is right.” They have said that to us in the hearings. We proposed to do that, and the committee feels it is perfectly right, and an amendment should go into this bill giving the folks who own these copyrights-just put a division in there so that if the Victor Talking Machine Co., for instance, owns a copyright and it produces a piece of music, that all the other mechanical reproducers might have accessibility to that music.

Mr. PURNELL. By doing what?

Mr. VESTAL. By the other companies paying a per centum, or a reasonable royalty for the use of it.

Mr. PURNELL. Paying just what they pay?

Mr. VESTAL. Yes; the same thing exactly.

Mr. PURNELL. Say the producing company buys outright a copyright and they become both the owner of the copyright and the producer?

Mr. VESTAL. Yes.

Mr. PURNELL. And I am an independent producer. I want to produce that song. How do I do it?

Mr. VESTAL. With the amendment proposed, you have the right and all other independent companies have the right to reproduce it by paying to the man who owns the copyright, or the company owning the copyright, a certain amount. The amendment proposes a 5 per cent royalty on the manufacturer's selling price. We proposed an amendment that they should have the right to do it by paying a reasonable royalty.

Mr. PURNELL. That does not help me much. You are the producer, we will say, and you buy Mr. Michener's copyright of his

song.

Mr. VESTAL. Yes.

Mr. PURNELL. You are therefore in the position of owner of the copyright and producer too. I am an independent producer; I like the song and I want to produce it. You have the whole thing tied I want to know how I, under your suggested arrangement, could produce the same song.

Mr. VESTAL. When I produce that song, then you can produce it by paying to me a royalty of 5 per cent of the manufacturer's selling price, according to this amendment.

Mr. RANSLEY. That is only after this amendment is adopted, and not now?

Mr. VESTAL. Not under the law now.

Mr. RANSLEY. Now, you pay 2 cents, do you not?

Mr. VESTAL. Yes.

Mr. FORT. In the case of this percentage of the selling price, sometimes a record made by John McCormack will sell for as much as $2.25 or $2.50, while some other song, sung by myself, for instance, would probably sell for minus 4 cents. How are you going to determine royalty based on the selling price of the record, when the selling price of the record is governed in that way?

Mr. VESTAL. That is the amendment that these gentlemen have written themselves, and they have said they were satisfied with it. The amendment we wrote is different.

Mr. FORT. I am not saying what the amendment does, but would not the effect of it be that all these big companies would first put out

the records made by the very high-priced performers, and then the independent producers would have to pay a percentage on the selling price of the records made by the high-priced performers?

Mr. VESTAL. Absolutely. The amendment we proposed was to the effect that all the other manufacturers would have to do would be to pay a reasonable royalty, and thus get clear away from the pricefixing proposition.

The CHAIRMAN. The use of the word "reasonable" would mean that there would be a dispute as to all these records.

Mr. VESTAL. I doubt that.

Mr. MICHENER. There would be a lawsuit in each case.

Mr. VESTAL. I think, with one or two suits, they would soon establish a reasonable price, and the courts would soon determine what would be a reasonable price and how it would be fixed. So I do not think there would be many lawsuits.

However that may be we are not worrying about that. We want these folks to have accessibility to the music. The only thing we have urged in this matter at all is the fact that we believe that price fixing is absolutely un-American, and that these folks who produce ought to have the right to bargain and sell just the same as anybody else. That is the principle behind this bill.

I do not believe it will increase the cost of the record one iota. Why? Because some of the records that these people are selling to-day, upon which they pay no royalty at all, cost the public more than other records where they do pay royalty. On the highest priced record that you buy to-day the producers are not paying a single cent of royalty. They are going to get all they can get out of them. That is the natural trend of business to-day. The man who is in the business is going to get all he can get.

The CHAIRMAN. The committee has some other important matters to consider this morning, and if Mr. Lanham desires to be heard we will hear him now for a few minutes.

STATEMENT OF HON. FRITZ G. LANHAM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. LANHAM. Mr. Chairman and gentlemen of the committee, if I may, I should like to make this statement without interruption, and then when I have concluded it I shall be glad to answer any questions. I think I can clarify some of these matters.

The CHAIRMAN. We will be glad to hear you, but we can only give you five minutes.

Mr. LANHAM. There are some things that I think ought to be brought to your attention.

In the first place, this bill is to deal with the man without whom the singer would be dumb, the orchestras would be silent, the records would be useless wax, and the machines that produce them would be junk. That is the man who makes the industry. We want to put him on a parity in the right to bargain with the man who writes a story. If I write a story, I have the right to sell it to one to publish serially in a magazine and get my compensation, and sell it to another to publish in book form, and to sell it to still another to produce on the moving-picture screen, and get the benefit of whatever

contract I can make with them. We want to get for this man who writes a song or a piece of instrumental music the same right, and provide that wherever his performance or his production is used for profit, as construed by the courts, he shall have the right to contract for his compensation as the man who makes the whole thing possible. They lay stress upon the fact that this is retroactive. I want to show you that it is not retroactive in the way or in the sense in which it has been claimed here to be retroactive, in so far as the copyright law that is in existence at present is concerned. The proposed measure makes this bill operative from the date of 1909. It does not affect contracts now in existence, and there is no intention to affect contracts now in existence.

