What is the immediate situation in terms of availability of colored margarine to consumers? Under the proposed bill (H. R. 2023) colored margarine could enter free of Federal taxes and restrictions into 30 States and the District of Columbia, right this minute. These States contain better than half of our population, or 70,484,140 persons by the 1940 census figures. Now, if margarine is judged unsuitable to be available it drops immediately to 33,497,884, or less than half. These 33,000,000 persons are the inhabitants of the 11 States where margarine factories are now located and where colored margarine is now permitted by State law, and they are only about one-quarter of our population.

I will venture only briefly into the realm of speculation and the unprovable and will make the prediction that small, slap-dash factories may quickly spring up in the rest of the 30 States where colored margarine is now permitted by State law. I will go further and predict that the quality of much of the margarine produced there, freed from the restraints of Federal law, will have a good chance of being below present standards.

The more self-interested thinking is, the more clouded it tends to become. That is why one searches in vain for the logic in the thinking behind a bill which would bar the distribution of a safe, wholesome food such as yellow margarine from interstate commerce. Only as a strategem, and a rather desperate one, in an industry struggle would such procedure make any sense, but I confess my education in civics didn't adequately prepare me to accept the idea of the Government's lending its offices to that kind of special interest legislation. If the Congress proposes thus to protect one industry from a competing industry, then I should not be too surprised to find representatives of, let us say, the radio manufacturers, the book and magazine publishers or the movie producers down here asking for a law which would prohibit manufacturers of television sets to sell them in interstate commerce. Such special pleaders might find the Congress already besieged by the manufacturers of silk hosiery, if there still are any, asking for a law which would put an excise tax on nylon stockings. If I may be permitted to be personal, I can speak to this point with some feeling. My father was a manufacturer of cotton hosiery, and while I was rather young at the time, I have no recollection of his ever trying to get anyone to legislate against silk hosiery, although its manufacture, of course, put him out of business. But his experience was a lot more drastic than that which may be expected by the dairy industry, for I just do not believe the Cassandras who threaten us with its imminent demise.

In closing, may I repeat that Consumers Union supports H. R. 2023 as voted by the House of Representatives. Our main areas of concern, should that bill be amended, are: withdrawal of Food and Drug supervision of margarine and the loss to the consumer of free choice in the market as a result of the Government's favoring one industry at the expense of another.

The CHAIRMAN. Any questions, Senator Millikin?

Senator MILLIKIN. What is the distribution of your membership? Miss WHITEHILL. We have a national distribution. Our circulation is something over 250,000. We have subscribers in every State. Our distribution is heavier along the coasts. I would say that prob

ably the Middle Atlantic States would lead, that they would be fol lowed very closely by the Western States, the Pacific Coast States that the next area would be the Middle West, including probably th cities of Detroit and Chicago. But our smallest concentration would be in the South.

Senator MILLIKIN. And the greatest concentration is in the cities' Miss WHITEHILL. Yes. Over 50 percent of our subscribers live in cities of 100,000 or more.

Senator MILLIKIN. Thank you very much.

The CHAIRMAN. Thank you very much, Miss Whitehill.

I believe there is no other witness scheduled for this morning and so the committee will recess until 10 o'clock Monday morning.

(Whereupon, at 12:15 p. m. the committee recessed until 10 a. m. Monday, April 11, 1949.)

OLEO TAX REPEAL

MONDAY, APRIL 11, 1949

UNITED STATES SENATE,
COMMITTEE ON FINANCE,
Washington, D. C.

The committee met, pursuant to recess, at 10 a. m., in room 312 Senate Office Building, Senator Walter F. George (chairman) presiding. Present: Senators George (chairman), Millikin (presiding), Butler, Martin, and Williams.

Also present: Mrs. Elizabeth B. Springer, acting chief clerk.

Senator MILLIKIN. The meeting will come to order. Mr. Holman? Will you make yourself comfortable, Mr. Holman. Senator George has to go to a meeting for a little while. He has read your statement, but for a little while he will not have the pleasure of hearing you.

STATEMENT OF CHARLES W. HOLMAN, SECRETARY, NATIONAL COOPERATIVE MILK PRODUCERS FEDERATION, WASHINGTON, D. C., ACCOMPANIED BY OTIE M. REED, CONSULTING ECONOMIST

Mr. HOLMAN. I am deeply sensitive of the Senator's consideration. I saw him reading the statement.

Mr. Chairman, before entering into my testimony, in which I will proceed to identify myself, I would like permission to introduce as a part of my testimony some revised and selected statistical tables which bear very closely upon the problem before the committee. Senator Millikin will recall that last year we introduced these tables. We have reduced them considerably and brought them up to date to the extent that they could be.

Senator MILLIKIN. Do you wish them put in the record, Mr. Holman?

Mr. HOLMAN. I would like to have them put in the record as a part of my testimony.

Senator MILLIKIN. They will be put in the record immediately after Mr. Holman's testimony.

Mr. HOLMAN. And a study which we have just completed of the character of the State oleomargarine laws that are in force at the present time.

Senator MILLIKIN. That also will be put in the record immediately after Mr. Holman's main testimony.

