a pound of margarine, according to experts at the Ohio State University. Efficient utilization of our resources calls for the lifting of these restrictive fees and taxes. If this Congress feels true concern for the pocketbooks and health of millions of little people in America, if you really want to preserve free competitive enterprise, then here is a good place to start. Laws such as this Antimargarine Act fetter free competition, impose a hardship upon the low-income family, bolster inflation, and are no longer even of significance to the selfish monopoly minded pressure group they were originally designed to protect.

On behalf of seven and one-half million American Federation of Labor members and their families, I beseech you to give favorable consideration to the legislation before you.

The CHAIRMAN. The next witness is Donald Montgomery, of the Congress of Industrial Organizations.

STATEMENT OF DONALD MONTGOMERY, CONGRESS OF INDUSTRIAL ORGANIZATIONS, WASHINGTON, D. C.

Mr. MONTGOMERY. My name is Donald Montgomery, Washington representative of the United Automobile Workers, CIO, appearing here this morning on behalf of the CIO.

The Congress of Industrial Organizations has consistently urged the repeal of all Federal taxes on oleomargarine. Through your committee it again makes that appeal to Congress.

Housewives who cannot afford butter should not be penalized because they use a substitute for butter. These taxes on oleomargarine are intended to make it difficult for them to buy a table fat which is cheaper than butter and is better than pan grease, and they have that effect.

Housewives who cannot afford to buy butter should be permitted to buy a substitute which is colored and flavored to suit their taste.. Taxes on oleomargarine are intended to interfere with this desire of consumers to get a table fat which imitates as closely as possible the butter which they cannot afford to buy. Such regimentation of consumer choices is not attempted by Federal law on behalf of any industry except the dairy industry. It should be discontinued with respect to that industry.

Like butter, oleomargarine should become a staple in the food trade, manufactured and distributed on a close margin of profit. Oleomargarine is still more or less in a specialty class. Federal taxes on oleomargarine probably are not intended to protect a high-profit position for oleomargarine, but they have that effect. The raw materials sell for one-third the price of butterfat, but when they reach the consumer processed and packaged they sell not for one-third but for onehalf the price of butter. Removal of the nuisance taxes upon manufacturers, wholesalers, and retailers of oleomargarine will stimulate competition, open the channels of distribution, and bring its retail price down within some reasonable relation to its cost.

These reasons for repealing the oleo taxes need no argument. The arguments against repeal, however, should be examined.

It is said that Federal taxes are necessary to prevent the passing off of oleomargarine as butter. This is a question which arises with respect to many foods. Congress has given the Food and Drug Administration ample authority to prevent fraud and misrepresentation in the sale of oleomargarine. If it is truly concerned with protecting con

sumers against fraud, it need only make sure that it is providing adequate funds for enforcement of the food and drug law.

This argument against oleomargarine is in itself fraudulent when it comes from the dairy industry. Section 403 (k) of the Food, Drug, and Cosmetic Act exempts butter, cheese, and ice cream from the requirement, which applies to all other foods, that artificial coloring, artificial flavor, and chemical preservatives shall be disclosed upon the label.

It is said that restaurants may easily substitute oleomargarine for butter. Admittedly this is a problem, but it is a problem we face on all foods served in restaurants. If the way to handle it is to require the proprietor to display a sign that he serves oleomargarine, we have no objection to that proposal. Indeed we would like to see the principle thoroughly applied so that the proprietor shall also display signs saying:

"Beef livers sold here."

"We buy spring chicken in barrels."

"Canned orange juice is mixed with fresh and water is added." "We serve processed cheese."

"We sell centralizer butter."

It is said that butter has a proprietary right to the yellow color in which it is customarily sold. If so, it stands alone in all of the gallery of foods which are sold on the basis of color. Food coloring is a fullfledged industry in the United States, recognized and regulated under Federal law. The regulation is designed to protect consumers against injurious food dyes, and against being deceived by the use of artificial color, which, as noted, must be revealed on the label of all foods except butter, cheese, and ice cream. Over 3,000,000 pounds of food dyes a year are tested and certified by the Food and Drug Administration.

Artificially colored foods are commonplace. This may be foolish, but it is not illegal. For the butter industry to claim exclusive title to its particular color is to ask us to go back to a state of nature from which all the food trades, including the butter trade, departed long ago.

