Mr. LINTHICUM. Now, the packers are for this bill for this reason, that the packers, Armour, Swift, and Wilson control the animal fats. That is, you take the particularly Guernsey cattle, in the old ones, there is a yellow fat from which natural coloring is made. They take that yellow fat and mix it with the oleo oil and they produce colored fats, natural colored, and natural fat coloring does not come under the oleomargarine law; only artificial coloring comes under it. So that, if you pass this bill, it will include all the products at 10 cents per pound made from this nut compound, but will not include the 45.000,000 pounds from the natural colored products of the packers. So that the only thing you do is to tax these fellows 10 cents per pound, and to leave the fellow who produces his from natural coloring through animal fats pay one-quarter of a cent per pound. Mr. ADKINS. You are not fooling me with your answer. Mr. LINTHICUM. I am not trying to fool anybody.

Mr. ADKINS. Suppose it would be to the commercial advantage of the packers to change the color, the natural coloring of oleomargarine, and they added coloring to the oleomargarine to change the color of the animal fat, would not they be in the 10 cent tax proposition?

Mr. LINTHICUM. If they did that, but they do not. The packers do not use any artificial coloring.

Mr. ADKINS He is now using a natural fat?

Mr. LINTHICUM. He is using a natural fat which he absolutely controls.

Mr. ADKINS. Why do they put that coloring in there?

Mr. LINTHICUM. Because these packers can not get the natural coloring and save 934 cents tax per pound.

Mr. ADKINS. What advantage is there to the nutriment of that proposition to have coloring in there?

Mr. LINTHICUM. It is not an advantage; it is the psychological effect, we might say. It looks so much better. The dairymen do the same when butter is white.

Mr. ADKINS. It is to fool the public?

Mr. LINTHICUM. Do not the other men fool the public, if you choose to style it that way.

Mr. ADKINS. Answer my question-is not that the purpose of it? Mr. LINTHICUM. What I am trying to do is this, if you are going to amend the law, I am not opposed to amending the law; but I say, while amending it, make it include everybody.

Mr. ADKINS. I understand, but you did not answer the question. Now I have had something to do with the pure food law-I am not a smart lawyer like you are, but if they have that coloring in there, it is for no other purpose than to fool the public; you know that. Mr. LINTHICUM. I would not be surprised.

Mr. ADKINS. You hate to say so.

Mr. LINTHICUM. So has the packer that coloring in there to fool the public, and they pay one quarter of a cent a pound and these people pay 10 cents. I only want a fair deal in this.

Mr. ADKINS. I want a fair proposition, and I want a fair answer to the question I asked.

Mr. JONES. Mr. Chairman, I would like to get back to the witness here, if we can.

Mr. YEATMAN. I would like to read these advertisements in the record. Here is an advertisement that appeared in the Coffeyville, Kans. Daily Journal, October 21, 1927, which says:

Nu-ine. Better than butter-1 pound free with each pound purchased. Pound, 29 cents.

That is one.

Here is an advertisement in the Richmond NewsLeader, June 19, 1925:

Nu-ine. The new nut butter has golden yellow color. Per pound, 35 cents.

Now here is an advertisement appearing in the Daily Oklahoman, out in Oklahoma, January 21, 1928. It is a list of 102 retail stores where Nu-ine can be purchased, and here is what it says about it:

First carload ever shipped to this city. Nu-ine-a new product.

It was only a few months ago that the Harris Meat & Produce Co. introduced this new product, that is ideal to use on bread, to the Oklahoma City housewives through the grocery stores. To-day it is recognized in many of the homes; its golden color, desirable taste, food value, and low price winning friends everywhere.

Here is a handbill, I do not know whose it is, but this advertisement

says:

Nu-ine, an oleo product colored, special, 29 cents.

Mr. JONES. None of those has said it is butter.

Mr. YEATMAN. One says "the new butter," I believe.
Mr. JONES. I believe one said "better than butter."

Mr. ASWELL. What harm do these advertisements do; what do they have to do with this proposed legislation?

Mr. YEATMAN. They go to show you the product is being used as a butter substitute and sold as a butter substitute and, if one butter substitute pays a tax, then the other butter substitute ought to pay the tax, shouldn't it?

Mr. ASWELL. There is no evidence to prove it is sold as a substitute. Mr. JONES. If one pays a quarter of a cent tax the other ought not to pay a 10-cent tax.

