lers of oleo, are necessary for the enforcement of oleo regulations. No Federal law prohibiting the sale of yellow oleomargarine would be effective because such a law could not reach within State borders unless it were enforced by a Federal tax. (April 28, 1948, p. 5094.)

Representative William H. Stevenson (Wisconsin)

Oleomargarine manufacturers know that housewives would not buy their product in its natural "tell-tale" gray color and so try to color it to imitate butter. Butter is made from unadulterated cream; it contains no foreign oil, no cottonseed, coconut, or soybean oils; it does not have to be artificially impregnated with vitamins; it does not have to be adulterated to look like something it is not. The attempt of the oleo interests to destroy the dairy industry is not new. In all parts of the world the manufacture and sale of oleo have been subject to regulation and taxation of one form or another.

It is often contended that oleo manufacture is a good thing for the farmers of this country. Actually, less than two-tenths of 1 percent of the total cash income from the products of the farm is received from farm products utilized in the manufacture of oleo. All the cottonseed oil used in oleo manufacture accounted for only about one-half of 1 percent of the cash income of the cotton farmer. The cotton farmer receives approximately four times as much cash income from cottonseed oil used in vegetable shortening and from cottonseed byproducts sold as dairy feed as he receives from the entire oleo business. The average farmer in the Cotton Belt actually receives 24 times as much today from the sale of his dairy products as he receives from the sale of cottonseed oil and other ingredients of oleomargarine. In 1946 less than 14 percent of the total soybean oil production was used in the manufacture of oleo, and only 5 percent of total cash farm income from soybeans was derived from the sale of oleo products.

There were 47 plants licensed to produce oleo in 1947. These plants were owned by 25 corporations, 4 of which were the Big Four meat-packing companies. The bulk of oleomargarine is produced by five or six large corporations.

If the Federal tax on colored oleo is repealed, you will see the price of colored oleo go up considerably in every State where the sale of colored oleo is not prohibited.

If oleo does displace butter as a spread it will mean practically the destruction of the dairy industry. This will mean less milk and cream, less meat, and less hides and leather for the American public.

Production of oleomargarine is increasing while per capita milk production per day is at its lowest point in 10 years. (April 26, 1948, pp. 4972-4975.)

Representative Henry O. Talle (Iowa)

"The Federal margarine taxes have helped us to protect our dairy farmers against unethical competition and the consuming public against fraud and deception." It is contended that removal of these taxes would materially reduce the cost of living. As a matter of fact, the present tax of one-fourth cent per pound on uncolored margarine plus the license fees would not cost the averge family as much as a penny a week if margarine were substituted exclusively for butter on the American table. And color may be added to this product by the purchaser easily, quickly, and at no cost, if desired.

"I do not object especially to the removal of the tax on uncolored margarine. I do, however, strenuously oppose the removal of the tax on butter-colored margarine." Margarine now attempts to imitate butter in every way. If color is added, the deception will be complete. Any action that lessens the demand for butter will curtail the production of milk and this would have an adverse effect on the production of hogs, cattle, and poultry. A decrease in livestock and dairy farming and an increase in crop farming would be hard on the soil. (April 26, 1948, pp. 4987-4988.)

Representative Charles W. Vursell (Illinois)

The 26 oleomargarine corporations which produce nearly all of that product sold in the United States are taking advantage of the high cost of butter and other foods under the guise of reducing the cost of living so that they can sell yellow oleo to imitate butter.

This is a fight for greater profits led by the comparatively few oleo manufacturers in the country, and by the cotton lobby of the South. Millions of dollars have been spent in a Nation-wide propaganda campaign by these groups.

If oleo is colored yellow to imitate butter, there will be no protection for the people eating 65,000,000 meals each day in restaurants and public eating places.

"There is little question, if oleo is allowed to compete with butter in color as the repeal of this law would permit, that the price of oleo will be raised by the manufacturers, guaranteeing them millions of dollars that otherwise would be saved to the consumers who are now buying oleo, if the Federal law is kept on our statute books unchanged."

