannot regard the settlement as very businesslike or as promoting British interests sufficiently. I fear the inflation of British costs by the carefree spending by American companies of sterling balances and I think the dollars spent on American films will be excessive. I must say, in conclusion, that I do not put very much trust in the Clause which talks about unfair competition and legitimate British interests. I do not think we can gain by that, and I fear that the leakage of dollars will be very great, and that conflicts and disputes will arise upon what is unfair competition and what is a legitimate British interest. I think there are these dangers to the industry both here and in the United States, and it is as well that we should be alive to these dangers in the hope of working for a new agreement by which they may be, if not overcome, at least mitigated.

8.8 p.m.

Mr. O'Brien (Nottingham, West)

Those of us who are aware of the difficulties within the film industry, particularly the difficulty to which the right hon. Gentleman the Member for Aldershot (Mr. Lyttelton) referred, during the period of deadlock, will appreciate that this agreement which was reached between the Government and the Motion Picture Corporation of the United States represents a first-class job, and my right hon. Friend the President of the Board of Trade is to be congratulated on such an achievement.

What was the position of the industry in this country in the midsummer of last year? This is an aspect of the problem which is apt to be confused, and which will be confused in the near future. It requires about 450 feature films a year to keep our cinemas going in their present way. Of that number, we are making ourselves, or did make in 1946 and 1947, an average of about 50 pictures. This year, it is estimated that the British film industry will be able to make 60 or 70 feature films—the others do not matter from the point of view of economics—but the industry requires 450 features a year to keep the cinemas going on their present pattern. Out of that number we were making about 50, and next year it is esti- mated that we may be able to make go or 100.

In these circumstances, it was necessary for something to be done. The Americans were not sending their pictures here, and independent production was at a standstill. As a matter of fact, towards the end of last year the British film-producing industry was reaching collapse. Not only did this Agreement settle the dollar problem involved, but it saved the British film industry. It restored stability and confidence in the industry. The negotiations which my right hon. Friend had with Mr. Eric Johnston were by no means easy. The Americans were pressing. It has been suggested that the Americans won the day but that is not the case—as a matter of fact, they have the sticky end of the stick. The Agreement admirably satisfies the safeguards required, which have been touched upon by the right hon. Gentleman the Member for Aldershot. The Agreement is adequate in every way, and the majority of those in the industry know that a first-class job of work has been done by the President of the Board of Trade.

I hope that this Agreement will be looked upon ill a constructive light. It is all right to shoot at it, but it would be the end of the British film industry without it, and cinemas would have to close. If the Agreement had not been negotiated, by today we should have at least one-half of the cinemas in the country shut down and the mass of the workers and their families deprived of their main form of amusement and relaxation. I wish it to be recorded publicly that the industry as a whole is grateful for this Agreement and satisfied that it is a fair agreement, protecting the interests of the British producers and exhibitors as well as giving a quid pro quo to the American interests. I hope that it will be given a fair trial. I hope that the Americans will realise our position here and will not try to abuse their position under the Agreement, although we in the industry feel that they will not and cannot do that. Eighty per cent. of the film studios in this country are owned by large British concerns, and it is not, therefore, possible for the Americans to gain control of British film production and use or misuse our studio space. Other Members will wish to deal with other aspects of this matter, but I wish to express our thanks for the admir- able piece of work which has been done under very difficult conditions.

8.14 p.m.

Mr. Edgar Granville (Eye)

I agree with what the hon. Member for West Nottingham (Mr. O'Brien) has said. He speaks with great knowledge and a good deal of authority, and he certainly knows the film industry of this country. I agree with him that the President of the Board of Trade has made a good job of these negotiations. We on these benches must wish this Agreement well and hope that the right hon. Gentleman will achieve the success he desires. I do not think, however, that he escaped from the recent disputes with the U.S.A. film industry entirely scot-free. He undoubtedly found Mr. Eric Johnson tough, and it must have been a very interesting conference which took place between the redoubtable Yorkshireman and the tough American. As I see it, the 75 per cent. ad valorem duty was not imposed by the Chancellor of the Exchequer for the protection of the home industry, but to prevent the drain in dollars. Before then we were losing something like 50 million dollars a year on the balance of payments, whereas this Agreement will reduce the amount to 17 million dollars a year. But as the right hon. Member for Aldershot (Mr. Lyttelton) has said, the American companies can finance their production here out of their dollar receipts, and more important still can buy British film rights in our American distribution from their surplus dollars, which may be another loss of dollar revenue to the Exchequer

The Board of Trade and the Treasury have never to my knowledge published the "Rank" dollar receipts against expenditure; in other words, the dollars we get from the Americans against the dollars granted by the Treasury for the so-called Rank prestige American experiment. I think the right hon. Gentleman has said that we were getting something like 4 million dollars per year gross receipts from the showing of British films in the American market. I believe that the figure is reduced finally to one million gross, and that most of that was invested in the United States. So that it is clear that we have to accept the fact that the Rank experiment for prestige films in America has failed, and I for one recognise this agreement and the increased quota as a new deal and policy for the film industry.

It is an extraordinary thing, as has been said, that during the period of that dispute the production in British studios fell to an all-time record low level. It indicates that we have to work together with the United States, and we have to export films to the United States just as we have to export textiles and other commodities. As the right hon. Gentleman said, the American market is a specialised market. The Americans start off with a tremendous advantage, because they have a population of 120 million against our population of roughly 50 million, which means that they can produce a picture for £500,000 and break even on the American market, making their profits on the British market. They start off with a tremendous market, therefore, in the amount of money they can spend on their feature films, whereas we can spend about £150,000 on our feature films.

Therefore, we must concentrate on producing special films which take into account the taste of the American public. We have to produce films which will not only succeed in New York but in America's great provincial areas, and these films must compete with the American productions. The advice of the experts of the Board of Trade in the past has been that the thing to do is to produce films depicting the British way of life and the British countryside in the hope that the United States would like them and buy sufficient of them, but the right hon. Gentleman must realise, in view of the small receipts that policy has given us in dollar earnings, that it cannot succeed. We have to consider the customer, whether it is films, textiles or anything else, and produce films under this Agreement which will not only satisfy the tastes of our own people, but will satisfy the tastes of the great public in the United States.

8.20 p.m.

Mr. E. P. Smith (Ashford)

It sincerely grieves me that I cannot agree with my hon. Friend the Member for West Nottingham (Mr. O'Brien), although to some extent we work together in the same industry. I notice that he is looking peculiarly rosy this evening, which is probably due to the fact that he has been in the open air all day whereas I have been listening to cotton and am in consequence a little more jaundiced than usual. The views I am going to put before the Committee are not unnaturally my own views, though in some respects they coincide with the views of the British Screen-writers Association of which I happen to be a humble member. That body is unique because it represents a professional combination of those who are primary producers and without whom the cinema industry would not exist. They ought to have an honoured place in the counsels of the industry, and it is very greatly to the discredit of the right hon. Gentleman the President of the Board of Trade that he has never seen fit to call in the Screen-writers Association to his Department's deliberations, whereas many minor branches of the industry have been most tenderly solicited.

Mr. H. Wilson

I have seen every section of the industry which asked to see me and a good many of the sections to which he referred are not by any means minor sections. They have given me most valuable advice, and if the screen-writers desire to offer me valuable advice I shall be only too glad to receive it.

