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went into experimentation and into plants and equipment. Much of it was sacrificed; much Government money is still invested in those plants. They cost the average taxpayer dearly. The farmers of the Nation on the other hand, through soybeans, replaced the oils which had formerly been imported, without the expenditure of a single dollar of tax money. The production of soybeans was doubled and more. Governmental decree required that soybean oil be used in foods only because of its great value there in our wartime economy. The meal enabled livestock feeders, including dairymen, to do one of the greatest of all wartime production jobs.

We in the United States can never again afford to place ourselves in the position of being dependent upon the other side of the world for our supplies of a major and essential food commodity. Certainly we cannot afford to do so with world conditions as they are today. Are we going to continue to deny the soybean grower who provided the edible oil and the protein to win the war his logical market for his soybean oil? Is his reward for a marvelous wartime production job, in effect, to be a tax of 10 cents per pound on his soybean oil?

Now, gentlemen, let us look at this thing from the standpoint of common sense. Let us review the situation briefly.

Approximately 20 percent of all the soybean oil produced in America goes into margarine, with 230,000,000 pounds being used in 1947. This market is second only to shortening among our customers. The 20 percent of the soybean oil which goes into margarine exerts influence far above that level in the price of the entire production of soybean oil, because it is a high-value use. Soybeans now supply over 60 percent of the oilseed meal supplies of the National used in livestock feeding. They supply well over 43 percent of all protein feed, both of vegetable and animal origin, used by the livestock feeders of the Nation. Take away the favorable high-value market for soybean oil and you also take away the protein feed. .

The CHAIRMAN. Are you supplying all of the needs of livestock?

Mr. STRAYER. We are not; not all of the recommended needs. The correct nutritional levels for our livestock population would require even more protein than is available today.

The CHAIRMAN. But despite the level to which you refer, are you filling the orders for soybean meal that you are getting for livestock feeding?

Mr. STRAYER. During the past winter; yes. During the summer it is problematical, because the processing level will go down during the summer months.

The farmers of America are among the largest users of margarine in the Nation.

Only 14 percent of the income of the dairy industry of the United States comes from the sale of butter. In the State of Wisconsin, acknowledged as a dairy leader, only 1.9 percent of the 1946 dairy income came from the sale of butter. Per capita consumption and production of butter is falling steadily.

Neither butter nor margarine nor any other commodity has a monopoly on yellow color. The same artificial coloring is used in butter as is used in yellow margarine. Soybean oil in its natural state is a golden yellow color, just as June butter is a natural yellow.

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Standardization of butter necessitates the use of artificial coloring the major portion of the year. Standardization of the color of margarine would require a similar coloring agent. One product has the same right to that coloring agent as the other. Neither can justify taxation of the other as a means of market monopoly:

The producers of butter and margarine have a joint problem. The per capita consumption of table spreads in the United States in 1935. was 20.1 pounds. In 1945 and again in 1946 it fell below 15 pounds per person. Correct nutritional standards specify minimum of 35 pounds per person, or over twice the 1946 rate of consumption. Butter production, on a per capita basis, sank from 18.2 pounds in 1934 to 10.5 pounds in 1946. There are only six States in the United States which produce enough butter to supply adequate table spreads for their own populations. There simply is not enough butter to go around. Our population is increasing rapidly, with a population increase in the past 9 years equal to the total current population of Canada. The per capita consumption of table spreads in America should be increased. But can the dairyman now logically defend his position when he is saying to the consumer of the Nation:“We can supply as butter only twothirds of the table spread you use, only one-half as much as you formerly used, and only one-third as much as you need, but we are going to extract from you a penalty of 10 cents per pound on all that which we cannot supply"? Frankly, I would hate to try to defend that position.

Gentlemen, the primary objective of any long-range agricultural program developed for this Nation should make provision for the production of the greatest possible amount of food for the greatest possible number of people at the lowest possible price commensurate with the maintenance of favorable living standards for the farm family doing the production. Such an objective does not and cannot include provision for confiscatory taxes designed to prevent the consumption of healthful food products grown on American farms.

There is no place in a free American economy for class legislation such as the present margarine taxes and restrictions. The American Soybean Association recommends your immediate action on the removal of Federal taxes, license fees, and restrictions on the sale of margarine, both colored and uncolored.

