Compromise in London

In the House of Commons last week up rose Harold Wilson, chubby President of Britain's Board of Trade. Said he: "The negotiations between His Majesty's Government and the representatives of the American motion picture industry have resulted in an agreement." This was good news to Hollywood, which had in part blamed the 75% British tax on U.S. film profits for inciting to panic (TIME, Jan. 19).

A fortnight before, Movie Czar Eric Johnston had gone to London prepared to talk turkey. He found the atmosphere ripe for a judicious compromise. Britain needed U.S. movies even worse than Hollywood needed the British market.

Last week, as they unfolded the terms of their agreement, Johnston and Wilson beamed fondly at one another. Said Wilson admiringly: "Johnston was a tougher negotiator than the Russians." Said Johnston of Socialist Wilson: "Were he in America, he would have made a great capitalist." Both parties to the deal stood to gain by it, and neither had anything to lose. In Hollywood, there were a few who called it a good deal only by comparison with the "confiscatory" 75% tax. Producer-Director Sam Wood spoke for the optimists: "Removal of the tax gives the green light on the greatest surge of production in Hollywood's history."

Though the 75% tax is abolished, Hollywood will not be able to take any more money out of Britain than-before. Out of a $68 million U.S. take at the British box office (1946 figure), the tax would have left Hollywood a maximum of $17 million; the new agreement places a $17 million limit on the amount of profits which can be taken out in dollars. All profits above that must be kept in Britain in nonconvertible sterling. Hollywood can invest this money in British-made pictures* or in whatever enterprises a special U.S.-British board will approve.

Hollywood can also take out as many dollars, above the $17 million limit, as British films earn in the U.S. (in 1947 they earned $4 million). But even here Wilson had won a canny advantage. U.S. producer-exhibitors for the first time would have an interest in promoting British films in the U.S., because that would help them get more dollars out of England.

*One company set to do so: MGM, which has, at Elstree, one of the world's best studios.

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