§ LORD BRABAZON OF TARA rose to call attention to the position of the film industry in this country with special reference to the action of the Board of Trade in the matter; and to move for Papers. The noble Lord said: My Lords, I have put down on the Order Paper a Motion with regard to the film industry. I cannot help reminding you that the film industry throughout the world is a very big one, and indeed a very complex one. It will be difficult to hold the attention of the House while I go through some of the ramifications of the industry 922 and its condition relative to this country to-day. I should like to start, as is only proper, by disclosing to your Lordships exactly where I stand personally in the matter. I am interested in films from the point of view of being a director of the Kodak Company, but the Kodak Company does not interest itself in production or theatres or in any way, so to speak, in the showing side of films. All it does is to sell films to anybody who wants to buy them. Therefore I have no prejudices, no feelings, no interest in this larger question of films at all—I am quite unbiased.
§ It would be almost a waste of time to try and emphasize the power of the film throughout the world to-day. It is part of our lives. We all go to the films. It is part of our daily hope that we shall go to more. The film brings us a message and it has great entertainment value. At the beginning of my remarks I would pay tribute to the American industry for the remarkable way in which it has produced thousands of films for a world thirsty for them. I do not say they have all been super films—far from it—but the demand for films is enormous, and Hollywood has risen to the occasion and supplied that demand. It is, of course, lucky and interesting that the Americans and ourselves should speak the same language. Consequently our films are interchangeable, and all over the world English-speaking films, which of course include the American ones, are predominant. That is having a most healthy effect in spreading the English language throughout the world. I do not suppose there is anything more important for the future peace and understanding of nations than that we should get a common language. The film is helping in that regard more than any other agent. If the Americans have a genius for anything in particular over and above us I should say it is for mass production. In the mass producing of anything, I suppose, the Americans stand in a class by themselves, but film production is not mass producing in any way. It is an expression of art, literature, imagination, and technical skill, and there is no reason at all why we should not be able to hold our own in this and to produce as good films as the Americans, or better. But, so far, we have not done it. The time is coming when this sad defect in 923 our national effort should have attention drawn to it. It is an extraordinary thing that the flow of films is one way from America to this country. America today occupies no less than 80 per cent. of our screen time.
§ There is a financial point on which I wish to speak briefly to start with. The earnings from American films during the war were frozen and not allowed to be exported. Then the Treasury allowed the money to go out. In 1939 £11,500,000 were passed to America; in 1942 £17,000,000 were sent to America; and now, I should imagine, the figure is round about £20,000,000. That goes entirely un-taxed. It is on that particular point I would like to say a word. Of all imports into a country I suppose a film is economically the poorest type for the reason that it has no physical advantage. You bring a plough into the country and you can plough with it; if you bring machinery you can manufacture something with it; but the importation of a film is different. Although the film certainly has an entertainment value and may have an uplift or a down drag, it is ephemeral, and consequently stands in a very different category to ordinary imports. The procedure to-day is that the negative of a film is brought into the country and has duty paid upon it as celluloid, quite irrespective of its entertainment value after it has been printed from and shown. When we as citizens of this country know how the Treasury helps us and attracts every possible penny out of our pockets, it seems extraordinary that they have not devised a method whereby some of this vast amount of money should be taxed on some different basis.
§ At present, usually, a subsidiary company operates for the American company and sends them the gains that they get, or it may be that the film is assessed for its earning power and then the rights are sold and the money passes to America in that way. But the fact remains that at present about £20,000,000 is going to America for films. And here I want to draw your Lordships' attention to a very curious thing, which is that when the money was frozen, when we had, so to speak, a whip hand on America, we were allowed to show English films in America, but from the moment the money was unfrozen not another film has been shown in 924 America. Having dealt with the financial point, to which I hope the Treasury in conjunction with the Board of Trade will give attention, I want to try and explain the organization and the method under which the film industry operates. Like Gaul, it is divided into three parts.
§ THE MINISTER OF ECONOMIC WARFARE (THE EARL OF SELBORNE)
Gaul was divided into four parts.
§ LORD BRABAZON OF TARA
Well, in Caesar's book it is in three parts. First of all, there is the producer. Of course his is an imaginative game, a risky game, a game of great technical skill, a game of great imagination. His is a world almost of its own and exceedingly difficult. Then there is the renter, who, so to speak, is the middle man between the producer and the theatre. His job is to sell the film, to place it in the theatre, to advertise it and to get out all those articles you see in the many papers up and down the world about the amazing film that is always arriving next week. That is part of the renter's job. Finally, we come to the exhibitor, and the exhibitor is what we know as the ordinary theatre owner. I am going to speak of them afterwards as theatres. You may have people who produce and do nothing else. There are two outstanding examples of that in America—Univcrsals and United Artists, although they are tied up with the rent people at the same time. Then there are renters and independent renters who have got together in a very strong organization about which I will say a word later. And then there are the exhibitors owning the theatres. In America there are 16,000 of them and in our own country about 5,000.
I want to draw your Lordships' attention to the organization of this industry in America. There are open and vertical trusts having organizations—big companies—that not only produce but rent and own theatres where they show their own films. It is just as well your Lordships should know what the five are. There is Metro-Goldwyn-Mayer, there is Paramount, there is R.K.O. which stands curiously enough for Radio Keith Orpheum, Twentieth Century Fox, and Warner Brothers. They, as I have just said, produce and rent. They have between them certainly 50 per cent. of the most worth-while theatres in America.
Now we pass to the English side. On the English side there is a vertical trust in 925 the original Gaumont-British block. They produced, rented, and distributed, and had their own theatres. Then Mr. Ostrier, one of three brothers who controlled it, went in for production, and from that day, instead of gaining money, they lost money. It was a very sad thing for English films when that occurred, because subsequently a company was floated, Odeon, and it was laid down in the prospectus that it would be no part of their business to produce, showing that people had lost heart in the ability of this country to produce, a very sad thing indeed. Apart from those two, Gaumont-British and Odeon, there is the A.B.C. That was a result of the activities of Mr. Maxwell. Besides that there are, of course, countless independent theatres. It is here that the figure of Mr. Arthur Rank looms large. I have met all these people, and I am not here to plead the cause of Mr. Rank or anybody else. I am trying to put the situation, as I see it, as to what is best for the film industry. But it is a curious tiling that, although many people disapprove violently of what may be called the Rank policy, I have never heard one single word in the film world against Mr. Rank personally. That is a very remarkable thing, and I think it is a great tribute to him.
I believe that underlying all his activities—because after all he started as a rich man, who was not out to accumulate money—is his desire not only to see good British films produced but that those films should go overseas and into America. I believe that that is in the heart of all of us too. We want to know why that is not happening. Mr. Rank centrals Gaumont-British and he controls Odeon, so that he has by that control no less than 600 out of 5,000 theatres in this country. The only rival he has is A.B.C., Associated British Cinemas. They have 350. Here I want to put a question to the Government. They are now telling people what they ought to buy and what they ought not to buy. How was it, then, that they allowed a. quarter share of the A.B.C. company to be sold to Warner Brothers, one of the American leading vertical trusts, when it would have been better if it had been sold to some English industry? No doubt the Minister will say a word on that in reply.
