(The information is as follows:)

RECORDS, REPORTS, AND PENALTIES FOR WHOLESALE GROCERS HANDLING

OLEOMARGARINE

(Reference Regulations No. 9, Bureau of Internal Revenue, United States Treasury Department, and statutes there set forth)

A wholesale grocer is required to keep records (separate records for uncolored and for colored oleomargarine, if any), entered at his place of business not later than the day following each transaction and kept there for 4 years, including the following:

1. Records of actual weight of oleomargarine returned to or by the wholesaler as to other oleomargarine, records of quantities indicated by the tax-paid stamps on the packages.

2. Records of the number of pounds in each consignment received, name and address of consignee, and date of receipt.

3. Number of pounds in each lot disposed of, name of the consignee, address to which delivered, and date of shipment.

4. Separate records of deliveries to each retail store where the purchaser operates more than one store.

5. Special record of persons ordering oleomargarine for shipment or delivery to others.

6. Separate records of oleomargarine returned by customers.

7. Separate records of oleomargarine returned by the wholesaler to the manufacturer or other seller.

Reports under oath of the following items of information must be made for each month, by the 15th of the following month (separate reports for uncolored and for colored oleomargarine, if any), and copies kept for 4 years (Forms 217 and 217-a):

1. Total pounds on hand at the beginning of the month.

2. Total pounds received during the month.

3. Total receipts of returned goods.

4. Total pounds disposed of during the month.

5. Total pounds on hand at the end of the month.

6. Total pounds accidentally destroyed, lost in transit, or unaccounted for, with explanations.

7. Statement of each individual shipment received during the month, including date of invoice, name and address of consignor, whether consignor is a manufacturer or a dealer, and number of pounds, with an explanation if there is any difference between invoice and actual poundage.

8. Statement of each individual shipment or delivery to other wholesalers during the month, including date of invoice, name and address of consignee (if name of consignee is a trade name, the names of owners must also be given; names and addresses on customers' special-tax stamps must be given, and if the shipment or delivery is to a different address that must also be given), number of pounds, and (for the States of California, Illinois, Missouri, New Jersey, New York, Ohio, Pennsylvania, and Texas) the county in which consignee is located. These statements must be entered on the form under a heading "Disposals to wholesale dealers" typewritten in capital letters in the center of the page, and must be arranged with names of consignees in alphabetical order, and all shipments or deliveries to each consignee grouped together, in order by dates.

9. Statements of shipments or deliveries to retailers and consumers during the month, including the same details as item 7 above, but giving the aggregate quantity for each customer at each point of delivery. These statements must be entered on the form under a heading "Disposals to retail dealers and consumers" typewritten in capital letters in the center of the page, and must be arranged by States (with State names typewritten in capital letters in the center of the page), and with surnames of consignees arranged in alphabetical order for each State. Where a purchaser has a number of stores to which shipments or deliveries were made, entries for the separate stores must be arranged alphabetically by names of the cities or towns, alphabetically by names of streets, and numerically by street number where there are two or more stores one the same street.

10. Statement of each individual shipment or delivery of oleomargarine returned to suppliers during the month, including date of consignment, name and address of consignee, and number of pounds. These statements must be entered

76269-489

on the form under a heading "Returned to shipper" typewritten in capital letters in the center of the page.

11. Similar statments, under separate headings, on oleomargarine disposed of as grease or for other inedible purposes or destroyed.

And the wholesale grocer is subject to these among other penalties, in addition to tax of $200, or of $480 for those who handle any colored oleomargarine:

1. Fine of $500 to $2,000 for nonpayment of special tax (liability for special tax is incurred at each place other than registered premises where oleomargarine is sold or offered for sale).

2. Penalty of $1,000 and forfeiture to the Government of all oleomargarine owned by him, or in which he has any ownership interest, for selling oleomargarine other than in original stamped packages ($2,000 penalty, and forfeiture, if quantity sold is less than 10 pounds).

3. Penalty of $1,000 and forfeiture of all oleomargarine, for making any sale unless the order is received and the sale consummated, the oleomargarine addressed and billed, and the sale recorded, at the wholesale grocer's registered place of business.

4. Separate and additional special-tax for each place of delivery when a purchase money draft is attached to bill of lading unless the bill of lading is endorsed specifically and not in blank to and the draft drawn on the person ordering. 5. Penalty of $1,000 and forfeiture of all oleomargarine, for having colored oleomargarine on the wholesale grocer's premises if he has not paid special tax as a dealer in colored margarine.

6. Fine of $50 to $500, and imprisonment for 30 days to 6 months, for each violation of requirements as to records or reports.

