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and he not only voted for this thing, but has spoken for the removal of this unfair and discriminatory tax.

Senator BUTLER. Butter is only one byproduct of milk.

Mr. RIVERS. Just one, that is right, sir, and I think the day will come when there will be no money in it.

The CHAIRMAN. Thank you.

Mr. RIVERS. Thank you.

The CHAIRMAN. Senator J. William Fulbright, of Arkansas, is the next witness.

STATEMENT OF HON. J. WILLIAM FULBRIGHT, A UNITED STATES SENATOR FROM THE STATE OF ARKANSAS

Senator FULBRIGHT. I have some figures in response I believe to the question of the Senator from Kentucky that last year butter was approximately 1,400,000,000 pounds production; margarine, 725,000,000 pounds.

Mr. Chairman, I testified before this committee some time ago, and I have a statement that I believe is a rather thorough covering of this subject from various angles which I would like to present for the record, and not read. It is quite long.

The CHAIRMAN. We will put that in the record.

Senator FULBRIGHT. I will give my attention this morning to one particular aspect of the problem relating to the question of the possible fraudulent sale of margarine, if that is agreeable to the chairman. The CHAIRMAN. Proceed.

Senator FULBRIGHT. Before I proceed, just as a matter of interest, regarding that further question, there is one little paragraph I would like to read.

The CHAIRMAN. Is this the statement which you wish incorporated in the record, or another statement?

Senator FULBRIGHT. This one relating to frauds is one I would like to read.

The CHAIRMAN. You will supply the large statement to the reporter. Senator FULBRIGHT. I will do that. It is practically the same as the one I gave before the committee before.

(The statement referred to is as follows:)

STATEMENT OF SENATOR J. W. FULBRIGHT, BEFORE THE SENATE FINANCE COMMITTEE, MAY 17, 1948

For 62 years the Federal antimargarine laws have been on the statute books. I do not think it will serve any useful purpose to debate whether they were justified at the time they were first passed in 1886. The argument used was that some such laws were needed to safeguard the public from fraud and to safeguard the health of the public. At that time, margarine was not the nutritious product that it has since become. Even so, the Congress should not have used the taxing power to hit at margarine and could have dealt with the situation more directly by pure-food laws. But the arguments used in 1886, or in 1902 and 1931 when the Federal margarine laws were amended and strengthened, no longer apply. They are relics of a day when there were few or no pure-food laws, when both margarine and butter were frequently manufactured under unsanitary conditions, and when trade practices were not so enlightened or so subject to public regulation and perusal as they are today.

It is not my purpose to review the whole long history of this controversy, but it will be helpful, I think, if we consider briefly exactly what margarine is, the arguments used to justify its drastic regulation-and it is more drastically regulated than any other food product, and the reasons that these arguments have lost today whatever validity they may once have had.

WHAT IS MARGARINE?

Margarine has been made in Europe since the days of Napoleon III, and in the United States since 1874.

The original product was made largely of beef fat which technically is known as oleo oil, hence the name “oleomargarine."

The name oleomargarine, indicating the use of oleo oil, is today a misnomer and its use should be discontinued. Ninety-eight percent of the fats and oils used in margarine today are vegetable, but under the archaic law of 1886 the product must still be labeled officially as oleomargarine. The more accurate name is margarine. It is made almost entirely today of domestic vegetable oils-largely soybean and cottonseed, with small amounts of peanut and corn oil being used. An official definition and standard of identity was adopted by the United States Food and Drug Administration in 1941 under the Federal Food, Drug and Cosmetic Act of 1938. Under it, margarine has a minimum fat content of 80 percent; the actual average figure for 1947 is slightly more. The standard requires fortified margarine to contain a minimum of 9,000 U. S. P. units of vitamin A per pound. But 99 percent of all margarine now is fortified with 15,000 units of vitamin, the content always being shown on the label. Margarine fortification is endorsed by the American Medical Association and leading nutritionists. The only basic difference between margarine and butter is that margarine is vegetable fat, butter an animal fat product. They are equally nutritious. Each offers about 3,300 calories per pound. The amount of vitamin A in butter varies according to seasonal and other factors; while in margarine it is maximum and uniform the year round. Both products are equally digestible.

