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The Federal tax has nothing whatever to do with the availability of oleomargarine as a food. If sold on its own merits the tax has no influence upon its price.

In the past year and at present many dairymen are dispersing their herds and discontinuing the production of milk because of inadequate incentive to continue. Any further interference with their markets will lessen the incentive still more. After these farms shall have ceased to produce milk it will require fantastic prices to induce their operators to restock for that purpose. The comparison as to fertility and prospective production of foods between dairy farms and those producing vegetable food and fiber is exemplified all over the world. Anything which contributes to lessening the number of dairy farms in a nation likewise contributes to inadequate nutrition of its people. Inadequate nutrition historically results in the decline of the nation.

The controversy is not over the relative merits of butter and oleo but over the question as to whether or not one shall be permitted to compete with the other by deceptive imitation in every visible respect. Color is the only question involved. The propaganda is a smoke screen to hide the objective.

Dairymen can and should meet fair competition. They should not be expected to compete with legalized fraud. The 10-cent regulatory tax may have been sufficient to prevent fraud at the time of its enactment but under present conditions it probably should be 50 cents in order to accomplish its purpose. Nobody is being hurt by the present tax on oleo. Both consumers and dairymen will be hurt directly by its removal.

Respectfully submitted.

I. H. STEFFY, Pres.,

Ohio Milk Producers Federation
and Akron Milk Producers, Inc.

STATEMENT OF THE NEW YORK CITY BRANCH,1 OF AMERICAN ASSOCIATION OF UNIVERSITY WOMEN, BEFORE THE SENATE COMMITTEE ON FINANCE BY MRS. LILLIAN W. CRUM, PRESIDENT

MARGARINE

The New York City branch of the American Association of University Women appreciates this opportunity of indicating the thinking of its members on the matter of the discriminatory Federal taxes and restrictions on margarine.

We strongly believe that American consumers, particularly those in the lowincome groups, are being treated unjustly as a result of the laws that have hampered the manufacture and sale of margarine for the past 62 years. Every family's food budget is severely strained these days, and for many the price of butter is prohibitive. More and more American women are using margarine— 84 percent according to a recent survey-and we feel they should not be compelled to accept the inconvenience, waste of time, and loss of essential food in coloring it yellow. Furthermore, we feel that is is unfair that one food, margarine, and its manufacturers, wholesalers, and retailers should bear the burden of taxation and restriction when none of its competing products are so penalized. Scientists and physicians, including the Council of Foods and Nutrition of the American Medical Association and the National Research Council, have testified repeatedly that margarine is the nutritional equivalent of butter. Our Federal Government itself recognizes margarine as one of the seven basic foods.

Furthermore, margarine is a product of American agriculture, drawing its ingredients from 44 of the 48 States.

Nationally and locally, members of AAUW work for higher standards of social and economic well-being for women and children. We sincerely believe that any law which discriminates against a pure, wholesome, and inexpensive food product is not in keeping with the American tradition of free competition. We therefore urge you, gentlemen of the Senate Committee on Finance, and the Congress of the United States as a whole, to repeal the unjust Federal taxes and restrictions on margarine.

1 Prepared in conference with Miss Kate Papert, social studies chairman, and Miss Eleanor Green, New York State social studies chairman.

AMERICAN DAIRY ASSOCIATION OF ARIZONA,
Phoenix, Ariz., May 15, 1948.

Hon. EUGENE MILLIKIN,

Chairman, Senate Finance Committee,

Washington 5, D. C.

Dear SENATOR MILLIKIN: In reply to your wire of May 12, we wish to advise that for the benefit of the hearing before the Senate Finance Committee on the pending oleo tax repeal, we go on record as asking protection along the lines of the enclosed resolution.

This resolution may be used as a statement from the American Dairy Association of Arizona.

