manufacturers and processors of dairy products. Artificial flavoring is added to oleomargarine in the form of diacetyl, to make it taste like butter. The coloration of oleomargarine to imitate butter would be the final step which would allow its widespread substitution for butter. The results would inevitably be fraud and deception on the part of dishonest dealers.

In January and February of this year a national research organization found that oleomargarine sales were 54 percent of the combined sales of oleo and butter, surpassing butter sales for the first time. Before the war oleomargarine enjoyed only 23 percent of the combined market. It is evident that governmental taxes and restrictions have not hindered the increasing sales of oleomargarine, which have more than doubled since 1941.

The statement was made at this hearing yesterday that the combined fat and oil intake in the United States was below the nutritional standard. The Food Nutrition Board, in its Bulletin No. 118, recommends that the total dietary fat consumption be 68 pounds per person' per year, consisting of 28 pounds of visible fat and 40 pounds of invisible fat. Visible fat includes oleomargarine, lard, shortening, salad and cooking oils. 42.3 pounds of visible fats were consumed per capita in 1945; 42.3 pounds per capita in 1946; and 44.3 pounds in 1947. This is far in excess of the recommended minimum. The invisible fat is supplied by foods other than those listed above.

In this hearing yesterday, Under Secretary of the Treasury Wiggins testified that total Federal taxes and license fees on oleomargarine in 1947 approximated 1 cent per pound for the industry as a whole. Since our per-capita consumption of oleomargarine was only 5 pounds during the year, the tax per user amounted to about 5 cents.

At current prices the difference between a pound of oleomargarine and a pound of real butter is approximately 50 cents. One fraudulent sale of colored oleomargarine to a butter purchaser then would cost the consumer more than the price of 10 years' insurance against fraud and deception.

Butter is a quality product traditionally served to guests as a symbol of good living. The housewife is entitled to get butter when she pays for butter, and this can only be guaranteed by practical Federal supervision of oleomargarine manufacture and sale.

The CHAIRMAN. Thank you very much.

Mr. McLATCHEY. I would like the privilege of offering for the record in opposition to the proposed oleomargarine legislation the following statements: One from Mr. Earl Gilmartin, of Spokane, Wash.; Mr. John Burnham, executive secretary of the North Dakota Dairy Industries, and Mr. C. O. Jacobson.

The CHAIRMAN. You wish those put in the record at this point or for the file?

Mr. McLATCHEY. For the record. May I read the wire from C. O. Jacobson?

Authorizing you to represent the Oklahoma Butter Institute in opposition to oleomargarine legislation. Oklahoma ranks eleventh nationally in butter manufacture. Any change in oleo law will deal a severe blow to the dairy interests of Oklahoma and strangely but true also to the cotton farmers.

(The statements follow:)

STATEMENT OF EARL GILMARTIN, OF SPOKANE, WASH., SUBMITTED TO THE SENATE FINANCE COMMITTEE ON OLEOMARGARINE LEGISLATION

My name is Earl Gilmartin. I am general manager of the Commercial Creamery Co., of Spokane, Wash. We manufacture butter, condensed milk, and other related dairy products. I am speaking for my company in opposition to the proposed bill H. R. 2245.

The repeal of the present oleomargaríne laws will have a detrimental effect upon the agricultural welfare of the State of Washington. More than 29 percent of the farms within our State reporting products valued at $600 or more sell farm-separated cream for butter making. To allow an imitation product such as oleomargarine to compete unfairly with butter will be harmful to dairy farming in the State of Washington.

The market enjoyed by the 15,000 dairy farmers who now sell farm-separated cream for butter making will be undermined. Because butter is a product that is concentrated and permits shipment to far distant urban centers it affords the only developed market available to dairy farmers living in areas that have no concentrated urban population. Practical economics establishes the fact that there is no other market available for dairy products from producers in these areas.