If the Victor Talking Machine Co., for example, have a contract with a man to-day to produce his record for 2 cents, and they produce the records of a certain song under that contract, after this bill passes they will continue to produce them for 2 cents, and it will have no effect upon the stock they have on hand. They can carry it on under the same contract.

But since 1909, the date of our present copyright act, there has been very much music that has been copyrighted that has never been the subject of such contract and which the mechanical companies are not reproducing.

We say that if a man owns the copyright of a song that has never been produced, after the passage of this bill, regardless of the year since 1909 when his copyright was acquired, he ought to have the same right to contract. But so far as contracts in existence are concerned, they are not affected by this bill. It is not retrocative except to allow a man to deal with his own unused property as he sees fit. It has nothing to do with existing contracts; it does not affect the present stocks, or contracts that the reproducing companies may have at

this time.

In regard to the question of accessibility, under this bill the music is made accessible.

If I enter into a contract with Mr. Purnell, as a mechanical reproducer to publish my song, at a certain rate, he has the right to do that, and any other company can produce it at the same rate and pay me the same royalty.

They speak about the manufacturer who owns the copyright. I want to ask, in answer to Mr. Fort's question with reference to the music publishers, what about these mechanical reproducing companies who own all these copyrights and who bought them from the authors and composers? They reap the benefit because they own the copyrights, or they would not be contending for this amendment in regard to accessibility as among themselves.

It is a question for Congress to decide whether to accept the amendment suggested by Mr. Vestal, to make it a reasonable percentage, or to go to the price-fixing feature the companies recommend and have it 5 per cent of the manufacturer's price. We are willing for Congress to do whatever it may want to do relative to those amendments. We do not believe in the principle of price fixing.

When a record is made, the singer who sings a song can charge these mechanical companies anything he pleases. He is free to contract with them. The orchestra who play for them can charge any

thing they please, but the man who gives the vehicle to the singer and orchestra alike and makes the whole business possible and profitable, is not allowed to have anything to say, except up to 2 cents, as to what he shall get for his record. We say that is unfair. We say you should put him on a parity with these other people and give him the same right.

When John McCormack sings a song for them, or when Paul Whiteman's orchestra plays, do not believe they get only 2 cents for each record. It is very much in excess of that.

The author or composer says, if they play my selection, let me have the same right to bargain for it, because I make the whole industry possible.

Now, let me say a word with reference to the increase in price. You had testimony before you the other day, and I am sure they must have put it at the maximum figure, in which they said that their entire cost of a record-paying the composer and the performers, making the record and getting it all ready for the trade-is 37 cents. I do not see how that can be accurate, because Mr. Wolverton this morning says that some of them are selling records at 18

cents.

But let us take the 37 cents, assuming that to be true. Let us say that 37 cents is correct. That record sells at retail for 75 cents. There is a spread of 38 cents. Who is getting it?

Should not the author have the same right as the singer and the orchestra, who can contract with the mechanical companies, as to what he shall get, for a certain part of this 38 cents to go to him, with still a reasonable profit being left for these big companies?

Then they talk about monopoly, and Mr. Wolverton read from the hearings back in 1909, and it seems to me that the monopoly he mentioned was from the standpoint of the mechanical reproducers, that some company might get all of these copyrights and have a monopoly. We have tried to provide against that in the amend

ment.

And they say that these companies can not act together; that they are all separate and independent. Now, gentlemen, if that be true, it seems very peculiar to me that these two letters which I hold in my hand-photographic copies of letters from two companies which were sent out to bring this propaganda to you gentlemen and to other members of Congress, one written by the Columbia Phonograph Co. and the other written by the Okah-Odeon Co., which puts another popular brand of record on the market-through two typewritten pages are word for word, letter for letter, identically the same, absolutely. And they say they never act together. I wish I had the time to read these letters to you.

The CHAIRMAN. I think we have already had those letters.

Mr. LANHAM. I do not think so. These are the letters sent out by the companies telling dealers to write letters and send telegrams to you.

What do they say? They say, obviously such an increase as is here proposed by this bill would seriously interfere with your business and profits as well as ours.

They are very solicitous about their own profits. They are willing to pay the singer, the performers, and the orchestra whatever they

charge, but they want to hold the author and composer only, in all the ramifications of our law, down to where he can not contract. And they say, in order to do this we need the aid of your Congressman. And they ask dealers to write letters to their Congressmen to oppose this bill on this ground and others, one of them being this spurious retroactive feature.

Why should there be any increase in the cost to the public on even the cheapest record? Of course, on the old, historic music in the public domain they pay no royalty whatever, and frequently those are the highest-priced records.

Why should there be any increase, when you have a margin, taking their highest figure of 37 cents-although they are selling some of them for 18 cents, which makes their 37-cent figure appear rather doubtful-why should there be any increase when you have a spread of 38 cents? Why should there be any increase in the cost to the public?

The CHAIRMAN. We will have to stop this hearing now, because we have one or two matters that we must take up in executive session. Mr. LANHAM. I thank you, Mr. Chairman, for your attention.

The CHAIRMAN. If there is anything else especially that you want to put in the record, you might do that, but I think we have had rather complete hearings on this whole proposition.

(Thereupon the committee proceeded to the consideration of executive business, after which it adjourned.)