When

Recently, a process has been discovered whereby palm oil can be refined so as to produce its color a deep yellow, which necessitates the change. the oleomargarine act of 1902, the Grout Act, was passed, Mr. Henry, chairman, stated: "So far as we have knowledge, no practical method has been devised for making oleomargarine in the semblance of yellow butter without the addition of some artificial color, and it is not believed that oleomargarine can be given a considerable or even a very perceptible shade of yellow by the use of any known ingredient."

The Commissioner of Internal Revenue, David Burnet, on November 12, 1930, ruled and now holds that the unbleached palm oil free from artificial coloration when used in substantial quantities in relation to other ingredients may be used in the manufacture of oleomargarine otherwise free from artificial coloration without subjecting the finished product to tax at the rate of 10 cents per pound.

Yellow is the butter trade-mark. It is universally agreed that butter is far superior to oleomargarine or any substitute as food. Dr. E. V. McCollum, of Johns Hopkins University, who appeared before the committee, stated:

I say that all butter substitutes, so far as I am aware, are distinctly inferior to even a low-grade butter." Doctor McCollum speaking of oleomargarine made to imitate butter in color and texture, stated: “I think it would be a step in the wrong direction from the standpoint of the maintenance of the Nation's health; that any invasion of so precious a product as butter or any other dairy product should be so marked."

One contention is the oleomargarine is the poor man's butter. The poor man is the last one to be deceived into paying butter prices for inferior quality. The poor men, however, are not the only ones involved. If oleomargarine is always sold for what it is and not to deceive, there might be no urgent need for a heavy tax on the colored article. Undoubtedly, much of it is sold as butter at butter prices by retailers, at the expense of the innocent purchasers. The regrettable fact is that oleomargarine, much inferior in food value as compared with butter, is consumed in hospitals, asylums, and other Government institutions, as indicated in public document placed in the Congressional Record by Senator Blaine, of Wisconsin, pages 7540-41, Congressional Record of April 17, 1930:

"For the year ending June 30, 1929, in St. Elizabeths Hospital, Washington, D. C., 121,297 pounds; Army Hospital, Hot Springs, Ark.; Army Hospital, San Francisco, Calif., 133,169 pounds as compared with 54,944 pounds of butter. "For approximately 11 months, ending April 30, 1929, in National Soldiers' Homes, 502,407 pounds as compared with 91,356 pounds of butter.

For the period, April, 1927, to March, 1928, in various United States Veterans' Bureau hospitals, 157,073 pounds as compared with 979,918 pounds of butter.

"For year ending October 31, 1929, in United States prisons, 196,627 pounds." The contention all these years has been to prevent fraud and deception. It is unnecessary to say that when oleomargarine or any other substitute, inferior in quality, is sold as butter, it deprives the producer of his legitimate market and the consumer of the difference in value in dollars and cents. It is unfair, unjust competition. Counterfeiting should not be permitted in butter any more than in gold dollars.

STATEMENT OF HON. ELBERT S. BRIGHAM, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF VERMONT

Mr. BRIGHAM. Mr. Haugen has pointed out to you the difference between the present law and the proposal made in this bill. The present law places a tax of 10 cents per pound upon oleomargarine, but provides that when oleomargarine is free from artificial coloration that causes it to look like butter of any shade of yellow, the tax shall be one-fourth of 1 cent per pound. Now, this bill (H. R. 16836) proposes to make color the basis of the tax, whether that color is produced by artificial or natural coloration. The line is drawn at 1.6 Lovibond tintometer, and I have a sample here colored to that degree, which will show you where the line is drawn between

oleomargarine that is taxed and that which is not taxed. That, you will see, permits some degree of yellow color. There is quite a difference between that and white. The Lovibond tintometer has been used in Pennsylvania to determine the color of oleomargarine for many years. Ŏleomargarine having a shade of yellow deeper than that sample is not permitted to be sold in the State of Pennsylvania, and the Lovibond tintometer has been used in the enforcement of this law and no practical difficulties have been met. I want to say to you that what we propose to do in this bill is exactly what was intended to be done when the so-called Grout Act of 1902 was passed. The Grout Act, as it passed the House of Representatives, provided that a tax of 10 cents per pound should be placed upon oleomargarine, but if it was free from coloration or ingredientmark the words, " or ingredient "--that caused it to look like butter, then the tax was to be one-fourth of 1 cent per pound.

The Senate struck out the words "or ingredients" and inserted artificial, so that we have the basis of the present law, that is, artificial coloration. Now, when that amendment came to the House for consideration, Chairman Henry of the House committee, accepted it because he said there were no known ingredients at the time which could be used to color oleomargarine so that it would look like butter, and he said that if any were discovered later that the situation should be met by future legislation.