Mr. McGhee (Penistone)

The right hon. Gentleman should let them keep their advice for a change.

Mr. Smith

I am glad to hear the remarks of the right hon. Gentleman. The screen-writers have had little encouragement from him hitherto, and I hope this means a change of heart. The screenwriters do not approach their industry from a political or purely commercial angle but from an ethical standpoint; and in the various memoranda which we have submitted to the Board of Trade—perhaps that was what the right hon. Gentleman was thinking about—we have always insisted, first of all, on the necessity for the encouragement of the independent producer; and, secondly, that British films should be British in character and not solely conditioned by the requirements of a foreign market. In that respect I disagree with what has fallen from my hon. Friend the Member for Eye (Mr. Granville). In this connection it is the stated view of the American Government, through the Film Division of the United States Chamber of Commerce, that the export of American films should not be regarded purely as a question of the internal industrial economy of the United States, but as an important factor for the publicising abroad of the American way of life.

I want to turn to the famous Agreement of 11th March between the right hon. Gentleman and Mr. Eric Johnston That Agreement had much favourable preliminary publicity, probably Governmentally inspired. [HON. MEMBERS: "No."] Yes, undoubtedly it was, because when the Agreement actually fell into our hands it turned out not to be so good as we had been led to believe. The right hon. Gentleman not very long ago publicly boasted—I think it was in rather questionable taste—that he had succeeded in drinking a Soviet Minister under the table. We were led to believe by this publicity that he had drunk Mr. Johnston under the table, but a labour far beyond the capacity of the right hon. Gentleman is to drink any hard-headed American businessman under the table. I am disposed to think that it was the right hon. Gentleman who was carried home to bed, and not Mr. Johnston.

If we turn to paragraph 4 of the Agree ment, what do we see? We find that the Treasury will afford facilities for remittance of 17 million dollars per annum payable as a fixed amount in equal monthly instalments; a sum in dollars equal to the British film revenues in the U.S.A., computed and payable quarterly.

Paragraph 5 states: American film revenues accruing during the two-year period referred to above will be dealt with under the Schedules of permitted uses. Schedule A encompasses uses within the sterling area without limit as to amount: Schedule B encompasses uses outside the film industry"— I regard this as very important— within the United Kingdom and is limited to £2,500,000 sterling during the first two years of the Agreement. That money can be invested in the acquisition of real estate, the con struction or renovation of buildings, participation in approved industrial or commercial enterprises, construction, acquisition and operation of hotels and related enterprises designed to foster tourist travel to the British Isles, and participation in travel and transportation agencies designed to facilitate and encourage tourist travel. I maintain that that will result in violent competition with indigenous British interests in what I submit should be a purely British province.

In addition to that, the owners of American film revenues are entitled to apply at any time to the control committee to use such revenues for other purposes and, if approved, the revenues may be used for such additional purposes. One can hardly doubt that such applications will be granted; and, therefore, it is bound to lead to a very considerable commercial infiltration. I regard this Memorandum of Agreement as no small step towards our becoming the 49th State of the American Union; and for those reasons this Agreement seems to be pusillanimous and highly undesirable. This Agreement must lead, it is true, to American film production in this country.

Mr. Granville

I have no particular interest in the film industry but in fairness to the President of the Board of Trade I should like to ask the hon. Gentleman whether he is aware that a statement has been made that there will be no unfair discrimination in the use of this money against the people of these islands, and that no extra building licences will be granted other than the licences which would normally be granted to our own building trade.

Mr. Smith

I am resting on the terms of the Agreement and not on any statement by the Government. It is true that this Agreement must lead to American film production in this country; and, of course, I welcome that; but will it be American capital backing British-conceived and British-executed films, or will it be American capital backing American films produced through an economic accident in an alien territory? Personally, I think it will be the latter. I think, too, that the right hon. Gentleman, however unwittingly, has sold other British interests unrelated to this matter down the river. Let us take the case of the British studios of M.G.M., which have been closed for so long. They are re-opening to make a film of that splendid and characteristically British play, "Edward, My Son." Does anybody suppose that any but minor British screen-writers or technicians will be employed? Of course, the key jobs will all go to the Americans. Mr. Spencer Tracy—

Mr. Wyatt (Birmingham, Aston)

Does the hon. Member for Ashford (Mr. E. P. Smith) know what is the nationality of Miss Deborah Kerr who is taking one of the leading parts?

Mr. Smith

She is certainly British, but Mr. Spencer Tracy, who is playing the lead, happens to be American. What is the tendency of the film going to be? Will it display the British viewpoint, the British way of life, or the British irony of the original? I do not think that it will. I think that it will display some caricature of British life such as we are accustomed to see in Hollywood importations. It must do so because it will be designed to sell in America to audiences who are already synthetised and allergic to anything beyond a particular approach.

That is a deplorable state of affairs, but we shall see under the Agreement that it will be multiplied many times over. With the best will in the world I cannot acquit the right hon. Gentleman of having brought about a situation which the British cinematograph industry and British public will live to regret. In war time, and without American influence, British films won a reputation for quality derived from a characteristic British tyle. That is now in danger of being sacrificed to an alien market. The employment of British producers, directors, actors and writers without American dictation is the main safeguard. I can see nothing whatever in the Memorandum of Agreement whereby that essential defensive system is retained intact.

In order to sell American-financed films in America and so get the major return for their investments, Hollywood will send American executives and creative film artists, writers and technicians over here. It stands to reason that these will not be the best or the pick of the bunch. What protection are we to have against Hollywood dead wood, shelved scripts and second-rate material? According to this agreement, none, apparently. We shall see a burgeoning into life of the petrified forest which is now static in Hollywood pigeonholes.

I must not say a word, I gather, Mr. Mathers, about the new quota arrangements. If I had been allowed to do so, I should have thrown some bouquets at the right hon. Gentleman as compensation for the brickbats which I have been throwing hitherto. Some people have criticised the British film producers for not seizing a golden opportunity during the recent imported-film shortage. That is a most unfair criticism. The blame must rest, if blame there be, on the Government for the state of uncertainty into which their manoeuvres threw the industry. For instance, a British producer dared not make a first-feature film for, say, £100,000 when he knew that if the Government came to terms with the American industry, or it has done, that first-feature film would become a second feature, and the £120,000 he had expected to net would drop to £50,000, thereby landing him with a loss of 50 per cent. The misery and unemployment which has overtaken so many precariously-situated workers in the industry must be laid at the right hon. Gentleman's door.

Now, coming to the subject which I must not mention, let me add that the right hon. Gentleman has done his best, sincerely and honestly, I believe, to deal with the future of this industry. If he will listen more to well-informed and disinterested criticism and less to interested criticism, however well-informed, he has a unique chance of rescuing and recreating an industry which is of value to our internal economy and is of immense potential importance to our international prestige and well-being.

8.35 p.m.

Mr. Wyatt (Birmingham, Aston)

I do not think that either the right hon. Member for Aldershot (Mr. Lyttelton) or the hon. Member for Ashford (Mr. E. P. Smith) explained to the Committee what they would have done other than make this Films Agreement if they wanted still to keep the cinemas in this country open. They both offered criticism of detail. I felt that the hon. Member for Ashford had not read the Agreement very carefully because there were certain things he said which are fully covered in it and, in fact, could not happen. With the last part of his speech about the dangers which arise to the film industry from the agreement I fully agree, and I would like to say something about that subject in a moment.