7. Fine of up to $1,000 and imprisonment up to 2 years, for selling, offering for sale, delivering, or offering for delivery, any oleomargarine not in prescribed new wooden, tin-plate or paper packages.

8. Penalty of $50 for each purchase or receipt of any oleomargarine not branded or stamped as required.

9. Penalty of $100 for each purchase or receipt of any oleomargarine from a manufacturer who has not paid the special tax, and forfeiture of such oleomargarine.

And various other penalties.

The CHAIRMAN. Identify yourself for the record, please.

STATEMENT OF ERSEL WALLEY, PRESIDENT, AMERICAN SOYBEAN ASSOCIATION, FORT WAYNE, IND.

Mr. WALLEY. Mr. Chairman and members of the Committee on Finance, my name is Ersel Walley. I live in Fort Wayne, Ind., and am engaged in farm management and rural appraising service in Ohio, Indiana, and Michigan. As a tenant farmer, as owner-operator, and as a farm owner, in northwestern Ohio, I have grown soybeans for 27 years. Currently, I am president of the American Soybean Association, the Nation-wide growers organization.

This statement is made on behalf of that organization to explain its position and attitude on the question of removing taxes on margarine.

The American Soybean Association felt that it was forced, at this time, to take an interest in margarine legislation. This interest was prompted by our opinion, now well sustained, that public sentiment would force the passage of legislation this year removing the restrictive taxes on yellow margarine, which now apply at the manufacturer, wholesaler, retailer, and consumer level.

Our way of life is based upon supplying to consumers the products which they want in the form in which they want them. This practice has contributed to our economic progress our achievement of a relatively high standard of living.

The American housewife and her family want yellow table spreadsbutter or margarine as they prefer. Our eating habits and food desires are deep-seated. We like yellow spread on white bread-pleased with a spread artificially colored and a bread made from flour artificially bleached. From the richest to poorest, we Americans want in our foods color or lack of color-natural or artificial-as best suits our eye and taste.

We fully recognize that approximately 82 percent of our population is urban and only 18 percent is rural. It is evident to us that that 18 percent or any segment thereof could not for long dictate in the face of the public demand for tax-free yellow margarine.

Annually since 1941 the American Soybean Association has gone on record as favoring the repeal of all Federal and States taxes which burden the manufacture, distribution, or sale of colored margarine provided that margarine is made from domestically produced oils the product of American farms.

Our position, which has the effect of leaving the present restrictive taxes on margarine made from imported oils, is, in the opinion of our members, well-founded. Prewar soybean growers know from actual experience that it is difficult or impossible to compete with imported oils. The reasons that the American soybean grower cannot compete with producers of tropical oils are well known and do not need repeating here; buying in a highly protected market, our growers feel they must favor protection for their own products in the domestic market. We appreciate the fact that our position might be characterized as highly nationalistic and even narrow; a point which is particularly emphasized by the fact that, coconut oil from the Philippines, to which country we are closely tied, has historically been one of the most severe competitors that domestic producers of fats and oils have had to meet. We fully consider the fact that our position in favoring the removal of restrictions only on margarine made from domestic oils might be construed by many as a violation of certain reciprocal trade agreements. It was our conclusion that the present laws already constituted a discrimination against foreign oils and that the removal of the discrimination on domestic oils would not, per se, change the present status as to discrimination against the use of imported oils in margarine.

It is the belief of the American Soybean Association that yellow margarine made from domestically produced fats and oils should be allowed to sell for what it is, on the basis of its true value, without Federal or State discrimination. We believe that butter has a right to a free market, and that soybean oil in the form of margarine has a similar right. We consider the present discrimination unfair. We believe that the immediate removal of Federal taxes on yellow margarine will benefit not only the producer of soybeans, cottonseed, peanuts, and corn, but also the producer of dairy products, including butterfat.

A population increase in the United States the past 9 years equals to the total population of Canada, has created a tremendous drain on our food resources. Experts expect this population increase to continue with a total increase of 18 to 20 millions from 1939 to 1950. The oncoming generation of Americans is nutrition conscious, creating a definite demand for larger quantities of meat and animal products.

Continued production of large quantities of efficient low-cost vegetable protein meal is essential to the adequate supply of meat, milk, and eggs necessary to the proper feeding of our increased population.

Currently the annual per capita consumption of table spread is 15 or 16 pounds-of which butter supplies approximately two-thirds and margarine one-third. We believe this per capita annual consumption can be increased not only to the prewar rate of over 20 pounds per person, but eventually to somewhat the nutritional standards recommended by the United States Department of Agriculture of 30 to 35 pounds per person.

