? Placard above box containing oleo stated: Colored oleo-Looks and tastes like real butter.

3 Colored oleo not available now-sold last November in Memphis for 63 cents. Sold last October in Knoxville for 64 cents. 4 No colored oleo found on sale.

Mr. BRANDT. I have given you about the general consensus of my opinion on this subject. I will be glad to answer any questions you may want to answer.

Generally that is my story on the product. The statement to the effect that the oleomargarine people have to bleach their product before they can manufacture it to make it white is unfounded because all oleomargarine manufacturers have to hydrogenate cottonseed and soybean oil before they can get the foundation stock to manufacture oleomargarine out of it, and in turn they have to add the color. Otherwise they would have a dirty white or a green tinge to it, and it is part of the process of manufacturing to bleach it. We could not bleach, we could not renovate, we could not clarify, we could not clean up a dairy product, and then manufacture it the way the oleomargarine people do and get by the Food and Drug Administration for the definition for butter. We cannot use a preservative and they do use a preservative. That is generally my statement on the subject. (The prepared statement of Mr. Brandt follows:)

STATEMENT OF JOHN BRANDT, LITCHFIELD, MINN., PRESIDENT, NATIONAL COOPERATIVE MILK PRODUCERS FEDERATION; PRESIDENT, LAND O' LAKES CREAMERIES, INC., BEFORE THE SENATE FINANCE COMMITTEE ON H. R. 2245, a BILL TO REPEAL THE TAX ON OLEOMARGARINE

Mr. Chairman and gentlemen, I am appearing in opposition to the legislation now under consideration by the committee, H. R. 2245. This bill, as it came from the House, cuts the heart out of the Federal control of oleomargarine. Federal enforcement of oleomargarine regulations is based on the exercise of the taxation power of the Congress. The bill leaves the regulations and penalties to benefit books but eliminates the taxes. The regulations are the basis for collecting the taxes. If the taxes are removed, the regulations go by the boards.

The bill is represented by its proponents as a piece of legislation to benefit consumers. Actually it is a bill to confer a trade benefit to a butter substitute. It legalizes the manufacture and sale of a product that is as complete an imitation of butter as is humanly possible, and it denies to butter any effective protection against this almost identical imitation. To give such legal sanction to an imitation with no protection to the genuine product is an unprecedented reversal of legislative policy and of the ordinary rules of fair play.

NO OTHER PARALLEL TO BUTTER-OLEO RELATIONSHIP

In the food industry there are a number of examples of substitutes and imitations. In no other instance, however, does one food product seek to completely imitate another product in all of its physical attributes and in its packaging and its advertising. In no other instance does one food product seek to trade on the good will and consumer preference of another product by such deliberate and misleading propaganda.

There is likewise no parallel opportunity in the food industry for the fraud and deception which is possible in the substitution of colored oleo for butter. The incentive for such fraud is tremendous-both because of the large volume of the products involved, and because of the wide spread in the prices between oleomargarine and butter. If H. R. 2245 becomes a law and butter is robbed of its last protection and its last distinguishing characteristic, the opportunities and incentives to fraud will be multiplied by the thousands.

Surely it is fundamental in American business law and in our sense of fair business practices that one industry should not be permitted to unfairly imitate the product of another. A corporation cannot take a name so similar to that of an established corporation as to permit it to capture the other's good will. Our trade-mark laws are carefully enforced to prevent one industry from unfairly imitating another established product.

It is fundamental in our business code that an industry which has developed a product and built up a good will and demand for its product should be protected against unfair imitation by another.

They are not discriminatory. industry is the right to some Congress is not being asked

Where, then, is the wrong in the present laws? The only trade benefit they extend to the butter protection against the unfair imitation of butter. to correct a law which is unfair-it is being asked to create an unfairness. It is being asked to legalize the unfair imitation by the oleomargarine industry of another's product. It is being asked to legalize a raid by one industry upon the established good will and on the markets of a competing industry.

CAMPAIGN IS BACKED BY ADVERTISING

The plot and the scheme to rob butter of its birthright and to give oleomargarine free license to masquerade as the genuine product is supported by an advertising and propaganda campaign running into millions of dollars. This campaign has been successful in stampeding the public and the press with catch phrases and arguments that have no relation to the real issue involved. It is now being used in an attempt to stampede and rush the Congress into passing this legislation without critically examining it to determine its real purpose. At this point I ask permission to include in the record the story of this campaign as reported in the March 5, 1948, issue of Tide magazine, a trade publication of the advertising and public relations profession.