Unless we had had this Agreement, the British film industry would have come to a dead halt and would have finished altogether. The cinemas would have had to close down. Suppose we had spent £4,500,000 a year on American films; it might have brought us 50 films a year. If we could have made 60 films in this country, that would have been a total of 110. We must have at least 170 films to keep the cinemas open upon a once-a-week basis. In this Agreement, by spending £4,500,000 we get something like £15 million of films. We must expect in return to have to make one or two concessions, in order to obtain £11 million worth of films for nothing. It would be a remarkable Agreement if it made no concessions at all. That is precisely what has happened. We are going to benefit by £11 million a year for no money at all in return. [An HON. MEMBER: No dollars."] Precisely. I am talking about the external basis.

In such an Agreement there are bound to be dangers. There clearly are some in this Agreement. Some wangling will be done under it, but the President of the Board of Trade has done a very remarkable job in covering the various loopholes in the Agreement. The schedules, such as that which deals with the uses permitted within the sterling area of unremitted sterling balances, very carefully cover the three principles which are set out at the top of page 5. The second of those principles deals with the subject of unfair competition and says that nothing shall be done which shall be unfair to the British film industry. That is an adequate safeguard when it is taken in relation with the fact that most of the things which can be done under the schedules are only by permission and with the approval of the Joint Control Committee. That committee is composed equally of British and of American representatives. Its approval will not be given unless the two British members approve, which means in effect the President of the Board of Trade. Consequently, most of those things cannot be done under the schedules unless the Joint Control Committee agree in the first instance. That is a real and adequate safeguard.

The British film industry are entitled to know a little more about what the President of the Board of Trade will consider to be unfair competition. The right hon. Member for Aldershot was on a very strong point here. Would it be unfair if Americans were to come to this country, put money into a film, pay more for techni- cians, writers and actors than their British rivals can, and yet, because they might be more efficient, produce their films in the end more cheaply than could their British rivals? Would that be unfair competition? There are all sorts of problems of that kind which come up.

As I see it, one of the main objects of this agreement is to persuade Americans that if they want to get more than their 17 million dollars a year out of the country, they have to do it by buying British films for showing in America. It is not quite clear in the schedules, however, whether or not the deals by which the distribution rights of British films are bought in America will be subject to the approval of the President of the Board of Trade and/or the Control Committee. I think this is rather an important point because we have just had some important agreements made between Sir Alexander Korda and Mr. Selznick of Metro-Goldwyn-Meyer, by which Sir Alexander Korda will get money from America in advance before he makes a film, the distribution rights of which will be sold to America, as the hon. Member for Ashford pointed out.

Of course, it is right that some cognisance should be taken of the requirements of the American market when those films are being made, and it is fair to assume that someone with Sir Alexander Korda's reputation will make a film that will be characteristically British and worthy of this country when exported. However, I agree with the hon. Member opposite when he feels that many other people would not be so scrupulous or careful of the honour of the country in which they were producing films, and it would be interesting to know how the Minister proposes to keep an eye on that sort of deal. Otherwise, as the hon. Member for Ashford said, we shall get a lot of shoddy imitation Hollywood products made which will be damaging to us.

Another danger which nobody has pointed out so far is that in this country those American companies which already have big tie-ups with A.B.C. or Rank for showing their films will be able to get a share of the 17 million dollars. A company like Paramount or Columbia, however, which is not mentioned as owning cinemas in this country, will have a much bigger fight to get a share of that money at the end of each year It has already been suggested to me—and this is beginning to happen—that some of these companies are considering financing British companies to turn out quota "quickies "very cheaply. They are making them with unremitted sterling which is quoted in America at 25 cents to the dollar; it is quite worthless to them, and they are prepared to spend unremitted amounts of it provided they can get a few dollars out by doing so.

They will finance the British company who make these quota "quickies "and will say to the independent exhibitor who has difficulty in fulfilling his quota a little later, "If you will take my American film, I will give you to go with it a film which has been made in Britain, which complies with all the quota requirements, and nominally you will be paid more for the British film in order to comply with the regulations than you are paying for the American film which you will call the second feature for the purpose of this arrangement, and you will show the second feature, which is really the big film "—it could be "Gone with the Wind" or something like that. It would not matter that they were paying a slightly less price, because in that way the independent American company would become entitled to a share of the 17 million dollars which otherwise they would not get.

That is the kind of thing the President of the Board of Trade must look out for the whole time. I think the hon. Member for Bury (Mr. W. Fletcher) understands that point from his own experience as an independent exhibitor. These difficulties are bound to crop up in such an Agreement, and it is wrong to attack the right hon. Gentleman on the ground that he made a bad deal, because it would be remarkable if, in dealing with business men from Hollywood, there were not a few apparent loopholes to begin with in such an Agreement, and I doubt whether there are many people who have secured so much from Hollywood as the President of the Board of Trade has in this Agreement. Provided it is watched, it should be all right.

The next point he must make clear is exactly what will be the extent of the American film production programme in this country. When I raised the matter last on the Adjournment on 30th April, the Minister said it would be agreed that they would not produce more than 12 films a year. We have still not heard any more details about that, and it is rather important for the British industry, because those 12 films will count towards the British quota and will secure studio space here and all the rest of it. The next thing he must see is that the Control Committee, or he and his officials, keep their eyes open the whole time to watch for deals, perhaps of the sort I was describing earlier, and other deals which could dodge this Agreement. Obviously the British company or association which will make a deal which is a disadvantage to this country will not go along to the Board of Trade and report to the President that they have just managed to diddle this country out of so many dollars, so he must keep a sharp lookout for it.

The fourth thing to be emphasised—apart from the predominant way by which the Americans will get their money out of this country, which is to buy the distribution rights of British films in America—is that there are many ways, which will not make a great deal of money, but by which the good relations between America and England can be vastly improved by the use of unremitted sterling under this Agreement. At the moment there is some serious danger that relations between this country and America may become damaged by this Agreement, because there will be some £12–14 million worth of money lying about at the end of the next two years which must be spent somehow. It is really hot money, and it must be spent or they will feel they are cheated.

If they feel they have not had any value for this in any way, there is bound to be bitterness. One does not want bitterness set up in an arena like the film world, because, after all, the film is one of the biggest propaganda media in the world. It is important to keep the thing on the highest level of statesmanship by saying: "You were kind to make this Agreement to help us in this way. Now let us try to keep it on something more than a purely commercial level. Why not, for instance, use some of your unremitted sterling to encourage British documentaries which can be made here and shown in America, or to make British newsreels which can be made here and shown in America?" After all, the American newsreels, and certainly the American newspapers, although America is well supplied with newsprint, are some of the worst informed of all, and it would be a good thing if one could have a newsreel shown in America which would really give the European scene. It could also be used to encourage international or Anglo-American cultural chairs at universities and institutes, and perhaps the best British magazines and periodicals of a cultural type in America.

Another thing which I hope the right hon. Gentleman can suggest to the right people in this trade is that in 1900, at the beginning of this century, one-third of all the books sold in America had British titles, and today only 2½ per cent. have British titles. I think my figures are right.

Mr. Harold Macmillan (Bromley)

Does the hon. Member mean "made"?

