2. Even if oleomargarine is the equal of butter in every respect it should not be permitted to imitate butter.

3. "The argument is not whether butter and oleo are on or near a par in nutritive and food value; the question is, Should we protect our dairy industry?"

4. Proponents of tax repeal claim that the tax on oleomargarine is a specialprivilege tax, "subsidy," and "restraint of trade." Even if these claims are justified, it is evading the basic question, "Should we protect our dairy industry?" We have tariff to protect industry; tariff may be considered a specialprivilege tax.

5. "We subsidize many farm products, including cotton and soybeans, I am told. We regulate many industries for the good of the Nation; regulation constitutes restraint of trade. But if these things are justified, then the cry of 'wolf' and is merely designed to arouse emotion."

6. It is claimed by the oleomargarine interests that if the tax on oleomargarine is repealed it will reduce the cost of butter and the cost of margarine. There is no apparent basis in fact for this statement. "How can removal of a tax on margarine reduce the cost of butter? They are not competing today because of the wide variance of price between butter and oleo." The cost of butter is not high compared to other prices of products made from butterfat and milk. "The price the farmer receives for butterfat sold to the creameries to make butter is much lower than the price the same farmer would receive if he should sell this same butterfat to evaporators, cheese factories, or as fluid milk." In consideration of the fact that an hour of labor is required to produce a pound of butter, including all steps involved in the process of production and distribution, it hardly seems possible that it could sell for less than a dollar a pound. In consideration of these facts, the repeal of the oleomargarine tax will not reduce the cost of butter or the price the consumer must pay for it.

7. The repeal of the tax on olemargarine will reduce the price that the consumer must pay for uncolored oleomargarine only a quarter of a cent a pound. No one pays the 10-cent tax on colored oleomargarine unless it is colored when it is purchased. The most that the removal of the 10-cent per pound tax on colored oleomargarine could do would be to make colored oleo available to consumers at the same price as paid for uncolored oleo today. It is not likely, however, that this will be the case if the margarine interests can get the privilege of making their product appear like butter.

8. The time that would be saved by housewives if they could purchase colored oleomargarine instead of coloring it at home is not as important as the proponents of tax repeal would lead us to believe because of the fact that the majority of the housewives use more uncolored oleomargarine for cooking than they do for a table spread. For cooking purposes it does not matter whether it is colored yellow or whether it is white.

9. The tax on colored oleomargarine is the only protection that the housewife has in knowing whether she is buying butter or oleo. "The Pure Food and Drug people have no authority, except over interstate traffic, to regulate and prevent the sale of margarine as butter."

10. Butter in reality is the balance wheel of the dairy industry. Milk is not produced in the same quantity during all seasons of the year. A sufficient number of cows must be kept to provide an adequate quantity of milk to be used in fluid form for the manufacture of cheese and other milk products during seasons of low milk production. During seasons of high milk production there is a surplus of fluid milk. It is during these seasons that the bulk of our butter is manufactured.

11. If dairy herds are reduced to the point of producing a sufficient quantity of dairy products for human consumption during the high productive period of the herds, there will be a scarcity of dairy products during the low producing periods As a result the price of milk will tend to skyrocket during periods of low production.

12. "The dairy industry is more important as a means of revenue to the farmers of every State than will be the sale of vegetable oils to margarine manufacturers even if they triple or quadruple their sales, completely pushing the use of butter from the market."

13. The dairy farmer is a better source of outlet for cotton and soybean products than the oleomargaine industry ever will be.

14. Beyond a doubt the dairy industry is worth protecting. The bill to repeal the Federal tax on oleomargarine should be defeated to avoid seriously crippling the dairy industry. (April 26, 1948, pp. 4982-4983.)

› Representative Katherine St. George (New York)

1. "There is nothing unfair about continuing the taxes as they have been, as has been so well pointed out, as they have been for the last 60 years or more. 2. The repeal of the tax will result in undermining the standards of food products. "Imitations and substitutions would take over our food industries." 3. "Other imitations of butter are taxed now. Adulterated butter which, like oleo, is an imitation of good butter carries the same per pound tax and the same manufacturers', wholesalers', and retailers' occupational taxes as does colored oleo. Renovated or processed butter carries the same per pound tax as uncolored oleo. There is no reason why an exception should be made for oleomargarine." 4. "Oleomargarine already has been given competitive privileges which are denied to butter. It may be 'fortified' with vitamins, flavored with butter flavor, and preserved with benzoate of soda. None of these--nor any other extraneous substance may be added to butter."

5. "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."

6. In order to have an adequate supply of fluid milk in slack seasons, more than enough must be produced during seasons of high production. It is during the high-production seasons that the bulk of our butter is manufactured. Without a butter outlet, farmers would be forced to reduce their herds. As a result, there would be an insufficient supply of fluid milk during the seasons of low production.

7. Mrs. St. George stated that the Hill amendment seems to be satisfactory to the dairy farmers because it would make it impossible for oleo to pass as butter. (April 28, 1948, p. 5112.)

Representative George B. Schwabe (Oklahoma)

1. "The products of the farm are our basic commodities. Civilization depends more upon the production which results from labor on the farm, and particularly from food production, than from any other type of human activity. Food is the first essential and milk is perhaps the most universally needed item of good (sic). From birth to the grave, we must have milk if our civilization is to survive."

2. The repeal of the tax on oleomargarine will result in a decrease in our milch-cow population and a decrease in milk production. Butter is the balance wheel of the dairy industry. A large percentage of people living on farms in this country depend upon the sale of milk, cream, or butter as their chief source of cash income. "If this bill passes and milch cows move off the farm, the family simply will not have this highly desirable food and will not have the money with which to purchase a colored substitute."

3. The dairy industry is essential to our soil-conservation program. The source of the best soil enrichment and fertilization will leave the farm with the sale of the cow. While the cow is on the farm the fertilizer is immediately available.

4. Cotton farmers will not benefit by the repeal of the tax to the extent claimed by proponents of repeal. "The dairy farmer in Oklahoma pays twice as much for cottonseed and soybean meals which are sold as dairy feed, as the value of the two oils sold for margarine. Similar situations exist in other States." 5. A consideration of vital importance is that in 23 States there are heavy taxes on margarine. Before repeal of the modest Federal tax would benefit the consumers by offering margarine at a slightly less cost than is being paid today, it would be necessary for these States to remove their taxes on margarine.

6. "If this bill is to pass it should not be passed in its present form, but some of these amendments should be adopted. Otherwise, the adoption of this measure, in its present form, will do great injustice to the farmers of my State, and of every other State which has any considerable dairy industry." (April 28, 1948, pp. 5124-5125.)

Representative Karl Stefan (Nebraska)

This legislation can easily result in the uncontrolled, ruthless competition of a low-cost synthetic product sold in almost complete imitation of butter. It will hurt butter prices and drive farmers out of dairying business to the detriment of agriculture in general and of business in our farming communities.

Prices of oleomargarine will rise and soybean and cotton growers will suffer because cheap foreign oils will be used in the manufacture of oleomargarine. The tax upon yellow oleomargarine must be high enough to differentiate it from the uncolored product. These taxes, including occupational taxes on hand

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 groupeven 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