The success of this oleo campaign is a matter that invites serious thought. There should not be permitted to exist in this country a situation under which far-reaching trade legislation can be secured simply by building up public pressure through the expenditure of huge sums for advertising and propaganda. Any condition under which legislation favorable to a particular industry can be secured by the expenditure of large sums of money is antagonistic to the general welfare of the Nation.

We urge most earnestly that you examine this legislation carefully and look at the real purpose behind it. We ask that you determine your position with respect to its passage strictly upon the merits of the issue, uninfluenced by the propaganda campaign that is being used to create pressure in its favor.

NO BENEFITS TO THE CONSUMERS

Despite the claims of the oleo propaganda, the enactment of the proposed legislation will confer no benefit to the consumers. Today the housewife can buy uncolored oleomargarine-a comparatively inexpensive table spread. If she wishes to color it yellow, modern packaging permits her to do so easily, quickly and without waste. The procedure takes only 2 minutes of her time according to the oleomargarine manufacturers' advertisements-2 minutes once or twice a week for the average family.

But if the present legislation is enacted she will lose her present low-price table spread because uncolored oleo will disappear from the markets. No one can doubt this because the National Association of Margarine Manufacturers has

announced that its reason for the repeal law is to get yellow oleomargarine. Their advertised slogan is "Fight for the right to yellow margarine."

When and if the "right to yellow margarine" is won, the consumers will pay for the victory through the nose. The victory, in fact, will not be to consumers. The oleo industry has put its chips on the table in millions of dollars of advertising and propaganda. It would like to see Congress cover that bet by passing the repeal law-leaving the consumers to pay the bill and add a profit to boot. We have seen the same sort of thing happen before. When vegetable shortenings first appeared they were sold for less than lard. Once the sales were built up for vegetable shortenings the prices were stepped up. Today they are for higher than those of lard.

In the case of colored oleo, we don't even have to project ourselves into the future. Present evidence shows what is happening and what will happen. Oleomargarine colored to imitate butter is advertised and sold in many cities. The cost of the colored product should reflect the higher tax on colored oleomargarine plus a reasonable mark-up to permit recovery of the higher license fees. However, the difference in the price actually charged consumers ranges from 11 cents as high as 27 cents. The tax on colored oleo is 10 cents. Who gets the extra 1 to 17 cents? For example, recent purchases in the State of Indiana showed price differentials in Evansville of 12 cents per pound, in South Bend of 16 cents, and in Terre Haute of 27 cents. Purchases in Atlanta, Ga., showed price differentials within the same city of 11 cents, 20 cents, and 22 cents. White oleomargarine purchased in Terre Haute, Ind., cost 32 cents, the colored 59 cents; a mark-up lacking only a few cents of being double. Such marked differences in the premium charged consumers for the colored product can only mean one thing that colored oleomargarine is being sold and will be sold for all the traffic will bear and not at prices calculated to furnish a cheap food to the consumer plus a reasonable mark-up to recover the higher taxes and licenses.

The oleomargarine manufacturers profess great concern for the welfare of the consumer and the need for providing the poor man with a cheap spread for his bread. They talk about "spite taxes"-a 10-cent tax on colored oleo that no one has to pay, and a one-quarter-cent tax on uncolored oleo. The one-quartercent tax is paid and absorbed by the manufacturer, as well it might be.

If the purpose of the proposed legiclation is, as claimed, to benefit the consumers, and handlers of oleomargarine, that purpose could be accomplished by repealing the tax and license fees on uncolored oleomargarine, while retaining the tax on oleomargarine colored to imitate another product. But if the real purpose of the legislation is to enable the oleomargarine manufacturers to imitate unfairly another's product, the proponents of the bill will vigorously oppose such an amendment.

NO BENEFITS TO CONSUMERS; DISASTER TO AGRICULTURE

The proposed legislation would confer no benefits to the consumer. It would increase the cost of living by shrinking the supplies of uncolored oleo. Most serious of all, it would upset our agricultural economy and substantially alter the diet of the American people.

Our agricultural economy and our national diet is based to a large extent upon an abundance of livestock. We are large consumers of meat products and we depend less than most other peoples upon cereals and root crops for our nutritional needs. In this we are fortunate because we are a healthier Nation than those which must largely subsist on grains and rice and field crops.