The Rank group, if I may so call it, speaks with great power to the Americans. 926 Mark you, there are some people who think Mr. Rank has approached this subject from a very curious angle. They put the analogy that if you were trying to set up a big motor business you would not first buy all the motor car shops in London, and produce a motor car afterwards. It is not quite analogous, but I think a good deal of the animus against Mr. Rank is due to the number of theatres he owns. I want to say that that is not so vicious as many people imagine, for this reason, that nobody would be wise or business-like to buy all the cinema theatres in England, because if he had too many he would put himself in the hands of the Americans. They would then be able to dictate the price he should pay for films, because people will have American films, they will have the best films, and if he had to get them and there were no other theatres he would have to pay the price the Americans wanted. The danger of a monopoly from the point of view of theatre control is therefore more imaginary than anything else.
But the Board of Trade have taken up a most singular attitude in the matter. They have—I think without any powers— got him to agree not to buy any more theatres without their consent. It looks as if that action can only have been taken because the Board of Trade think there is a monopoly. Having made up their minds that they think there is a monopoly, and having taken this attitude relative to Mr. Rank, they then set up a Committee to inquire into the question, if there is a monopoly, what should they do about that monopoly—a most extraordinary situation. It is rather as if you sent a man to gaol first and tried him afterwards. That is the sort of attitude that the Board of Trade have taken up and I see they have now extended their activity to A.B.C. Only this morning it is said that A.B.C. are not to buy any more theatres without their consent, a very curious action which I think wants explanation, especially as it is taken before the Committee they have set up has reported.
Now I want to impress this point on your Lordships. Shakespeare once said "The play's the thing." And it is the same in the film industry. The film is the thing, nothing else. You or I and the people of England do not go to cinema theatres because they are big buildings or 927 because they are very magnificent to look at. People go to see films that they wish to see. You may find one of these great palaces empty one day and then, perhaps the next day, because there are notices outside that a certain film is being shown, that theatre is crowded. That is because, as I say, people go to see films, and I maintain that no combine or monopoly will ever stop the people seeing the film they want to see. If the big circuits try to bar a film there are still the independents, and if the independents bar it, then people will go and see that film in a tent in a field. They will see the film they want to see. For that reason I do not think there is anything like the danger people envisage in the acquisition of many theatres in one block. After all, if you have a theatre, what is your business? It is to get clients to enter the theatre. Why should you ever want to bar any particular film?
I pass now to the renters. Here a very curious situation arises. The renters have combined themselves into an organization called the K.R.S., the Kine-matograph Renters Society. It is a curious body because they are all bound by the decision of the majority, and on the council of this body the American vertical trusts have a majority. Their object, of course, is to try and squeeze as much money out of the exhibitor as they possibly can. It is curious to note that their success is such that the amount paid for films in this country exceeds what is paid in America on a percentage basis. In America you have to pay 35 per cent. of your takings and here you have to pay 42 per cent. This combination of vertical trusts in America was held by the Government to be a restraint on trade, and the great combines were put into the Courts. After a long argument an agreement was come to without anybody being sentenced. A consent decree was agreed to in America and Clause 5 of that decree forbids conditional selling. Conditional selling is rampant here. Conditional selling means that if you take one film you have got to take another. If you take a film that is not A class you have to take a film of A class. That was held to be in restraint of trade in America, and I urgently put before the Board of Trade that the situation in that regard wants looking into now. Instead of that, it 928 is allowed to drift on and many people are exceedingly unhappy as to how that particular organization of renting works.
Now I want to try to show how very little national we are in this matter and how exceedingly international. There is a gentleman—I do not know him; I know nothing against him, and he is probably a most charming and excellent man— called Eckman. Mr. Eckman is the managing director of Metro-Goldwyn-Mayer in this country, a representative of one of the biggest of the American vertical trusts. He is a very prominent member of the K.R.S. and dominates it, I suppose, as much as anybody can. His interests are, of course, American, but we find him on the Films Council. The Films Council is an organization set up by the Board of Trade to advise the Board about British films and how the British film industry may be made more healthy. Yet upon that organization we find this protagonist of America—a most extraordinary situation.
There is also an organization called the Hays organization, about which I should like to say a word. Mr. Will Hays is an ex-Postmaster-General in America, and is head of an organization which combines all the American industry. It is true to say that in America these big firms fight against each other, but outside America they speak with one voice, and that voice is the voice of the whole organization. Its name is the Motion Picture Producers and Distributors of America, and in this country they have as representative a Mr. Fayette W. Allport, about whom one never hears. He is ill at the moment. He is always in the background, and he is the power behind the American film interests in this country. The American organizations outside America speak with one voice. What have we in this country? We have no organization whatever which can speak for the film industry in this country—nothing at all. It is high time that the Board of Trade used their good offices to try to get the British film industry together to speak with one voice. It may be a voice crying in the wilderness, it may be a small voice, but at any rate it will be a voice; and that voice we do not hear to-day.
While we are talking about the Board of Trade and its investigation into the power of monopoly, I should like to ask the noble Earl who is to reply whether 929 the activities of the Hays organization in this country will be looked into by that Committee, because: if that is not a mono- poly I do not know what is. To look into Mr. Rank's activities and not into the American activities is to prick a mouse and to leave an elephant wandering about the country. I find—I do not know whether I am right here—that there is in the Board of Trade a desire to keep the English industry in small pieces rather than in big organizations. It may well be that when you have reached a position from which you can talk to America on equal terms there may be parts of your organization that you can reorganize, and take away production from theatres, or something of that kind; but it is highly inadvisable at present. From the point of view of national policy nothing is being done, and when a man like Mr. Rank emerges, who may be strong enough to fight the Americans, he is worried with pinpricks. I do not believe that that is wise.
I have never been to Hollywood—I should like to go one day—but I have the greatest admiration for that community with its. difficulties, its imagination, its aspirations, its failures and its successes. I am certain of this, that when they have a very depressing time somebody has only to propose—of course within closed wall? —the health of the President of the Board of Trade to bring back hilarity to them. I do not know whether your Lordships realize that thirty per cent. of the net revenue of the film industry in America, the fifth biggest industry in that country comes from this country. I do not in any way complain about that; what I plead for is that there should be trade both ways. It is intolerable that so many films should be sent here and that we should not be able to send films to them. I am not saying for a moment that they are trying to stop us illegitimately. It may be that we have not films worthy to be put on their market, although that seems difficult to believe when we see some of the lower-class American films; bat it is true to say that we must produce good films before we have a right to expect them to go all over the world.
I now come to what is far and away the most important part of the film industry, and that is the production side. Here the whole situation is very tender. There is a great gambling element in it, 930 and unless you have the money to ensure continuity and to carry on you will always fail. A great firm like Metro-Goldwyn will produce about forty films in a year, and out of those some six will net ninety per cent. of their money; the other thirty-four will bring in only ten per cent. If that is true of that great organization, with its enormous experience, it will also be true of people who are starting in the film industry. That is why it is exceedingly dangerous to go into production unless you have the wealth and the experience 1o carry on through difficult times until you get a "winner," because only when you get a "winner" will you be able to go forward.