Mr. Wyatt

No, originated in Britain. It has been suggested to me that perhaps a British bookstall set up in New York by the use of this unremitted sterling would have a big trade. The last thing I want to mention is the question of providing finance for the British independent producers. This Agreement will, of course, open the doors to serious dangers to the British film industry if it is not adequately checked. We have the quota but we must also have with it the provision of finance for the independent producer. On 30th April, in the House, the President of the Board of Trade said this in answer to the case I had made to him: I can tell the House that our investigation of this financial problem is now nearly complete, and I am now in a position to say that the arrangements I am making, details of which I hope to be able to announce in a few days, using existing financial and distribution facilities in the industry so as to strengthen them and put them on a sound financial basis, will be such as to provide a means of guaranteeing to every independent producer that if he has a reasonable project and a reasonable budget … he will not be prevented from going on by lack of finance."—[OFFICIAL REPORT, 30th April, 1948; Vol. 450, c. 881.] It is seven weeks since the President said he would make the announcement within a few days.

I know it is difficult to try to persuade private enterprise to take a risk. We have seen that over a long period. The film industry, of course, is a trifle risky; private enterprise does not like the look of it at the moment, despite the fact that the quota and the Films Agreement have been arranged. If the President cannot persuade private sources to produce the money which is essential, the industry will fall completely into the hands of Mr. Rank and A.B.C., who will be turning out their own films very cheaply. Mr. Rank says that he will be making 60 films in the year beginning next October. His organisation can fulfil their own quota and not bother about finance for independent producers. They need not worry, for they know they can show any film which they make. If we do not provide finance for the independent producer there will be a serious threat to the quality of British films. It is, in fact, already beginning to take shape. It is essential that the President should use the power under the Borrowing and Control Act to raise this money for the reconstruction of the industry if he cannot get it from private sources.

Mr. Granville

In view of the fact that it was stated recently in "The Times" that the President of the Board of Trade has said there would be no subsidy, can the hon. Gentleman tell us where the money is to come from?

Mr. Wyatt

Under the Borrowing and Control Act, the Minister can have the money raised from private sources, but will guarantee it in case anything should go wrong. I have read what he said and I do not think it precludes the possibility of using that Act. At the moment many substantial and important deals which could be made with America by the British film industry are being held up because of the lack of the initial impetus of money which is required from independent sources.

8.53 p.m.

Mr. William Shepherd (Bucklow)

Many hon. Members are waiting, as the hon. Member for Aston (Mr. Wyatt) has said, to hear details of the means by which the President proposes to finance the film industry. If he succeeds in devising a system which will stimulate efficient, economic production, at the same time safeguarding the public purse, he will need to display a good deal of ingenuity and will have succeeded where his predecessors have failed.

This Agreement has had too satisfactory a reception. Whilst it may give a certain amount of satisfaction in some quarters—in the immediate sense—it is contrary to the long-term interest of this country and the industry. The best thing that can be said about the Agreement is that all sides are dissatisfied with some part of it; obviously therefore, it cannot be completely one-sided. We are accustomed now in Parliament to Ministers making agreements which are not in the best interests of the country. The best thing we can say is that on this occasion there was not an expensive perambulation to some distant part of the world to secure it: it was arranged in this country.

Mr. Wyatt

Perhaps the hon. Member will tell us exactly what other agreement he would have made which would preserve the British film industry?

Mr. Shepherd

The hon. Member for Aston is too impetuous, for I was obviously coming to that point. I did not expect for one moment that the President of the Board of Trade would get the better of Mr. Eric Johnston. It is difficult, of course, for Ministers of a British Socialist Government to deal efficiently and confidently with their ministerial counterparts, but when they have to deal with some of the toughest of American business men we hardly expect that to end with Mr. Eric Johnston being under the table. Mr. Eric Johnston is by no means under the table.

It is true that if we are to preserve the exhibiting side of the film industry in its present state and to have the same number of programmes and cinemas, an agreement something like the one entered into was inevitable. But I suggest that the time has arrived when we cannot afford to spend £17 million upon films from abroad. This afternoon the President of the Board of Trade said that we are spending too much money on tobacco, and of course we are. But there is some sort of revenue justification there. It is certainly true that we are spending too much money on films, and the whole country at the moment is living in a fool's paradise which must shortly come to an abrupt and perhaps a tragic end. We are living beyond our means and sooner or later the storm will break. The Government should have taken a stronger line over the whole issue. Before the war we were sending to America roughly £4 million a year in film revenue. Now we are proposing—

Mr. Benn Levy (Eton and Slough)

Before this Film Agreement we were spending at the rate of £11 million.

Mr. Shepherd

I said before the war. The hon. Member is correct, but I was pointing out that there has been an alarming increase in the amount of American films which we bought. If we took £4 million worth as the average before the war, during the war it went up to nearly £17 million, and the time has arrived when this country cannot afford to pay such sums of money. We have to face the fact, whether we like it or not, that there has to be some radical alteration in the amount of money we are prepared to spend. I do not think the method proposed by the right hon. Gentleman is a good one. It is dishonest to say we are going to have the films on some sort of "tick" and hope that it will work out, and then to place on the Americans a lot of irritating restrictions. When the Americans sell us films they expect to be paid for them, and if we cannot pay for them it is better not to buy them, or to make some more satisfactory arrangements.

I believe the time has come to abolish the double-feature programme which is a sheer waste of our money and resources and to get down to a lower standard of one feature-film for each performance. It should be appreciated that we are not dealing with a temporary situation. So long as most of us will be living we shall be facing a shortage of dollars in overseas currency, and therefore it is no good acting as though we were tiding over a temporary period. If we are prejudicing our ultimate position by taking this temporary advantage it is not the right course to pursue.

We are to allow the Americans to invest money in all kinds of ventures. The President of the Board of Trade has said that they can invest money in hotels, and very rightly he got into trouble for saying that. What is more ridiculous than to tell the Americans that they can invest money in hotels in this country? In the first place, they cannot build hotels. We have not the resources with which to build them, and they will not send the materials over for us to do so. What hotels need are furniture, furnishings, cutlery, carpets, crockery, linen, all the things that America cannot or does not supply.

It is sheer nonsense to say that the Americans should invest money in hotels, because what we are doing under this Agreement is to say that we will transfer our valuable fixed assets to America in return for useless second-feature films which people ought to be paid to look at instead of having to pay to look at. We are transferring valuable fixed assets to America for something which has no value whatever. What is more, we are saying as a consequence that next year and the year after we shall pay to the Americans interest in dollars on the investments they are to make in consequence of taking a share of our fixed assets. I can see no merit at all in encouraging the Americans to take our fixed assets and for us in return to take the trashy second-feature films which they send over to us which are an insult to the intelligence of anybody and a prostitution of the art of film production.

I wish to turn to what are really the bad features of this Agreement. Under the Agreement the Americans are allowed to buy an awful lot of things and they will have an awful lot of money in their pockets. In fact, they will have approximately £12 million in their pockets to spend each year. It is no use saying that we are to have agreements to ensure fair competition.

Mr. Eric Fletcher (Islington, East)

How does the hon. Member arrive at the figure of £12 million?

Mr. Shepherd

I am assuming that the amount of dollars which they are to be allowed to take out is of the order of £4 million, and I am assuming that they will send films which will yield them a revenue of £17 million. Therefore, I was assuming that £12 million would be the amount which they would have available.

