ARTICLE VIII-AMENDMENTS

These articles may be repealed, amended, or altered only by two-thirds vote of the qualified voting members present at a meeting of the association, providing the proposed amendment shall have been mailed to the secretary and all members at least 30 days prior to such meeting; or without a meeting with the written consent of a majority of voting members in good standing at that time.

November 8, 1925.

Mr. TUTTLE. Without reading these three pages, just let me say that they are the ordinary articles of association of the loosest kind. I said when I started that this association was actually little more than a clearing house. You will find this agreeing with that statement after in the record you have examined these articles of association. Our board of directors are elected by our members, but there is no provision in any way for price fixing or for bargaining on behalf of the association. No such authority is given. It is an ordinary standard form, probably taken out of some textbook of forms for articles of association.

Representative VESTAL. If there is no objection, the matter will be made part of the record.

Mr. TUTTLE. Now, with that fact down, and on that basis, what has been our effort; in the first place, as I have said, we fought the society on the question of whether the radio broadcasting was a public performance for profit. The result of the decision showed it was a pretty even question, because various courts suggested all possible answers. Finally it stands with the Circuit Court of Appeals decision in favor of the composers. Our next effort was to find a solution in Congress on this basis, namely, that our service to music, in the form of popularizing it, was a fair exchange for their service to us. They differed with us, and apparently the committee must have differed, too, because they took no action. We are seeking a solution on the basis of what I have described as the "blank check," and one of the gentlemen of the committee has suggested about these figures that were put in the other day. I think I ought to say a word about these figures, as I had something to do with the matter of the negotiation. These figures have been put in to simply show you, historically, what was being discussed at that time. We are not wedded to those figures. If the committee wants to appoint a subcommittee at some time to sit down and decide what should be the figures, we would be glad to sit down with you. I do not suppose you want to take the time to go into this question at this time. If you do, I will go into it. I say, those figures are only tentative, and how were they arrived at? They were arrived at on this basis; and inasmuch as this matter has been put in by the members of the association, I assume there is nothing confidential, is there, Mr. Mills?

Mr. MILLS. Go ahead.

Mr. TUTTLE. If you do not check me on the basis of their being confidential, I will proceed.

Mr. MILLS. You know you wanted them to be confidential. Senator DILL. I would not disclose them if they were confidential. Mr. BUCK. Mr. Chairman, I wish to say at this time, I wish to ask Mr. Harkness if he desires that they be disclosed.

Mr. HARKNESS. It rests with you, Mr. Buck.

It is immaterial with me. The matter has been passed between the two associations. Mr. Buck. We believe the cards should be on the table; we subscribe to that.

Mr. TUTTLE. If the matter is agreeable to you, it is agreeable to me.

Mr. BURKAN. Mr. Chairman, I suggest that everything, all secret arrangements and everything else, be in the open, both agreements prepared by Mr. Tuttle on behalf of the National Broadcasting Association, that they also be placed on the table, and everything that has been done and said come out in the open.

Mr. HARKNESS. Let me correct that statement. There are no secret agreements and there have been no secret agreements. I object strenuously to that word being used. Counsel speaking for the opposition side was not in at the conference between Mr. Buck and myself, and his statement is absolutely incorrect. There are no secret agreements.

Mr. BURKAN. I understood they are confidential communications and agreements, and therefore they are secret.

Mr. HARKNESS. You stated "secret agreements."

There has been no such thing and will be no such thing, and Mr. Buck and I, as individuals, have met and conferred in a friendly spirit to endeavor to solve this problem.

Representative VESTAL. Let us proceed.

Mr. TUTTLE. What I am going to say is not going to startle anybody; and if there is anything secret about it, I must state I do not know it, but I just wanted to be sure Mr. Mills did not feel I was trespassing on anything that is confidential. With the assurance I am not, I am going to say this. We were told they would like to have a schedule prepared which would bring in an income of a million dollars for three years, and these figures are scheduled for the purpose of approximating that amount; and then I have had read you the letter which Mr. Mills sent after we had scheduled those figures, saying that his constituents did not feel that they would like to go into it on a three-year basis, but if we would take the same figures which would be one-third of a million dollars for one year, they would make an arrangement, as he thought, for the one year.

