A.—6

adopted in Great Britain and Northern Ireland under the Income-tax Act, 1918, and it was reported to the sub-committee that a similar principle of taxing only part of the profits of the. non-resident manufacturer also underlies the laws of some or all of the Dominions, though not in every case those of Provincial or State Governments within these Dominions. The representative of India intimated, however, that he was unable to accept the principle, and it was also pointed out by the representatives of Canada and of the Commonwealth of Australia that they were not in a position to speak on behalf of or to bind Provincial or State Governments. Signed on behalf of the sub-committee. 17th November, 1926. Pekcy Thompson, Chairman. THIRTEENTH REPORT. EXHIBITION WITHIN THE EMPIRE OF EMPIRE CINEMATOGRAPH FILMS. The General Economic Sub-Committee beg to make the following report to the Imperial Conference on the subject of the exhibition within the Empire of Empire cinematograph-films :— 1. The importance and far-reaching influence of the cinema are now generally recognized. The cinema is not merely a form of entertainment but, in addition, a powerful instrument of education in the widest sense of that term ; and, even where it is not used avowedly for purposes of instruction, advertisement, or propaganda, it exercises indirectly a great influence in shaping the ideas of the very large numbers to whom it appeals. Its potentialities in this respect are almost unlimited. 2. In Great Britain and Northern Ireland the proportion of Empire-produced films to the total shown has recently been only about 5 per cent., and in the Irish Free State the proportion is probably not higher. In Australia, of the total number of films imported in 1925, only a little over 8 per cent, were of Empire origin, and on the basis' of length of film the Empire proportion was probably substantially less. In New Zealand in recent years the proportion of films shown which were of Empire origin appears to have been about 10 per cent. In Canada the direct imports of films from Great Britain and Northern Ireland in the year ended the 31st March, 1925, were only 1-3 per cent, of the total films imported. The proportion of British films shown is also known to be very small in South Africa, Newfoundland, and India, and in the colonies and protectorates, although statistical data are lacking. 3. It is a matter of the most serious concern that the films shown in the various parts of the Empire should be to such an overwhelming extent the product of foreign countries, and that the arrangements for the distribution of such Empire films as are produced should be far from adequate. In foreign cinema pictures the conditions in the several parts of the Empire and the habits of its peoples, even when represented at all, are not always represented faithfully and at times are misrepresented. Moreover, it is an undoubted fact that the constant showing of foreign scenes or settings, and the absence of any corresponding showing of Empire scenes or settings, powerfully advertises (the more effectively because indirectly) foreign countries and their products. 4. In Great Britain and Northern Ireland and in the Irish Free State, Empire-made films enjoy in respect of Customs duty a rebate of one-third. In Australia, British-produced films (i.e., films wholly printed in Great Britain and Northern Ireland from negatives of which at least 75 per cent, of the length was photographed in Great Britain and Northern Ireland) are admitted duty-free, whilst other films are subject to duty. In New Zealand, films which qualify for admission under the British preferential tariff are duty-free, others being dutiable. In Canada, films made in Great Britain and Northern Ireland, and in certain other Empire countries, pay a preferential rate of duty which is one-half of the general rate payable by most other countries, including the chief source of supply; France and a few other foreign countries which obtain the benefit of the French convention pav a rate which in this case is the same as that now paid under the British preferential tariff, but the imports from these countries are insignificant. In South Africa, Newfoundland, and India, Empire-made films do not receive a tariff preference. The degree of preference accorded to British films in those colonies which have s preferential tariff varies from one-fifth in Mauritius to one-half in Trinidad and other colonies, some of the duties being levied ad valorem and others at specific rates. In Bermuda foreign films pay sd. per 100 feet plus a surtax of 10 per cent., and in Fiji 12f per cent, ad valorem, while British films are admitted free. Most of the African colonies and protectorates are precluded by international agreement from according any preference. 5. As indicated in the preceding paragraph, Australia requires that for any film to be entitled to preferential treatment the larger part of the picture which it shows—whatever the nature —must have been photographed in Great Britain and Northern Ireland. But in Great Britain and Northern Ireland, and apparently in certain other Empire countries, positive films need only have been printed within an Empire country receiving preference, from negatives taken elsewhere, to qualify for preference. Existing duties are levied on a basis which ignores the actual earning-power of a film, but the levy of duties on the basis of exhibition or entertainment value would give rise to serious administrative and other difficulties. Generally speaking, it must be concluded that the existing duties on films, and the preferences accorded in some cases, have been of little effect in promoting film-production, as distinct from film-printing, within the Empire. 6. Great importance is attached by the sub-committee to the larger production within the Empire of films of high entertainment value and films of sound educational merit, and their exhibition throughout the Empire and. the rest of the world on an increasing scale. The sub-committee have considered various methods by means of which, it has been suggested, this object could be most usefully assisted by the Governments of the various parts of the Empire. These methods include : Effective Customs duties on foreign films, whether accompanied by a change in the basis on which

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