This proposal to repeal the tax, if adopted, will strike a heavy blow against the dairy interests and result in still smaller herds and higher prices for the scarce milk. The whole course of agriculture in the Northern States would be changed. Repeal of the tax would bring disaster to the dairy business which employs more people and produces more farm income than any other segment of agriculture. If this legislation passes there will be less food for the American people and less food to ship abroad.

Twenty percent of the total income of agriculture in the Nation is derived from dairy products. This income will be endangered and meat and hides will become scarcer and more expensive if this legislation is passed. Dairy farming preserves the fertility of the soil and aids soil conservation.

"During flush milk production the manufacture of butter is a necessary outlet for surplus milk which cannot be sold in bottles. Butter continues to be the product upon which the dairy farmer largely relies for tax money when the bottom falls out of other markets." (April 26, 1948, pp. 4979-4981.)

(Loretta Stankard, Carl Hagen, General Research Section, May 20, 1948.) The CHAIRMAN. The first witness is Senator Maybank.

STATEMENT OF HON. BURNET R. MAYBANK, A UNITED STATES SENATOR FROM THE STATE OF SOUTH CAROLINA

Senator MAYBANK. I have only a short statement to make. I appreciate your kindness in calling me first, because I was going to South Carolina later in the day.

I appreciate the privilege of appearing before this committee again in the interest of margarine tax repeal. My presence here is not uncommon, because I have been here constantly during the past 6 years on behalf of the legislation you are now considering.

I hardly think it necessary to go again through the long 62-year history of this injustice. That has been done before this committee many times in the past and is a matter of record in the printed proceedings which are available to all. Extensive hearings were held in the House of Representatives, and the arguments were thoroughly and ably presented prior to the passage of this bill by that body. I am deeply appreciative of the fine efforts of my fellow townsman, Congressman Rivers, for his untiring efforts in getting this legislation out of the Agriculture Committee and steering it through the House debate to a successful vote. I call your attention to the fact that it was Congressman Rivers' bill which won House approval and is now before this committee.

It does not even seem necessary to go into the many, many reasons for the repeal of these taxes and license fees again at this time. As far as the manufacturers, wholesalers, retailers, and housewives are concerned, they are positively aware of the unjustness of these regulations. Their testimony in the House hearings is clear evidence of their feelings. The farmers-the men who produce the high-grade vegetable oils used in the manufacture of margarine certainly know the facts. And, Mr. Chairman, all of these people have felt the burden of these ridiculous penalties far too long.

This is a question transcending the lines of any party or any group— even so powerful a group as the one which has been able to maintain this legislated stranglehold on an otherwise competitive industry.

Mr. Chairman, the time has come when the American people are no longer willing to tolerate the existence of such a restraining hand on the manufacture of one product, a product which has every right to take its deserved place and stand on its own merits with other products in its field.

The properties of margarine and the benefits to be gained from its use on the family tables of this country have been expounded over and over again by competent authorities. Its nutritional value is an established fact, controlled and labeled by our Pure Food and Drug Administration standard of identity.

The argument always resolves itself to one of color. While butter, the admitted opponent in this battle, may be colored any tint of yellow without even having been so labeled, even though it may have been white originally, the ingredients of margarine must be bleached to keep from giving the finished product a natural yellow tint. Butter, cheese, and ice cream enjoy special and unique exemption from labeling artificial coloring under the act of 1923. Margarine is denied the use of yellow simply because the dairy industry has misused its enormous political influences to drive a competitive product off the counter. This is discrimination and a violation of the American principle of open, competitive business.

Mr. Chairman, it is my sincere belief that these regulations are pointedly designed to restrain the free marketing privileges of our group of manufacturers. They go beyond that. They place undue restrictions and hardships on our housewives in their daily marketing. I have no doubt that the majority of our people prefer butter for table use. That may be habit and education and it may not. The main point is this: Our low-income families have no choice. The purchase of margarine for their use is an economic necessity. But whether they buy margarine by choice or by necessity, it is their inalienable right to be free to buy yellow margarine if they so desire. Butter is colored a particular tint of yellow to meet the consumer preference of a particular market. Why not margarine?

