yellow color from naturally colored ingredients have increased and may continue to increase with the development of new oils made edible through improved methods of refining. The proposed amendment would, it is believed, prove easier of administration than the present law for the reason that the question of whether these naturally colored ingredients constitute artificial coloration would not be raised. It is thought that H. R. 15934 would not materially affect the revenue collected from this source because it is believed manufacturers would turn to the production of the white product taxed at the rate of one-fourth cent per pound and thus avoid the higher rate of tax, namely, 10 cents per pound. The provisions of this bill restricting the sale of oleomargarine in sealed and stamped packages would, it is believed, afford greater protection to the consumer and offer less opportunity for the fraudulent sale of oleomargarine as or for butter.

The Treasury will gladly furnish any figures or records indicating the production of, and revenue collected from, oleomargarine under the law now in effect which may be called for by your committee.

Very truly yours,

OGDEN L. MILLS, Acting Secretary of the Treasury.

Mr. FORT. Did your committee give any consideration to the possibility of handling this whole situation by forcing the coloration of oleomargarine in a manner not making it capable of being used as a substitute for butter?

Mr. BRIGHAM. We believe this measure will force them to adopt some other color.

Mr. FORT. But is it not better legislation to do directly what we are trying to do than to attempt to do it by the indirect use of a consumption tax on a product that some people want, whether they knew whether it is as good as butter or not; they want it.

Mr. BRIGHAM. There is no objection to them having it, and they can have it at one-fourth of a cent tax, if it does not have the yellow color of butter.

Mr. FORT. Does it not come to the point that your tax is nothing but a direct tariff on oleomargarine for the benefit of butter?

Mr. BRIGHAM. No; I do not agree with that.

Mr. THURSTON. It is to prevent deceit and fraud also.

Mr. BRIGHAM. Yes.

Mr. FORT. You can do that directly by forbidding the manufacture of yellow oleomargarine; by completely forbidding the manufacture of yellow oleomargarine altogether.

Mr. BRIGHAM. I presume that could be done. The gentleman's opinion of the legal aspects of the case is better than mine. Mr. FORT. You say it is done in Canada?

Mr. BRIGHAM. In Canada the Government prohibits the manufacture and sale of oleomargarine.

Mr. FORT. If they prohibit that, they can certainly prohibit yellow. Mr. BRIGHAM. They prohibit the manufacture and sale of all oleomargarine regardless of color.

Mr. SABATH. You are speaking about palm oil being used. To what extent is it being used now as coloring?

Mr. BRIGHAM. It was not permitted to be used until November 12, according to the ruling of the Commissioner of Internal Revenue. Prior to that time palm oil was a reddish-looking substance which could not be used in any substantial quantities. A method of refining was developed.

39295-31-2

Mr. SABATH. What is the percentage of palm oil that is used in the last few years in coloring in comparison with other color that they have used?

Mr. BRIGHAM. I say that up to November it could not be used. It was not permitted to be used by the Commission of Internal Revenue, so that it is only since November 12, when this ruling was issued, that it can be used at all. The statistics are not as yet available to show how much has been used since that time.

Mr. SABATH. Have you seen the reason why they permitted it to be used?

Mr. BRIGHAM. Yes; because the methods of refining had been so developed that a product resulted which could be used in substantial quantity, 10 or 12 per cent, in the manufacture of oleo and its use was permitted.

Mr. SABATH. And because of that fact you are fearful that a great deal of it will be used for that purpose.

Mr. BRIGHAM. That all oleomargarine will be colored with palm oil; there is no question of it.

Mr. SABATH. You do not know that.

Mr. BRIGHAM. You have seen full page advertisements in the Saturday Evening Post and other periodicals of yellow oleomargarine. In Pennsylvania they can not sell it because the law prohibits it.

Mr. SABATH. They are using a great deal of soybean oil for coloring purposes.

Mr. BRIGHAM. I can tell you just how much was used. In 1929 there were 619,000 pounds of soybean oil used in the manufacture of oleomargarine.

Mr. SABATH. If you preclude the soybean being used for that purpose, naturally that will affect the soybean growers.

Mr. BRIGHAM. Soybean oil imparts a greenish color to the oleomargarine and I doubt if manufacturers will use much of it if they can use this palm oil, because that makes a better oleomargarine. Mr. PURNELL. This palm oil comes in free of duty, also.