Respectfully yours,

RESOLUTION

A. E. BANKS, President, By HAROLD BOWLES, Secretary.

Whereas the whole history of oleomargarine has long ago proved the necessity to protect the public from fraudulent sales of oleomargarine in the guise of butter; and

Whereas lack of proper restrictions against oleomargarine's use of the natural yellow color of butter to mislead the public has worked undue hardship against dairy farmers, the dairy industry, as well as the general public; and

Whereas when the oleomargarine manufacturer says that he should be granted the right to use yellow color without restrictions because consumers are accustomed to a yellow spread, he actually means that he wants to infringe upon the good will and consumer acceptance created by butter; and

Whereas legislation is now pending in Congress which would repeal control measures and permit and encourage the unrestricted use of yellow color in oleomargarine: Now, therefore, be it

Resolved, That the dairy farmers and their industry, while they do not oppose the sale of oleomargarine when it is sold for what it is, are irrevocably opposed to all attempts of this product to masquerade as butter; and be it further Resolved, that the ADA of Arizona go on record as favoring legislation insuring the retention of the exclusive use of butter's characteristic yellow color for butter. Adopted May 12, 1948.

EUGENE D. MILLIKIN,

AMERICAN DAIRY ASSOCIATION OF OKLAHOMA,
Oklahoma City, Okla., May 15, 1948.

Chairman, Finance Committee,

Washington, D. C.

DEAR MR. MILLIKIN: The American Dairy Association of Oklahoma, representing approximately 150,000 dairy farmers, are opposed to any reduction in the present 10-cent tax on yellow-colored oleomargarine for the following

reason:

1. They harm no one. They are not burdensome to manufacturers, handlers, or consumers. The trivial benefits that might be derived from their repeal would be far outweighed by the damage to our agricultural economy and to the consumers' interests. Proof that the laws are not restrictive to the oleomargarine industry is the fact that since 1941 oleo sales have more than doubled; retail outlets have increased 64 percent. These are the figures of the Bureau of Internal Revenue. The same authority shows some 260,000 retail oleo outlets-about every other food store in the Nation. As for the consumers' interests, no one pays the 10-cent tax unless oleo is purchased yellow. The one-fourthcent-per-pound tax is paid by the manufacturer, and is a negligible amount per capita. The old contention that the home coloring of oleo is tedious and wasteful no longer holds water. Modern packaging enables a housewife who wants yellow oleomargarine to color it easily, quickly, and without waste.

2. Repeal of the laws would open the doors to fraud upon the consuming public. Many believe that fraud is not possible in substituting colored oleo for butter because of the existence of the pure food and drug laws. Actually, these laws have no jurisdiction as long as the frauds are practiced within State borders. Only through the operation of present Federal tax laws can the Government reach within State borders to suppress and prosecute fradulent practices. To

permit colored oleo without the present regulatory laws would invite widespread substitution of an inexpensive yellow imitation for a genuine product. Among the thousands of handlers of oleo-in warehouses, trucks, stores, restaurants and elsewhere-there would be those who could not resist this lure of easy money.

3. Repeal of the laws would seriously damage an important segment of American agriculture and threaten the Nation's dietary standards. Uncontrolled and ruthless competition of a low-cost product in almost identical imitation of butter would hurt butter prices and drive many farmers out of dairying. Unfortunately those who say, "Let the consumers drink milk," do not have the answer to this dilemma. To have enough milk to meet fluid demands in the slack season requires more than enough milk in the flush season. Some of this excess must go into butter. Without a butter outlet farmers would cut their herds toward the point where there would be insufficient fluid milk in the slack season. Cattle numbers would continue to decline. In the final analysis the question is whether America is to continue its meat and milk-products diet, or revert largely to a grain and field-crop subsistence.

4. Oleomargarine is not entitled to the color yellow. The claim that oleo has as much right as butter to the color yellow is false. Oleo in this country is produced from the oils of cottonseed and soybeans. The oleo industry claims it must bleach these oils white because of Federal laws. The real reason is when cottonseed oils are turned into fat they become gray; and when soybean oils are turned into fat they become green. So to have a uniform color the oleo manufacturers must bleach out the gray and green colors. It is impossible to produce a natural yellow oleomargarine from domestic oils.

Butter, on the other hand, is always yellow, although at some seasons of the years it is less yellow than at others. When color is added to butter it is for the sake of uniformity, not for the purpose of making it look like some other product. In tests run at the University of Wisconsin on four commercial milk supplies, it was found that the natural color of butter is at its lowest ebb during March and April. Even at this low ebb, it never went below 2 Lovibond tintometer units. Oleomargarine becomes subject to the 10-cent color tax when its exceeds 1.6 Lovibond units of yellow and red combined. Yours truly,

EARL J. EVANS, President

ARIZONA DAIRYMEN'S LEAGUE,
Phoenix, Ariz., May 15, 1948.