Mr. Fletcher

Should not the hon. Member make an allowance for the new quota provisions which have recently been announced?

Mr. Shepherd

I did make an allowance by reducing the balance by £1 million. It may be that the figure I have quoted will be reduced to fro million. Let us say that the amount will be £10 million which they will have to buy something they want. Is that indulging in unfair competition? Who is to say that it is unfair and who is to prove it? They will have the money. They will be able to buy our stars and our producers, and export the resulting films produced by America to the United States, thereby getting a good many dollars out of this country. The drain from this country will not be limited merely to the £4 million which we are supposed to pay them under the initial Agreement. Indeed, the American companies in this country will be the spivs of the business. They will be rolling around with their pockets full of pound notes with which to buy anything they can. It is no use saying that it is unfair competition if a man has the money and wants to engage a film star, a producer or buy a story. It would be extraordinarily difficult to say that it is unfair to buy something if he pays us with his own money.

As a consequence of this Agreement we shall have an enormous amount of money chasing the film resources of this country. It is true that we are entering into a deflationary situation so far as the normal economy of the country is concerned, but we are not entering a deflationary situation in relation to films. I suggest that the effect of this Agreement will be to do the very thing which we do not want to do at the present time, that is, to force up the cost of film production in Great Britain. The solution of our problem as film producers does not lie in the President of the Board of Trade shovelling out public money to support the Government. It lies in getting film production on an economic basis so that every man who wants to put finance into it can do so with the prospect of a reasonable return and with reasonable security.

I suggest that the whole effect of this Agreement will be to destroy the chance of getting economic productions in Great Britain. What do we want to do at the present time? We want to get productions of first-feature films at a cost of about £50,000. We can do that if we do net get enormous pressure from people with money to burn. What we are going to get, I suggest, as a consequence of this Agreement is a very large number of people running around this country with money to burn, and the prospects of our getting economic productions, which will give us a return here and in the foreign markets, will disappear.

For these reasons I do not think that this Agreement can be commended. It is an Agreement which, admittedly, eased a situation which was difficult and perhaps, in the immediate sense, desperate. But the whole effect of it, so far as the long-term policy and success of the industry is concerned, must be damaging. I regret to see that the Government have bought a temporary advantage at the cost of what must be a permanent injury to the film industry in this country.

9.7 p.m.

Mr. Butcher (Holland with Boston)

I regret to say that on this occasion I do not find myself in agreement with the hon. Member for Bucklow (Mr. Shepherd). I agree with him that we must carefully consider whether at the present time we can afford a substantial dollar expenditure for films. But that is a matter of high policy with which the Government are concerned. I believe that this limited expenditure on this form of popular amusement can be made at the present time.

During this Debate the Committee has often been referred to the negotiations between the President of the Board of Trade and Mr. Eric Johnston. I think it is a mistake to regard those negotiations as being carried on in too tough a spirit. I believe that we and the American people are so closely wrapped up together in the future of the world that it is right that in all matters we should attempt to come to some form of understanding. The observations that have been made as to the hard bargaining which has gone on between those two parties has not made it any easier to negotiate any agreement we may have to negotiate with America in the future. I regard this Agreement as the best that could be negotiated in the circumstances. It is all very well for the hon. Member for Bucklow to attack the American films as not being worth looking at—

Mr. Shepherd

I must protest against that statement, because I specifically referred to the second-feature films or supporting films, the vast majority of which I say are not worth looking at. I did not say that America produced no good films. I referred specifically to the intolerable second-feature films.

Mr. Butcher

The hon. Gentleman is quite entitled to say what he regards as intolerable, but so is every little boy and girl who goes to the box office. They are perfectly entitled to decide whether they are going to spend their 1s. 3d. on the films which the hon. Member regards as intolerable, or whether they would prefer to see some of the highbrow productions which I have had the misfortune to sit through. The great consolation in most of the highbrow productions is that we receive complimentary tickets, which is a great satisfaction to everybody.

I believe that we must regard the interchange of films between this country and America as a real and positive advantage to both of the nations and it is on those lines that I would wish the problem of film production and display in the country to be faced—not as a case of tough bargaining between the Minister on one side and the businessman on the other, but as a co-operation of two communities, having in common an interest in a new form of art with, at the moment, many crudities, but steadily progressing as it goes forward. It is on those lines that I would wish to see development.

I listened with the greatest possible interest to the speech of the hon. Member for Aston (Mr. Wyatt). I agreed with much of it. The only part with which I did not agree was when he spoke on the question of who is to back the independent producer. I believe that no man is entitled to say, "I will make a film and you shall have the pleasure of taking the risk whether your money shall be lost or whether there shall be a profit." The risks should be taken in exactly the same way as they are taken by Mr. Rank, who has backed his judgment and put his money behind films.

The last point to which I wish to refer concerns the American money which may be used in this country. I do not regard it at all as the hon. Member for Bucklow regards it. He seems to think that it is a misfortune that American money should be invested over here. I believe that one of the few ways in which this country can come through the difficult period with which it is faced is by the permanent investment in this country of dollars in the form of capital investment. I think that these things will move together and make it easier for England and America to go forward into a period of prosperity in which we can co-operate with one another in art, commerce and international understanding.

9.12 p.m.

Mr. W. Fletcher

This Debate has been conducted in such an atmosphere of good humour and desire for factual information, in some contrast to the Debate which went before, that I think it would be right for me to start by trying to show why the President of the Board of Trade in his negotiations had to make certain concessions which probably he would not have had to make in other circumstances. The difficult situation created goes right back, as so many difficulties in this country do, to the Chancellor of the Duchy of Lancaster. When he was Chancellor of the Exchequer he was wildly optimistic about the way in which the dollars in the Loan would last. When people on this side of the Committee and others opposite made reference to tobacco and films, which he soon found himself in the position of having to cut down, he waived them aside in that famous sonorous voice of his and made it quite clear that nobody who criticised him knew anything about it at all. He was in a state of no dubiety.

At the last moment, he got into a panic. He cut down with the guillotine which not only put the exhibition side of the film industry into the greatest possible difficulty from which they are hardly emerging now, but also created the atmosphere of extreme annoyance on the part of the American film world which he then passed on as an inheritance to the President of the Board of Trade. It was in that atmosphere that the President of the Board of Trade had to negotiate. I think it is only fair to the right hon. Gentleman to say that these handicaps were there. But in exonerating him I am by no means exonerating His Majesty's Government, because the right hon. Gentleman whom I have just been quoting was the architect of the difficulty. I believe that what was said by my hon. Friend the Member for Buck-low (Mr. W. Shepherd) about this difficulty was perfectly right. Taking it by and large, the path has been chosen by the Government of taking a short-term advantage which is a relief to the exhibiting side of the industry, which is a relief to the producing side to some extent, but which makes very great long-term sacrifices. I believe that there can be no sort of doubt about that.

I once tried to impress on hon. Members the fact that the film industry runs in swings of about 10 years. During 10 years there is an insufficiency of products and then the man who has a film to sell has a free hand and can, more or less, dictate the terms on which he sells his films throughout the world. Then we pass over the divide, and on the other side we come to the 10 years where there is too much demand. The exhibitor comes into his own again and finds himself in a position where he can more or less dictate to the producer the terms which he will pay. I have seen fluctuations of such an order that a type of film which one could get at a 20 to 25 per cent. cut even with a flat rate could a few years later be got with a 50 per cent. cut.