Br. BRIGHAM. I understand it does.

Mr. HAUGEN. I request that Members note their presence.

The CHAIRMAN. Give their names to the stenographer as they go out. Are there any Members who are opposed to this?

Mr. HAUGEN. Not to my knowledge.

Mr. O'CONNOR. I heard Doctor Aswell say that he was opposed to it.

Mr. HAUGEN. It was reported unanimously by the committee.

The CHAIRMAN. Are there any Members of the House who want to appear in opposition to it?

STATEMENT OF HON. FRANKLIN MENGES, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA

Mr. MENGES. I have a letter from Doctor Kellogg, who has the enforcement of the Pennsylvania law in charge in the State, in which he states that they have had the rulings of the higher courts on the use of the Lovibond tintometer in Pennsylvania, and if you care to have the letter and a copy of the law I will be very glad to submit them.

The CHAIRMAN. Put the letter in the record.

Mr. MENGES. The letter referred to I will insert, as follows:

Dr. FRANKLIN MENGES,

COMMONWEALTH OF PENNSYLVANIA,
DEPARTMENT OF AGRICULTURE,
Harrisburg, February 9, 1931.

House of Representatives, Washington, D. C.

DEAR DOCTOR MENGES: Replying further to your inquiry of the 31st ultimo will say that we believe we have been very successful in enforcing our oleomargarine law for the simple reason that we have fought any interference with any person or persons attempting to stop prosecutions when ordered for unlaw. ful sales.

We have had court decisions upholding the law, especially decisions from the higher courts, upholding that phase of the law which prohibits oleomargarine to have a color in imitation of butter, even if the color were imparted in the form of a highly colored fat.

The tintometer test, however, has been an added feature helpful in controlling excess color, which requirement, it is noted, is included in the proposed amendment to the oleomargarine law.

If I can be of any further assistance, please advise.
With kind personal regards, I am, as ever,

Sincerely yours,

JAMES W. KELLOG, Director-Chief Chemist.

The CHAIRMAN. Is there any Member of the House who desires to be heard in opposition? Mr. Linthicum was present at the beginning of the hearing and desired to be heard.

SPEECH OF HON. J. CHARLES LINTHICUM, BEFORE RULES COMMITTEE OF THE HOUSE, FEBRUARY 10, 1931

THE OBJECT OF THE BILL

Mr. LINTHICUM. H. R. 16836, known as the Brigham oleomargarine law, seeks to place a tax of 10 cents a pound on all oleomargarine that exceeds 1.6° color as shown by the Lovibond tintometer. It is simply an annual installment of the perrenial oleomargarine legislation fostered by the National Dairy Union in order to maintain an artificial and unnatural price for butter.

WHAT THE BILL DOES

It eliminates all color in oleomargarine. The bill differs from all prior legislation or attempted legislation in that it establishes an arbitrary degree of color which to all appearance is white. One and six-tenths degrees of color has only the very slightest degree of color and is much lighter than the paper upon which the bill is printed.

It would tax all oleomargarine made of natural cottonseed oil, peanut oil, or beef-fat oil 10 cents per pound, the only way that such oils could be used under the law being to subject them to some sort of bleaching process.

The bill seeks to eliminate all color from oleomargarine and to do this by penalizing color 10 cents a pound under the name and guize of a tax.

IT CREATES A BUTTER MONOPOLY

Oleomargarine was invented by a French chemist seeking to win a prize for producing a product which would most nearly imitate butter. Unless it is "made in imitation or semblance of butter " under the definition of section 2 of the act it is not oleomargarine. The people who buy and use it buy it because it is like butter, just as nutritious as butter, and usually far cleaner and further, because they desire a substitute for butter without having to pay the enormous prices maintained by the Butter Trust. This bill would destroy oleomargarine by making it impossible to use the customary ingredients and the result would be, eat high-priced butter or go without. The monopoly would be complete.

THE BILL WOULD DEPRIVE PEOPLE OF MODERATE MEANS OF AN IMPORTANT ARTICLE OF FOOD

The report of the Commissioner of Internal Revenue for the year ended June 30, 1930, shows that 331,288,735 pounds of oleomargarine was withdrawn tax paid. This shows that it is an important article of food. To add 10 cents per pound to the cost of this would mean the addition of $33,000,000 to the national food bill to be paid by the poor people of the United States only to add to the profits of the Butter Trust. This, however, on condition that it could still be made as in 1930. The result of the 1.6° color joker, however, will make its manufacture almost impossible and the result would be that very little oleomargarine would be produced and the extra cost to the customer would be twice the above amount. Oleomargarine is the only competitor that butter fears.

