Said association declares that butter and margarine are both needed in the market basket of the food program of our Nation and both should be available on their respective production merits.

Said association contends that the taxes on margarine deprive many consumers of an accepted wholesome food.

Said association contends that the coloring of margarine and butter neither detracts nor injures its quality, that margarine should not be singled out and penalized for the same color that goes into butter.

Some dairy products are used in the manufacture of margarine; said association has faith in both butter and margarine.

Said association contends that the taxes on margarine have long since served their purpose and, therefore, is urging the removal of said taxes from the tax laws of the Nation.

ASSOCIATION, THE SOUTHERN COMMISSIONERS OF AGRICULTURE, By J. ROY JONES, Vice President,

STATE OF SOUTH CAROLINA,

By J. ROY JONES, Commissioner of Agriculture.

The CHAIRMAN. Mr. Robert C. Jackson, of the National Cotton Council of America.

STATEMENT OF ROBERT C. JACKSON, WASHINGTON REPRESENTATIVE, NATIONAL COTTON COUNCIL OF AMERICA, MEMPHIS, TENN.

Mr. JACKSON. My name is Robert C. Jackson. I am Washington representative of the National Cotton Council of America, which has its headquarters at Memphis, Tenn.

Our Washington office is located at 1406 G Street.

As a representative of one of the groups, Mr. Chairman, that through the years has fought for the repeal of the margarine taxes and fees, I wish to express appreciation to you for your prompt action in arranging for the committee to hold hearings on this subject. We appreciate that, and we appreciate the opportunity to express the views of the cotton industry regarding this subject.

In line with your suggestions, we have deleted certain portions of this statement which I will skip over, statements that have been touched upon by other groups.

The CHAIRMAN. Do you wish the statement included in full?
Mr. JACKSON. If we may.

The CHAIRMAN. It will be included in full following your remarks. Mr. JACKSON. The National Cotton Council represents six groups which comprise the raw cotton industry, including cotton farmers, ginners, warehousemen, merchants, spinners, and cottonseed farmers, Its membership extends throughout the cotton-producing States from Virginia to California. Its sole purpose is to increase consumption of American-grown cotton, cottonseed, and the products thereof.

It has been contended that the interest of the cotton industry in the repeal of antimargarine laws has been exaggerated and that these laws affect the economy of the cotton-producing States in only a very minor way. To understand how false this contention is, it is first necessary to examine briefly the extent to which the cotton States depend upon profitable markets for cotton and cottonseed products. About one-fourth of all the fiber consumed in the entire world is produced on the cotton farms of the United States. Nearly one and one-quarter million of our farms and more than 5,000,000 of our farm people depend heavily upon cotton for existence. In eight Southern

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States, farm income from cotton and cotton seed in recent years has averaged more than one-half the total cash farm income from all crops combined. In all these States, farm income is a big part of the total income from every source, including trade, finance, transportation, and industry, and a major part of the income from all these other sources is based upon the handling of cotton. Cotton spells prosperity or depression for a large area of this country, and experience has taught us that we cannot have a prosperous Nation except for brief periods when there is a depression for any substantial portion of this country.

When the farmer takes his harvest to the cotton gin, Mr. Chairman, it is divided into two products. The gin divides it into the lint and the seed. These two products are marketed through separate channels. The cotton lint goes on to the textile mills, the cotton seed to the cottonseed crushing mills where it is divided into four useful products: The cottonseed linters, which is the short fuzz, the cottonseed hulls, the cottonseed meal and the cottonseed oil. Each of these four commodities is a valuable product but the cottonseed represents about 55 percent of the combined total of the four. On an average the seed bring about one-fifth as much income as the lint.

The CHAIRMAN. What do you do with the hulls, use them for feed? Mr. JACKSON. The hulls are used for feed, yes, sir. They are a roughage feed. They sprinkle a little cottonseed meal on them and it is a very valuable roughage feed.

The CHAIRMAN. What happens to the linters?

Mr. JACKSON. The linters are the highest known source of pure alphacellulose used for smokeless gunpowder, used for the manufacture of synthetic fiber broken down into cellulose and reconstructed, and used in other instances for padding and mattresses and so forth. During 1947 the margarine market alone took 32 percent of all cottonseed oil consumed in this country and was the biggest single user of the oil. Thus, any legislation that restricts the margarine market hurts the cottonseed producer and, therefore, the whole cotton industry. Just as the soybean people pointed out this morning, Mr. Chairman, a market taking 32 percent of your product is a big market in itself but more significant is the influence that market has on the price structure of the approximately 70 percent so it has a tremendous influence on the price of the cottonseed.