What I am afraid of in this Agreement is that during the next few years advantages will be given in the permissible use of funds for the American film industry which would from their point of view be quite reasonable and legitimate. Incidentally, it is a little dangerous to talk all the time about the Americans doing this, that and the other. We should narrow it down very much more. It is not the Americans. It is the American film industry which is concerned and which will have the handling of that money. It is natural to think that they will be very much less tempted to buy hotels than to devote that money to the proper pursuit of their own line of business, which is the film industry.

Therefore, the pressure of this money for permissible uses—it is one of the most dangerous sides of the Agreement—will undoubtedly lead to the buying up gradually in every sort of way of the brains and the beauty and the bodies which are needed to produce films. The danger which has been pointed out is summed up in this way: Is this going to be a hot-house for hybrids? Are we going to have produced under the cover of the permissible use of this money a curious hybrid of film which is neither British nor American and will probably have the disadvantages of both? It really is a danger—it has been pointed out by others before, but I am not ashamed to emphasise it again—that if we lose the character of the British film through the pressure of money buying up the essentials which go to make it, we shall have lost something of the greatest possible value. I hope that the safeguards which the President of the Board of Trade has tried to introduce and suggested in the various joint councils will be very real.

There are certain dangers to which his attention should be called. At the present moment in America there is under way a big attack on the American film corporation under the Sherman Anti-Trust Act, and there is quite a considerable possibility that the big trusts, if we like to call them that, may be broken up into their integral parts. The President of the Board of Trade should be aware that there is some danger that the guarantee of those clauses which refer to the exhibition of British films in America may not be quite so easy if the breaking up of the American film trusts actually takes place after the attack which has already been announced. It is rather a curious commentary that it is a Socialist Government which has made this Agreement with the large American trusts—the monopolists in this line—but necessity makes strange bed fellows, as probably all of us know.

There is another danger in this and that is that the independent producer will lose his independence in a very short while. I can see it happening. There must be delight in the minds of the exhibitors who can begin to fill their houses again by having something to put on their screens, but there is the danger that the independents, who have gone through a very difficult and precarious period, will in the first flush of being able again to carry out the functions for which they are there, be blinded by the fact that they are coming shortly to a very different period, a period when it is quite probable that—we have the figures today—not only here but in every country in the world the production of films will be catching up on the demands. That is the time when it will be more than ever necessary to see that the independents do really remain independent, and that goes for the exhibitors just as much as for the producers. There are certain influences in this country, and I am not going to criticise them because they have been doing extremely good work producing very fine films, but, certainly, the very large circuits, which are getting larger every day, do constitute a possibility, though not by their own will and desire to do harm to anybody else, of very great danger, and what is most English in films is very often produced by the independent studios.

There is another side of this question which needs to be taken into consideration. The hon. Member for Bucklow thought that the real criticism which can be levelled against this Agreement was not so much in the details of it as from this angle. It is quite possible that, in a very short time, the value of the dollar and the need for dollars may be even more apparent and greater than it is today. We are to some extent being numbed into insensibility on the dollar question. So often we hear everybody saying that we must have dollars, and that dollars are our great problem. If one repeats a thing sufficiently long enough, even if it is a note or cry of warning, it deadens the sensibility of those who hear it. I doubt very much, from the study of the economic situation as it is today, whether we are justified in any way at all in expending this amount of money on films. The position is acute and difficult, and we may have load-shedding in whole industries before we get through, but we ought to remember that the vital industries which we have to keep going to buy food and raw materials should have greater precedence than has been given to them by this Agreement. I am not certain that, in six months' or a year's time, the money we are willing to spend will not look very improvident and give rise to attacks very much more severe than the mild suggestions and almost kindly criticisms which we are putting forward at the present moment.

The other point that needs driving home again is that the dollars this industry is going to earn are not free dollars. We talk about blocked sterling, but these are blocked dollars. They cannot be used for the urgent needs which the Government put before us daily. They are simply there in order to bring into this country more films from America. That may have a snowball effect in due course, and it may produce exactly the state of affairs which I am putting before the President as constituting a grave danger. I do urge the right hon. Gentleman to consider very carefully whether this Agreement will not have to be revised at a very early date. I hope he will be able to tell us later on how far he thinks the rather vague safeguards which he has put in will really go. What I am quite certain, from past history, we shall find is that there is a possibility that the whole effect of this will depend on idle capital. It may be the beginning of a bad situation which, in the past, produced the "quota quickie" and all the evils which arose from it in the interval.

On the other hand, it may be, as has been suggested, that it is the beginning of an era in which both sides, desiring the essence of what they think right in the film, will have a proper interchange of films between America and this country, with more British films going there than we have seen before. That will depend to a great extent on how this is administered, and how it is administered will depend on how certain phrases are to be translated. How are we going to say what is fair and what is not fair? When we go into negotiations with people, I think that the times the expression "This is not quite fair" is used must be something like 100 per cent. We cannot define it. There is no means by which we say what is a fair practice and what is not.

As a final note of warning to the Minister, I feel he must take this into consideration. The myth of the tough American business man has been enormously over-stressed. I do not believe that American businessmen are any tougher than British, French or Chinese—or even those who come from Birmingham.

Sir Patrick Hannon (Birmingham, Moseley)

Does my hon. Friend make any aspersion on Birmingham?

Mr. Fletcher

I was praising them as being hard-headed businessmen, quite capable of holding their own in the House or in business.

Sir P. Hannon

Hear, hear.

Mr. Fletcher

When the next election comes, we may have an even better selection than we have now—[HON. MEMBERS: "Oh."] I was looking straight in front of me.

The Deputy-Chairman (Mr. Hubert Beaumont)

I think we had better get back to the Debate.

Mr. Fletcher

Will the President of the Board of Trade tell us how he believes the- safeguards which he has put in the Agreement, regarding the permissible use of this money, will ward off the danger that this is a means by which the essence of the British film industry will in a few years time pass out of the hands of British ownership; and will he tell us how he thinks this Agreement, as it is continued in years to come, will get more films shown in America and the use of the dollars received from those films, no longer walled in in the very narrow sense constructed by this Agreement, but available for general purposes which arc much more important?

9.28 p.m.

Mr. H. Wilson

The short Debate which we have had on this Films Agreement has been characterised by very great fairness on the part of everyone who has taken part in it. The right hon. Member for Aldershot (Mr. Lyttelton), in his comments, was very fair indeed, and I hope that he will not mind my saying that his remarks were in marked contrast with the rather ill-conditioned attack on the Agreement made in certain sections of the Press, for purely political motives, by persons not concerned with the merits or demerits of the Agreement. The right hon. Gentleman, on the other hand, praised the Agreement in one or two respects. He certainly understood the background against which it was negotiated, and, where he criticised, I think that his criticisms were at least not unfair.

He began by condemning the very long delay before the Agreement was published. He said that it seemed rather as though His Majesty's Government were ashamed of the Agreement in holding it up for so long from the light of day. I have explained to the House, and I will gladly explain to the right hon. Gentleman, that the reason for the delay was the fact that this Agreement was signed and made with a somewhat scattered industry in the United States, and there were many points of interpretation, not as between us and the motion picture industry of America, but as between the individual constituents of the motion picture industry of America. Therefore it was some time, and I agree with him an unduly tong time before these points were cleared up and the Agreement was published.