To a large extent the butter-manufacturing industry consists of small independent units. These are generally located in rural areas in small farm towns and villages. Frequently the creamery company is the principal employer of local wage-earning citizens and as such has a great effect upon the economic welfare of the town. In the State of Washington almost one-half of our population is rural. The welfare of these people in terms of gainful employment is seriously effected by the proposed oleomargarine repeal legislation.

In our State much of the topography is such that the dairy cow affords the best method of utilizing much of the land. The dairy cow is able to produce nature's most nearly perfect food from this pasture crop and provide for our citizens a highly desired nutritious food. Discouraging this type of agriculture through oleomargarine repeal legislation is undermining the sound structure of our American agriculture.

STATEMENT OF JOHN BURNHAM, EXECUTIVE SECRETARY, NORTH DAKOTA DAIRY INDUSTRIES ASSOCIATION, TO SENATE FINANCE COMMITTEE, MAY 18, 1948, at a HEARING TO WEIGH THE MERITS OF PROPOSED REPEAL OF CERTAIN TAXES LEVIED ON VEGETABLE OIL SUBSTITUTES FOR BUTTER

Mr. Chairman, and members of the committee, as a newspaperman I shall make this statement factual concise, and analytical. We, as champions of the butter industry, are not hostile to any food product, nor do we uphold punitive taxes and fees levied against any food product. However, we do believe that every food product offered the American people be sold on its own merits, without discrimination but also without access to facilities for substitution or imitation of other food products. We favor only such taxes as shall protect the consumer from such substitutions and imitations.

Let's weigh both butter and oleomargarine from the standpoint of the three groups of Americans involved: 1, producers; 2, processors; and 3, consumers. (I place them in that order, not because it is the order of importance, but because that is the natural flowage of goods and services.)

1. Producers.-Butter is made from cream produced on 5,000,000 American farms, farms in every State of the Union. All the component parts of butter are produced domestically. These farmers also produce milk used for all other dairy products-fluid bottled milk, condensed milk, ice cream, dried-milk products, cottage cheese. Butter, however, always has been the balance wheel of dairying. Butter takes the surplus milk in times of seasonal surplus. Without a copious market for butter, all milk production would be cut to the average needed for other uses. This would result in severe fluid-milk shortages in our urban centers at seasons of slack production. Oleo has found its friends among northern Senators from our large cities. May I point out to them and to their constituents, in a friendly way, that a blow at butter today may take away the baby's milk bottle next winter. That is not emotion; that is a prediction based on an appraisal of statistically correct factors of production and marketing.

These 5,000,000 farmers, gentlemen, are the men who produced food for freedom during the war. They supplied the best-fed and most adequately nourished Army in the history of the world. They supplied the home-front workers in shipyards and bomber plants and in thousands of factories. They fed our allies, both those in uniform and the destitute and starving civilians, and today they are still feeding the hungry half of the world.

Their thanks has been harsh; charges of profiteering because food prices are high, although no higher than prices of all other commodities and of labor. For a decade they have broken all production goals and production records despite shortages of new farm machinery, and repair parts for old machinery, shortages for which bickering management and labor both are to blame.

Now you would slap the dairy farmer again by giving a substitute product every opportunity to imitate a dairy product, a process which will go on to include all dairy products. While your Federal Agriculture Department preaches the soilsaving wisdom of livestock farming, you would by one act give a body punch to the most technical type of livestock farming.

Our southern friends, both in and out of Congress, tell us that the substitute for butter today is made from oils of the soybean and the cottonseed, and that these, too, represent a sizeable segment of American agriculture.

Let me say now that our southern friends are being taken for a fast, rough, one-way ride. During the war years the oleomargarine industry built up an impressive statistical picture showing that its product was being made, to an increasing degree, from native oils. Naturally so, for there simply was no nonmilitary shipping in the South Pacific, and cocoanut oil was impossible to obtain. We all remember the wartime shortages of jute, rubber, pineapples, bananas, quinine.

