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 the 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.)

AFTERNOON SESSION

(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. EARNGEY. 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.

STATEMENT OF WILLARD B. EARNGEY, JR., SUPERINTENDENT, NORFOLK GENERAL HOSPITAL, NORFOLK, VA., AND MEMBER OF THE COUNCIL ON GOVERNMENT RELATIONS, AMERICAN HOSPITAL ASSOCIATION

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 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:)

STATEMENT OF JOHN N. HATFIELD, CHAIRMAN, COUNCIL ON GOVERNMENT RELATIONS, AMERICAN HOSPITAL ASSOCIATION, BEFORE COMMITTEE ON FINANCE, UNITED STATES SENATE, MAY 17, 1948

Mr. Chairman and committee members: My name is John N. Hatfield. I am 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 members 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 institrtional members, 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 1% 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.

Now I should make it clear that we do not desire to serve oleomargarine to every patient in our hospital and to our employees nor to discontinue the purchase of butter entirely just because of the differential in price. People come to our hospital to receive good care which will restore them to health. A necessary part of that care is adequate and proper food. It is not the aim of our hospitals to provide luxury care in every case. We owe it to the welfare of our patients and to the community which we serve to be as sensible and economical in our purchases of supplies as we can be without injuring or jeopardizing the quality of care which we render.

As a matter of fact I would not be here today if there were any question as to the relative food values of oleomargarine and butter. For many years it has been popularly recognized that there is little difference in food value between these two agricultural products. And now we understand that there have been conclusive scientific findings on this question. We presume that your committee will have this information available in considering the question before you.

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. 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.

Under the present law, if a hospital wishes to purchase colored oleomargarine, it must pay a tax of 10 cents a pound. It is not only the amount of tax which imposes a burden in this case. The tax has made it more difficult for hospitals to purchase colored oleomargarine. We have been told that a large percentage of the oleomargarine on the market today has had the natural color of its ingredients removed because of this tax law, and it is not always easy to buy the colored product.

However, if the hospital wishes to color the bleached oleomargarine, it must pay a manufacturer's license fee of $600 per year., Senator Fulbright last December pointed out that all of the Federal taxes and license fees on oleomargarine amounted to less than $5,000,000 in 1946. It is plain that these taxes are not intended to produce revenue but to use esthetic senses of consumers as a means of forcing the use of one food instead of another. The result is to deny the hospital the right to choose which food it will serve to its patients and employees. This, again, is a burden upon the provision of care to sick people, a tax upon distress, and we believe that in principle it is wrong.

Hospitals today are faced with a dilemma arising from inflationary conditions. Increases in wages to hospital personnel and increases in the cost of equipment and supplies and services have added tremendously to our burden. Besides, hospital care is more elaborate and more costly than ever before. We must either curtail the amount of service which we provide or raise our rates again and again. Reduction in the essential quality of hospital care is unthinkable. Raising hospital rates will certainly make it more difficult for persons who need hospitalization to receive the care which they should have. Consequently we must eliminate all unnecessary costs in providing to the citizens of our communities the finest quality of hospital service at our command. As I said before, we cannot afford to provide luxury service. We must be economical in our buying and we must secure at the lowest possible prices those things which are necessary to provide good care.

The tax discrimination between butter and oleomargarine on a purely economic basis is a violation of this principle. It has forced us to buy a luxury food where in many cases a utility food would be preferable. It has denied us the right to choose between these foods on the basis of nutritional value. Under the present situation sick people are forced to pay an unjust tribute to a long-fostered prejudice which has no factual or scientific support.

The Council on Government Relations of the American Hospital Association has voted that the association should support any effort to remove this unjust tax. While we think that it is wrong in principle and that it is an unjust burden upon all consumers, we would like to urge that your committee give particular attention to the possibility of exempting hospitals from these tax provisions. In every hospital food is prepared and served to patients and employees under the direction of highly trained people who are able to make a sound judgment in their choice of food on the basis of known food value. They should be free this choice on the basis of what is best for the patient. It is most