Now, that is as far as I know anything about the "innards" of this business, and, inasmuch as I heard the figures had gone in, I thought it was fair to tell you how they were arrived at.

If anyone feels that amount ought to be more or less than $333,000 a year, that is a matter for consideration and discussion. I feel that if the society does not feel satisfied with the figures they ought to tell us and tell the committee what radio broadcasting should pay.

Representative LANHAM. Suppose these figures did not aggregate the sum that they thought the composer should get out of it. How was that to be supplemented in order to bring it up?

Mr. TUTTLE. It was based upon the experience and the number of stations, in knowing that the programs were so much, the result would be so much.

Senator DILL. It was not supposed to include any other broadcasting stations outside of the association?

Mr. TUTTLE. Yes.

Mr. HARKNESS. I wish to say that the plan stated "All broadcasting stations in the United States must be considered." No particular group or lot should be considered, but every station in the country would consider it, and that was what was done. It was an absolutely fair and equitable decision on the basis of users and hours on the air.

Representative LANHAM. And the estimate was that the return would total that much?

Mr. TUTTLE. Yes.

saw

Mr. HARKNESS. The plan is one of four that was submitted to the society, and they had a full opportunity to select which one they fit. The one that was selected was then presented to the National Association of Broadcasters. They in turn selected that program, that plan, and it was then presented by their trustees to the administrative committee of the society and accepted by them as a fair and equitable arrangement.

Representative LANHAM. That is, as the basis of contract but not

of law.

Mr. HARKNESS. As a basis of contract for a period of three years. As Judge Tuttle has stated, at that time they advised us they had authority from their board for contracting for but one year, but would go to their board and endeavor to secure the instigation of that for a three-year period, and that is where the matter stands. They came back with this letter saying they had seen their board and the board did not feel disposed to go beyond the one year, which put the plan in the discard, because we could not present it to the broadcaster on a one-year program without the three years, and I think Mr. Buck will agree with me, and it stands that way now.

Mr. TUTTLE. Well, I am saying if the gentlemen of the society do not feel that those are appropriate figures, and they may not, if they feel that way, I do not suggest they should consider themselves bound by those figures; but I am suggesting that they state to the committee what their picture is of what radio broadcasting ought to pay on the basis of some stability. What we are after, as I said in the beginning, are the three elements of stability, equality, and fairness, and I invite and invite again any statement from the society which will tell us what they think is the method by which that basis can be afforded to our mutual interests, so that there need not be friction, so that there can be peace, so that we will not have to be down before Congress year after year seeking some measure of protection. Let them tell us what they think radio broadcasting ought to pay into their coffers, and then we will see whether we can write that amount into their blank check so that this may be over with.

Now, a word about the benefit of this policy; as I see it, in the first place, it is in its operation calculated to furnish that basis, stability, equality, and fairness. It does that, not only for broadcasters, in my judgment, but above and beyond that, in my judgment, it does it by the music people, and above all it does by the independent, he is

furnished by law with police regulation, which gives him a permanent standing; it does not make it necessary for him to part with his copyright to anybody else in order to stay in business. He does not have to join anything unless he wants to, and above all he gets, the copyright holder gets, the return for his own brainwork.

Now, I read yesterday the address of Mr. Buck, and it was all on the assumption, from start to finish, that one person, the copyright holder, did get the return on his brain work, and I will endeavor to show you gentlemen that that is not the way it works at all. You have said, sir, how about the man who writes a distinguished piece of music, or is a distinguished man, himself, in the music world. Ought not he be able to put into his pockets, for his excellent work, more than somebody else, whose work is not so excellent? Yes; but that is not the way it works to-day. He parts with his performing right; he gives them over to the control of other men; he conveys them away for five years; he never gets the royalty on that music at all. What he gets is dividends out of a pool, which he shares with other men who are placed in a class with him. He does not place himself in that class. Even that right is given entirely to somebody else three or four men, as the case may be, who place him with other people, in a class, so for Heaven's saks, gentlemen, do not imagine that we have to-day a situation where the individual copyright holder is in control of his own work, if he is a member of the society or engaged in bargaining on that basis. It illustrates again that the ordinary laws of economics are not in operation.

