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Senator THYE. I have listened to the testimony that has been given at this hearing, and there have been some excellent and clear-cut statements on the question.

I was most impressed by the statement that Mrs. Barker presented to this committee. She outlined the basic problem most emphatically, not only as a housewife but as one familiar with public eating places and the habits of the public in such eating places. She called to our attention that there are 65,000,000 meals served daily in public eating places in the United States—65,000,000 opportunities to defraud the public daily by serving a colored substitute that would resemble butter, smell like butter, and taste like butter.

You could not imagine a splendid dining room in one of our leading hotels in Washington displaying signs on the walls to indicate to the public that they were serving oleomargarine. It is just not conceivable that a public eating place of that type would want to display such signs; and consequently, if the substitute product were served, the public would not be aware of it.

Now, Mr. Chairman, I served for quite a number of years as dairy and food commissioner in my State, and I have been called to the food laboratory many times to witness baking products which had a golden, rich color, giving the impression that much butter had been used as a shortening for the product. Tests showed it was nothing but the reflection of the coal-tar dye in the product. That is an example of an attempt to defraud or mislead the public. This type of thing creates the regulatory problem, which is the essential problem involved in the bill before this committee. The 10-cent tax on oleomargarine colored commercially for sale does not deny the public any nutritive value in that pound of oleomargarine. It does not take away any of the food content. It simply attempts to regulate and identify the product.

The whole purpose of the regulatory taxes lies in the simple fact that when the product is uncolored it contains all the food that the colored product would contain. The only reason you would want to color it, then, would be to deecive the eye and to make an acceptable item in a public eating place or an acceptable spread on a slice of bread so that when colored to imitate butter, the substitute does not in any sense create the suspicion or the idea in the mind of the consumer that it is not butter.

Again I come back to the point that the present laws are regulatory, The tax, as some people call it, is applied to absolutely establish the identity of the product so that the Federal Bureau of Revenue could enter into policing the sales by collecting that tax. In that manner the public in itself would have less of the substitute product imposed upon it as an imitation of butter. I must say, again, Mr. Chairman, that in my own mind I have always looked upon the 10 cents a pound for the colored product as a regulatory measure, an attempt to govern the product and to keep it identified as oleomargarine.

On the other hand, if it is a tax, then, Mr. Chairman, I must call to your attention the intelligent statement so ably presented by Charles Holman, who asked that this committee name a subcommittee and make

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a real study of the question in its every phase and then report back to the full committee.

If it is a tax question, and I have stated before I do not believe it to be a tax question, then I must call to your attention, Mr. Chairman,

a that when you presented the income-tax-reduction bill on the floor of the Senate there were many attempts to amend the act, to eliminate excise taxes. You acknowledged at the time that the question justly and rightfully could be discussed, but you stated we were only going to consider this one tax question and that a study would be made of the entire tax structure. In due time it was anticipated that an equitable tax measure would be brought out dealing with all such proposed changes.

Now, if we are making a study of all excise taxes and we are going to come forth with a new tax bill that will level off all unjust and unfair taxes, then the dairy producing group is entitled to have this tax also considered at the time the final study and final presentation of the tax-revision program are made. I have said I think it is essentially a matter of regulation and not of taxation in the proper sensean attempt to identify a product which, when colored, is synthetic, camouflaged to represent itself in the public's eye as butter; if you consider it a tax matter, then deal with it as a tax measure and bring out a recommendation when all excise tax adjustments and inequities are being scrutinized.

Mr. Chairman, I must again call your attention to the time on the Senate floor when you begged us not to press for amendments, not to ask that these amendments be acted upon because you wanted to have the opportunity to bring revision of the entire tax structure before this committee and have it all acted upon in one measure, rather than in a piecemeal manner.

I wish to thank the chairman, and I apologize for having taken so much of your time.

The CHAIRMAN. We are glad to have your participation and appreciate your statement.

Are there any further statements ?

The committee has received through the mails a number of written presentations from persons who indicated an interest in these hearings and who were invited to give us the benefit of their views. I will not undertake here to identify the statements received, but all of them will appear in the record, together with any that may be received tomorrow. These will all be gone over carefully and will receive consideration along with the matters presented orally in these hearings.

The hearing is closed.

(Thereupon, at 5:30 p. m., hearing in the above-entitled matter was closed.)



Akron 4, Ohio, May 14, 1948. Re Oleomargarine bill. THE FINANCE COMMITTEE OF THE UNITED STATES SENATE,

Washington, D. C. HONORABLE SENATORS : Since time for oral presentation of evidence relating to the oleomargarine bill is not available to me, may I submit the following facts for your consideration?

This controversy is not as to the comparative nutritional values of oleo and butter; not as to whether or not consumers shall eat vegetable fat or animal fat but is purely a dispute as to whether or not one food product shall be legally. permitted to be fraudulently sold upon the merits of its chief competitor. Many other factors have been cleverly injected into the argument for the obvious purpose of confusing consumers and vegetable oil producers as to the actual objectives and effects of the legislation.

The controversy is purely in regard to color, and color has no effect whatever upon the flavor or nutritional value of the product. Consumers have been lead to believe that oleo must be bleached for the purpose of evading the color tax. There is no practical method of making oleo with the natural yellow color of butter. Vegetable oils must be hydrogenated in order to solidify them. Although some vegetable oils are quite yellow in liquid form, the color resulting from hydrogenation surely does not imitate butter. The bleaching is for the purpose of destroying these very undesirable colors and not because of any color tax.

During the war the sales of cottonseed and soybean oil for oleo manufacture did increase while cheap imported oils were not available. Now, however, cocoanut oil has begun to flow. Already in 1947 one-third of the factory colored oleo was made from the cheaper cocoanut oil. There is no reason to expect that it ever will be made from other than the cheapest oils available. Therefore, oleo manufacture is an increasingly negligible outlet for the products of soybean and cottonseed farmers. Removal of the tax could benefit them only to the extent to which deceptive sales of oleo could be increased and as long as prices for domestic oils could compete with imported oils. Dairymen are the big buyers of cottonseed and soybeans.

In Canada it is illegal to manufacture or sell oleomargarine and the people raise no controversy in regard to that law. In our own country the agitation does not come from the low income groups. Much of the noise comes from womens' clubs many of whose members never prepare a meal themselves nor even feed their own children. Their sole objective apparently arises from idleness and a desire to attract attention to themselves. Few of them possess authentic information or understand the real significance of the issue. Likewise the press and radio have been fooled by a clever smoke screen into believing that this issue has something to do with the availability of oleo as a food.

Interviews with housewives in the lower and middle income groups reveals a better understanding. Although many of them use oleo they serve it as such and see no reason for coloring it. Nor are they concerned about removal of the tax.

If oleo is used for cooking it certainly need not be colored. If served upon the table as a spread neither its flavor nor nutritional value will be changed by coloring. If colored it is for one purpose only and that is to deceive the family.

If oleo has no desirable natural color its manufacturers can select any color in the spectrum except the natural yellow color of butter and not be subject to the color tax. Since that is the case what reason can there be for insisting upon using the natural yellow color of butter other than for deception?


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 berds 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 conciitions 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.




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.


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,




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 oleo.margarine: 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.


Oklahoma City, Okla., May 15, 1948. EUGENE D. MILLIKIN, 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 1911 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

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