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DECEMBER 13,
THE MUSIC TRADE REVIEW
1919
11
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SOME LEGISLATIVE PROBLEMS THE
INDUSTRY MUST FACE DURING 1920
George W. Pound, in a Special Interview, Outlines the Pending Moves of Congress
as They Will Affect the Music Trade, and Counsels Watchfulness
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One of the chief functions of the Music In-
dustries Chamber of Commerce, through its
general counsel, George W. Pound, during the
war and the period immediately after, has been
to look out for the interests of the several
branches of the industry in connection with
legislation for revenue and otherwise that was
calculated to affect the industry in any way.
In lining up the business prospects for 1920
it is quite evident that this work of the Cham-
ber of Commerce will still have an importance
not generally realized by the rank and file of
the trade. The War Revenue Act is still in
force and the question of amending that meas-
ure, or providing a substitute for it, will come
up during the next session of Congress. There
are other important matters pending in Con-
gress and in the various State Legislatures that
are of vital interest to the music industry and
must be watched carefully.
Two Years to Settle Legal Problems
In commenting on the activities of the
Chamber of Commerce during 1920 George W.
Pound, in a special interview with The Review,
said: "Judging from all appearances, it will take
at least two years to solve the present legal
problems confronting the music industry. A
new War Revenue bill is very probable, and, in
fact, is now being seriously considered. The
principle on which the bill will be founded has
not yet been settled, but it will be decided
shortly by the committees at Washington
whether a general bill will be offered providing
for such modifications, or repeal, of taxes as
may be deemed necessary. The other sugges-
tion is that there be introduced a series of
separate bills covering separate industries and
emergencies and granting the desired relief.
"It appears to be the thought of the Senate
Finance Committee that what is most desirable
is a general bill drafted on a broad principle,
but even should this plan be adopted it will take
several months to thresh out the many ques-
tions involved, and it is improbable that the
new bill could be passed before fall.
New Copyright Law Coming
"There is also in prospect a new copyright
law which, according to present plans, will em-
body some radical changes from the present
act, particularly in regard to the mechanical
reproduction of music. In the first place, it
will be demanded by certain interests that an
increase of several hundred per cent, be made
in royalties for mechanical reproduction as at
present provided for in the law, and this phase
PIANO TRADE GOOD WILL
a problem the merchant may fix the arbitrary
figure which his deliberate judgment dictates.
Or he may compute his investment in good will
as the sum total of his advertising and promo-
tion expenditures. However, if certified ac-
countants are called in when a deal is pending
they are almost certain to object to any plan
whereby advertising investment is given the
status of capital under the name of good will.
An ingenious plan that has been followed in
some instances in the effort to measure the dol-
lars-and-c»nts value of good will has been to
ascertain the difference between the net earn-
ings of the business under scrutiny and the
return upon the capital actually invested at a
conservative rate (say 6 or 7 per cent.). The
excess earnings over the allowable return upon
actual investment are taken to be earnings upon
good will and with this as a starter the value
of the good will is determined by multiplying
by ten the profit attributed to good will during
the year covered by the computation. Or, again,
we have the definition of Roger Babson that
good will value is fixed by what could be
earned by a business without new advertising
or without promotion effort other than that
already put forth.
(Continued from page 9)
chant has two vital points of contact to watch.
His local advertising must be "right" just as
must the national advertising of the manufac-
turer, but even more to the point, the personal
element—the personality of the merchant and
his aids—must be such that the casual cus-
tomer will warm to the institution. Bound up
with this personal equation, if you please, are
all the considerations of credit, terms, deliveries,
furnishing of repair parts, etc. Most serious of
all. perhaps, is the advisory element. The cus-
tomer of the butcher, the baker or the candle-
stick maker may not expect the merchant to
give expert advice as to the selection to be
made, but the average piano prospect does and
herein lies one of the greatest of the potential-
ities of piano trade service.
It is conceivable that a day may come in the
experience of a piano merchant when the cold,
materialistic side of good will appraisement
transcends the sentimental side. Perhaps the
merchant desires to fix an item for his inven-
tory or mayhap he is about to enter negotia-
tions for the sale of his business. Given such
George W. Pound
applies particularly to manufacturers of talk-
ing machine records and music rolls.
"The last United States copyright law was
passed in 1909, after a four-year fight, and I
was privileged to write the particular sections of
the law which apply to music.
Copyright
is always a mooted question, and any new
measure will naturally be made the center of a
strong legal fight, which will mean that it will
be a long time in passing. The word roll, for
instance, which was unknown at the time the
present act was drafted, will be one of the mat-
ters that demand earnest consideration.
"One of the most important matters coming
up before Congress some time in the future will
be the new Tariff Law, giving increased pro-
tection to American manufactured products.
There is a growing sentiment in the Senate, and
particularly among some of our good friends,
that the new law should be deferred until 1921,
but at the present time statistics and informa-
tion are being gathered and I have been asked
by the United States Tariff Commission to sub-
mit facts and figures. It is probable that a duty
of at least 45 per cent, on musical instruments
and supplies will be provided for in the new
law when drafted. This is the figure held by
members of the industry and economists gen-
erally as proper and necessary to guarantee
proper protection to American musical manu-
facturers.
Revision of the Patent Laws
"A general revision of the patent laws is also
promised for the future, inasmuch as it is con-,
sidered that there is room for many reforms
in that measure. In the new law when drafted
it is proposed to include a compulsory manu-
facturing clause under which a patent would
have to be manufactured or utilized within a
given period, probably one or two years, with
precedent favoring the former period. Should
the patent not be so utilized it would fall in
public domain and the holder would forfeit any
exclusive rights to its use.
Federal Trade Commission Activities
"The Federal Trade Commission, which has
long held widespread and arbitrary powers in
the matter of interstate commerce, is rapidly
extending its functions and is gradually hold-
ing and promulgating the doctrine of control
over bad and unfair business methods. The
second-hand, used or rebuilt decision is an in-
stance in point along this line, it being held
that when used or rebuilt instruments are ad-
vertised the fact mu,st be so stated, not mere-
ly in a negative but in a positive manner.
I
look for more general activities on the part
of the Federal Trade Commission in the regu-
lation of business, and it would be necessary
for the trade to keep in close touch with the
newest rulings as issued by that body.
Universal Conditional Sales Act Urged
"The passage by Congress of a Universal
Conditional Sales Act in interstate commerce
is also to be urged strongly. A large num-
ber of States have already passed such an act,
and this is expected to give encouragement
to those who are seeking to have such a law
added to the national statutes.
Constant Alertness Essential
"I have referred to only the most impor-
tant matters coming up before Congress in
which the music industry is naturally inter-
ested, but there are many other matters, some
of them cropping up almost overnight, that will
require of the industry that it be particularly
on the alert during the months of uncertainty.
Besides the acts of Congress there must also
be watched carefully the workings of the va-
rious State Legislatures, which are prone now and
then to take a fling at business generally, and in
many cases enact, or endeavor to enact, laws
directed especially against musical instrument
manufacturers and retailers. The war pro-
vided the excuse for much radical legislation and
many of the law makers have not yet realized
that the emergency is passed. Hence there is
to be expected considerable legislation that is
drastic, uncalled for and unnecessary, and it Is.
this that we must guard against."