One of the most reprehensible effects of antimargarine laws is that they weigh most heavily on the neediest farmers of the cotton-producing areas.

Cottonseed is particularly important to them, for by tradition and business practice the one part of the cotton crop which is almost always left unmortgaged in the hands of the man who grew it is the seed. More often than not, the entire proceeds from the sale of the lint are used to pay off the mortgage which was necessary, in the first place, in order to get the money to produce a crop. It is, therefore, you see, usually the seed money on which the farmer relies to carry him and his family from the end of one crop to the beginning of another and which determines how much he can do toward providing himself and his family with something more than the barest essentials of life. In view of the fact that the average per capita income from 1946 in the 11 States of the Southeast was only 801, anyone with normal humanitarian instincts will readily understand why legislation which

restricts the market for cottonseed is so strongly opposed, not only by cottonseed producers, but by all the people of the areas involved. Senator George, I am sure, appreciates the fact that in a typical cotton community in the South the whole tone of business during the fall months is created by the market and the price for cottonseed because the seed money is free money, it is the spending money, the money they look to for a good Christmas and winter clothes and a few things more than the necessities.

It is important to note that the markets that margarine should and can exploit are chiefly markets which are not being supplied today.

It has been pointed out here this morning, and I will not repeat it, as to the decline in butter production even though milk production has been going up. In other words, the dairy farmer is finding it more profitable to channel his production through the whole milk route rather than through the butter route.

The harmful effect of these antimargarine laws on our country,the health of our country, falls with special weight upon the very people who grow the cotton. No one needs a better diet more than this large low-income group. No one is less able to pay the price of butter.

The margarine taxes, however, strike the cotton farmer a double blow. By restricting his markets they reduce his cash income. By making margarine more expensive and harder to get, they reduce his chance to buy good food with the few dollars that he does make.

You have heard testimony here today from representatives of the retailers and the wholesalers in which they told about the burdensome regulations in connection with handling margarine. We got it from the Bureau of Internal Revenue that only one in two retail stores sell white margarine and only one in a hundred sell colored margarine.

I am sure that if you were to make an examination in Washington, you would find approximately all the stores selling white margarine, some few selling colored margarine and if you did the same thing in most other cities you would find it true, which means that if only one and two of them are selling margarine, that there must be thousands and thousands of the small rural crossroads country stores that are not selling it and those are the stores where the farm people normally would buy margarine if they could get it, but they are not handling it. As a result, many cotton farmers cannot even buy the margarine into which their cottonseed oil goes.

But we do not oppose antimargarine laws solely because they penalize the pocketbook of our farmers, or even because they harm the health of low-income groups throughout the country. There is another and perhaps a more important reason for opposing all such legislation.

The margarine laws are wrong in principle. They are politically immoral. They are undemocratic and un-American. They penalize the farmer who produces cottonseed, soybean or peanut oil for the ostensible benefit of the farmer who produces butter. They restrict one domestic food for another in an attempt to favor another. They take money from the pocketbooks of one group of our farmers and attempt to channel it into the pocketbooks of another group. They tax the necessary food of the poor and leave untouched a rival food which not every one can afford to buy.

During recent years, Mr. Chairman, the cotton industry has become increasingly alarmed over the rapid progress that the rayon industry

is making in taking away many of the markets that cotton has enjoyed for a hundred years past. They are duplicating the cotton construction. They are going into the markets one by one, analyzing them, to see what they have to do to go into that market. They are doing everything they can to take the market away from us and the industry is terribly concerned about it. A great many people have asked us:

Why do you not take a lesson from what the dairy people are doing? Why do you not solve your problems with a tax on rayon like the tax on margarine? The cotton industry accepts the premise but rejects the principle. Starting from zero in the early 1900's, the rayon industry has each year steadily increased its productive capacity. In 1947 domestic rayon consumption totaled almost a billion pounds, or the equivalent in, usable fiber of about one-fourth of the cotton consumed.

The CHAIRMAN. The late Senator Bankhead was very much interested in legislation that would provide for fair marking of cotton products and, as you know, there is at the present time a world marketing statute. That does not go to the question of taxation.

Mr.JACKSON. No, sir; that is a labeling requirement.

The CHAIRMAN. But it does go to the point of informing the consumer what he is getting.

Mr. JACKSON. I must say in that regard the rayon people have done a very good job of advertising their products. They always see to it that anything you buy made of rayon is on them. In other words, they think it is good enough and they want people to know it and they are advertising it through that medium. We think we ought to do that more for cotton than we do.

We believe that a tax on rayon is justified if a tax on margarine is justified, but we do not believe in the principle of internal domestic tariffs on one American product for the benefit of another.