It is, however, through production, and not through owning theatres or through renting, that the film industry is worth while, because it is only through that production that we can express ourselves in other countries. If we have anything to show the world about our own way of living or about anything which is peculiarly English, it can be done only by ourselves. The enormous propaganda importance of production to this country is not, I think, appreciated by the Board of Trade at present. On the production side we have been through a very tiresome time. When we were being "blitzed" every day, production fell to almost nothing. The great Sir Alexander Korda went to America—quite rightly; nightly bombing and the production of films do not go hand in hand—but Mr. Rank carried on: a very meritorious action. It is now said that he has a monopoly of production space. Times are better from the point of view of bombing, and back comes Sir Alexander Korda. He comes back from America this time as a representative of Metro-Goldwyn, who have formed a company in this country of which two-thirds is American, and he wants space to produce films. If Mr. Rank was really a monopolist at heart, this is the one man for him to stop. Did he stop him? Not at all; he got all the space he wanted to produce British films. One of the troubles of the production side is this lack of space, which is largely due to the fact that the Government have requisitioned studio space. That is a thing that wants very serious investigation because some of the space he used for most trivial pur- 931 poses. If it is true, as I am sure Lord Grantley will agree, that there is a shortage of studio space, it is high time that the Government co-ordinated the situation and released more studio space for production.
I do not resent Sir Alexander Korda coming back, in spite of the fact that it is an American company, and for this reason —we are still young in skill of production. We have got a lot to learn. When you have got a great company like Metro-Goldwyn behind you, you have continuity of policy. You may have six or eight failures but you can build up in this country an organization which will know about film production—its artists, its scenario writers, its technicians, its camera men, and that sort of thing. You would get a community of people from whom at any time, if another company wishes to start and try its luck in producing, the personnel can be drawn and from which you will be able to get, not amateurs, but really skilled people.
What I have said will, I hope, impress your Lordships that in the matter of production you have got to be big. If you are in a small way of production the odds are you will probably fail. What has Parliament done in this matter up to now? The 1927 Act laid down that as all our screen time was occupied by American films there must be a quota and 20 per cent. of the time on the screen must be devoted to English films. That sounds grand, but you never know what the effect of Acts of Parliament is going to be. The classic example is the Act of Parliament which exempted graveyards from local rates; within three years the whole of England was declared a graveyard! You never know what is going to happen. What did happen under the Quota Act was that Americans came over to this country, and produced their 20 per cent. here. They made, deliberately, the worst films that have ever been put on the screen on purpose, so that English films stank throughout the country and everywhere. Was that a very friendly act? Is that the sort of thing we are advised to do by representatives of our Films Council? It was a most unfriendly thing to do. Then came the Act of 1938, when it was realized that these tin-pot films which fulfilled the quota were doing immense harm. The quality test was 932 introduced, so that any film upon which you had spent more than £22,000 ranked for double quota, and if you spent over £37,000 the film ranked for treble quota. I have talked to Mr. O'Brien, who leads the great trade union of cinema photographers and other operatives, and I find him a man who really redounds to the credit of this country. He is a great trade unionist who not only looks after his own particular men but has the imagination to look after and think about the industry as a whole. He considers that it would be possible to have a reverse quota in America—a quota of their screen time in relation to the screen time of this country. Personally I think that is a very difficult thing, but it might be done and the suggestion does warrant investigation.
I should like to put the point of view of Mr. Michael Balcon. Mr. Michael Balcon is a very great opponent of the American ascendancy. He is a talented producer, a charming man. He produced the "San Demetrio" film. I do not know whether your Lordships have seen it, but it is extremely good. He takes the view that as a small producer, when there were three great circuits—A.B.C., the Odeon and Gaumont-British—he had a chance of selling his films, but when he sees there is only going to be one he considers he has no chance. I cannot follow that argument at all. It assumes that the owners of these big theatres are going deliberately to show their own films even if they are bad and lose money on them. I have tried to point out before that the exhibitors will always want the best films. If they do not make them they must get them from somewhere else, and I cannot see why they should take American films rather than English films. I hope that that attitude of defeatism will not be followed.
We are going to have the great privilege of hearing a speech from Lord Grantley later in the debate. I know your Lordships will welcome him here because not only is it his first speech in your Lordships' House, but he has had a vast experience for many years of this industry. He has always ornamented it and is generally looked up to.
In conclusion I want to say this. First of all to the trade. Cannot something be done to get them together, to bury their extraordinary animosities towards each other, so that they speak with a 933 voice that means something for this country and can organize themselves in some arrangement in which only English interests are represented and not foreigners? To the Board of Trade I say this: In these clays when the Government meddles and muddles with everything, if you must meddle try to be constructive and not destructive; build and do not pull down; help and do not be a hindrance. There is, I am confident, a partnership between America and this country under which one day the film world must be better balanced than at present to teach the world many things. We do not resent American domination in any way. We are lucky indeed that the domination of our screen is by a great Ally and not by one of the Axis partners, which might very easily have happened. But the time has come to see. that this industry, so important for propaganda purpose, for the spread of prestige of this country, should grow in strength and vigour and take its share side by side with America as a great picture-producing country. I beg to move.
§ THE EARL OF LISTOWEL
My Lords, I am sure we are all exceedingly grateful to the noble Lord, Lord Brabazon of Tara, who speaks on this subject with a really exceptional fund of inside knowledge and long personal experience, for having focused the attention of the House to-day on the film industry. The cinema in these days follows close behind the wireless and the daily Press in the shaping of public opinion. It is therefore right and proper that Parliament should keep a watchful eye on the changing conditions in this young and growing industry. We all hope—I am perfectly certain the hops is shared by everyone in the House—that this industry will reach maturity at the highest level of technical and financial efficiency, strong enough to stand on its own legs in the face of any competitor from overseas, and offering to the public the widest possible range of choice in high-scale entertainment and even occasionally instruction.
The question really is whether the film industry will ever be able to reach this stage of development by the sole agency of those engaged in its operation and without any help or guidance from public authority. I believe that the history of its growth in recent years is pretty convincing evidence that, if it were left 934 alone to follow its own devices, there is a real danger that it might sail straight from the Scylla of unlimited and uneconomic competition to the Charybdis of private monopoly. So long as the industry here was made up of a large number of small firms and companies, too impecunious to do anything much other than undercut one another, there was little prospect of the improved efficiency essential to large-scale film production. A happy combination of bankruptcy and amalgamation by purchase gradually eliminated the weaker brethren, but at this point it may be fairly said that the remedy began to look almost as dangerous as the disease. A single financial interest, to which the noble Lord has already referred, acquired two of the great cinema circuits, including half of the cinemas in London, the largest distributing agency in the country, and half of the studios available for film production.