Now, those ingredients have been discovered. The research laboratories of the manufactures have been at work trying to discover some substances which could be used under the ruling of the Commissioner of Internal Revenue interpreting the artificial color provisions of the law. This ruling was that in order to have a substance classified as a natural ingredient it must be used in substantial quantities in the manufacture of the oleomargarine. The first thing used was the highly colored fats of old dairy cows slaughtered in packing houses. You perhaps remember the testimony along that line which was introduced in connection with the bill before you two years ago. Now, the supply of these fats is limited and only a limited number of pounds of oleomargarine could be colored by their use. But last November the Commissioner of Internal Revenue issued a ruling that refined palm oil could be used in the manufacture of oleomargarine and the product be taxed only one-fourth of 1 cent per pound. I have a sample here of this refined palm oil. You see how deeply yellow it is in color. There is enough of that available or will be available, to color all the oleomargarine that is produced in the world so that it will look just like butter. Mr. MICHENER. Where does it come from?

Mr. BRIGHAM. From Java and Sumatra. So all the oleomargarine produced from now on can be colored yellow in imitation. of butter and escape the 10 cents tax. That completely nullifies what was intended in the Grout Act of 1902.

Now, gentlemen, an emergency, I think, confronts the dairy industry. I obtained some prices from the Oil, Paint and Drug Reporter, and some oleomargarine formulas which I believe are basic formulas. The raw material for the manufacture of a pound of oleomargarine containing animal fats, cost 9 cents-that is, before manufacture. The raw materials before manufacture for a pound

of vegetable oil margarine cost 6.8 cents per pound. I obtained figures from the chief of the Dairy Bureau, Mr. Reed, showing that the cost of producing butter fat at the farm was more than four times the cost of the materials for making this oleomargarine. Now, we have a degree of competition confronting the dairy industry which threatens its very existence.

Mr. O'CONNER. What would that make the butter cost now? Mr. BRIGHAM. The butter costs more than the farmer is getting for it now, probably 40 cents a pound.

Mr. O'CONNER. Getting 29 cents a pound.

Mr. BRIGHAM. The wholesale price is 28 or 29 cents the last quotation I saw.

Mr. FORT. Was that four times the figured cost of the material in the butter?

Mr. BRIGHAM. Yes; for the material in the butter, and I assume that the cost of churning the ingredients making oleomargarine, and the packaging would be about the same as the churning and packaging, and so forth, in the cast of butter.

Mr. O'CONNER. What does oleomargarine sell for now?

Mr. BRIGHAM. I have seen advertisements offering yellow oleomargarine at 21 cents a pound. I saw such an advertisement in my home paper last night.

Now, the question is whether public policy demands the protection of the butter industry. The principal countries of the world have passed stringent laws to protect butter from its counterfeit, oleomargarine. Some of these laws prevent coloration in imitation of butter. Some prescribe differences in packages, and some go so far as to provide that butter and oleomargarine shall not be sold in the same store. The Dominion of Canada absolutely prohibits the manufacture and sale of oleomargarine. The reason for this almost universal public policy is that butter made from cows' milk contains certain substances called vitamines, which make it superior in the human diet to oleomargarine. On this point both Dr. E. V. McCollum, of John Hopkins University, and Dr. Walter H. Eddy, of Columbia University, were in complete agreement. Doctor McCollum stated to the committee that butter was rich in vitamine A and had considerable quantities of three other vitamines. A telegram from Doctor McCollum inserted in the record shows that crude palm oil contains only one-third as much of vitamine A as is found in butter, and he said, in his opinion, the method of refining palm oil would destroy its vitamine A content. Doctor Eddy, when questioned on this point, admitted that a pound of butter would have twenty-five times as much vitamine A as would a pound of oleomargarine made with palm oil as an ingredient. The evidence proves conclusively that oleomargarine is deficient in vitamine content and is not to be compared with butter as a source of supply of these elements so essential to normal growth and well-being.

I think the emergency confronting the dairy industry demands prompt action in order to protect the industry from the competition of a counterfeit inferior in its effect upon the consumer.

The CHAIRMAN. I understood you to say that the original intention when they passed the original act was to tax anything that looked like butter.

Mr. BRIGHAM. Yes; the language of the House bill exempted from the 10 cents tax anything that was free from coloration or ingredient that caused it to look like butter of any shade of yellow. The Senate struck out the words "or ingredient" and inserted artificial before coloration, which is the present law, and that was accepted because there were no known natural ingredients at that time to be used to color oleomargarine.

Mr. SABATH. That was for the purpose that the consumer should not be misled to buy oleomargarine instead of butter, that there should be no misrepresentation.

Mr. BRIGHAM. I beg your pardon?

Mr. SABATH. Because at that time many people were selling oleomargarine or butterine as butter. That is, it was being attempted, and it was for the purpose of precluding people from selling the socalled butterine instead of butter. Is that a fact?