I might ask at this point to have incorporated the statement that was made in 1943 before this committee, if I may do so.

The CHAIRMAN. We will be glad to put that in the record. We are glad to have you here, Senator. Thank you very much. Senator MAYBANK. Thank you.

(The statement is as follows:)

STATEMENT OF HON. BURNET R. MAYBANK, UNITED STATES SENATOR FROM THE STATE OF SOUTH CAROLINA, MADE BEFORE THE SENATE FINANCE COMMITTEE, WHICH APPEARS IN THE HEARINGS ON THE REVENUE ACT OF 1943

Senator MAYBANK. Mr. Chairman, I have a short statement that I would like to read, with your permission. I have three gentlemen here who are experts that I would like to introduce for short statements.

The CHAIRMAN. Yes, sir. Do you wish to introduce them now?

Senator MAYBANK. No. I would prefer to make this short statement and then have the privilege of introducing them.

On October 12, I introduced S. 1426, designed to suspend, for the duration, the existing 10-cents-per-pound tax on margarine containing yellow color, whether artificial or otherwise, and to restrict the definition of the term "manufacturer” for the duration, so that restaurants, boarding houses, hospitals, and so forth, could color margarine and serve it to their patrons, guests, and employees without incurring the $600 annual license fee now imposed upon them.

On November 3, the House Agricultural Committee, by a vote of 14 to 11, adopted a motion deferring further hearings or action on H. R. 2400 or similar

legislation relative to oleomargarine for the balance of the Seventy-eighth Congress. H. R. 2400, by Representative Fulmer, was designed to repeal all existing Federal taxes, license fees, and related restrictions on the manufacture, sale, and use of margarine. The House Agriculture Committee in effect declined to consider further H. R. 2400, despite the fact that over 30 witnesses, representing science; manufacturers; wholesalers; retailers; cotton, soybean, livestock, and peanut producers; labor; consumers; and hospitals, unequivocally urged the repeal of the existing discriminatory margarine taxes and license fees. Therefore, I am requesting the Senate Finance Committee to incorporate my bill in the pending Revenue Act of 1944.

The manufacture, sale, and labeling of margarine is now fully and adequately regulated by the Food and Drug Administration under the Pure Food, Drug, and Cosmetic Act, and the standard recently promulgated by that Department for margarine. That supervision is not affected, in any way, by my bill.

I firmly believe that it is in the best interest of the public during this war period for margarine to be made available at its low cost and point value to the consumers throughout this country who are unable to obtain sufficient butter for an adequate diet. We are now reduced to one tablespoon of butter per day per capita, and this, in the opinion of experts in nutrition (and certainly in the opinion of laymen who do not like dry bread and won't eat it), is not enough. The free use of margarine will tend to make up this deficiency and relieve an important wartime scarcity.

All competent nutrition authorities, including the American Medical Association, National Research Council, and our own Department of Agriculture, have established the fact that modern fortified margarine is equal nutritionally to butter. Each pound of margarine packed for consumer use contains 9,000 USP units of vitamin A, which is the average found in each pound of butter.

The average American who can afford butter and has points to buy it, if his grocer has it to sell, would rather have butter than margarine. But, as we know, there is not now enough butter and probably will not be for the duration of the war. From the standpoint of nutrition, the deficiency between supply and demand can be supplied with fortified margarine, in a palatable form, if the existing restrictions that my bill proposes to suspend for the duration are removed as handicaps. For too long the consumer has been the "forgotten man" in the efforts of certain butter interests to "exterminate" margarine.

Now, Mr. Chairman, with your permission, I am going to ask that Mr. Carlson be heard.

Senator CLARK. Before you go into that: Your bill is designed to take off the license fee for artificially coloring margarine?

Senator MAYBANK. Taking off the $600 license fee that everyone must pay to color margarine.

Senator CLARK. It does not have anything to do with the price of margarine as such?

Senator MAYBANK. No.

Senator CLARK. The bill is designed to permit people to color the margarine so as to, in some cases, fool people into thinking that it is butter.