Moreover, throughout most of our Nation, we have learned the lesson of soil conservation. We know that certain crops, such as soybeans, are seriously soil depleting because of the nutrients they consume and because they leave the earth subject to erosion and wind-blowing. We also know that we must restore to the soil what we take from it. Livestock furnish valuable supplements for the soil and make possible the practice of good husbandry without soil depletion. Where field crops are not supplemented by livestock and dairy production, we have impoverished soil, erosion, dust storms, and poor farming conditions.

Let's figure the cost. The Federal Government alone has spent over 4 billion dollars for agricultural conservation payments in the past 13 years. The Government did it because the soil belongs to our posterity. Everybody should share in the costs of soil-maintenance practices that exceed the benefits to immediate holders. But we ought to get our soil conserved as cheaply as possible. It is poor business to let our fields run down. It has been considered good business to slow up erosion by spending public money for erosion controls. It

ought to be the best idea to encourage the kind of farming that, while it feeds us, not only controls erosion but enriches and builds the soil-and does all this without the expense of many erosion-control practices.

Down which road are we to turn? Down the road of a field-crop agriculture, the road that has already denuded millions of acres of our own best soil? Or down the road of a livestock agriculture, the green fields preserved and enriched for ourselves, our children, and their childen's children.

The legislation which you are considering today would hurt butter. By the same token it would hurt the entire dairy industry. It would mean fewer cows, less livestock, a less-abundant agriculture, poorer farming conditions.

I am aware of the stock reply to this assertion. They say, "If there has to be less butter, let that milk go into fluid milk or cheese or evaporated milk. If there has to be an outlet for the surplus milk in the flush season, let it go into some other product than butter."

Unforunately, it does not and will not work out that way.

The oleo people say dairymen have failed to supply enough butter. They say that is proof that restrictions ought to be taken off of yellow oleo so it can take butter's place. But such a conclusion rests on a fantastic interpretation of the facts. Certainly the production of butter has declined. Certainly dairy herds have been liquidated amazingly in the areas depending most on butter for a market. But dairymen have been victims, first of wartime governmental policies and, second, of the very stability of their own industry.

I have testified many times before, and others have told the same story, how wartime price policies crippled dairying and butter production. They started off by trying to squeeze farm-separated-cream producers into delivering whole milk. But like a tube of toothpaste squeezed in the middle, and running out at both ends, the Government's pressure made a good many dairymen run out of the dairy business entirely instead of into another market.

The OPA put ceilings on and held them in spite of rising costs. The dairyman was hurt again. Instead of raising the ceilings to keep him in business, the Government handed him a substitute-subsidies. The way they set up the subsidy in the first place put the squeeze on the farm-separated-cream producer all the harder. He just kept on going out of business, although the whole milk folks hung on a little longer.

Thus in seven States that account for 50 percent of total creamery butter production-Minnesota, Iowa, North and South Dakota, Nebraska, Kansas, and Oklahoma-dairy cattle numbers decreased by 17 percent between January 1, 1942, and January 1, 1948. In the rest of the country the dairy cows about held their own in numbers.

But 17 percent of the cows went out of business in these seven States. Their milk didn't go into fluid milk or any other product. Their owners simply liquidated them because there was no other satisfactory or profitable outlet available for their milk. That is what we are going to be up against in increasing degree if the oleo repeal bill becomes a law.

Besides the way the farmer was squeezed, there was the lack of ceilings on cream that took a lot of creameries out of the butter business. When the creameries switched over to whole milk instead of farm-separated cream they found out they could sell the fat as cream for ice cream and fluid cream at higher prices. By the hundreds they quit running their churns. Butter was made in 4,692 plants in 1940, and in only 3,540 plants in 1946.

That's the story of what Government regulation did to butter.

There was Government regulation of oleo, too. They regulated the oleo business by giving it 10 percent more oil in 1943-44 than in 1941, while other food products had to take a smaller percentage of oil. Oleo got 10 to 20 percent more oil in 1945 than in 1944, while other food uses continued to be limited to 10 or 12 percent less than in 1941.

After we got rid of Government ceilings on prices, the dairy industry got into trouble out of its own stability. Dairy prices go up and down in a smaller range than do other prices. Dairy prices are now 250 percent higher than at the bottom of the depression. On the other hand, hogs are up 515 percent, cattle 485 percent, and wheat 500 percent. With cattle up so much, and dairy prices so little, there was reason and profit in getting out of the milk business.

