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. . . .
More on the Famous Players-Lasky Antitrust Case
|
