We recognise on this side of the House that the film position today is sufficiently critical to warrant careful handling, and in anything I have to say, I particularly do not want to make the task which faces the President of the Board of Trade any more difficult, for it is quite difficult enough as it is. However, it is necessary that the House should consider this matter on a fairly wide basis.
First, I think there has grown up amongst exhibitors the feeling that their interests have been rather neglected. At least, speaking for hon. Members on this side of the House, that is not the case. We have had to criticise certain things in the film industry from here hut, after all, the exhibitors have the largest capital investment in the industry, they are those who are directly in touch with the public, and what they think has to be given due weight in the whole picture. On the whole, they want a low quota because in the past their profits have been built up largely upon American films. They are extremely perturbed about the quality of British films which are being produced under a quota which they think is unduly high. From what I gather myself about the industry, the effect of fixing the 45 per cent. quota has undoubtedly been to give some substance to the fears about the quality of British production which, I think, have been formed as a result of fixing too high a quota.
Perhaps somebody from the Treasury Bench will tell me whether what I am about to say is correct. Last year during some of our Debates on the film industry it was said that the takings in this country from the first-feature British film exceeded the takings from American films of similar character. I believe that since we discussed this matter last year the position has rather been reversed and that the exhibitor has some cause for anxiety that the high quota and protected position of the British producer has led to a distinct falling off in the quality of his products. Of course, as the President of the Board of Trade has said, the best of those products, no doubt, are the best in the world; but we must look at rather more than that, and see whether in trying to fill a quota, once 45 per cent. and now 40 per cent., they are able to maintain the same quality. So much for the exhibitor. We must look at his interests as well as those of the producer.
Producers, admittedly, are finding finance extremely difficult and the President's film corporation was formed to try to fill in some of the gaps. But the position of the producer, both independent and otherwise, is certainly serious. The advances which one joint stock bank has made to one large film concern, I think, are greatly in excess of £10 million, and the security which that bank has against these advances largely consists of canned films. That is not the type of banker's advance which is particularly popular in either Lombard Street or Threadneedle Street. The producers in theory want a high quota, which they think will stimulate production and make the gaining of finance easier. It has not, of course, had that effect.
In all this matter the House is in considerable difficulty in trying to strike the correct balance between the interests of the exhibitor, on the one hand, and the producer, on the other hand; the President of the Board of Trade indeed, touched upon this matter. One thing which is certain is that the amount of unemployment which is now begining to be apparent all over the industry is a matter which concerns every hon. Member in this House. When we are trying to find the correct balance between the interests of the exhibitor and those of the producer, including the independent producer, we shall generally find a rough and ready answer by looking at the state of employment and trying to direct our policy so that this so-called redundancy is removed and that our studio space begins to be used again. I will have something to say about that presently.
Besides the exhibitor, the producer and the worker in the industry, there is another most interested party: that is, the Treasury, who are vitally concerned. There is no doubt about whether we are able to afford any increased imports of American celluloid. That, I imagine, is out of the question.
From that I am led, I hope in an equally objective way, to say something—I am afraid some of this will be very critical—about the contemporary history of these negotiations, upon which I really cannot congratulate the Government. We gave what support we could to the Government in making it clear that we could not afford the unrestricted importation of American films. I think that at the time of our first film Debate, the President of the Board of Trade was in negotiation with the Americans. We on this side reinforced so far as we could what hon. Members were saying opposite, that the Government should not give way. The balance of payments crisis was too serious to admit of any playing about with an increase in the amount of remittable sterling earned by American film companies in this country.
At that time we urged—and the hon. Member for West Nottingham (Mr. O'Brien) was also insistent on this point—that every effort should be made to gain an agreement with the Americans—to gain more than agreement in fact; to gain also their co-operation. The result of the President's negotiations was the conclusion of an agreement between Mr. Eric Johnston and himself, which went some way to clear up the mess from the broken plates left by the original penal tax upon the importation of American films. At that time both the hon. Member for West Nottingham and, in a less responsible position, I myself, felt that considerable advances had been made and that there was a possibility of the film business being on the verge of better times.
A great mistake was made at that time, because immediately after the agreement had been concluded, the quota was put at 45 per cent. without any previous consultation at all with the Americans. That was a very immature piece of negotiation. Whether rightly or wrongly—that question really does not arise—it infuriated American opinion; they thought they had not been treated on the square. Much of their subsequent attitude has been dictated by the feeling that the President ought not to have fixed so high a quota so soon after the agreement with Mr. Eric Johnston, without having informed those on the other side of the negotiations. This has nothing whatever to do with our right, which remains absolute and sovereign, to fix whatever quota we think suits British interests. That is not the question. But those experienced in commercial negotiations, especially with the Americans, know that it is far better to put all the cards on the table and tell them what action it is proposed to take beyond the actual negotiations which are in hand, if we want a lasting agreement. I am not saying that the Americans are right in their attitude, but the fact that they did not know what action about the British quota was going to be taken, has led to a number of very unpleasant consequences for ourselves.
As far as the present quota which we are now discussing is concerned, I notice from reports, not only in the Press, which I have received from America that the reduction of the quota from 45 to 40 per cent. has done nothing whatever to relieve the bitterness—I do not think that is too strong a word—which the American film industry have at the size of the quota generally.