Foreign Relations of the United States Diplomatic Papers, 1938, The British Commonwealth, Europe, Near East, and Africa, Volume II

841.4061 Motion Pictures/114: Telegram

The Ambassador in the United Kingdom (Kennedy) to the Secretary of State

London, March 14, 1938—6 p.m.
[Received March 14—4:30 p.m.]

211. Your No. 108, March 12, 4 p.m.

1. The 14 points in your No. 12 [13] of January 12, 2 p.m. have been met in the bill now before the House of Lords to the following extent:

(a) Point 2, exhibitors’ quota increased to 12½% for the first year and is now only slightly below renters’ quota of 15%;

(b) Point 4, cost test is now the basis of quota determination. Viewing test may not be applied until 12 months have elapsed and until complicated legal formalities have been complied with, making it improbable that it will ever be applied;

(c) Point 5, first two requests substantially met in present bill, third request is being met in pending amendment;

(d) Point 7, reciprocity is provided for by pending amendment;

(e) Point 9, two non-British personnel are provided for instead of the four requested;

(g) [f] Point 11, met in full.

2. Lately, when Stanley appreciated that certain provisions favorable to American renters would meet determined opposition in Parliament, he has met the situation by asking for discretionary and revisionary powers for the Board of Trade. Thus the bases for quotas (affecting Hays’ points 1, 2, 4, 5, 6 and 12) may in future be revised.

3. Because the Board of Trade will have considerable latitude in fixing quotas, rates of payment, et cetera, it may be possible to work out some sort of an understanding with the British Government concerning the future administration of the bill in so far as American interests are affected.

4. In general, the bill does not solve the central problems it set out to solve. It is not too much to expect that, after being administered for a while, many changes may be found advisable or necessary and that new films legislation may be required after a year or two. In our opinion, the bill as it stands, with the addition of the triple credit and reciprocity credit amendments would not be unfair to American interests and would permit them to carry on their business in Great Britain without substantial loss of revenue.

5. I have asked our experts to answer the foregoing technical points of your telegram and the answers to the points are theirs. In my opinion the triple credit and reciprocity credit amendments should certainly be granted; if they are, my whole opinion of the bill would be that we have a reasonable bill from any American point of view but not so reasonable that we definitely should not consider that we have made substantial concessions to the British point of view. We therefore have certainly gained for ourselves a credit to be used on the trade agreement.

As I told you in Washington it is perfectly easy to work out a plan here that is not unreasonable for the film industry as an industry but at the same time it ought to be definitely understood that in our agreement to accept this bill we have made great concessions to be credited us in the rest of the negotiations. I have made this point in America and I am sure this will be understood.

I have just finished an hour’s talk with Stanley. He has agreed to fight for the reciprocity agreement and triple credit and I have talked with Halifax²⁷ and Cadogan for support. Stanley finally said after discussion that he will rise or fall on the agreement and I think he is prepared to resign if they do not give it to him. He feels, however, that sending these messages along at such a late hour has made it impossible to work out the plans of the State Department; if it had been done early last summer he might have been able to get more concessions for the United States.

Regarding paragraph that credit should be given on the trade treaty considering the concessions that have been made on the film bill, he said that the House of Commons feels that he has made altogether too many concessions to the American point of view as it is and to come back at a later date and say that concessions may have to be made on “apples” or anything else to the Americans since the Americans made concessions to the British on films, would create an uproar in the House of Commons to the effect that too many concessions have already been made in the present film bill.

I said that unfortunately that was not the argument I felt should be considered; that if we adopted the same tactics towards the insurance business in the United States we would have just as many arguments that we were not doing as well as the British, and they would get the same answer they made to us in the film industry.

I do not see anything concrete that they will give us now as a credit and they will fight not to give us anything to the bitter end. My own idea, however, is that we can not do anything about the film bill; inclined to hope that he is able to get as much as he said he was willing to get us today and then try and bring to his attention at a later date some satisfaction for our side on some disputed trade agreement point.

If we get what he is trying to get in the film bill you have not done a bad job for the industry.

Kennedy

27. British Lord President of the Privy Council.