THERE IS NO FRAUDULENT SALE OF OLEOMARGARINE

The present law requires all oleomargarine to be labeled oleomargarine, and there is no fraud. It is sold as oleomargarine and bought as oleomargarine. Surely the use of oleomargarine is no crime which should be penalized. Almost every State requires that public eating places serving oleomargarine shall notify customers of that fact. There were a great number of cases of prosecution of butter manufacturers for low butterfat content in 1930, but only one instance of a prosecution of an oleomargarine dealer. If it does. not imitate butter it is not oleomargarine.

FOREIGN OILS WILL BE USED AS LONG AS THEIR USE IS MORE ECONOMICAL THAN THE USE OF DOMESTIC OILS

The use of coconut oil in oleomargarine has become so pronounced for the reason that it is imported from the Philippines and sold several cents per pound cheaper than domestic oils. Coconut oil is a highly nutritious oil but of no greater food value than peanut and cottonseed oils. These domestic oils would be used if they could be secured at equal prices. Surely the way to remedy this is not by internal taxation.

THE DROP IN BUTTER PRICES IS BLAMED ON OLEOMARGARINE

The sponsors of the bill gave as their principal reason for its passage the fact that butter had decreased in price during the last year. Such argument needs no answer. Every food product, commodity, and article of manufacture or production has sustained a similar or greater drop.

The United States Daily for January 20, 1931, reports:

Retail food prices were 3 per cent lower on December 15 than on November 15, according to a statement issued January 19 by the Bureau of Labor Statistics of the Department of Labor. Decrease on 28 articles ranged from 30

per cent for oranges to less than 0.5 per cent for chuck roast.

THE BUTTER INDUSTRY SEEKS TO MAINTAIN ITSELF BY ARTIFICIAL MEANS AND BY TAXING COMPETING PRODUCTS

There would be as much reason for the farmer to ask for a tax on autos and tractors run by gasoline to sustain the horse, which consumes farm products; to tax silk in favor of wool and cotton; to tax bananas in favor of oranges; or coffee in favor of postum, as to try and maintain the tax proposed by this bill.

It discourages science and advancement, or, as so aptly stated by Mr. Justice Field in Powell v. Pennsylvania (127 U. S. 678) :

Who will have the temerity to say that these constitutional principles are not violated by an enactment which absolutely prohibits an important branch of industry for the sole reason that it competes with another and may reduce the price of an article of food for the human race? Measures of this kind are dangerous even to their promoters. If the argument of the respondent in support of the absolute power of the legislature to prohibit one branch of industry for the purpose of protecting another, with which it competes, can be sustained, why could not the oleomargarine manufacturers, should they obtain sufficient power to influence or control the legislative councils, prohibit the manufacture or sale of dairy products. Would argument then be found wanting to demonstrate the invalidity under the Constitution of such an act? The principle is the same in both cases. The numbers engaged upon each side of the controversy can not influence the question here. Equal rights to all are what are intended to be secured by the establishment of constitutional limits to legislative power, and impartial tribunals to enforce them.

THE REMEDY IS A COMPLETE REVISION OF THE OLEOMAGRARINE LAW

Oleomargarine should have an equal chance with other domestic products. A tax upon its manufacture of $600 each year and 10 cents per pound, a tax of $480 on the jobber and $48 on the retailer is unjust, discriminatory, confiscatory, and un-American. The Treasury officials have repeatedly sought such revision. Year after year they have given the following recommendation:

It is again recommended that the present law be amended by repealing those provisions imposing a double rate of tax on the product and special taxes on dealers, and substituting therefor a flat rate per pound and single rates of special taxes upon wholesale and retail dealers, with provision for individual or original packages of certain sizes fixed by the law, each of which shall bear the tax-paid stamps, marks, and brands so as to clearly identify the character of the product to the purchser.

Why should oleomargarine be taxed out of existence? It is pure, wholesome, and nutritious. The places of its manufacture are Government-inspected and cleanly beyond complaint. It is far cheaper than butter, yet often more nutritious. It occupies a place among