Many soybean growers also produce cream for butter. We believe that yellow butter and yellow margarine are complementary and both necessary and that the market for clean quality butter and clean nutritious margarine can be expanded-constructively and fairly without confusion or misrepresentation and without tax on color.

Our position or policy has not, in the past and does not now, in any way, shape or form take an antagonistic attitude toward the dairy industry. Let me repeat again that our growers for the most part are also dairymen. We feel, and the economic trend of the past 40 years supports our opinion, that the milk production in this country will more and more go into a higher value use. We know of no soybean grower who would be interested in owning and milking less cows as a result of the passage of the pending legislation to repeal the taxes on margarine. We do know that year by year our farmers are meeting requirements which enable them to turn their dairy production to higher value use.

This inevitable economic change and trend does not mean that butter will become extinct but it may mean that the per capita production of butter will continue to fall. Surely no thinking person can maintain that as a lesser portion of our people are able to get butter that all others must either go without yellow table spread or pay a discriminatory tax to enjoy it. Truthfully this is the thing that has already happened and accounts for the present overwhelming public demand for removal of the taxes.

The American Soybean Association appreciates the fact that the average consumer does not know and perhaps does not care whether margarine is made from domestic or imported oil in view of the common experience that it meets high standards of purity, cleanliness, nutrition, color, and taste.

Pearl Harbor created the most severe emergency in the history of the United States in many vital ways. Not the least of these, as to the successful prosecution of war, was the shortage of fats and oils created by the Jap's seizure of the Far East. The expansion of the soybean acreage and the soybean handling and processing industry since Pearl Harbor constitutes one of the outstanding achievements in the whole history of man's efforts to feed himself. In 2 years our growers made this Nation for the first time in recent history selfsufficient as to edible fats and oils. At the same time soybeans made possible the extra protein feed so vitally essential to our wartime and postwar food programs.

Considering the uncertainties of the future, we submit to you the proposition that such an essential segment of our agricultural production, as the soybean industry has proved itself to be, should be kept strong.

We have asked the secretary of the American Soybean Association to follow with his statement which goes into greater detail in explaining and supporting the position of our growers which I have just

outlined.

The CHAIRMAN. Would your association object to adequate regulations, if they do not exist, to make misbranding difficult and unlawful to the end point that the consumer knows what he is buying?

Mr. WALLEY. Well, the matter, as a consumer, for instance, let us take the farmer viewpoint. We buy fertilizer. I defy any farmer to take a sample of 2-12-6 or old 0-20-0, and look at it and tell which is which. We depend upon the labeling in everything we buy. That is right. We will not object.

The CHAIRMAN. Do you object to labeling, branding regulations if they are adequate?

Mr. WALLEY. We see no reason for objection.

The CHAIRMAN. So that the consumer would know what he is getting.

Mr. WALLEY. That is right. That is the common practice and we would certainly approve of it.

Now, I will ask Mr. Strayer to present his paper.

The CHAIRMAN. Would you answer the question in the same way?

STATEMENT OF GEORGE M. STRAYER, SECRETARY, AMERICAN SOYBEAN ASSOCIATION, HUDSON, IOWA

Mr. STRAYER. I would, sir.

My name is George M. Strayer, and my home is at Hudson, Iowa. I am a farmer and a seed producer, and I am secretary of the American Soybean Association. I grew up on a farm and I acquired this set of overgrown hands by milking a herd of cows every night and every morning for a period of years. I feel that I know the problems of the dairyman for I have been one of them for a period of years, and I today maintain a herd of about 20 milk cows on that farm. In my small town there is located a cooperative creamery which 5 years ago made about 3,000,000 pounds of butter per year. Last year that creamery produced only about 1,700,000 pounds of butter as the result of diversion of milk into more profitable channels. I sell butterfat to that creamery, and I contribute to the advertising fund of the lowa Dairy Industries Council, for I believe that pure wholesome dairy products are worthy of advertising.

Mr. Walley has already told you why the American Soybean Association, representing soybean producers, is interested in the proposal to remove the restrictions and taxes on margarine. He has told you that repeatedly, since 1941, the American Soybean Association has gone on record favoring the repeal of all Federal and State restrictions on the sale of margarine made from domestically produced fats and oils. In my section of Iowa the dairyman is also a soybean producer. Both commodities come from the same farm, and it is my observation that the average farmer in that section does not support the position taken by the dairy leadership. The farmer believes that all products on his farm should have a free and open market-that taxing his soybeans to subsidize his butterfat is foolish and nonsensical.

Corn is the principal crop which we raise on our farms, the most of which is used as feed for livestock. The next crop in importance is