Report after report by medical associations and nutritional scientists declare margarine to be a nutritious, high-quality food.

For example, the report on margarine by the New York Academy of Medicine States:

"From a nutritional viewpoint, when it is fortified with vitamin A in the required amount, oleomargarine is the equal of butter, containing the same amounts of protein, fat, carbohydrates, and calories per unit of weight. Moreover, since the minimum vitamin A content of enriched oleomargarine is fixed, and the amount of this vitamin in butter may range from 500 to 20,000 units per pound, enriched oleomargarine is a more dependable source of vitamin A than is butter. Since it is a cheaper product than butter, fortified oleomargarine constitutes a good vehicle for the distribution of vitamin A and fats to low-income groups and should therefore be made available to them. Under the standards set by the Food and Drug Administration, oleomargarine is as clean and sanitary a food as butter. The two products are likewise equal in digestibility. Their relative palatability is a matter of individual taste."

A report on margarine by the Food and Nutrition Board of the National Research Council states:

"The present available scientific evidence indicates that when fortified margarine is used in place of butter as a source of fat in a mixed diet, no nutritional differences can be observed. Although important differences can be demonstrated between different fats in special experimental diets, these differences are unimportant when a customary mixed diet is used. The above statement can only be made in respect to fortified margarine and it should be emphasized that all margarine should be fortified."

Perhaps the most significant study of the relative nutritional qualities of margarine and butter was that made by three University of Illinois scientists, the results of which were published in the February Journal of the American Medical Association. In my opinion, this study explodes the contention that butter contains some mysterious and highly beneficial growth ingredient not present in margarine.

Three distinguished scientists of the University of Illinois College of Medicine Drs. Harry Leichenger, George Eisenberg, and Anton J. Carlson-conducted a 2-year study of 217 children in two separate orphanages-one group of which had butter in its diet and the other margarine. This study showed no difference in the effects of the fats on growth and health.

I call your attention to the following conclusions of the three scientists: "Blood studies showed there were no significant differences between the margarine or butter groups.

"The children in the margarine group experienced a high degree of good health during the study and in comparing their health to those in the butter group it appears to have been much better.

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"When infirmary records are compared, it is readily seen that the margarine group fared much better than the butter group. We are not making claims that the margarine group were healthier simply because their diet contained margarine. Other variables are more likely to account for their better health.”

In 1886, it was contended that margarine was an unhealthy food and was being sold fraudulently as butter. In 1902, when the original law-which imposed a 2-cent tax on all margarine-was amended to reduce the tax on uncolored margarine and place an almost prohibitive impost on the artificially colored yellow product, the argument was again made that consumers must be protected from fraud. In 1931, when the 10-cent tax was imposed on all yellow margarine— whether artificially or naturally colored-the contention was made that margarine was a foreign product since a great deal of it was then being made from imported palm and coconut oil.

I should like to point out here that the "foreign" argument is of no importance today. More than 95 percent of all margarine is now made of domestic ingredients. This argument is as archaic today as the contention that margarine is an unhealthy food.

Equally invalidated is the contention that the antimargarine laws are needed to protect consumers from the possible fraudulent sale of yellow margarine as butter. There were no pure-food laws when Congress passed the antimargarine law in 1886, and both butter and margarine were sold in bulk, or tub form. Now margarine is sold only in cartons, specifically and properly labeled.

Nowadays the Federal pure-food laws and similar pure-food laws in 47 of the 48 States guarantee the proper labeling and standard of purity of food products, including margarine, thus adequately protecting consumers. There are also, of course, criminal statutes in every State against fraud and misrepresentation.

Of course, no law was ever passed which would prevent lawless men from breaking it. But few risks were ever so well guarded against as the possibility that margarine would be sold fraudulently to any widespread extent if these discriminatory taxes were repealed. If we have any doubts on that score, however, there is no reason why we cannot further strengthen the already extensive labeling and marketing requirements to achieve even greater safeguards. I am sure many Members would agree to the general principle that direct legislation of this sort is preferable to the use of the taxing power of the Government to accomplish a similar purpose indirectly.