The right hon. Gentleman described the background of the negotiations. He summed it up very fairly by saying that this country wanted American films but was unable to pay for them at American prices. He then went on to describe what the Agreement does. What does the Agreement do? In the first place, as the hon. Member for Eye (Mr. Granville) said, it reduces the dollar drain on film earnings from 50 million dollars a year to 17 million dollars a year. We were, in fact, still paying until this week, when the Agreement came into effect, some one million dollars a week for the privilege of showing, not new American films, but the old American films which had been in this country for many months and perhaps years. We were paying this huge sum of dollars for the privilege of seeing "Ben Hur" for the twenty-third time.

The point has been made by some of those who have attacked the Agreement that we should not be spending such a figure as 17 million dollars on American films but should be spending it on food and raw materials—it is said that we ought to be spending it on bacon or something else we could import from the United States. But, as I have pointed out, we shall from this time on be paying only 17 million dollars instead of 50 million dollars, and therefore there is a considerable dollar saving. We could not have reduced that drain of 50 million dollars a year in any other way except by compulsorily closing down cinemas showing "Ben Hur" and other films to which I have referred. I know that the right hon. Gentleman never suggested, and never would have suggested, closing cinemas in order to cut down that dollar drain, but it is a fair question to ask those sections of the Press, chiefly the "Financial Times," which I think the right hon. Gentleman the Member for Bournemouth (Mr. Bracken) reads now and again, and the Beaverbrook Press, whether it was their considered policy that our cinemas ought to have been closed down in order to put an end to this dollar drain on films. If those who have attacked this Agreement feel that that was the right thing to have done, then they should have the courage to come out clearly and say so.

There was no other way of reducing the dollar drain. It would have continued at that figure until finally the cinemas were closed down by sheer consumer resistance on the part of the public who would refuse to go on seeing these films again and again. We could, it is true, have imposed an import duty on newly-imported films, which is what we did a year ago, but there was no way of reducing the earnings running at 50 million dollars a year on films already in this country. We could not do that unless we imposed the same tax on the earnings of our own film producers, and that would have meant the final death blow to our film-producing industry. We were prevented from going in for any discrimination of that kind because of our obligations in regard to non-discrimination by international treaty with the United States—by Article 3 of the Bilateral Agreement negotiated by the right hon. Gentleman the Member for West Bristol (Mr. Stanley).

I think that the worst effect—and the right hon. Gentleman said this earlier—of the state of affairs before the Agreement was signed was on our own film-producing industry. What might in theory have been a great opportunity for our producers and our film-producing industry was, in fact, a period of great unsettlement, because finance was becoming more and more difficult, and the financial condition of this industry has never been satisfactory. As my hon. Friend the Member for Aston (Mr. Wyatt) well knows, I am trying still to deal with that situation and get it in a balanced basis. The already deficient finances of the industry would have dwindled away completely if the boycott had continued and those who had to find the finance were faced with the prospect, with which they were faced, of the cinemas closing down one after another. In fact, although one or two journals have suggested that the phase of unsettlement in which the industry was placed in April and May was due to the Agreement, it was due to a hangover, particularly in financial terms, from the period which immediately preceded the Films Agreement.

The right hon. Gentleman and other hon. Members have pointed out that the total cost is not limited to the 17 million dollars set out in the Agreement itself. As the right hon. Gentleman pointed out, it is open to the American film industry to buy up the services of stars, technicians and screen-writers and also to acquire studio space. He pointed out that a very real danger was that this money might be used to an undue extent for the purpose of making imitation British films, which would count in the quota under the Cinematograph Films Act and also be exported all over the world as British films. I certainly agree that this is a danger and is something to be watched.

The Agreement is, of course, subject in all its workings to the three general principles which have been referred to in the Debate tonight, one of which is that The expenditures for any of the purposes in Schedule A shall not be such as to go beyond the limits of fair competition or be otherwise harmful to the legitimate interests of the British film industry. The hon. Member for Bury (Mr. W. Fletcher) described that as rather vague. I cannot disagree with him. It is vague. He asked what was meant by the word "fair," on which it is possible to place different interpretations. As he knows, the operations of the Agreement are subject to the guidance and control of the Control Committee on which the Board of Trade and the Treasury are represented. That Committee has to see that the basic principles of the Agreement are not, in fact, defeated during the period of the operation of the Agreement. The word "fair" is one which can only be interpreted, so far as this industry is concerned, in the matter of the number of films to be made here with this blocked sterling.

As I have already told the Committee, the figure of 12 films in the year was freely discussed in the negotiations, and I find that that figure was quoted by Mr. Johnston in the United States after his return. It is a fact that I said on 30th April that studio space is the key to the situation. Unless the American producers have studio space they cannot do so much direct damage to the interests of British film production. I also said on that occasion that we were prepared to take steps to prevent individual American producers trying to book up and hire studio space before the Agreement came into force and before the Control Committee was set up. That matter is subject to control.

I agree with the right hon. Member for Aldershot that the best use of the blocked sterling is to promote the showing of genuine British films in the United States. That is how the Agreement was intended to operate, and is, indeed, already operating. Already, as a result of this Agreement and the blocked sterling available, our films are getting far better bookings in the United States than they have had over a very long period in the past. I agree that that does not earn us a single additional dollar at the present time. The right hon. Gentleman is right in that, but it does help our balance of payments position in the future. As the hon. Member for Bury said, our dollar problem is not one that is going to disappear in the next two years, and certainly anything we can do to help the position of our film industry to increase its productive power, and, above all, to strengthen its foothold in the American market is something which can give us direct and lasting dollar benefits.

It is a fact, as the hon. Member for Eye said, that recent experiments in getting British films shown in the United States have not been as successful as their promoters had hoped, but many difficulties have had to be faced. Not the least of them were those referred to by the hon. Gentleman, and not merely the language difficulty but difficulties of getting acceptance of our films in the United States. We have had the Rank experiment and other experiments, which were very successful in a limited sphere, with some of our best productions sent over to the United States under capable sponsorship. We have had films made by Sir Alexander Korda, which have been pushed in the United States by yet a different technique of exhibition. I am certain, and I am sure that the Committee will agree with me, that we would never have succeeded in getting admittance of our films to the United States on a satisfactory basis as long as it was being done against the atmosphere of hostility and mistrust which was generated by the Import Duty and the boycott.

Another point, which takes up one of the matters mentioned by the right hon. Gentleman, is that to get our films established in the United States would involve a considerable cost, a cost, moreover, in terms of dollars. From now on, following the agreement, although we do not gain a single dollar from the showing of British films in America, that cost will be borne by the American motion picture industry. Indeed, the full earnings, over and above the 17 million dollars referred to in the Agreement, will depend directly on the energy and success achieved in pushing British films in North America.

Mr. Granville

Does that mean capital exploitation?

Mr. Wilson

Yes, indeed. There have been many comments in the American Press on this Agreement. The American Press have taken a very different view from that taken by the sections of the British Press to which I have referred. One of the significant comments by one of the American motion picture papers shortly after the signature of the Agreement was that the British—and here I quote— have taken an exceedingly long-range viewpoint of the whole matter and are using the Americans to build up their industry. One executive declared: The only way we can build up the 17 million dollars which we are assured is in direct proportion to the extent to which we build up the British industry'. That is a fair comment on the part of one of the American journals on this Agreement.