Mr. YEATMAN. I am just here trying to give you the information that the Internal Revenue Bureau has on this subject.

Mr. JONES. Go ahead.

Mr. YEATMAN. Now here is an advertisement appearing

Mr. ADKINS. Let me interrupt you right there: These complaints come to you, do they not, and they ask the department to act on them; you do not solicit them, do you?"

Mr. YEATMAN. No, sir; they were voluntarily submitted.

Mr. JONES. I think that advertisement that says 66 new butter" is objectionable.

Mr. YEATMAN. This says "A spread for bread," you understand. Of course, butter is used only as a spread for bread.

Mr. JONES. Sometimes they use various things as a spread for bread.

Mr. YEATMAN. Did you ever hear of anything except butter and butter substitutes being commonly referred to as a spread for bread? Mr. ASWELL. Yes; they use jam.

Mr. JONES. And what about gravy? But there is only one of those advertisements that is advertising it as butter.

Mr. YEATMAN. Here is an ad: "Nu-ine, a spread for bread, already colored." That is from Kansas.

Mr. KETCHAM. May I call attention to this statement. Here is a piece of real art:

Elgin butter, pound 47 cents.

Wedgwood butter, pound 54 cents.

Nu-ine, already colored, pound 25 cents.

Mr. ASWELL. It states it is an imitation.

Mr. KETCHAM. I am not saying anything about it; I am showing the necessity of coloring is shown by the arrangement—

Elgin butter, pound 47 cents.

Wedgwood butter, pound 54 cents.

Nu-ine, already colored, pound 25 cents.

Mr. JONES. Just as a lot of other products are advertised.

Mr. KETCHAM. These are all under this cut of a carton of butter. Mr. YEATMAN. Here is another advertisement appearing in the Kansas City Star:

Nu-ine (use in place of butter) pound 30 cents.

Here is another one, an advertisement in a handbill of William Holzrichter, out in Kansas some place.

Nu-ine butter, pound 35 cents.

Mr. MURDOCK. Whose advertisement is that?

Mr. YEATMAN. William Holzrichter.

Mr. ASWELL. Who is he?

Mr. YEATMAN. He is apparently a retail dealer, William

Holzrichter.

Mr. ASWELL. Where?

Mr. YEATMAN. In Kansas. That is one that was sent in to us. The CHAIRMAN. What does he state?

Mr. YEATMAN. "Nu-ine butter, pound 35 cents."

Mr. ADKINS. Is there any tax on peanut butter?

Mr. YEATMAN. No, sir.

Mr. ADKINS. Nobody is fooled in buying peanut butter in the idea they are buying cow butter?

Mr. YEATMAN. No, sir.

Mr. ASWELL. But in these advertisements not one of them said anything about cow butter.

Mr. O'DAY. I want to say he presented quite a number of advertisements there, gentlemen, and he is a member of the law enforcement divis on of the United States Internal Revenue Department. Mr. ASWELL. And why has not he acted?

Mr. O'DAY. Why has not he arrested or made an attempt to arrest somebody for fraud, if these people sold this stuff for butter, or as a substitute for butter?

Mr. ASWELL. That is a good question.

Mr. O'DAY. Why does not he cooperate with the different branches of the Government, the Federal Trade Commission, the pure food and drug act branch of the Department of Agriculture, and why don't he cooperate with the different State governments who handle fraud in its different phases? He has not stated that anybody has been arrested for it yet.

Mr. ADKINS. Do you think the Government is neglecting its duty along this line?

Mr. O'DAY. Apparently, and you should insist if there is a fraud being committed those gentlemen there should insist upon arresting the people for fraud.

Mr. ADKINS. Probably we had better look into the question.
Mr. JONES. Let him answer the question.

Mr. YEATMAN. I will answer the question in this way, that the Internal Revenue Bureau has no authority to arrest anybody for fraud in cases of this kind.

Mr. ADKINS. You can squash that business.

Mr. YEATMAN. No, sir.

Mr. JONES. You can report it to the Attorney General.

Mr. YEATMAN. The Attorney General would have no authority in tracting down the Oklahoman selling Nu-ine.

Mr. JONES. If they violated a national law?

Mr. YEATMAN. They do not violate the oleomargarine act when they do that.

Mr. ASWELL. Are they guilty of fraud or not?