Hon. EUGENE MILLIKEN,

Senate Finance Committee, Washington 5, D. C. DEAR SENATOR MILLIKEN: The Arizonia Dairymen's League wish to go on record at the Finance Committee hearing on the repeal of the oleo tax as having no objection to the repeal of the tax if a means can be devised whereby butter can be protected from the fraudulent use of oleo and that oleo shall be made to sell on its merits alone and not trade on the merits of butter.

We are,

Respectfully yours,

HAROLD BOWLES, Executive Secretary.

STATEMENT SUBMITTED TO THE FINANCE COMMITTEE OF THE UNITED STATES SENATE BY THE ARIZONA MILK PRODUCERS OF PHOENIX, ARIZ., IN OPPOSITION TO H. R. 2245

The Arizona Milk Producers is a cooperative marketing association with about 750 dairy farmer members whose combined dairy herds number about 8,000 producing cows. About 60 percent of the milk produced by them is utilized as fluid milk and cream and the remainder is marketed as butter and other manufactured milk products.

The board of directors of this association is on record as unanimously opposed to the removal of Federal restrictions on the use of yellow color in oleomargarine prior to sale to the ultimate consumer. Our opposition is based on the following grounds:

BUTTER AND OLEOMARGARINE ARE BASCALLY DIFFERENT PRODUCTS

Notwithstanding any alleged or apparent similarity between butter and oleo, the raw materials from which they are manufactured are different and the standards observed in the handling of the raw materials are different. The production of milk and cream is controlled by sanitary ordinances, both local and State, and butter which enters into interstate commerce must be manufactured from milk or cream meeting stringent requirements of the Pure Food and Drug Administration, among these are that milk and cream be free from foreign matter of any kind. Removal of foreign matter by filtering and purification by heating do not make milk or cream containing foreign matter acceptable to the Pure Food and Drug Administration. Oleo, on the other hand, is produced from vegetable seeds, in the handling of which no sanitary controls are exercised. Chemical preservatives are prohibited in butter, but permitted in oleo. Artificial flavoring is prohibited in butter, but permitted in oleo. The addition of commercial vitamins is prohibited in butter, but permitted in oleo. The only materials entering into the manufacture of oleo which meet the standards of butter manufacture are the skimmed milk and salt used. Because of these differences, butter necessarily costs more to produce than oleo.

These basic differences in the nature of the two products make it imperative, in the interests both of consumers and producers, that the products be marketed in such form that the consumer may know which product he is getting, and that the inferior, and cheaper oleo may not by deception be substituted for the higher priced and superior product, butter.

SIMILARITY OF THE PRODUCTS IS NOT ACCIDENTAL

It is not by accident or coincidence that such similarity as exists between butter and oleo occurs. Butter is a natural product resulting from the simple mechanical operation of churning cream or milk. Such artificial coloring as is used in butter making is added to secure a unform color throughout the year, and not to make it look like some other product. The practice was adopted long before oleo was developed. Oleo is produced by highly involved and technical manufacturing processes, every part of which is directed toward making a product which will resemble butter as closely as possible. The only purpose of adding color to oleo is to make of it a better imitation of butter.

FRAUDULENT SALES OF COLORED OLEO HAVE OCCURRED IN THE PAST AND WILL BE MORE FREQUENT IF RESTRICTIONS ARE REMOVED

Past experience has shown that prior to the placing of restrictions on the use of yellow coloring in oleo, deceptive substitution and fraudulent sales of oleo for butter were common. At that time oleo did not simulate butter as closely in texture and flavor as it now does. Deception would therefore be easier now than at that time. Even since the enactment of restrictive legislation now in force, fraudulent substitution is by no means uncommon.