A dairy organization cites six cases of the fraudulent sale of margarine as butter. This record actually shows there is little danger of fraud. The cases represent the isolated actions of a very few individuals over a period of 20 or 30 years. The amount of margarine involved was infinitesimal by comparison with the amount of the product which was manufactured. The records of judgments under the Federal Food, Drug, and Cosmetic Act, published by the Food and Drug Administration, show that from 1930 through 1947 butter was seized for various violations 2,292 times; margarine only 21 times during this period. In only 2 cases was margarine seized for contamination, filth, addition of foreign matter, decomposition, or similar reasons. Butter was so seized in 652 cases. Margarine's few seizures under the Food and Drug Administration have been mainly because of slightly less than 80 percent fat content.

During the period mentioned butter volume was 4 to 5 times that of margarine. But the seizures were at a ratio for butter of 100 to 1 for margarine.

In this connection, only butter is exempt from certain labeling requirements of the Federal Food, Drug, and Cosmetic Act. The artificial color may be, and is, added without stating this fact on the label. Special dairy interests that put through the legislation on margarine were able to prevent butter from having to be accurately labeled. Likewise, the label states no grade or other value by which the contents-a pound of butter-may be judged by the consumer. Furthermore, much butter is artificially flavored without so stating on the label.

I think it should be made clear here, so that there may be no concern on the point, that no responsible margarine manufacturer or distributor of margarine no proponent of repeal of these discriminatory tax laws-is opposed to the labeling and marking provisions of the pure-food laws. Margarine wants to be known as margarine, labeled as margarine, sold as margarine. I am afraid some spokesmen for the butter interests have conjured up a specter of "fear" on this particular issue that is almost as fraudulent as the thing they say they want to prevent. Closely allied with the contention that these Federal margarine taxes are necessary to prevent the widespread fraudulent sale of yellow margarine as butter is the claim of the proponents of these laws that butter has some kind of preemptive

right to the use of yellow. Indeed, in 1902, when the tax of 10 cents a pound was laid against yellow margarine, the claim was freely made that yellow was butter's color, and the tax was actually justified as a kind of impost imposed for the use of that color.

Representative Wadsworth, of New York, chairman of the House Agriculture Committee, answered this contention when it was first made with a clarity and cogency that seems to me still convincing:

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"If that claim is right," he asked, "what shade of yellow is it (butter) entitled to. It is only in the months of May and June-and I speak as a practical butter maker myself when I make the assertion-that creamery butter, and that, of course, is the butter of commerce, has a decided yellow color or tint, and that color disappears entirely, or almost so, when the fall and winter sets in "I deny that butter has the copyright, patent right, or any other right to any particular color, whether yellow or otherwise *. If coloring oleomargarine helps to perpetrate a fraud, then the coloring of butter is actually a fraud, because it makes the consumer believe, and necessarily, that fall or winter, or white butter of any season of the year, is June butter, which is generally considered the best."

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I hope that even those who contend that the antimargarine laws should be continued will not deny that modern margarine is a nutritious and high-quality food, equal in every respect to the butter product.

HOW THE ANTIMARGARINE LAWS PENALIZE MARGARINE

Why, then, does the Federal Government impose the following taxes and license fees on margarine?

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In addition, Federal Regulation No. 9, promulgated and enforced by the Bureau of Internal Revenue, imposes very burdensome restrictions on those engaged in the manufacture and distribution of margarine.

The law imposing the $600 tax on manufacture of colored margarine has been interpreted to mean that private hospitals, private charitable institutions, public eating places, and others which buy and color margarine must pay the yearly manufacturers' licence fee of $600 plus the 10-cents-per-pound tax.

WHY WERE THOSE LAWS ENACTED?

There are, of course, no sound reasons for the imposition of these taxes and license fees on margarine.

Both margarine and butter are colored yellow to meet food habits. We are accustomed to yellow table spreads just as we are used to white milk. We would look with distaste upon green milk-though in every respect except color it might be identical with other milk. Our housewives do not object to white margarine for cooking purposes. They are accustomed to white cooking fats-such as lard. But they do want their margarine yellow for table use. There is no valid reason why their preference should be ignored or thwarted.

Margarine looks like butter. Furthermore, it imitates and is a substitute for butter but what is wrong with that? If we are to levy a tax on all products which imitate the original, in color and other characteristics, we are going to stifle competition. The very essence of competition is to develop new products which are like the old but which are better and cheaper.