But already imports of cocoanut oil are increasing. In a friendly way I would point to those imports as a handwriting on the wall. Oleo simply because of wartime shortages built up a statistical record which won the friendship of southern farmers and legislators. When these restraints on production of colored oleo are repealed, when oleo has used its friends, then it will go back to cheap foreign oils and the cotton and soybean farmers will wonder why in the world they deserted their northern friends. And they will remember that dairy cattle feed has brought to soybean farmers nearly three times the amount of revenue derived from oils used in oleo, and that cotton clothing sold in rural America is much more profitable a market than the cottonseed oils which go into oleo.

I believe that we have proven to you gentlemen that all Americans, workers in the cities and on southern plantations, benefit from a healthy condition of butter production, and should not be detracted from the truth by the $6,000,000 publicity campaign of the "monkey butter" boys.

2. Processors.-There are more than 4,000 creameries in America which make butter. Oleomargarine is made by scarcely 20 companies, most of them very large companies and all of them integrated into a financially and politically powerful trust. Some of you Senators have spoken and voted for the benefit of small business. Some of you have expressed friendship for farm cooperatives. Some of you have expressed concern over the growing control, in every phase of our American life, by a numerically small but financially powerful amalgamation of monopolies. Butter is made by thousands of small creameries, independently owned. It is made by hundreds of farmer-owned cooperatives. No person and no group controls any sizeable segment of the butter industry. Compare that democratic, competitive, American situation with this tight little monopoly of oleo makers.

3. Consumers. It is hard to wipe away the torrent of $6,000,000 worth of crocodile tears, wept sympathetically for the poor housewife by oleo's public-relations

men.

But let's be honest. Factual. The desire of those who produce cream and make butter is that no substitute for butter be permitted to imitate butter in a manner designed to fool the housewife. Certainly, then, the housewife should agree with our premise: Allow all wholesome substitutes, but insist that they sail under their own colors, that they not be permitted to falsify their true content by imitating a product of entirely different content.

Butter through Mother Nature has been given the color yellow. Yellow is our trade-mark. It has been the color of butter for 4,000 years. For comparison, consider a taxicab company which for scarcely 40 years has used yellow as its color and its name. If some of you gentlemen, Senators though you be, were

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to go into Chicago today and start a cab company, painting your cars yellow, you well know there would be a court injunction issued against you before your cars had been on the streets an hour. That is because of a record of 40

years. Ours is 4,000.

Allow us to keep our trade-mark and to insist that no substitute be given carte blanche right to take our markets and fool the housewife. The makers of oleomargarine say it is a good, nutritious food. If so, it should have no hesitancy

in selling for what it is, adopting its own color trade-mark, its own individualized package and container.

Several northern friends of oleomargarine, in this Congress and out, have said there is an economic argument for the vegetable oil substitute, that butter at 80 cents to $1 per pound is out of reason.

Well, last year I bought a fair $4,500 home for $12,000. Last spring I bought an $800 car for $1,800. Last night I had a $1 dinner for $2.50. The man who did a dollar-an-hour job in fixing my oil burner was paid $3 an hour, which wasn't too much considering that the 89-cent work shirt he wore cost him $2.25. We all grant that every commodity every American buys is far out of line with prewar prices-food, clothing, household utilities, everything.

So why pick on butter? Why the emphasis on "dollar butter" and not on overpriced cars, refrigerators, radios, pork chops, men's suits and children's underwear? The answer, again, is that $6,000,000 campaign which pointed continuously and forcefully at butter, always at butter.

I charge that butter is not overpriced, compared with other items of human need today. Certainly the making of butter has not been so profitable as to invite new competition. Dairying is failing to hold its own in this day when less exacting farming pays so well. In the decade from 1937 to 1948 milk cow numbers dropped a million, from 26,000,000 to 25,000,000, while human population in America increased during the same decade from 130,000,000 persons to 145,500,000. Cut the heart out of butter, gentlemen, and you'll rebuff the dairy farmer so sharply that a million babies-offspring of returned GI's-will be without a fluid-milk supply.