MARKING AND LABELING AND THE PURE FOOD AND DRUG LAWS WILL NOT PREVENT FRAUDULENT SALES OF OLEO FOR BUTTER

With restrictions removed, it is reasonable to suppose that colored oleo packed in bulk will be made and sold. Such packages, if properly labeled, could be shipped to any place in the United States without violation of Federal pure food and drug laws. Unscrupulous operators could, and we believe would, buy and repack such oleo in forms and wrappers which would confuse and deceive the purchaser. Unless these operations crossed State lines, the pure food and drug laws would not be applicable. In Arizona we have no special legislation covering traffic in oleo. Control of deception and fraud in the sale of oleo for butter under the general statutes relating to fraud would, we believe, be extremely difficult.

IMPROVED BUSINESS ETHICS WILL NOT CONTROL THE SITUATION

It is only necessary to review the history of bootlegging during prohibition and the more recent experience with black-marketing under OPA to realize that there are plenty of people who would sell oleo for butter if there were attractive profits in the operation.

PRESENT TAX ON COLORED OLEO NOT ADEQUATE

At the time the present tax of 10 cents per pound on colored oleo was established, the general price level of all foods, including butter and oleo, was much lower than at present, and the 10-cent tax was an effective deterrent to the manufacture of colored oleo. Increased prices of both oleo and butter have made the 10-cent tax a much less effective barrier, and the tax should be increased proportionately to the increase in prices or, preferably, the addition of yellow color before sale to the consumer, prohibited.

Hon. EUGENE D. MILLIKIN,

Chairman, Senate Committee on Finance,

COLUMBUS, OHIO, May 18, 1948.

Senate Office Building, Washington, D. C.:

We understand Mr. Joseph Fichter, master of Ohio Grange, in testimony before your committee indicated or inferred that the four Ohio margarine manufacturers are opposed to H. R. 2245 because if H. R. 2245 becomes law we could not make or sell colored margarine until the present Ohio law is repealed. We strongly resent Mr. Fichter's statement insofar as the position of this company is concerned as he had no authority or right in any way to testify to our views in this legislation. Further understand that Mr. Fichter failed to mention or call to the attention of the committee that at the present time, pursuant to the constitution of Ohio, a law is being initiated by petition to permit the manufacture and sale of yellow margarine in Ohio. The Capital City Products Co. is 100 percent in favor of H. R. 2245 and we respectfully request that you place our telegram in the record.

Hon. EUGENE D. MILLIKIN,

THE CAPITAL CITY PRODUCTS CO. By F. J. CURTIN.

CHALLENGE CREAM AND BUTTER ASSOCIATION,
Los Angeles 12, Calif., May 12, 1948.

Chairman, Senate Finance Committee,

Senate Office Building, Washington, D. C.

DEAR Mr. MILLIKIN: We have no quarrel with oleomargarine so long as it is sold for what it is a vegetable compound distinguished in some manner which will eliminate deception of consumers who wish butter.

Records of the Commissioner of Internal Revenue are replete with a multitude of instances where oleomargarine has been colored a butter yellow and sold as butter. The surest way to prevent fraud and deception is to have the two products entirely different in color. The natural color of butter is yellow since the beginning of time, though varying in some degree due to feeds at various times of the year. It, therefore, does not seem proper that butter be some other color to bring about this distinction between oleomargarine and butter to prevent fraud and deception.

Butter is a natural healthy food product, yet here we find a vegetable compound now being fortified with vitamins plus the addition of butter flavoring, preservatives, and coloring, so that it cannot be distinguished from natural butter. Certainly the existing regulations covering oleomargarine have not been detrimental to its use. Since 1941 sales of oleo have more than doubled and retail outlets have increased more than 64 percent, and all mostly at the expense of butter. Butter was practically dealt a knock-out blow under OPA. Under this regulation, ceilings on every other dairy product return a higher income to dairy farmers than butter. Demands by Government were large for all dairy products and as a consequence only a limited amount of butter was produced-and that which was produced, a sizable portion had to be set aside for Government. Consumers though desiring butter in many instances could not purchase the same and this condition resulted in a heyday for the oleomargarine interests. Now under pending legislation before your committee it is proposed to complete this knockout by permitting oleomargarine to masquerade as butter.

Repeal of colored oleomargarine regulations, and it can be expected this will be followed by widespread competition of this low-cost imitation of butter, would seriously damage butter markets, as butter is a basic dairy commodity, and

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