That is the only advantage of coloring it, is it not, to make it a more acceptable substitute for butter? Not that it has anything to do with the taste; that does not have anything to do with it, except you are trying to improve the competitive position for margarine?

Senator MAYBANK. You can do it now providing you pay the $600 license fee. Senator CLARK. I eat it myself without coloring. It tastes as well without coloring as it would with coloring.

Senator MAYBANK. That might be correct, but unfortunately in hospitals and other places people refuse to use it in an uncolored form.

Senator CLARK. The coloring matter is the whole subject of the controversy. Senator MAYBANK. Because of the $600 license fee many small restaurants, many small places, cannot afford to pay the $600 license fee.

Senator JOHNSON. Don't you think in hospitals they could serve butter? Senator MAYBANK. They haven't butter to serve. That is why I want the experts to testify. I have an expert here from the restaurants and one from the hospitals, and a nutrition expert, to testify to exactly what they are up against in the institutions.

Senator JOHNSON. Will they testify?

Senator MAYBANK. Yes; they are right here.

Senator JOHNSON. Will they testify to the very large volume of butter that has been recently released by the Army so that hospitals can get all the butter they want?

Senator MAYBANK. I trust they can answer any questions that you may want to put to them.

Senator JOHNSON. I hope they will give us that information.

Senator MAYBANK. They will give you all the information that you ask for. Senator CLARK. That is only during the duration?

Senator MAYBANK. Only during the duration.

Senator GUFFEY. I like margarine, and I like it colored. I do not like to think of eating lard. That is my objection.

The CHAIRMAN. Do you wish the witnesses called now?

Senator MAYBANK. Yes.

The CHAIRMAN. Will you call your first witness?

Senator MAYBANK. Anton J. Carlson.

Senator LUCAS. May I ask one question of Senator Maybank?

The CHAIRMAN. Yes.

Senator LUCAS. You spoke of a bill before the Agricultural Committee, introduced by Mr. Fulmer, of South Carolina.

Was that a bill which deals with this subject separately and is not included in the finance bill?

Senator MAYBANK. That is correct. That is a bill not for the duration and not to relieve the present situation where you have to pay 15 and 16 points for butter, whereas you can get this product for 3 points.

The CHAIRMAN. The next witness is Hon. A. Lee M. Wiggins, Under Secretary of the Treasury.

STATEMENT OF A. LEE M. WIGGINS, UNDER SECRETARY OF THE TREASURY, WASHINGTON, D. C.

Mr. WIGGINS. I am very glad to appear before your committee to present the Treasury Department's view on the tax aspects of the pending proposals which would modify or repeal the excise taxes and occupational taxes on the manufacture and distribution of oleomargarine.

At present oleomargarine is subject to tax of 10 cents per pound if it is yellow in color and to a rate of one-fourth cent per pound if it is uncolored. Imported oleomargaraine, whatever its color, is taxed at a rate of 15 cents per pound. In addition, annual occupational taxes are imposed on the manufacturers and distributors of oleomargarine. The manufacturers' occupational tax is $600 a year. Wholesalers are subject to a tax of $480 if they distribute colored oleomargarine and $200 if they handle only the uncolored product. At the retail level, the occupational tax is $48 for the distribution of yellow oleomargarine and $6 for the distribution of uncolored oleomargarine.

Although this schedule of tax rates has been in effect since 1902, the origin of the taxes goes back to 1886.

The legislative history of these taxes and the considerations advanced in their defense during their long history indicate that their origin was associated with an effort to prevent the widespread, fraudulent sale of oleomargarine as butter. Toward the close of the past century there was apparently need for using the Government's taxing power as a regulatory measure. The taxing power was also brought into use in connection with the regulation of the production or distribution of a number of other commodities, such as narcotics and firearms. The imposition of a tax on the production, sale, or importation of a commodity, the distribution of which the Government finds it necessary to regulate, enables the Government to establish rules, regulations, and reporting requirements with which manufacturers or distributors must comply. Failure to conform to such regulations con