Finally, it is said that oleomargarine is an imitation, a substitute, against which the original and the genuine-butter-should be protected. American industry has grown great on substitutes, and our standard of living has been immeasurably enlarged and lifted by their The automobile originally was a substitute for the horse and buggy. The rubber tire was a substitute for horseshoes. The drop forge is a substitute for the blacksmith, and gasoline is our substitute for the oats in the horse's feed bag.

use.

I want to point out to you the basic fallacy of any such argument in our American economy. Our industry has grown great on substitutes, and our standard of living has been immeasurably enlarged and lifted by their use. The automobile was a substitute for the horse and buggy. You went out of town and were not sure that you were going to get back. It was not a good substitute for the horse and buggy.

Senator HAWKES. You were not even sure that you were going to get out of town.

Mr. MONTGOMERY. In that case, you were lucky you did not have far to walk back.

The CHAIRMAN. You would be sure to get out and under.

Mr. MONTGOMERY. I may point out that the harness manufacturers never asked for and never got a law requiring the automobile consumer either to paint his own car or to go without. We did not have any taxes against selling automobiles already colored.

As a result, we have got rid of the horse and buggy and have a better substitute. But that is not going to happen in the case of butter. During the recent war we were told to eat cheese as a substitute for meat. We shall be hearing that again this summer.

Fortunately our Government has not made it a practice to penalize substitutes. Right now it is vastly subsidizing a substitute for crude oil. The synthetic-rubber industry is virtually a Government subsidy. Oleomargarine is a substitute for butter. Our Government should not place penalties upon it on that account.

The mistaken policy which our Government has pursued with respect to oleomargarine should now be corrected. The dairy industry has curtailed the production of butter materially. This is because dairy farmers are finding more profitable outlets for their milk in whole-milk products. This is good for consumers, too, because the greatest nutritional value of milk is in its nonfat solids. But because of the curtailment of butter production we are not meeting consumer requirements for table fats. Oleomargarine has not made up the difference. Its production and use should be encouraged because we need it.

The Congress of Industrial Organizations has no quarrel with dairy farmers because they are putting less milk into butter. manufacture since the war. But it believes that other farmers, those who grow cotton, soybeans, and peanuts, should be given every opportunity to produce and sell the vegetable oils which they want in place of the butter fat we cannot get and cannot afford to buy. The Federal Government should repeal the discriminatory taxes which deprive these farmers of that opportunity and deprive us as consumers of a wholesale and less costly type of food.

And briefly, just one other point: We think that all of these manufacturing and wholesale and retail taxes on margarine should be repealed in the interests of developing the widest possible channels of distribution for that product. At present, butter is sold as a staple on very narrow margins, between the retailer and the farm price of butterfat. Oleomargarine is still more or less of a specialty because it is not so widely and generally used.

We believe that if the channels of trade are fully opened to this product, competition will develop which will bring the retail price of margarine closer in line with its cost. I think it has been pointed out to this committee, or certainly will be, that whereas oleomargarine sells at about half of the price of butter at retail, the raw materials which the manufacturer buys cost him only about a third of the price of butterfat, and there is that larger margin in this product which we believe and hope will be reduced when the opportunities for handling it are fully opened up by repeal of these laws.

Thank you, Mr. Chairman.

Senator HAWKES. May I ask you this question? Do you think if this bill were passed, and permission was given to color margarine, do you think the benefit of the lower costs of production will reach the

ultimate consumer as you want it to, and as I want it to, or do you think it may not?

Mr. MONTGOMERY. I am afraid under present conditions, when so many of the things we buy are sold in what is called a seller's market, that it is not realistic to look for very active competition or for getting the full benefits of competition. That I hope is a temporary condition, which is not going to continue.

I do not think that is any reason for keeping the laws that are hindering competition. I know that you do not.

I

Senator HAWKES. I think you have given a very good answer. think where you have a shortage of practically everything, the full benefits will not be obtained as quickly as they will under a competitive market where production is in excess of demand or equal to it.

Mr. MONTGOMERY. I agree, but I think there will be some increase in the competition in oleomargarine very quickly. I think small margarine manufacturers will grow up, finding outlets through these retail stores that are not now handling it at all, and that we will have the benefits of competition in the manufacture and sale of that product. Senator HAWKES. Mr. Chairman, I was not in the meeting this morning because I had to attend another meeting, but I remember we discussed this question of the restaurant and so-called fraud in the restaurant at a previous meeting. I am just wondering whether you can straighten me out.

