Page 93 - Inside the Film Factory New Approaches to Russian and Soviet Cinema

74 THE ORIGINS OF SOVIET CINEMA: A STUDY IN INDUSTRY DEVELOPMENT
when at least 278 American, German and French films entered the USSR. It
peaked in the mid-1920s when up to 85 per cent of films in the Soviet market came
from abroad. 35
The plan to exploit imports for capital formation ran into difficulty in its initial
stages, however, due largely to problems in Goskino’s organisation. The trust never
managed to take advantage of its mandated distribution monopoly for imports.
Goskino’s distribution network existed largely on paper: while it managed to supply
theatres in the Moscow region, it often failed to reach outlying areas. Theatre
managers in the hinterlands had to acquire films from other sources, and
competing distribution companies grew in strength relative to Goskino.
Sevzapkino, for example, expanded its distribution activity well beyond its original
Petrograd location, and it even established an exchange in Moscow to challenge
Goskino’s control of Russia’s largest urban market. Smaller firms established
regional distribution networks in outlying regions, acquiring prints (including
imports) from Goskino and renting them to theatres at high prices because of the
extra transaction. Rather than expanding its own distribution network, Goskino
simply farmed out regional distribution to these middlemen. 36
Goskino’s failure to fulfil its mandate betrayed a flaw in the entire trust system
that was just then becoming apparent to Soviet officials. The government wanted
to encourage a competitive, free-market economy while exerting control over each
industry through the government trusts. Yet the trusts were frequently
undercapitalised and could not achieve sufficient size to effect genuine domination
of their industries. When smaller competitors proliferated under NEP freedom, the
trusts experienced difficulties supplying their product to private retailers in remote
areas, an abiding problem given the USSR’s geographical expanse and often
uncertain transportation system. There promptly developed a layer of middlemen
traders who bought goods from trust producers and supplied them to retailers not
reached by trust deliveries, a practice that added to retail prices because of the
traders’ higher margins. 37
Theatre managers (the retailers of cinema) in various regions fell prey to this
expensive trading system when Goskino resorted to distributing through such
middlemen. Some theatre managers were forced to pay a distributor’s share of up
to 70 per cent of gross receipts. This added to a set of circumstances which drove
up ticket prices throughout 1923, causing a ‘theatre crisis’ which threatened to
scuttle the industry’s entire developmental agenda. All theatres showing foreign
films were subject to a national tax of 25 per cent of gross receipts, a burden then
passed along to consumers in the form of higher ticket prices. The taxes were
earmarked for the Commissariat of Enlightenment, the agency which oversaw the
film industry. But not all tax revenues went back into film-related work; much of the
revenue was diverted to the Commissariat’s non-income-generating responsibilities
such as schools and libraries. Many local governments aggravated the problem by
adding local taxes to ticket prices. 38
This combination of uncertain distribution and quick inflation of ticket prices put
the squeeze on commercial exhibitors, many of whom leased their theatres from