My hon. Friend the Member for West Nottingham (Mr. O'Brien) and the hon. Member for Eye, in their brief comments, on the whole praised the Agreement, and I would like to thank them for what they said. I entirely agree with the hon. Member for Eye that this Agreement is not all that we should have liked. If we had written the Agreement ourselves and had not had to negotiate it with anybody else we could have got off scot-free, but these agreements are not made in that way. The hon. Member for Ashford (Mr. E. P. Smith) made a speech of slightly different tone. He complained that I had never seen the screen-writers. I have never been asked to do so. If the screen-writers had asked to see me I should have been only too glad to have met them at an appropriate time and to have listened to their views on how I ought to carry out my job. I might possibly in the course of the discussions add a few words on how they ought to carry out their job, but I am quite sure that my remarks on that subject would not be as helpful as their remarks on my performance.

Mr. E. P. Smith

Can I say to the right hon. Gentleman that we are quite ready to receive any amount of advice?

Mr. Wilson

Yes, I think as a matter of fact that they need it. Speaking now as an ordinary cinema goer, and in a purely private capacity, I think some of us are a little bit tired of some of the stuff they have been turning out recently—this is no reflection on the hon. Member for Ashford (Mr. E. P. Smith) about whom I want to say something in a moment. We are getting tired of some of the gangster, sadistic and psychological films of which we seem to have so many, of diseased minds, schizophrenia, amnesia and diseases which occupy so much of our screen time. I should like to see more films which genuinely show our way of life, and I am not aware, apart from some of the pronouncements of the leading members of the Opposition, that amnesia and schizophrenia are stock parts of our social life. I should like the screen writers to go up to the North of England, Scotland, Wales and the rest of the country, and to all the parts of London which are not so frequently portrayed in our films. They would indeed be making films which could be made nowhere else in the world, and which not only our own cinemagoers but the cinemagoers of the whole world would be anxious to see. The right hon. Gentleman was on good ground when he said what British films exported ought to be.

I am not commenting on the film of the hon. Member for Ashford. In that connection may I say that I never set out to drink Mr. Johnston under the table but, equally, I was never carried home from any of the negotiations as he suggested. To correct any misapprehension, let me say that the fact that Mr. Johnston spent two days in bed in the course of the negotiations was entirely due to the effects of our intemperate March climate on a Hollywood constitution. However, I am sure the hon. Gentleman will wish to know that there have been some preliminary negotiations with the Russian Government on an exchange of films. Here again I am sure the right hon. Gentleman will agree that it would be valuable if some films showing our way of life could be imported into Russia, even if we did not make very great financial gain out of them—because I am not quite certain what we would do with blocked roubles.

Mr. E. P. Smith

I could make a suggestion.

Mr. Wilson

The hon. Gentleman may like to know that one of the ten films of ours that have been asked for is his own "Shop at Sly Corner." I congratulate the Russians on their taste, even if I cannot pretend that the "Shop at Sly Corner"—which I personally enjoyed—really shows our way of life very fully.

Mr. Smith

Is the right hon. Gentleman aware that I think it is a shocking film?

Mr. Wilson

To be quite honest, I have only seen the play, and I was judging from that, and I think the hon. Gentleman has some responsibility for the play, at least.

The hon. Member for Bury (Mr. W. Fletcher), whose speech was so different from the speech he made earlier in the afternoon on cotton—[An HON. MEMBER: "What did the right hon. Gentleman expect?"]—It was made in a very different tone. He expressed anxiety which many of my hon. Friends have expressed, and which I myself have expressed at various times, about the pressure on our film production facilities through the permissible and allowed uses coming under the schedule in the Agreement. As I have said, studio space is the key to the situation, and as long as we control studio space that puts a definite limit to the amount of unfair pressure on our own legitimate film interests. However, I agree with the hon. Gentleman that we have to use this period to get our own film producing industry into proper shape.

We have to get costs down, and even though there will be a certain inflationary pressure from the expenditure of the blocked sterling, there is no more urgent need for the film industry now than to reduce its production costs to increase its efficiency. That will be one of the duties of the production committee which has been referred to and of the joint production committees which are being set up at the studio level.

We must also solve—although I cannot go into it tonight—the problems of finance and distribution outlets for independent producers. When that is done, when the industry is really tackling the problem of costs, we shall see some hope for the future of the industry. One of the most powerful aids in this matter will be the new quota, which we shall be debating presently.

Perhaps I might sum up the position. The Agreement—which I do not pretend is perfect—pulls out both our own cinema-going public and our dollar expenditure on the one hand, and Hollywood on the other hand, from a very difficult situation which, quite frankly, was harming both. The right hon. Gentleman was absolutely right—the fundamental situation is that we want American films. We do not want them as badly as that, but a lot of our people want to see them. In any case, we must have them if we are to keep our cinemas open, for we must keep our cinemas open if we are to build up our own industry. On the other hand, we cannot afford to pay for the films. It is true, therefore, that we are not in a position to dictate terms in such negotiations as those which resulted in this Agreement. That is why I admit the Agreement is not all we would like it to have been. That is perhaps one reason why it is vague, indefinite and imprecise in its drafting. In addition, there is the language difficulty to which the right hon. Gentleman referred.

The Agreement provides a short breathing space for our film industry. It has introduced into it a greater degree of settlement and a greater possibility of increased production. Since the Agreement was signed, we have now something like 300 more technicians employed in film production, even though many studios, in an attempt to increase efficiency and to reduce costs, are now carrying out their productions with a smaller number of technicians. The industry is working at a greatly increased rate of activity, compared with the position before the Agreement was signed. With this Agreement, which settles the position for two years and, in some respects, for four years, we have provided a breathing space for our own industry. For reasons mainly outside its control the industry failed to make full use of the period of boycott, when it could have greatly increased its production and occupied a greater proportion of our screen time. During this breathing space—the period of the Agreement—with the assistance from the financial arrangements I am making—

Mr. Wyatt

The right hon. Gentleman will remember saying on 30th April that he hoped to be able to announce the financial arrangements within a few days. I do not know whether that justifies the suggestion that amnesia is a national characteristic. Can he say how long will be "a few days," as some seven weeks have now elapsed. It is very important that, if he cannot get the money from private sources, the President should use his power under the Borrowing and Control Act.

Mr. Wilson

I am anxious to avoid solving this problem through the medium of public money of any kind, even if it were to be self-repaying public money. We are all anxious to find some other way of doing it. The "few days" has been rather a long time because financial circles in this country have unhappy memories about film production. It is not easy for me, even with all the shotguns in the world, to bring about the marriage I want to see between finance and the film industry. The shotguns are still pointed at both parties and I hope the marriage will be carried out in the relatively near future, although I will not commit myself to a time.

But, with the assistance provided by these financial arrangements when they are complete, with the much greater financial settlement in the industry following the film Agreement, with the assistance given by the quota, and with the active demand for British films, I know the whole Committee will hope and expect that the British film industry will now put itself on a sound economic basis and go all out for maximum production at the minimum cost, and, at the same time, not only maintain the high standard of quality reached a year or two ago, but improve continually upon it. If that can be achieved, this Agreement will not have failed in its main purpose, which is to build up our own production industry and to enable it to play a real and valuable part in the battle of the balance of payments a year or two from now.

Committee report Progress; to sit again Tomorrow.

Forward to