It was at this juncture that the Board of Trade stepped in, and it did not do so unasked. The Cinematograph Films Council, of which half the members represent this country, and not merely the trade from another part of the world, requested the Department to take whatever action might be considered necessary to prevent the absorption of the whole industry by one financial giant. The President of the Board of Trade acceded to this request. He asked Mr. Rank to refrain from purchasing a controlling interest in the third and last of the main cinema circuits, and to consult him before adding further to his already substantial collection of film studios. This public-spirited gentleman did not hesitate to give the required undertaking. It is not a little remarkable that we have heard no complaints from Mr. Rank, who has the largest single interest in the film industry. He does not share, apparently, the noble Lord's dissatisfaction with the action of the Board of Trade. From first to last Mr. Rank has shown a keen desire to co-operate in a scheme considered by the Government to be a safeguard from the public point of view as well as in the best interests of the film industry.
It is hard to see how exception can be taken to the action of the President of the Board of Trade by anyone who takes a completely impartial view of the problem, whether it is seen from the angle of the film-going public or from the angle 935 of the cinema owner and cinema producer. So long as we attach our present value to the free circulation of opinions of all sorts as a necessary condition of democratic government, we cannot allow one man, however wise enlightened or progressive he may to establish sole control over any of the present organs for the dissemination of ideas and information among the public. We must, at all costs preserve the independence of the Press, the wireless, and the cinema. These are the three key points for the exercise of a wholesome influence on public opinion, and their independence of monopolistic control is an indispensable safeguard for democratic institutions. What has happened already over a number of years in totalitarian States shows the intimate connexion between control of publicity and political power. But if an independent and reasonably competitive industry is desirable for a healthy state of public opinion, it is no less important if a high level of efficiency is to be reached and maintained by the film industry. I cannot imagine any industry less suited to the standardization and mass-production methods of a giant monopoly, whether the owner of the monopoly be a business magnate or the State. A film that grips the public owes its success, as the noble Lord has already said, to the inventiveness of film technicians, to the imaginative conception of a first-rate producer, and to the willingness of business men to risk their money in order to put something really original on to the screen. The vitality of the cinema depends wholly, just as much as the vitality of the stage, on its independence of Government Departments and multiple theatre owners. I cannot conceive anything more likely to kill it than a form of control that would tend to discourage experiment, to stifle originality, to cut out risk-taking, and to standardize whatever picture has the greatest commercial success.
It is for these reasons that, in contradistinction to the noble Lord who preceded me, I welcome the action of the Government in preventing what is obviously a healthy process of rationalization from degenerating into a malignant monopolistic growth, but I greatly hope that they will not rest on laurels so easily acquired. The stand-still agreement may 936 freeze the film industry until the end of the war, and it has been taken a step further by the recent undertaking from the A.B.C. circuit to which the noble Lord referred. But the partnership on which the whole relationship is based between industry and the State is one along many that will be strained to breaking point with the return of peace. I cannot see any prospect of long-term security for the public, unless the Government can devise some form of statutory safeguard against a resumption of the trend towards monopoly. The only effective safeguard is one that comes in time, and I hope that action will be taken during the current year. I sincerely trust that the Committee of inquiry that the Board has appointed will report as soon as possible, and that its Report will not have the fate of many others and be put immediately into pigeon holes. What I should like to be certain about is that the Government are in fact already turning their minds towards the future, and I hope the noble Earl who replies will have something to say on that subject. I trust that they will not hesitate to do whatever they feel should be done to encourage an independent and successful film industry in this country, and at the same time to protect the public from the serious constitutional dangers inherent in this type of monopoly.
My Lords, in prolonging this debate I will try to give you such experience as I have of this tempestuous business in which I have been engaged for some fifteen years. I feel that what we have heard from my noble friend Lord Brabazon is so well informed in general that he might well have been engaged in the last fifteen years in the battles that I have had. Before I make any further remarks to your Lordships, it will be proper, I think, to say that I am not like my noble friend Lord Brabazon of Tara only slenderly connected with the business. I am very closely connected with the film business, and with Mr. Rank's various interests (particularly D. & P. studios) during the last six years. I feel that the general public, and indeed perhaps your Lordships, are unaware what an enormous business this is, and what a colossal industry it is. It is a curious thing that some of the industries which do not sound important and are not perhaps worthy of 937 continual leaders in The Times, are indeed from the point of view of turnover greater than some of the heavier and more important and serious industries that so frequently engage the attention of your Lordships' House. I am credibly informed that the Box Office receipts in this country of the cinema industry, which now is the turnover of the cinema industry, show a considerable increase to £100,000,000 per annum. The importance of the industry in America is very considerable. They talk about it as if it were a desperately serious thing. I do not think we do so here.
We have, heard, and my sympathy is very much with the speakers, a great deal about the American domination of this industry. It is there and I frankly cannot see why we should persuade the Americans for love to stop trying to dominate the industry. I think that if we dominated any industry in this great Empire of ours we should try to stick to that domination. At the same time I do not see why we should not struggle, or why the Government should not help us to struggle to better it in a more practical manner than they do at present. We did not do for the industry what we should have done after the last war. How lucky we are, as Lord Brabazon said, that the film industry with its immense propaganda potentialities is dominated by Americans and not perhaps by some enemy country. How lucky we are that when we were joined in battle with our enemies we had a friendly neighbour with the power to assist us with propa- ganda in the British Empire. How grateful we should be that our Allies the Americans have consistently made films which show quite rightly the grandeur of the traditions of this country. In this connexion I may mention such films as "Lloyds of London" and "Mrs. Miniver." How lucky we are to have had this help. But I do not think the industry can fight its battles entirely alone, as it is doing at present.
I feel less concerned at the moment with what I may call the fiscal or trade angles than I am with propaganda angles in the film industry. There are three main channels of propaganda in the world, the newspapers, broadcasting and films. I have heard the noble Earl, Lord Listowel, speak of independence Films are always bound to be independent pro- 938 paganda because they are bought. You pay 3s. 6d. to go and see a film you like, and the public will never be dictated to; they will go to see the film that they want to see. I would like to point out to your Lordships something that may not have struck you about films. From the point of view of domestic propaganda, everyday-life propaganda, it seems to me they are the most important medium of propaganda and of education that exists. If I may for a moment mention something i that sounds perhaps frivolous, what has made little boys throughout this country say "O.K." instead of "Yes"? What has made ladies do whatever they do to blacken their eyebrows, not by the thousands but by the millions? The film business. The simplest method of propaganda to the millions is a picture. I myself, when I go into a club, am inclined to pick up an illustrated magazine rather than a written one, because it is so much easier to see something with your eye.
I admit that the Government were far-sighted in 1927 when they made an attempt to protect the industry with the 1927 Bill. What puzzles me is that, when that legislation came up for review in 1937 and 1938, they persisted with the formula that has proved itself a failure. That has only resulted, as my noble friend Lord Brabazon said, in encouraging quick pictures, as we used to call them, cheap pictures which did not redound to the credit of the British film industry. Although many suggestions were made both of a fiscal character and otherwise, that we should depart from a quota system with small qualitative alterations, it is true that the 1938 Act and the admirable Report on the industry presented by my noble friend Lord Moyne, did help the industry from 1938 onwards. The bad pictures decreased by means of the quantitative restrictions that were imposed under the Act and good pictures came on to the screen. But it is still the wrong system and I would like to see the Act taken off the Statute Book.
