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The Famous Players-Lasky Antitrust Case

Paramount Conspiracy

Testimony of Harris Connick & Walter E. Greene


New York Telegraph - April 28, 1923:

Harris D. H. Connick, of 511 Fifth Avenue, who made an investigation in 1919 for Kuhn, Loeb & Co., into the motion picture industry, with special reference to the Famous Players-Lasky Corporation, was the first witness. He said he was a graduate of Stanford University and was director of works of the Panama Pacific Exposition.

The witness said he came to New York in 1916 and was vice president of the American International Corporation.

He told of having made the survey in the Fall of 1919 for Kuhn, Loeb & Co., who, he said, wanted the information in connection with underwriting a $10,000,000 stock issue of the Famous Players-Lasky Corporation. He said the Famous-Players got the $10,000,000 with a view to investing it in theatres. In December, 1919, he said he joined the Famous Players-Lasky Corporation.

Asked his duties, he said:

"I went in as chairman of the finance committee and also as a sort of manager under Mr. Zukor. I had all the duties of a general manager."

He said he and Mr. Zukor had innumerable conferences over the plan to secure theatres.

"Mr. Zukor's plan was to acquire a number of modern theatres in 'key' cities, so he could get his pictures without fail in first-run theatres in those cities."

The witness said that he left the Famous Players-Lasky Corporation in December, 1921. He said in 1920 Mr. Zukor feared only the competition of the First National Corporation, and said there were negotiations looking to an arrangement between the two organizations for increasing the sale of pictures.

"The primary object of these conferences," said Mr. Connick, "was to get a working agreement with the First National, or, its component parts. They wanted to make some arrangement which would do away with competition between the companies in employing stars, buying stories, and in every way."...

"While you were discussing these plans, did Mr. Zukor ever say to you that, by working out his plans, he could dominate the motion picture industry?" asked Mr. Farrington.

"Mr. Zukor was under the impression that Famous Players could then dominate the situation," replied Mr. Connick, "and that his plan would give permanency to this."

. . . Asked whether he thought the power of the screen was good or evil, the witness said: "As a matter of course the screen has a lot of power and is unquestionably one of the educational influences of the day."

Asked what would be the result if large producers should acquire fifty per cent of the theatres in the country, Mr. Connick said that it would be a very profitable thing for the producers, but said that the independent producer would have a difficult time placing his pictures unless the picture was of superlative quality. He said that the owner of the theatre, if he was a producer, would naturally use his own pictures because they would make more money for him, but said they would find time to put on a picture of an independent producer if it was exceptionally good and a sure moneymaker.

On cross-examination Mr. Connick said in reply to questions of Mr. Swaine that the motion picture business was "a very boastful business."

"When you said this morning that Famous Players dominated the motion picture industry, what did you mean?" asked Mr. Swaine.

"I meant that compared in every way they were better than any other concern in the motion picture field," replied the witness.

"In the same way, would you say that Caruso dominated the operatic field?" queried Mr. Swaine.

"Well, not exactly," said Mr. Connick. "God Almighty had a good deal to do with Caruso and he did not have much to do with the Famous Players Corporation."

. . . Mr. Swaine asked the witness if it was not the growing competition of the First National organization that prompted Mr. Zukor and the other officials of Famous Players to buy theatres.

"The idea was to get rid of competition," said Mr. Connick, "trying to clean them right up. It was a case of dog eat dog."

The witness said that First National was not as threatening as its thousands of franchise and sub-franchise holders might seem to indicate, pointing out that only a few hundred of the theaters were large ones, the great majority being small houses. He said First National had at least one theatre in every "key" city of the country. . . .

New York Telegraph - May 1, 1923:

Walter E. Greene, vice president of the American Release Corporation, who was a partner with Hiram Abrams in an independent distributing exchange in 1916, told of the formation of the Paramount Pictures Corporation by a number of distributors from all sections of the country, of which W. W. Hodkinson of California was elected president.

Questioned by Mr. Farrington, counsel for the Commission, Mr. Green told how in May, 1916, Adolph Zukor, the president of the Famous Players Corporation, had become dissatisfied with the way its pictures were being handled by the Paramount Pictures Corporation and the witness said he had been told by his partners, Abrams and Alexander Lichtman, that Mr. Zukor had threatened to leave the Paramount Pictures Corporation, although he had a 25- year contract with it, unless some changes were made in its policy.

The witness said that following Mr. Zukor's return from a visit to California in May, 1916, that he, Abrams, Lichtman and Mr. Zukor had a conference at the home of the latter, at which Mr. Zukor said that he found it hard to get along with Hodkinson, and suggested that Hodkinson be removed as president and that Abrams be substituted in his place. He said they came to an agreement while at Zukor's home that if possible they would have Hodkinson deposed, and also the treasurer of Paramount Picture Corporation, a man named Pawley, removed. It was also agreed that Zukor should have 50 per cent of the stock of the Paramount Corporation. . .

Mr. Greene told of the organization of Artcraft Pictures about July, 1916, of which he was elected president. He said the object of the Artcraft Pictures was to distribute pictures by Mary Pickford and other high-class stars. He said the Famous Players Corporation furnished the funds to organize the Artcraft Pictures, but the latter was advertised as an independent company.

Mr. Greene said the Famous Players Corporation took over the Paramount Pictures Corporation in May or June, 1917, and that the Artcraft and Paramount were merged. He said it was in the Summer of 1917 that he first heard of the plan to acquire first run theatres. At first it was planned to make contractual arrangements with certain first run theatres by which the Famous Players pictures would be given to these theatres provided they took a majority of the corporation's pictures. But this plan fell through, he said, and then they decided upon buying or leasing theatres. . . .

The witness was asked about Mr. Zukor's connection with Lewis J. Selznick in the Summer of 1917. He said they formed the Select Pictures Corporation in which Famous Players had a half interest. He said the business policy of the Select Pictures Corporation was discussed by the executive committee of Famous Players Corporation, but that practically all the transactions connected with the production of pictures were carried on by Mr. Zukor and Mr. Selznick. This arrangement lasted only a year, he said, Famous Players selling its half interest to Mr. Selznick. Soon after this the Realart Corporation was organized with the financial help of Famous Players Corporation. he said the organization of this corporation was to provide an outlet for a secondary list of pictures, which it was thought could be released to better advantage through another organization.

He said at first it was not generally known that the Realart Corporation was a subsidiary of Famous Players, but it became known within a few weeks. . . .

Mr. McDonald asked Mr. Green if the organization of Artcraft Corporation had not been made at the special request of Mary Pickford and because she insisted her pictures should not be distributed with other pictures, and the witness said he understood such was the case. . . .

 

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