On many midwestern farms the soybeans and the butterfat are joint products of the farming operation, and the soybean oil meal is fed to the dairy cows, the poultry, the hogs, and the beef cattle on that same farm. The producer of soybeans who does his own thinking is not worried about the repeal of the margarine taxes, for he envisions in that repeal not only an increased market for his soybean oil at a relatively high price but he sees continued high production of protein feed in the form of soybean-oil meal and thus an opportunity to continue production of milk, meat, and eggs on an economical basis.

The producers of soybeans are not out to wreck the dairy business, as some individuals would have you believe. They do visualize thé needs of the Nation and understand the problems of food production and distribution within our cities and our rural areas. They believe that justice should prevail and that over a period of years the man who


milks the cow will benefit even more from the removal of the taxes on margarine than will the soybean producer, so long as that margarine is made from domestically produced fats and oils and the protein meal is available for livestock feeding.

We do not come to you asking for special privilege; nor do we ask for the retention of a special privilege previously granted. We do not ask for restrictions on the sale of other commodities. Neither do we suggest substitution of margarine for another commodity, for there is room in America for both when sold on their own merits.

We do suggest that the consumers of Americas have a perfect right to buy butter if they prefer butter; that they have a similar right to buy margarine if they cannot afford butter or prefer margarine; and that in making such purchase they should not be forced to pay tribute to the Government or to the producers of another commodity.

We further maintain the soybean producer has a perfect right to sell his crop through the medium of margarine which is colored the same color as the soybean oil which he produces, without the extraction of 10 cents per pound tribute to Government.

We recommend the immediate removal of Federal taxes, license fees, and restrictions on the manufacture and sale of margarine made from soybean oil, cottonseed oil, corn oil, peanut oil, and the other fats and oils produced on the farms of America. The CHAIRMAN. Thank you very much, Mr. Strayer.

The chairman wishes to suggest to the remaining witnesses for today that they carefully review their prepared testimony and eliminate as much repetition as is possible. We will be glad to include the full statements in the record, together with any abbreviated statements which may be made.

We will meet again at 2:45.

(Thereupon, at 1:20 p. m., a recess was taken until 2:45 p. m., the same day.)


(The committee reconvened at 2:45 p. m., upon the expiration of the noon recess.)

The CHAIRMAN. The meeting will come to order.
Mr. John N. Hatfield is the first witness this afternoon.

Mr. EARNGEY. Mr. Chairman and members of the committee, my name is Willard B. Earngey, Jr., superintendent of the Norfolk General Hospital, Norfolk, Va., and member of the council on Government relations, American Hospital Association.

The CHAIRMAN. What did you say your name was?

Mr. EARNEY. Willard B. Earngey. I am a member of the council on Government relations of the American Hospital Association.

Mr. Hatfield was unalterably detained in Fhiladelphia; and I am, therefore, submitting his report.

In accordance with your request, Mr. Chairman, we have submitted to the committee a complete report. We have one or two brief points we would like to make, and then we will conclude our discussion.

The CHAIRMAN. Mr. Hatfield's statement will be entered in full immediately following the gentleman's remarks.

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Mr. EARNGEY. The first point is that the American Hospital Associational represents 4,000. hospitals, 85 percent of the Nation's general hospital beds, and 55 percent of its mental, tubercular, and other longterm-illness beds.

Those hospitals serve meals to more than 2,000,000 people every day, nearly 2,000,000,000 meals last year. The average daily census of hospitals in 1946 was 1,239,454. Hospitals also had to feed about 830,000 employees. The normal consumption of butter or margarine would have approximated 37,500,000 pounds.

If there were any question as to the relative food values of oleomargarine and butter, we would not be here. Hospitals do not desire to serve oleomargarine to every patient; adequate and proper food is a necessary part of hospital care.

Hospitals today are, however, pinched by inflationary conditions. We must eliminate all unnecessary cost while providing the finest quality of hospital service. The present tax has forced us to buy a luxury food where, in many cases, a utility food would be preferable.

Hospital food is prepared by highly trained people who are able to choose on the basis of known food value. They should be free to make this choice on the basis of what is best for the patient.

The CHAIRMAN. May I ask you this? In your experience, is oleomargarine ever indicated rather than butter or butter rather than oleomargarine ?

Mr. EARNGEY. No, sir; primarily, I would say, on the basis of the individual want or like of the patient.