Representative HAMMER. How are we to fill in here the number of cents to be paid?

Representative LANHAM. That was suggested.

Representative HAMMER. How are we to do that unless we know the earnings of these broadcasting associations, unless we know something about their business and what you have invested and the valuation of your property and the overhead expenses-how are we to arrive at this? If we are going to regulate you, we have to have some basis. And while I am asking you, I notice 1,000 watts, so many cents, and the highest is about 5,000 watts. Well, the station at WJZ, at Boundbrook, N. J., is 50,000 watts. Do you mean to have the same price for over 5,000 watts that you would have for 50,000 watts?

Mr. TUTTLE. The classification in the bill does seem to stop over 5,000 watts.

Representative HAMMER. I am only asking that for information. Mr. TUTTLE. Well, I am saying that I think the classification of the size of the station should well be carried through to any extreme that the committee feel was logical.

Representative HAMMER. The largest station in the world is WJZ, I understand it-50,000 watts.

Mr. TUTTLE. It does seem to me that a station of superpower character might well be put in a classification separate and apart by itself. In other words, so far as I am concerned, that classification is merely tentative.

Senator DILL. Let me say I wrote it simply tentatively; I did not know; I only wanted something to work on.

Representative HAMMER. You did not answer my question about how we are going to arrive at the way these figures were put in the bill. You say that has been answered?

Representative LANHAM. That has been answered.

Mr. TUTTLE. I was not here when Mr. Harkness testified; did he not put in these figures?

Representative BLOOM. Yes.

Representative HAMMER. You spoke of the income of the authors, what their sales were, and the return from the sales. Has there been any effort to get the income of the radio broadcaster?

Mr. TUTTLE. I can answer that as I did the other day, that so far as the members of our association are concerned, there is not one of them who balances his books on the broadcasting with a profit— not one.

Representative HAMMER. Then, why should we have such a bill which was passed in the House; why should we be so careful not to place in it any penalty for violation of the antitrust laws; why should we spend weeks and months in hearings on it to get that bill and succeed in getting a bill which, I think, should not have been passed?

Mr. TUTTLE. Well, this bill provides this, so far as that is concerned :

Whenever the Interstate Commerce Commission or other Federal body under authority of law shall find that any licensee bound so to do has failed to provide reasonable facilities for the transmission of radio communications or has made any unjust and unreasonable charge, or has made or prescribed any unjust and unreasonable classification, regulation, or practice with respect to the transmission of radio communications or service, it shall certify such finding to the Secretary of Commerce.

All laws of the United States relating to unlawful restraints and monopolies and to combinations, contract, or agreements in restraint of trade are hereby declared to be applicable to the manufacture and sale of and to trade in radio apparatus and devices entering into or affect interstate or foreign commerce and to interstate for foreign radio communication.

And the bill also provides that those provisions are to be policed by the Secretary of Commerce and the Federal Trade Commission, and if they are found guilty, their license is taken away.

Representative HAMMER. But section 4 is not in there, or anything that was proposed

Mr. TUTTLE (interposing). Well, the provisions for the regulation of radio, of course, in this bill, are far more drastic than anything in the copyright law at the present minute. I wanted to touch, if I could, in a concluding thought, on the matter of what has been called here as price fixing. I attach importance to that, because it is used as a slogan that we must not engage, Congress must not engage in price fixing, and that is said to be the end of it. Now, I do not think the matter can be disposed of quite as summarily as that. After all, what we are here to do is to find a solution and not coin phrases. We are not to be carried away by a motto, but we are to seek something constructive. I have endeavored myself to avoid phrases as much as possible. I could coin phrases that would be very strong relative to the situation, but I have tried to understate rather than overstate our case. Now, I want you gentlemen to consider something on that subject as a method of approach. In the first place, if this bill that has just been referred to by Judge Hammer