I have to-day drawn out a little memorandum with a friend of mine, who I think is more knowledgeable than any other human being in this country about the history of the films, and I am going to ask your Lordships' indulgence to read it:Prosperity in the film industry depends mainly on the maintenance or improvement of 939 the present economic conditions in it. Those conditions require an improved export trade and this in turn in the last analysis means an improvement in our film exports to the United States. In order that those aspirations might not be obstructed or affected by the exchange situation, it should be noted that an improvement in film exports would probably have the effect of an improvement in our film imports from that country. This would mean a higher grade of film imported and a higher level of prosperity in the British cinemas. The linking of these two factors cannot be over-estimated. A practical proposal for giving effect to this policy does not necessarily involve negotiations between two Governments. What could be attempted, and the Government might promise their good offices in bringing them into being, would be conversations between the representatives of the trade of the two countries. Only if these conversations prove abortive need we consider any direct conversations between the two Governments.One other condition of prosperity is peace in the industry. Far too much time and effort have been spent in the past over squabbles or civil war between the different departments of the industry. This is a natural result of the eternal struggle between the producer (or renter) and the exhibitor, and nine-tenths of that struggle centres round the perennial question of prices for films or the charges made by the renter to the exhibitor for the films shown. In my opinion, this struggle should be brought to an end as soon as possible and the history of the recent past has made it clear that arbitration tribunals (if necessary compulsory) should be introduced into the structure of the film trade. The perpetual conflict about film rentals, grading, bars, etc., and other similar questions, will thereupon come to an end and economic and equitable participation of the revenues of the industry between producer and exhibitor will be finally settled.I must apologize to your Lordships for being a little technical in that last part.
Pictures can only be made by writers and directors, and means to keep them in this country can only be obtained with money. Mr. Rank is the only man lately who has attempted to do so. I am the last person in the world to wish to see any monopoly in the film industry. But I personally, so far from worrying about the so-called Rank monopoly or about the fear that Mr. Rank might become a Colossus of the industry striding over it, would like to see one or two more like Mr. Rank to help us, because money is the only thing that puts pictures on celluloid. Mr. Rank did not forget the importance of improving the quality of English pictures in this country. But, however good may be the pictures that are coming along, they will be of no value if they cannot be 940 marketed well. It is no good having good commodities if markets are shut against you by arbitrary factors. Good marketing can only be achieved by what Mr. Rank has tried to do, by setting up large vertical structures with a dominant position in foreign markets such as ownership of theatres. This can only be achieved with ample finance and with all possible assistance from the Government.
I myself feel that assistance from the Government is suffering because of a body called the Films Council. I do not feel that the Films Council set up under the 1938 Act has achieved any good or that it has the right composition. I myself was a member of it for two years. I have to speak with great discretion, the Council being a statutory Committee and its proceedings secret, but as far as I can make out the record of the Films Council is an annual factual survey of the industry and the setting up of one Committee lately, a Committee to examine into the possible danger of monopolistic tendencies. The Films Council, broadly speaking, was set up to advise the President of the Board of Trade regarding the administration of the Act and to keep the President of the Board of Trade well advised regarding trends in the industry. I do not think it has done that and I feel inclined to quote to your Lordships a criticism of the Films Council made to me by a colleague of mine on the Council. He said he did not think useful advice could be given to the President of the Board of Trade on the subject of the film industry by twenty just men and a statutory woman. That is just exactly what I feel about the Films Council.
I would like to point out one other fact about the Films Council. The setting up of that Council had for its object, as I understand, the furtherance of British film making, and I hope subsequently the marketing of films. The composition of the Films Council is twenty-one people, of whom eleven are distinguished laymen outside the trade and ten are members of the film trade. Of the ten members of the film trade two, I think, are concerned with or represent film making. The other eight are divided, four being concerned with film distribution and four with film exhibition. You can take it that in this country all those concerned with film distribution or film exhibition live on and draw their life blood from American films.
941 It is no good ray offering simply destructive criticism of the present Act without making some constructive suggestions. I think the simplest thing during the war would be to try and draft some legislation, which if Parliamentary time can be given could be quickly passed without any controversy, to enable a smaller Council to be set up with no trade members and carrying with it a high odour of national interest—I repeat national interest. I would like the Committee to be a whole-time Committee, in constant touch with trade associations and Government Departments. With great humility I suggest to your Lordships that it might include an expert on education, and at this point I would like to inform your Lordships that either I am blind or there is no mention of the word "films" in the new. Education Bill now before another place. That seems astonishing to me. My second member would be an expert from the Foreign Office, and I think there should also be an expert from the industries and manufactures department of the Board of Trade and an expert from the Ministry of Information. I think the Chairman, perhaps, should be the only member not in very close contact with the Government, perhaps a man of immense financial experience, perhaps, if you like, a Member of Parliament.
My last word to your Lordships would be to repeat that this debate will have been useful if it has impressed upon your Lordships, and in so far as possible upon the public, the really enormous propaganda value of the film business. I am willing for the moment during the war to forget the industrial importance of it, but I am not willing to forget the propaganda importance of it.
My Lords, I am sure I shall carry the whole of your Lordships with me in congratulating my noble friend Lord Grantley on his maiden speech in this House. Not only because of the manner and the brevity of its delivery, but because his speech was packed with moat valuable information. I am sure your Lordships will regret with me that we had not the privilege of his presence in this House when the various Film Acts were before us. I think we might have put them into better shape if we had had his intimate and expert knowledge. As one who has been inter- 942 ested in the progress of the British film industry for many years I offer the noble Lord congratulations from this side of the House, and I am sure all your Lordships will join in those congratulations. If he will allow me I should like to make some comments on his speech and I would venture most strongly to support his suggestion that there should be an advisory council composed of eminent persons not connected with the trade. That is a most valuable suggestion and I agree that it should be a small body, although I think it ought to include one statutory woman. I should also like to support him in his plea for some assistance from the Government, especially after the war, for the industry. He did not specify exactly what he meant, but I will specify what I have in mind and I hope to carry him with me. My noble friend the Earl of Listowel has already thanked the noble Lord, Lord Brabazon, for having brought this subject up again. We have discussed it several times in recent years, but I think it is valuable in changing circumstances that there should be another debate now.