The principal purpose of our statement is to point out to you that the present tax laws establish an effective prohibition on the use of oleomargarine in many cases in the provision of hospital care. This prohibition adds to our difficulty and to our expense in providing hospital service, at a cost that the public cannot afford to pay. It curtails the amount of service we can give, and it adds to the expense of patients who require care in our hospitals. As such, this tax is a tax upon distress; and, in principle, we believe it is wrong.

That concludes my discussion.

The CHAIRMAN. What would be a practical way, if you thought it advisable to do it, to indicate to the patient whether he was getting oleomargarine or butter?

Mr. EARNGEY. We could do that by menu on patients where you have a selective menu, as most hospitals that give private care do. On the ward side, I do not believe it would be particularly necessary because of the relative food values in the situation, unless the law made


it so.

The CHAIRMAN. Thank you very much.
Mr. EARNGEY. Thank you, Mr. Chairman.

(The statement of John H. Hatfield is as follows:)


Mr. Chairman and committee members: My name is John N. Hatfield.

I ani administrator of the Pennsylvania Hospital in Philadelphia and chairman of the council of Government relations of the American Hospital Association. Today I wish to speak to you on behalf of my own hospital and also on behalf of the 4,000 hospitals of this Nation which are members of the American Hospital Association.

The Pennsylvania Hospital, with which I have been identified for 25 years and of which I have been administrator for more than 17 years, was founded nearly 200 years ago to provide hospital service to the citizens of the British colonies. Benjamin Franklin was the founder of the hospital and a member of our first board of managers. He and his fellow citizens recognized the necessity of making hospital care available through an organization which would be primarily devoted to the service of the community. Subsequent boards of managers have followed this principle, and I am proud to say that the Pennsylvania Hospital has a long record of meritorious service to the community which it serves.

During the last fiscal year the Pennsylvania Hospital cared for 13,722 inpatients. The total number of adult in-patient-days was 119,937. To these inpatients we served approximately 375,000 meals. In addition, we served approximately 394,000 meals to employees and niembers of our staff on duty in the hospital providing care to sick people.

You will see that in our hospital we do a large business in food. It is not one of our major activities, but we definitely have a responsibility for feeding sick persons in our care and for feeding people who provide care to the sick. Normally we would have consumed 16,020 pounds of butter last year. Butter was served to our patients in quantities sufficient to meet minimum diet-therapy needs. Employees maintained at the hospital received butter once daily, while the others received no butter. The price of butter was much too high to permit serving it at all meals and in normal quantities. As a matter of fact, we consumed 6,652 pounds of butter last year-one-third of normal.

Although I have been speaking to you specifically on the basis of my own experience as administrator of the oldest hospital in the country, I wish you would bear in mind that I speak in a representative capacity for most of the hospitals of the country. The American Hospital Association has nearly 4,000 institi:tional menibers, including proprietary hospitals; nonprofit hospitals such as those of churches and religious orders and community nonprofit corporations; and governmental hospitals, including hospitals of cities, counties, States, and the Federal Government. In our membership we have approximately 85 percent of the general hospital beds of the Nation and approximately 55 percent of the mental and tubercular and other long-term hospital beds. Since this is a Federal tax, its burden applies equally to every hospital in the Nation.

The nature of hospital service is such that the average hospital has a double dietary problem. It must provide food for sick people. It must also provide food for employees. In 1946 the annual survey of the American Medical Association showed that the average daily census for all hospitals was 1,239,454. Feeding these people presents a highly specialized problem for which most hospitals have trained and experienced dietitians. General and special hospitals caring for short-term cases require an average of 112 employees per patient. However, in long-term hospitals only a third of this is required. On the average, hospitals require 73 employees per 100 patients. Thus, in addition to the 1,239,454 patients, hospitals also had to feed approximately 830,000 employees, or more than 2,000,000 people every day.

Of course, not every hospital employee has all his meals at the hospital. Nor does every patient consume three meals a day, some require more, and the problem of special diets complicates the picture. But it has been estimated that in this Nation nearly 2,000,000,000 meals of all kinds were served in hospitals last year. This indicates a feeding problem of major proportions, and I think that our viewpoint with relation to food problems is significant. It means too that the normal butter or margarine consumption would have been approximately 37,500,000 pounds.

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