AFTER THE MEAT-EATING SPREE-WHAT?

Those other things went up so much, because we are trying to feed the world, and because most Americans have so much more money in their pockets than ever before. When they have money they want meat. They can't have all they want

The aver

of meat and milk both right now, and farmers are giving them meat. Last year it was worse even than now. Last April a pound of butterfat was only worth 2.9 pounds of hogs. This April butterfat was up to 4.1 pounds of hogs. age, though (1927-46), is 1 pound of butterfat to 4.3 pounds of hogs. When our meat-eating spree levels off there will again be as much butter as there used to be, or more. If you take away the butter market now, there will be no come-back. The price of butter will go lower. Instead of today's downward trend in cow numbers being reversed, it will go even further.

The fact that all these things have happened to dairying in the last 6 or 8 years is an urgent reason for not loading on the last straw, which would be unregulated competition-actually an invitation to fraudulent substitution-between yellow colored oleomargarine and butter.

Now, there is another side of this question that ought to be considered. When you hurt dairying in favor of the oleo manufacturers the harm comes to 22 million producers in favor of 26 manufacturers. Of course, the oleo people will pretend that the cottonseed and soybean crops will benefit. Well, let's see. Last year the American consumer bought 1,300,000,000 pounds of creamery butter. The average retail price was 78.2 cents per pound, of which the dairy farmer got 76 percent, or $770,000,000. Suppose now that all that butter had been oleomargarine, all made out of domestic oils. The price of oleo last year was 40.9 cents per pound. The farmer got 31 percent of that, or he would have gotten only $165,000,000 if oleo had replaced butter. Actually, he wouldn't have gotten the full $165,000,000. Oleo would have replaced some shortening, and there would have been an increased percentage of foreign oils in the additional oleo.

Folks, American prosperity depends on a good income on farms. If you do something like this that cuts farm income by $600,000,000 or more, how do you expect to keep on selling washing machines, radios, dresses, and so on? The factory wheels will come to a standstill, there'll be pink slips in the pay envelopes, and in the end that cheap oleo will cost a pretty penny.

We believe that the principles of the present Federal oleomargarine laws should be retained because:

1. They deprive no one of oleomargarine. One retail store in every two now sells oleomargarine and the sales of the industry have more than doubled since 1941. Housewives who wish to color it may easily and quickly do so-and at a saving which on an hourly basis would amount to $3 an hour.

2. No means except the taxing power of the Federal Government can effectively fight fraud in the substitution of yellow oleomargarine for butter. The pure food and drug laws are inoperative and ineffective when a fraud is committed within the borders of a State.

3. Repeal of the laws would seriously damage an important segment of American agriculture and threaten the Nation's dietary standards. To have enough milk to meet fluid demands in the slack season requires more than enough milk in the flush season. Some of this excess must go into butter. Without a butter outlet farmers would cut their herds toward the point where there would be insufficient fluid milk in the slack season. Cattle numbers would continue to decline. In the final analysis the question is whether America is to continue its meat and milk products diet, or revert largely to a grain and field-crop subsistence. 4. Cotton growers and soybean farmers would not get a penny more for their cottonseed and soybean oils through the repeal of oleo legislation. They receive the same price for thir oils regardless of their utilization, and the complete loss of the oleomargarine market would not be felt. The dairy cow, moreover is a better customer for cottonseed and soybean meal than the oleo manufacturer is for the oils.

5. Repeal of the laws would be costly to consumers. Yellow oleo, without the competition of uncolored oleo, would sell at clser t the price f butter-as it is selling in many cities today. At the same time the price spread between butter and oleo could be kept wide enough to accomplish the primary purpose of the oleo manufacturers-to take over a larger and larger share of the table-spread

market.

6. Óleomargarine already has a disproportionate competitive advantage over butter. It is a low-cost product which is permitted to be fortified with vitamins, flavored with butter flavor, and preserved with bensoate of soda. None of these ingredients may be added to butter.

7. Other imitations of good butter are taxed; and oleo should not be an exception. Adulterated butter-which, like oleo, is an imitation of good butter-carries the same per pound tax and the same occupational taxes as does colored oleo. Renovated or process butter carries the same per pound tax as uncolored oleo.