First of all I would like to deal with the action taken by the President of the Board of Trade with regard to Mr. Arthur Rank and the A.B.C. circuits. He has been defended already by my noble friend the Earl of Listowel, and I am willing to defend Mr. Dalton also despite the fact that Mr. Rank was a constituent of mine when I was in another place and I have known him for many years. It is perfectly true to say he has not a monopoly. My noble friend Lord Brabazon gave figures to your Lordships but he omitted one factor. He pointed out that Mr. Rank has about half the studio space not taken by the Government—I think that is what he meant by available space—and about 600 theatres. The A.B.C. circuit has about 400, I think, not 350 as stated by Lord Brabazon. Those are the two biggest groups of theatres. What the noble Lord, Lord Brabazon, omitted to remind your Lordships of is the fact that they are mostly very large supercinemas and that the other 3,000 or 2,500 cinemas include all the smaller ones, even village halls only showing films once a week. But it is the super-cinemas, the prestige theatres, which are owned or controlled for the most part by these two great groups. Nevertheless it is wrong to say that Mr. Rank has a monopoly at 943 present. But what obviously influenced Mr. Dalton and, I think, would influence any Government in their senses, was the danger that a monopoly might be created. After all Mr. Rank is a human being and one day somebody will inherit the cinematograph empire he has created.
I have discussed this very matter with Mr. Rank himself quite recently and I put that point to him. I suggest that his trustees would be faced with heavy Death Duties and might have to sell. I must not say what he told me, but I believe the noble Earl, Lord Selborne, is entirely wrong. He can so arrange matters that the organization he creates will not be broken up and the Government will not get fifty per cent. of the film empire as I call it, unless they accept payment in kind for Death Duties, which I have long advocated in regard to land. There is a danger, I think, of its getting into other hands. In any case—I am going to speak perfectly frankly—the political influence of the films can be enormous, and particularly the influence of the news reels. Selection of news is what really gives a newspaper proprietor his power and the selection of the news in the news reels will give whoever controls them their power. I am sure no member of my Party nor anybody with the interests of democracy at heart would willingly and without a qualm see this immense power over the minds of the citizens and on the education of the young pass into the hands of a small group. That would be a very dangerous thing. We should be very alarmed if there was any suggestion of all the great newspapers getting into the hands of one group, and I am sure my noble friend Lord Southwood would have something to say about it at once if any such thing seemed likely. Any monopoly of theatres, production, studio space, technicians, skilled writers and workers and the rest, in this vast intricate industry would, we believe, be harmful and dangerous. I cannot understand why my noble friend Lord Brabazon should come here and make a gratuitous attack on the President of the Board of Trade for acting in what I believe the majority of people would say was a perfectly proper manner. He 944 wanted to safeguard the position, and without using the cudgel of a Parliamentary Bill he spoke to the owners of these two great groups of cinemas, was met immediately and handsomely by them, and the immediate danger was averted.
Because we have to think of the future. I think it was a perfectly right thing to do. He did not punish Mr. Rank and we have heard no complaints from Mr. Rank or the Maxwell interests about the President's action. As to the future, your Lordships have heard a very authoritative statement about playing time as it is called, that is screen time, in the United States. It is tremendously important to have a certain share of this if we are to be able to produce the high quality films in this country without losing a great deal of money. It must be remembered that America means Canada in this connexion, and it must be remembered also that the most important theatres in Australia, New Zealand and South Africa are almost completely controlled by the American cinema magnates. The Australian and New Zealand situation is very bad from our point of view. Those two countries are too small in population to support a large film producing industry, at present at any rate, and yet all the important theatres in Australia and New Zealand are controlled by the American interests and it is most difficult to have British films shown in them.
We shall be in a very strong bargaining position after the war. The British market is the second largest English-speaking market for films in the world. As I think Lord Brabazon reminded your Lordships—but I shall put it in a different way—the profits on the American superpictures are made in this country. They "come out even" in their home country, where there is a great deal of competition, and the profit comes from this country. That is a very great bargaining asset; but we must be able, if the worst comes to the worst, to supply British films for our own theatres.
What can the Government do? I should have thought that diplomatic action was justified later on. I think that we have a right to bargain with the Americans on this matter. I am not 945 taking up an anti-American attitude at all. We shall have to bargain with America in a friendly way on other great matters, such as civil aviation and foreign trade; why not bargain with them, on the highest level, on this question of reasonable playing time for suitable British films? It has not been attempted in the past because we have been in a weak position in many ways, and not least diplomatically; but after the war we shall have immense prestige, and we should have a much more friendly feeling with America, as comrades in arms. I think, therefore, that reciprocity could be obtained by friendly arrangement.
I have another suggestion to make. I think that whatever happens to the Ministry of Information after the war—I suppose there will be an outcry to abolish it immediately—the Film Division of the Ministry should be kept in being. It has accomplished a very remarkable task during the war. I do not want to trouble your Lordships with more than one figure, but in the third year of the war 18,000,000 people saw non-theatrical showings of Ministry of Information educational films produced for various Ministries, such as the Ministry of Agriculture, Home Office, War Office, and for the Home Guard and so on. These films were shown outside ordinary theatres; and the sponsored films have been on the whole very successful also. They have done excellent work in the war. We have a nucleus there, I believe, of a very valuable department which any Government will require in the future. The easiest way to introduce a new Government policy to the people, such as a new agricultural policy, is by means of a film. We are doing it in the war; why not continue to do it in time of peace when the need will also be urgent? I hope that that suggestion will be adopted. I also hope that the studio space which the Government have taken—I am not referring to the studios used for storage but the fully-equipped studios—should be retained under the control of the Government after the war for renting to reputable producers, so preventing any monopoly on the production side.
Thirdly, I hope further study will be given to the idea of a Government-controlled corporation to finance suitable films. A hint of this was given in Lord Grantley's admirable speech. This is not 946 a wild Socialistic idea; a scheme for it was carried a great distance forward by Sir Andrew Duncan, when he was President of the Board of Trade. I am told from disinterested sources with knowledge that it would be of very great value to have something of that kind. The difficulty is to get people who understand the business to administer this film finance corporation; such people do not grow on gooseberry bushes, but they can be found. I hope also that part of the finance for this Government film backing may be provided by an ad valorem tax on foreign films. Such a tax is a very great bargaining weapon. I think that those suggestions arc worthy of some attention, and with great humility I put them forward, once more thanking the noble Lords who have spoken, and especially Lord Grantley, for what they have told your Lordships to-day.
§ THE EARL OF HUNTINGDON
My Lords, I want to say only a few words in order to reinforce the plea made by the noble Lord, Lord Strabolgi, that after the war the Government should go into the film-making business from the educational side. When I was in the United States some years ago I was very much impressed by the scientific films which were then being shown in the universities and in some of the schools. They were very clear and well done. Like Lord Grantley —whom I should like to congratulate very much on his eloquent speech—I would express great disappointment that nothing is said in the Education Bill about films. It seems to me that in the future the possibilities of instruction by film must be enormous, yet so far the Government seem very little aware of those possibilities. I suggest that all those organs of the Government which are now used for making motion pictures—the Ministry of Information, which has done some magnificent work, the War Office and others—should be collected together and made into a Government film-producing unit which should turn out educational films for our schools, and also educational films which might be exchanged or sold abroad to the Empire and to the United States. I feel convinced that there is a great future in this form of education, and at the same time it would fulfil the need of giving our own ideas and our own (to use an unpleasant word) propaganda to the world, our own English 947 ideas on many different matters. I hope most sincerely that the Government will consider that, and will enter as a partner in the film-producing business.