Why cannot a restaurant today buy oleomargarine and the color and mix that up and serve it on the table?

Mr. MONTGOMERY. I think they can. I think the point was made by one of the witnesses this morning.

Senator HAWKES. I am sorry I was not here. What I have in mind is that this question of serving somebody oleomargarine instead of butter in a restaurant, as I have thought of it, becomes less of a question in my mind because I think they can do it today. Am I right or wrong?

Mr. MONTGOMERY. I believe that they can. I think there is the possibility for a great deal of substitution in restaurants; as a consumer I would like to see that prevented. I am not sure that I know how to do it. I certainly know that when I order a cup of coffee, I hope that I get coffee, and often I find that I do not. "Then go to a restaurant that really sells you coffee that has plenty of coffee in the cup," you may say. This problem that you are raising is not peculiar to oleomargarine at all. There are all sorts of substitutions possible in restaurants, and I dare say in a good many restaurants they are practiced.

I wish we would get away from that. That is not the problem before this committee, because it is not peculiar to oleomargarine and butter.

Senator HAWKES. If a restaurant put on the bill of fare "Bread and butter, 10 cents," and then served oleomargarine, they would be violating the law, would they not?

Mr. MONTGOMERY. I would think so. Are they violating the law if they put on "Fresh vegetable soup," and sell you canned vegetable soup?

Senator HAWKES. I think the question is, How fresh? I think it might come in there. What I am getting to is this: What are they going to do when oleo, if this law is passed and oleo has more of a free

market than it has had-what distinction-one question was brought up this morning as to how they would overcome that. They would say bread and oleo, or what, on their bill of fare?

The CHAIRMAN. Senator Fulbright has suggested an amendment that would require them to publish it; to put a sign up.

Senator HAWKES. Put a sign up in the restaurant?

The CHAIRMAN. That is required in many States.

Senator HAWKES. Thank you very much.

The CHAIRMAN. Thank you.

Mr. MONTGOMERY. Thank you.

The CHAIRMAN. The next witness is Tyre Taylor of the National Association of Retail Grocers of the United States.

STATEMENT OF TYRE TAYLOR, NATIONAL ASSOCIATION OF RETAIL GROCERS OF THE UNITED STATES, WASHINGTON, D. C.

Mr. TAYLOR. Mr. Chairman and gentlemen of the committee, my name is Tyre Taylor. My address is 712 Jackson Place, here in Washington. I appear here on behalf of and as general counsel to the National Association of Retail Grocers, the headquarters of which are at 360 North Michigan Avenue, Chicago.

The National Association of Retail Grocers, gentlemen, represents and speaks for the independent retail grocers of the United States. Its opposition to these Federal taxes and restrictions on margarine is of very long standing. As a matter of fact, for more than 40 years, in recurring national conventions, we have been passing strong resolutions against all of these restrictions.

At this point, if I may, Mr. Chairman, I would like to introduce for the record a copy of the last resolution which was passed by our national convention in San Francisco last June.

The CHAIRMAN. It may appear in the record at this point. (The resolution is as follows:)

Whereas the special Federal tax on retail dealers in oleomargarine cannot be justified as necessary to protect public health since oleomargarine is a pure food product, subject to the same vigilance of the Federal Food and Drug Administration as other foods, and it cannot be justified as a revenue measure since only a small amount of money is collected; and

Whereas this tax is unwarranted and serves no useful or legitimate purpose of the Federal Government; and

Whereas it is an unjust discrimination against the lower income groups and tends to keep prices up at a time when a downward adjustment of prices is being called for by the President and his administration; and

Whereas the National Association of Retail Grocers has a record of long and continued opposition to this tax on retail dealers: Therefore be it

Resolved, That the association renew and redouble its efforts to have this unjust tax repealed and that to this end the national association invite the active assistance and cooperation of all affiliated State and local associations.

Mr. TAYLOR. Of course, in the first place, gentlemen, these taxes are an unmitigated nuisance from the standpoint of the consumer. They impose on the housewife the time-consuming mess of mixing in the coloring. How many woman- and man-hours have been wasted in performing this exasperating chore over the past 62 years will never be known, but the total if it could be determined would be fantastic. But, more important, these taxes penalize the distribution and use of a wholesome, economical product with a high nutritive value. That