Mr. YEATMAN. Not under our law at the present time, and there is no other national law that I know of that would touch the retail dealer in oleomargarine inside the State, selling this product in place of butter. That is not a Federal question.

Mr. O'DAY. Is it not a Federal question under the Federal pure food and drugs law, if there is any species of fraud in selling food? Mr. YEATMAN. The food and drug act deals purely with interstate commerce only.

Mr. O'DAY. Does not this product go into interstate commerce? You know it does.

Mr. YEATMAN. Is that advertisement in interstate commerce?

Mr. O'DAY. It does not make any difference; the product goes into interstate commerce and if the Federal food and drug officials at Washington know that product is sold fraudulently, you know as well as I do they have an opportunity to make a case.

Mr. ADKINS. Are you insisting he is misrepresenting to the committee in his answers?

Mr. O'DAY. He is not fair in his answer. I say he is not fair in his answer, because he knows the Department of Justice can handle fraud in any matter of interstate commerce; I do not care whether it is food or not.

Mr. ADKINS. He is misrepresenting the Government's authority here to this committee.

Mr. JONES. He did not say that.

Mr. O'DAY. I do not say that at all.

Mr. JONES. He is questioning the accuracy of his reply.

Mr. O'DAY. I simply say this. Congressman, that he knows if there is fraud committed in the sale of a product under the oleomargarine act, that the department, under section 147 of the internal revenue laws-it is the duty of the collector of internal revenue and the Commissioner of Internal Revenue to take samples of the product, present them for analysis and inspection before the Commissioner of Internal Revenue and determine if the product is oleomargarine which they suspect to be oleomargarine; and, if they decide, after

inspection and analysis, that the product is oleomargarine, is it not subject to taxation under that act?

Mr. YEATMAN. Yes, sir.

Mr. O'DAY. All right; there is my answer.

Mr. ASWELL. Is there any of this product manufactured in Kansas; answer that question?

Mr. O'DAY. Yes; I think there is, at Salina, Kans.

Mr. ASWELL. Is any of it manufactured in Virginia?
Mr. O'DAY. No.

Mr. ASWELL. Then how did it get down there, if it does not go in interstate commerce?

Mr. O'DAY. It does go in interstate commerce; I ship in interstate commerce when I ship to Virginia. But he has the answer to that question-the department can enforce the law if that product is sold fradulently.

Mr. YEATMAN. I will answer that question just this way, that the Supreme Court of the District of Columbia has issued a permanent injunction enjoining the Secretary of the Treasury, the Commissioner of Internal Revenue and certain of his subordinates from applying the provisions of Treasury Decision No. 4006 to this product known as Nu-ine, and that is the reason our hands are tied in respect to that product.

Mr. JONES. They do not enjoin you from taking it up if they try to palm it off as butter, do they?

Mr. YEATMAN. Yes.

Mr. JONES. Where it is advertised as butter?

Mr. YEATMAN. We first have to have that product taxable under our act, you see.

Mr. MENGES. Who asked for that injunction?

Mr. YEATMAN. It was asked for by the Baltimore Butterine Co. Mr. LANTHICUM. May I ask a couple of questions?

The CHAIRMAN. Without objection.

Mr. LINTHICUM. Suppose we took this product before it was colored, and we used some of the coloring produced from this fat taken from these old animals, and colored it, would it come under the provisions of this act which you propose?

Mr. YEATMAN. Yes, sir.

Mr. LINTHICUM. In what way?

Mr YEATMAN. It would be subject to all the Government regulations applying to oleomargarine.

Mr. LINTHICUM. It would not use any artificial coloring.

Mr. YEATMAN. That would not matter; it would have to have the word oleomargarine printed on both of those panels.

Mr. LINTHICUM. It has all that.

Mr. YEATMAN. It is an oleomargarine product, is it not?

Mr. LINTHICUM. No; it has the brand name on it.

Mr. YEATMAN. The point is, it is not branded oleomargarine. It would pay a tax of a quarter of a cent a pound.

Mr. LINTHICUM. A quarter of a cent, yes; I know that.

Mr. YEATMAN. It would have to be put up in a Government inspected factory; it would have to be sold by persons who have paid a special tax as wholesale dealers and retail dealers and be regulated down to the consumer. Then we would have jurisdiction.

Mr. LINTHICUM. It would pay a tax of a quarter of a cent a pound?