Mr. HOLMAN. A legal analysis of the proposed Gillette-Wiley amendment in the nature of a substitute to H. R. 2023 by Mr. Marion R. Garstang, counsel of our organization.

Senator MILLIKIN. That will be put in the record.

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Mr. HOLMAN. And a legal brief on the constitutionality of the proposed amendment.

Senator MILLIKIN. That will be put in the record.

Mr. HOLMAN. And finally, a memorandum by way of a letter from Mr. Garstang to me commenting upon certain remarks which Senator Fulbright made in testimony of April 8 with respect to intrastate problems of the State.

Senator MILLIKIN. That will also be put in the record.

Mr. HOLMAN. Senator, my name is Charles W. Holman, and I am secretary of the National Cooperative Milk Producers Federation, with headquarters at 1731 Eye Street N. W., in this city. I would like to file at this point a list of our national directors, all of whom are farmers or their employees and a list of our present member associations.

Senator MILLIKIN. That will be put in the record at the end of your statement, also.

Mr. HOLMAN. The total now is 86. In addition there are about 600 submember organizations. That is, some of our organizations are federations of their own.

Senator MILLIKIN. Are all of these associations cooperative associations?

Mr. HOLMAN. All of them are cooperative, and all of them are farmer-owned. These owners, these farm families, according to our latest figures, number approximately 425,000, and they reside in 47 States.

Also, Senator, these organizations which the farmers own last year marketed a little over 19 percent of all the milk and separated cream that left the farms in the United States. I am here to testify in behalf of the Gillette-Wiley amendment in the nature of a substitute to H. E. 2023 as passed by the House. That amendment, I understand, was referred to this committee by the clerk for consideration. We believe that the substitute amendment is superior to the bill which passed the House.

In the early fall of 1948 dairy groups generally, including our federation, adopted a policy of favoring the prohibition of the manufacture and sale in commerce of oleomargarine colored yellow in imitation of butter.

Since that position has been very widely advertised and to a great extent in misleading character, may I state at this point by way of interpolation that at no time have our organizations ever changed their opinion that the best method of controlling a food product such as oleomargarine, which has thrived and whose whole objective is to imitate butter as closely as possible, is the taxation method. In the fall of 1948, seeing that propaganda was able to change the thinking of the country in large degree from right to wrong, we conferred with all the various dairy groups that we could reach and came to the conclusion that the next best method would be complete prohibition in commerce of the manufacture and sale of yellow oleomargarine. We have not departed from that belief, either.

But the House Committee on Agriculture amended the original H. R. 2023 for consideration by the House, and the bill as reported for consideration by the House purported to be a prohibition of yellow oleomargarine in interstate commerce.

In adopting our earlier policy in the fall we were aware that we were relying on the newly developed concept of the interstate commerce power. With respect to the bill that is now before you, known as the Gillette-Wiley substitute, and which has been signed by 26 Senators in all, there is no doubt whatsoever as to the constitutionality of such a bill. The legal memorandum by Mr. Garstang points out, among other things, that the proposed amendment follows the Filled Milk Act of 1923 which I helped draft and which passed this Congress almost unanimously. That act has twice been to the Supreme Court in criminal cases, and has been upheld in every regard by that Court. We, therefore, believe that it is superior to the bill which passed the House.

To the extent that the Gillette-Wiley substitute amendment effectuates this policy which I have described, it more nearly would carry out the feeling of all dairy groups as to the need of control of the oleomargarine problem in lieu of the existing legislation which uses the classified tax plan as a basis of control. Both H. R. 2023 and the Gillette-Wiley amendment would repeal existing taxes on oleomargarine and on manufacturers and handlers. From that point they differ. The House bill would permit unlimited manufacture and interstate commerce in colored oleomargarine. The Gillette-Wiley amendment would prohibit interstate commerce in yellow oleomargarine.

The House bill seeks to control imitation and fraud in the sale of the product only with respect to public eating places, and to that extent would attempt to carry out a function which probably belongs to the States, at least for enforcement purposes.

The Gillette-Wiley amendment would leave unhampered the administration of the Federal Food, Drugs, and Cosmetic Act with reference to colored oleomargarine.

Senator MILLIKIN. Does your bill, Mr. Holman, put any prohibition on the interstate movement of uncolored oleomargarine?

Mr. HOLMAN. None whatsoever, except that in the provision whereby we leave unhampered the Federal Food, Drugs, and Cosmetic Act, there would be the usual control by that agency over any food product such as white oleomargarine, and in case white oleomargarine should be colored at some point in intrastate commerce, we believe that the Food and Drug Administration would have the right to follow it through to the ultimate consumer. That means that the Federal Food and Drug Administration would continue to exercise its authority as to the ingredients, the labeling, and the adulteration of oleomargarine.

We favor a ban on the shipment of yellow oleo in interstate commerce instead of the complicated H. R. 2023 because incontrovertible evidence shows that the House bill is impossible to enforce.

From the time, Senator, that this proposal came out of the committee about a year ago, we have made a sincere effort to check the extent to which it would be possible to enforce from a central authority the handling of food in so many thousands and thousands of establishments, and in that connection let me describe what the House bill would do.

The House bill would require any restaurant or eating place serving yellow oleo to display a printed card notifying patrons that oleo was

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