Dairying, far from deserving a rebuff, needs stimulation, cultivation, encouragement. The answer lies right in the hands of you gentlemen, in the United States Senate.

That is my case and my argument.

It has been expressed poorly, by a farm boy from out of the barnyards of the Midwest.

The butter industry seeks nothing, save a chance to live and to be a friend of its associates, including its competitors. It would bar no competitor from the market. But it must insist that each food be identified in the market place, in fairness to each such food, but especially in fairness to the consumer.

The CHAIRMAN. Thank you very much.

We will recess until 2 o'clock.

(Thereupon, at 1 p. m., a recess was taken until 2 p. m.,

day.)

AFTERNOON SESSION

the same

(The hearing was reconvened at 2 p. m., upon the expiration of the noon recess.)

The CHAIRMAN. The hearing will come to order.

The next witness is Dr. Louis Koenig of the Armour Foundation of the Illinois Institute of Technology.

Will you be seated, please, and identify yourself for the reporter?

STATEMENT OF LOUIS KOENIG, CHAIRMAN, CHEMISTRY AND CHEMICAL ENGINEERING DEPARTMENT, ARMOUR RESEARCH FOUNDATION, ILLINOIS INSTITUTE OF TECHNOLOGY

Mr. KOENIG. My name is Louis Koenig. I am chairman of the chemistry and chemical engineering department at the Armour Research Foundation.

I should make it clear now that the Armour Research Foundation has no connection with the Armour & Co., meat packers, who, I believe, are manufacturers of oleomargarine.

We are a nonprofit institution set up by the Illinois Institute of Technology. Our services are devoted to research and development for Government agencies and for industry.

Our policy prevents us from testifying as so-called expert witnesses; that is, as to generally known facts. Our testimony must be restricted to the facts which we ourselves have determined, or redetermined, and the conclusions which we can draw therefrom.

It is our understanding that some statements have been made which appear to be contrary to generally accepted facts. These statements related to the bleaching which occurs during hydrogenation of the oils going into oleomargarine; specifically, cottonseed oil and soybean oil.

It had been said, apparently, that oleomargarine could be manufactured by hydrogenation and have a natural yellow color such, that, apparently, it might be confused with butter.

We were a little surprised at these statements, since it is somewhat accepted that a good deal of bleaching occurs during hydrogenation, and statements in various reference works seemed to confirm that.

We instituted experiments to determine it for ourselves, and it is the results of those experiments that I would like to put in here.

The CHAIRMAN. Is there any way to make it whereby the color would naturally be the color of butter?

Mr. KOENIG. Well, it may be colored.

The CHAIRMAN. I say "naturally"? Is there any way to make it yellow without injecting coloring material?

Mr. KOENIG. So far as we know, there is no way in which soybean and cottonseed oils can be hydrogenated to the consistency necessary for oleomargarine without losing practically all of the original yellow color which the oils have.

The CHAIRMAN. Is there any way to make it other than by hydrogenation?

Mr. KOENIG. Not from soybean and cottonseed oils.

Our experiments consisted simply of taking cottonseed and soybean oils, both refined and unrefined, but in both cases unbleached, and hydrogenating them according to the normal hydrogenation process to a consistency similar to that of oleomargarine. And we found that in the four corroborated cases in which we did that, there was a regular and easily observed bleaching.

I have here the color values which will put a quantitative significance on these results. I also have some samples, if you think it is worth while showing them.

The CHAIRMAN. Yes. Let us see what you have.

Mr. KOENIG. This is a sample of the cottonseed oil which we used before hydrogenation, and this is a sample of the product after hydrogenation [indicating].

You see that there is a considerable bleaching of color there.

This is a sample of soybean oil before hydrogenation, and this is a sample after hydrogenation. You will notice that there is a little greenish color in the hydrogenated soybean which is not present in the hydrogenated cottonseed. That is due to some chlorophyll pigments which occur in the soybean.