Mr. BRIGHAM. Yes.

Mr. MICHENER. The real purpose now is to protect the dairy industry. Is that correct?

Mr. BRIGHAM. Its real purpose is to protect the consumer and the dairy industry.

Mr. MARTIN. How is it going to protect the consumer?

Mr. BRIGHAM. It protects the consumer from having an essential article of diet imitated exactly in color and texture so that sales talks can be used by dealers because there is a greater profit on the sale of the counterfeit than the genuine article. Sales talk promotes its sale and gets it over to the public.

Mr. MARTIN. If plainly marked there is no opportunity for deception.

Mr. BRIGHAM. That same thing is true in France or Germany where they will not permit the two to be sold in the same store because experience has demonstrated that where that occurs there is substitution and fraud committed.

Mr. MARTIN. If poor people should buy oleomargarine, then do they, in order to get the vitamin A, or can they get the vitamin A by using spinach or something like that, to get the full complement and yet do it cheaper? Is that so?

Mr. BRIGHAM. The trouble is that, taking the dietary habits of the American people as they actually are, the proper vitamin intake is not obtained in the way suggested.

Mr. KETCHAM. Thirty pounds of spinach to the pound of butter. Mr. MARTIN. Was that brought out in your committee?

Mr. BRIGHAM. It can be done. But take the question I asked Doctor McCollum. It is substantially this: Taking the dietary habits of the American people as they are, would it contribute to the well-being of the people of the United States if oleomargarine were substituted for butter. And I advise you to read his answer. Mr. MICHENER. Is there a question about the right of Congress to tax regardless of the reason that the tax is placed there? Could Congress lay a tax of 10 cents a pound on butter?

Mr. BRIGHAM. It does place à tax of 10 cents a pound on both renovated and adulterated butter.

Mr. MICHENER. I am not talking about the health end of it.

Mr. BRIGHAM. I do not say adulterated butter is not as wholesome as oleomargarine.

Mr. MICHENER. I think you get my point. My point is this, From the legal standpoint, has Congress the right to tax a wholesome article of food, and excise tax, so to speak?

Mr. BRIGHAM. The Supreme Court has sustained the present oleomargarine tax.

Mr. MICHENER. Yes, but on what grounds?

Mr. BRIGHAM. I do not recall that.

Mr. MICHENER. The question I am getting at is this: I am sympathetic with your bill. I have a large number of dairymen in my district. I will leave that to the head of the grange. I have probably more dairymen than most of the men here. You people seem to think that is a joke. I am very serious about it. Have we the right place to tax regardless of the food element?

Mr. BRIGHAM. Yes, I think we have.

Mr. MICHENER. That is all.

Mr. BRIGHAM. I will insert in the record a letter from the Secretary of Agriculture and a letter from the Secretary of the Treasury in reference to this bill.

The CHAIRMAN. That will be all right.
(The letters referred to are as follows:)

DEPARTMENT OF AGRICULTURE,

Hon. G. N. HAUGEN,

Washington, D. C,, January 22, 1931.

House of Representatives, Washington, D. C.

MY DEAR MR. HAUGEN: We have carefully considered the House bill 15934, amending the oleomargarine act, which accompanied your letter of January 9. The original act of August 2, 1886, was obviously intended to restrict the sale of oleomargarine colored yellow in imitation of butter. The effect of this law has been in part nullified by the recently acquired ability of the manufacturers of oleomargarine to obtain a yellow product by the use of naturally colored fats. We believe that Mr. Brigham's bill would correct this condition and under the circumstances is justified. So far as we can determine, the limit placed on the yellow color permitted in oleomargarine is high enough to allow the use of any naturally colored oleo oil and would exclude the use of yellow colored vegetable oils which are obviously added for the purpose of increasing the color. The bill, therefore, has the approval of this department. Sincerely,

ARTHUR W. HYDE, Secretary.

THE SECRETARY OF THE TREASURY,
Washington, January 21, 1931.

Hon. GILBERT N. HAUGEN,

Chairman Committee on Agriculture,

House of Representatives.

DEAR MR. CHAIRMAN: Receipt is acknowledged of your communication of January 9, 1931, transmitting a copy of H. R. 15934, a bill to amend the act entitled "An act defining butter, also imposing a tax upon and regulating the manufacture, sale, importation, and exportation of oleomargarine," approved August 2, 1886, as amended, and requesting a report thereon.

The bill would change the law now in effect to impose a tax of 10 cents per pound on all oleomargarine of any shade of yellow and restrict its sale to certain specified sized packages not exceeding 5 pounds to which a stamp of appropriate denomination would be affixed by the manufacturer.

The matter of imposing a tax of 10 cents per pound on all oleonrargarine of any shade of yellow is, the Treasury believes, a question of policy for Congress to decide. It is true that the production and sale of oleomargarine obtaining its