Record #1238

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Mr Charles C. Pettijohn, General Counsel, MPPDA
Reel 8
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Meetings - MPPDA Board
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Memo regarding the legislative situation facing the motion picture industry. This memo was circulated to the board of directors at the meeting held on 10 December 1930. Tax. impending tax legislation: "our industry, being an amusement industry, properly today pays less taxes than any other industry in America. Box-office statements published in our trade papers are not helpful ..." Reliance noted on "friends of the industry" to combat legislation; potential differences in interests of independents and circuit theatres, following taxes on chain stores. Agenda for meeting of Board of Directors, including "organization of demand for educational pictures".


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1 November 1930: Pettijohn on the tax and legislation situation. The motion picture industry of the United States will be confronted with legislative problems particularly during the months of Jan, February and March, 1931, unprecedented in the history of the business. Every State in the Union, with the exception of Connecticut, has a bonded indebtedness. The bonded indebtedness of these 47 states without exception is greater today than at any time since 1925, and in all states but four it is greater than at any time during the past 10 years." ... Many will propose a 5% or 10% admission tax. "The circuit theatre executives and company members all know and appreciate the fact that 10% of the gross intake of most of their theatres is more than their profits. For example, the Roxy Theatre can take in $60,000 per week and probably lose $10,000 that week. An admission tax of 10% of the gross under such conditions would show net taken in of $54,000 and a loss of $16,000, or a theatre taking in $20,000 per week and making $4,000 would show that theatre taking in $18,000 per week and not making a cent. "South Carolina is the only state today in which the gross theatre revenue is taxed 10%. That bill was passed during the war and has never been repealed. "During the 1929 sessions of the various state legislatures commissions were appointed either by the Governor of by these legislatures themselves to survey, study and report to the 1931 sessions ... as to how and where the states can secure additional revenue to meet existing conditions in those states. Thirty such commissions in 30 states were so appointed ... These committees have all functioned, and we have more or less information as to what these committees are recommending. ... [list of states in all but 2 of which] these committees ... have recommended a tax on all admissions to places of amusement of from 5 to 10% of the gross receipts ... "We are not the only industry recommended for taxation in most of these reports. Chain stores have been 'recommended' everywhere. Public utilities are running us a close second, and quite a few of the states that do not already tax cigarettes and tobacco are included in their recommendations. The agitation to tax and otherwise restrict chain stores has drawn attention to circuit theatres to an extent not heretofore felt. Probably 90% of our adverse legislation next year will be directed toward or against the circuit or affiliated theatres. "Boiled down, the facts are as follows: The States need and are going to get this additional revenue from somebody. The motion picture industry is looked upon as an industry that can well afford to pay taxes. As a matter of fact, our industry, being an amusement industry, properly pays less taxes than any other industry in America. Box-office statements published in our trade papers are not helpful. Tax commissioners in all states receive motion picture trade papers, and read them about the time they make up their budgets. "If half the taxes that are recommended against this industry are passed in the 1931 sessions of the various state legislatures, the industry will be saddled with an additional minimum new expense of $100m. per year. This is a matter for this industry to give its best thought and united attention to. It calls for the constant attention of all involved. "44 states will hold legislative sessions beginning Jan 2, 1931, and continuing up to May or June. In addition to admission tax measures, the industry will be faced with a few state censorship bills, occupational tax bills, footage tax bills, bills against 'block booking', 'blind buying' and other 'strike' measures, introduced in many instances by independent exhibitors. Small exhibitors will in many instances 'run out' on the larger theatres on the admission tax question, particularly where an admission tax bill is offered on theatre admission above 35c or above 50c. Many of these small theatre owners think it would be smart to have the large theatres taxed, and small theatres not taxed. They believe that would help their business, and that in that manner they could strike at 'circuit theatres.' Much time and thought has been given to this subject, and we are in good shape with the small exhibitors in every state except three, namely Minnesota, Michigan and Maryland. Some of the small exhibitors in Texas will run out on us, but that situation will be all right. "We have, of course, a schedule, by states, indicating 'friends of the industry', or the individuals in the respective states to whom we look for cooperation when situations arise. Many of them are our personal friends. ... we cannot expect the same fine legislative results in 1931 that we have been able to bring about every year since 1922. We know it is the biggest task we have ever faced. "Attached is an agenda for a Board of Directors meeting -- 11-1930, includes: "11. Organization of demand for educational picturesa. Refer to purposes of Association 'educational as well as entertainment value'; this must be per se and as a collateral good-will element b. Explain activities of Association in that connection in the past 1. In entertainment pictures attention to educational values, authenticity, etc. 2. In pedagogic pictures a. NEA, Eastman, etc. American College of Surgeons, etc. b. Recent questionnaire to college presidents, etc. c. Must further organize this demand in order to: 1. Create a market for such pictures and for the equipment, raw stock, etc., because our members will sell the film, will sell the equipment, and will sell the pictures. 2. Create good will for the industry."

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