§ LORD BARNBY
My Lords, I should like to make another appeal for the British point of view on this question. This is a field in which so many non-British interests and personalities intervene that I think your Lordships will agree that it would be right, if time permitted, for many voices to be raised here to support the representations which I am sure the noble Earl who is to reply will make to the President of the Board of Trade as to the points emphasized in this debate. This is a large industry; Lord Grantley has called attention to the volume of its turnover, and Lord Brabazon has emphasized the high percentage of the revenue of the American producers which is represented by the British market.
This has been in some ways a unique debate. Lord Brabazon has done a great service by examining this industry carefully, and not hesitating to mention by name personalities in the industry and to examine their operations. He has thus shown what an intimate acquaintance he has obtained with an industry in which he has no direct interest. That is a precedent which might well be followed in the case of other industries, which, with the exception of the coal trade, the rayon industry and parts of the chemical industry, have not often been dealt with in your Lordships' House. It would be serving a good purpose if these industries were discussed here, where we are without the handicap of discussions in another place, where votes are considered necessary, so that Ministers may be guided by the opinions expressed.
The film industry is a great industry, for one thing by reason of the amount of money which it represents. I think we should emphasize the contribution which the Empire makes to the profits of American producers. The amounts involved from a commercial point of view are great, and have a substantial influence on the exchange problem, directly or indirectly. It has also a cultural side, and it has been said already how important it is from the British point of view that wise guidance should be given by the Government, so that the British point of view may be reflected through- 948 out the world and so that the culture and prestige of the British Empire and its achievements may be made more widely known. I feel that the noble Lord, Lord Grantley, did great service in emphasizing that that aspect of the matter perhaps exceeds in importance the financial aspect. Whatever it may be, I appeal to my noble friend that he should emphasize to the President of the Board of Trade that there are very strong feelings in this country that wise action by the Government should produce something which will result in greater opportunity for British enterprise.
§ THE EARL OF SELBORNE
My Lords: we are indebted to my noble friend Lord Brabazon of Tara for the eloquent and well-informed speech that we expected of him and in which he introduced this most interesting debate. His Majesty's Government welcome the debate because it gives them an opportunity of removing certain misapprehensions which appear to exist. I profoundly agree with my noble friend and with other noble Lords who have spoken on the very great importance of this subject. It has been a disaster that the British film industry suffered such a severe blow in the last war when its growth was paralysed through this nation being mobilized, while for three years America was still a neutral country. The American industry then obtained an ascendency which it has never lost. The years after the last war were years in which the British industry never really recovered from the blow it then suffered.
As your Lordships are aware, Parliament has twice passed legislation to try to assist the industry, the first time in 1927 and the second in 1938. I confess I was very sorry to hear from the noble Lord, Lord Grantley, to whose very important and interesting speech we were so delighted to listen this afternoon, strictures upon the Act of 1938, because in this matter he speaks with an authority which no one can deny. To hear such discouraging words from so high an authority is depressing. It is however not quite fair to judge the Act of 1938 by results up to date, because no sooner was that Act on the Statute Book than this war supervened, and the industry, certainly the production side of the industry, was exposed to exactly the same factors that had nearly crippled it in the last war. Although the Quota Act lays 949 down certain quotas of British footage that have to be shown, it is impossible to realize these figures under present circumstances because, as Lord Brabazon of Tara pointed out, a large number of the studios have been requisitioned for national purposes and a very large number of the artists are engaged in one type or another of war service. Therefore it is impossible to hope that the industry can go ahead in the way we wish to see it go ahead until after the war. During the war, however, the industry has shown that it is very much alive in producing some notable films—films like "In Which We Serve"—which are as good as any films produced anywhere in the world. I agree with my noble friend Lord Brabazon of Tara when he says that there is nothing to prevent this country turning out as many first-class films as any other country in the world.
As noble Lords have said, this country owes a very great debt of gratitude to Mr. Rank for the services he has rendered to the film industry. I hope your Lordships do not think that the President of the Board of Trade or the Government arc in any way antagonistic to Mr. Rank. On the contrary, we should like to see several Mr. Ranks. He is just the type of man that industry requires, particularly the film industry. Organization and resources are most necessary in the film industry. I entirely agreed with Lord Brabazon of Tara when he said that you cannot go into the production side of the industry without great experience and great capital resources.
We ought to beware of loose thinking on the subject of monopolies. It is fashionable to condemn monopolies just as it is fashionable to demand rationalization of industry. I have heard people condemn monopolies and demand rationalization in the same speech! In recent years the State has gone to considerable lengths to help forward the rationalization of great industries like the coal industry, the steel industry, and various sections of the agricultural industry, by creating organizations which lay themselves open in certain respects to the charge of being monopolies; but, as Lord Strabolgi pointed out, there is no charge against Mr. Rank of having acquired a monopoly in this industry. The prominent position that he has attained has been due to the 600 or so theatres that 950 he controls and which number among them many of an important nature. My right honourable friend the President of the Board of Trade took the view that in a cultural industry such as the film industry it was undesirable that any one interest should have too great an influence, in the same way as has been said this afternoon we should none of us like to see all the newspapers owned by one person. Even in the case of the B.B.C., which is a Government monopoly, we are all aware of the inherent objections there are to any form of monopoly in a cultural industry. My right honourable friend would welcome four or five Mr. Ranks, just as we have five big banks and four great railways. We want to strike that happy mean between chaos and monopoly which is summed up in the word "rationalization."
Capital, knowledge, experience, and integrity have been brought to the industry by Mr. Rank, and we want to see several more men of that calibre assisting in building up this great industry, which is of so much importance to the whole Empire. In the view of my right honourable friend, with which I am sure your Lordships will agree, there must also be room in the industry for the small man. There must be means by which the small man can have his share in the industry and also the opportunity of getting a bigger place by his own exertions and his own ability. That is the reason why my right honourable friend entered into this perfectly voluntary understanding with Mr. Rank that he would not increase his interests without the prior consent of the President of the Board of Trade. That agreement includes the production side as well as the exhibiting side, in so far as studio space is covered by it. My right honourable friend entered into a similar agreement with the A.B.C. group for exactly the same reason, so no question of any sort of discrimination against Mr. Rank arises. On the contrary, His Majesty's Government are deeply indebted to Mr. Rank for all he has done.
My noble friend Lord Brabazon of Tara criticized the President of the Board of Trade for taking this step first and, as he put it, appointing the inquiry afterwards. That is not quite an accurate presentation of the facts. In the first place the whole question of whether Mr. Rank's influence in the industry was suffi- 951 cient or not was raised before the President of the Board of Trade by the Films Council, and it is the Films Council who are conducting the inquiry. What the President of the Board of Trade has done is to enter into an agreement with Mr. Rank and with the A.B.C. group which does not prejudice any future legislation or any future decisions, but which stabilizes the position for the moment while this inquiry is proceeding.