We are willing to compete with rayon in the open market energetically and fairly in the traditions of our free enterprise economy. We reject the whole idea of legislative privilege and discrimination whether applied to cotton and rayon or to margarine and butter.

We have not asked, and we shall not ask, for penalty taxes on our synthetic competitor.

At the same time we believe we are perfectly justified in demanding that the penalty taxes on margarine be removed.

In conclusion, let me suggest that everyone who has to take a stand on this great national issue should do so with a sense of history, with an appreciation of the changing conditions that come with changing times. We believe that sincere and open-minded men, who may have found some merit in the antimargarine laws in the past, have come to realize that the time for ending them is here.

Today, the average American-the housewife, the laborer, consumers everywhere-has become familiar with the facts of the case. The slow process of public education has gone on for many years and it has been tremendously quickened by the general concern over food shortages in the recent past.

Today, public opposition to the antimargarine laws is so widespread and so strong that we believe they cannot and will not be tolerated any longer. We respectfully urge your committee to recommend their appeal.

(The complete statement is as follows:)

My name is Robert C. Jackson. I am Washington representative of the National Cotton Council of America, which has its headquarters at Memphis, Tenn. The National Cotton Council represents all six branches of the raw cotton industry, including cotton farmers, ginners, warehousemen, merchants, spinners and cottonseed crushers. Its membership extends throughout the 18 cotton-producing States from Virginia to California. Its sole purpose is to increase consumption of American-grown cotton, cottonseed and the products thereof.

One of its chief objectives, reaffirmed unanimously by its delegate members every year since the National Cotton Council was organized in 1938, is the repeal of Federal and State laws, which unfairly handicap the production and distribution of margarine-a product made chiefly from oils grown by cotton farmers and other farmers of America.

It has been contended that the interest of the cotton industry in the repeal of antimargarine laws has been exaggerated and that these laws affect the economy of the cotton-producing States in only a very minor way, To understand how false this contention is, it is first necessary to examine briefly the extent to which the cotton States depend upon profitable markets for cotton ..and cottonseed products.

About one-fourth of all the fiber consumed in the entire world is produced on the cotton farms of the United States. Nearly one and one-quarter million of our farms and more than 5,000,000 of our farm people depend heavily upon cotton for existence. In eight Southern States, farm income from cotton and cottonseed in recent years has averaged more than one-half of the total cash farm income from all crops combined. In all these States, farm income is a big part of the total income from every source, including trade, finance, transportation and industry, and a major part of the income from all these other sources is based upon the handling of cotton. Cotton spells prosperity or depression for a large area of this country and experience has taught us that we cannot have a prosperous nation, except for brief periods, when there is a depression in any substantial portion of the country.

The income of cotton farmers is derived from the sale of two products, cotton lint and cottonseed. On an average, the seed brings about one-fifth as much income as the lint, but for millions of people that one-fifth is the margin between low income and starvation.

The price of cottonseed is determined largely by the price obtained for the oil which is crushed from it. During the last completed crop year, oil accounted for about 55 percent of the market value of the four products of cottonseed oil, meal, linters and hulls. The two biggest markets for cottonseed oil are shortening and margarine. During 1947 the margarine market alone took 32 percent of all cottonseed oil consumed in this country and was the biggest single user of the oil. Thus any legislation that restricts the margarine market hurts the cottonseed producer and, therefore, the whole cotton industry.

One of the most reprehensible effects of antimargarine laws is that they weigh most heavily upon the neediest farmers of the cotton producing areas. Cottonseed is particularly important to them, for by tradition and business practice the one part of the cotton crop which is almost always left unmortgaged in the hands of the man who grew it is the seed. More often than not, the entire proceeds from the sale of the lint are used to pay off the mortgage which was necessary, in the first place, in order to get the money to produce a crop. It is, therefore, usually the seed money on which the farmer relies to carry him and his family from the end of one crop to the beginning of another and which determines how much he can do toward providing himself and his family with something more than the barest essentials of life.

In view of the fact that the average per capita income for 1946 in the 11 States of the Southeast was only $801, anyone with normal humanitarian instincts will readily understand why legislation which restricts the market for cottonseed is so strongly opposed not only by cottonseed producers but by all the people of the areas involved.

The economic effects of existing antimargarine legislation upon the cottonproducing areas are not limited to restricting the present low income of our farmers but also darken their future by denying them an opportunity for avoiding or cushioning any set-back in the years ahead in the price of cottonseed by development of a new market. The production of edible oils from American farm products has been running nearly 50 percent ahead of the prewar rate largely because of an unprecedented demand arising from a world-wide shortage of fats