Of course, the supreme irony of this amazing claim of butter to a monopoly on yellow, is that the fats and oils used in the manufacture of margarine contain some naturally yellow color. Under Federal regulations, however, these fats and oils must be bleached, a process which adds to the cost of manufacture, in order to make white margarine. Otherwise, the margarine resulting would have to pay the 10-cents-a-pound Federal tax.

DO THESE LAWS PROTECT THE DAIRY INDUSTRY?

There is little question that the purpose of the 10-cents-a-pound Federal tax on colored margarine and the license fees imposed on wholesalers and retailers, as well as the bulk of State legislation penalizing margarine, is to favor the butter industry and to limit the production and distribution of margarine.

Indeed, a careful study of the congressional debates in 1886, 1902, and 1931 will convince almost anyone that the fundamental reason back of this legislation was not the desire to protect consumers from potential fraud-there were other more direct ways to do that; nor was it that margarine was unhealthy-in which case its sale should have been prohibited; nor was it because margarine, for a time, was manufactured largely from imported oils-a higher import duty could have stopped that. The fundamental, underlying reason was a desire to protect the dairy industry in general and the butter industry in general and the butter industry in particular against competition from margarine.

In 1886, Representative Millard, of New York, a leading proponent of the original bill told the House: "Either oleomargarine must go or the great dairy industry of the country must be wiped out, utterly destroyed." This argument was repeated over and over. We are still hearing it today.

A report made in 1939 to the Secretary of Agriculture, Barriers to Internal Trade in Farm Products, says:

"Generally, those favoring margarine legislation have been frank to say that their object is to 'protect' the dairy industry. When the Washington tax of 15 cents per pound was carried to the Supreme Court, the sponsors of the act candidly stated that their purpose was to help the butter industry and they made their arguments on that basis."

The Dairy Record, a magazine representing the dairy industry, said in an editorial on June 18, 1941:

"The dairy industry must set as its goal the complete extermination of oleomargarine. It must never rest until the manufacture and sale of oleomargarine have been outlawed in this country."

And Hoard's Dairyman, another well-known spokesman for dairy interests, said, on January 25, 1948: "The tax of 10 cents a pound on oleomargarine colored in semblance of yellow butter is to stop the sale of this product. The tax should be higher ** * It seems to us the dairy industry has a right to protect

its products."

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I could cite scores of similar statements which make it very clear that the basic reason for the antimargarine laws was to protect the dairy industry.

Leaving aside consideration of the wisdom or justice of legislation which seeks to protect one domestic product against another or one group of American farmers against another, let us consider whether antimargarine legislation has accomplished its avowed purpose. Has it "protected” the dairy industry?

Let us grant at once-what cannot be doubted for a moment-that antimargarine legislation-both State and Federal-has hurt the margarine industry. It has made margarine more expensive for the manufacturer to make and the consumer to buy; it has made it less attractive to users-especially through the 10-cent tax and other drastic restrictions on yellow margarine; it has curtailed margarine's retail outlets; it has discouraged expansion of the industry. In short, it has limited both the production and distribution of margarine. But, despite this fact, the production of margarine has expanded steadily and the 1947 output of 725,000,000 pounds is the highest on record, exceeding the next highest year, 1946, by 100,000,000 pounds.

But what of the dairy industry, particularly those farmers who earn the major part of their livelihood from the sale of milk for butter making?

In 1901, the year preceding the passage by Congress of the most drastic of the antimargarine laws-the 10-cent tax on yellow margarine-per capita consumption of butter was 19.9 pounds. It has never been that high since.

Following the enactment of the last Federal antimargarine legislation in 1931, per capita butter consumption fluctuated within narrow limits-dropping from 18.1 in 1932 to 17.8 in 1933, rising briefly to 18.2 in 1934, and then dropping to 17.1 in 1935. With one exception-when it rose to 17.3 in 1939-it continued to drop steadily until 1945.

And then, in 1946, it dropped again—this time to 10.5, the lowest per capita butter consumption in our history. I mention this particularly because the butter lobby has advanced, against all the evidence, the argument that wartime conditions-price control, rationing, and other emergency factors-were largely responsible for declining butter consumption.

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