§ LORD BRABAZON OF TARA
My noble friend may be quite right, and I am sure he is, in what he says, but if the Press is wrong in its announcements perhaps the Government might correct them. The Press definitely mentioned the Committee set up by the Cinematograph Films Council "at the invitation of Mr. Hugh Dalton"; that it was he who asked for it and the Council who set it up, not the other way round. If that is wrong, it should be contradicted in the Press.
§ THE EARL OF SELBORNE
That is not contrary to what I said. It was the Films Council who drew the attention of the President of the Board of Trade to the question of so-called monopoly, and the President of the Board of Trade then invited the Films Council to hold an inquiry into the matter. Meanwhile he entered into this agreement with Mr. Rank, which was followed by a subsequent agreement with the A.B.C. group, which, as I said, stabilized the position pending that inquiry. Then Lord Brabazon made an attack on the Government for having allowed American interests to acquire half of the Maxwell interest in the A.B.C. group. That was in 1941, and I must ask your Lordships to carry your minds back to the circumstances of that time. My information is that there was no firm British offer at that moment and I would also recall the fact that the dollar position in 1941 was very difficult. But it is somewhat difficult to disinter in 1944 a matter that occurred in 1941. After all, my noble friend Lord Brabazon was a member of His Majesty's Government in 1941 and I was not, so I should rather expect that he should be able to give me information than that I should give him information. I cannot believe that with his great knowledge of the film industry he in that position would have allowed any illadvised step to be taken by the Govern- 952 ment at that time. Lord Brabazon also criticized the Government because an American gentleman named Mr. Eckman was appointed a member of the Films Council. He is the only foreigner out of the twenty-one members of the Council. It is perfectly true Mr. Eckman, who is a very highly respected gentleman, is an American citizen, and I would say again in reply to my noble friend that that appointment was made in 1941 by the President of the Board of Trade in response to strong recommendations from the section of the industry with which Mr. Eckman is connected, and the statutory obligation is laid upon the President by the Act of 1938 to appoint on to the Films Council people who are representative of the industry.
My noble friend also raised the question of what he termed the danger of monopolistic tendencies of American companies. I think he mentioned the Hays organization. I would like to assure him that that matter, together with the whole question that I have been alluding to is under the careful consideration of my right honourable friend the President of the Board of Trade, and he hopes very much to learn the exact facts of the position from the forthcoming report of the Films Council. Then my noble friend, as did Lord Grantley, raised the vitally important point about the export trade from this country. I agree with them that the British film industry can never be in a really healthy condition until we have a much bigger export of British films than exists at the present moment.
My noble friend raised the question of the reciprocal quota system—that is to say the arrangement under which the proportion of American films shown in this country is affected by the proportion of British films shown in America. That principle was recognized in the 1938 Act, but my right honourable friend the President of the Board of Trade has extended the principle in the Defence Regulations which he issued in 1942. An American who acquires the foreign rights of British films can now count them against his quota in this country, and this can be made cumulative. That is very desirable because the principal factor which is limiting exports at the present moment is the shortage of output caused by the war conditions to which I have referred. Therefore if there is an unfulfilled quota 953 of exports waiting for the industry after the war when the industry is in a position to take advantage of it, it will be of great benefit to the industry. I think my right honourable friend the President of the Board of Trade is entitled to the gratitude of those who have the welfare of the film industry at heart for what he has done by his Defence Regulations in this matter.
Then Lord Brabazon complained about the release of the sterling balances in 1942. I think, my Lords, I ought to give you the history of that matter. In 1939 it was impossible for the Government to allow all the money that was paid in cinemas here to flow freely to America, as it did in peace-time. We could not possibly afford it. The dollar position did not admit of it. Therefore, by agreement with the companies, a large portion of that money was retained here. But you really could not justify that arrangement indefinitely after the advent of Lease-Lend, and therefore the system was ended in 1942. My noble friend is mistaken in thinking that Income Tax is not paid on these profits. It is paid just as much as Income Tax is paid on any other profits in this country; but I will draw the attention of the Chancellor of the Exchequer to what the noble Lord said on this matter. It is quite true that in calculating these profits the cost of the film to the American renter or exhibitor has to be taken into account, and it is possible there is a loophole there that requires filling up. It is possible, also, that the release of the sterling balances may have led to a diminution in the number of British films that have been exported abroad. But the factors working in the other direction which I have mentioned will, I hope, tend to redress the trend,, especially when the British industry is in a position to take advantage of them.
The noble Lord, Lord Strabolgi, suggested that the Foreign Office might take a part in helping to promote the export of British films to America. I agree with him that this is a matter not only of commercial but also of political importance. I think it is just as important that Americans should understand the English as that the English should understand the Americans, and the more interchange of national films that there is between our two great nations the better, I think, it will be to our mutual understanding of 954 each other Therefore, when the appropriate time comes, I am sure my right honourable friend, if he is still President of the Board of Trade, will not forget the noble Lord's suggestion. Lord Strabolgi urged that the Ministry of Information Film Division should be maintained after the war. I agree with the noble Lord that that division has produced some very notable films during the war. It has, indeed, done some very notable work. I understand that the matter is at the present moment under consideration, and I will see that what the noble Lord has said is brought to the attention of the appropriate authorities.
It has been suggested during this debate that if a representative organization of the industry could be created it would be of great help to its development, and the Government have been urged to take a more active part in that direction. Everything your Lordships have said will be brought to the attention of my right honourable friend, but I cannot help feeling myself that if an organization is to be really representative of an industry it has to be spontaneously generated, and While the Government can help or the Government can hinder it is very difficult for a Government to do in a matter of that sort what the industry ought really to do itself. But I can assure your Lordships that the Government, and especially my right honourable friend the President of the Board of Trade, are most anxious to do everything that can be done to help this great industry. We agree with what has been said this afternoon as to the importance of the industry politically as well as industrially, and we believe that the industry has a great future after the war. Any help the Government can give to this industry, as to others, I am certain my right honourable friend will be only too glad to give.
§ LORD BRABAZON OF TARA
My Lords, I must thank my noble friend the Earl of Selborne very much for his reply. It is rather interesting that we should have had two replies, one from the noble Earl, Lord Listowel, who replied for the President of the Board of Trade, advocating practically a State monopoly, and a reply from the Minister who has just said he would like more Ranks. It is a little difficult to steer between these rather narrow, opposed policies. I must say that I think the noble Earl, Lord Selborne, 955 really did noble work when he pointed out that people who complain about monopoly advocate State control with the same voice. I cannot imagine anything more frightful happening to the film industry than that it should be run by the State. It is a terrible thought. I never envisaged this debate bringing up such a dreadful thing. However, there it is. I was delighted to hear from my noble friend that this new Committee is going to view monopolies as monopolies and is going to investigate the Hays organization. If it is going to do that useful piece of work this debate will have been worth while. I thank my noble friend very much for his reply. In regard to this question I am not going to follow the example set by Lord Londonderry in relation to civil aviation, but I shall raise the matter every six months to ensure that the President of the Board of Trade has not only started to wake but will really be awake on this very important question. I beg leave to withdraw my Motion.
§ Motion for Papers, by leave, withdrawn.