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is evident from testimony that the United States Food and Drug Administration cannot adequately protect the consumer against fraud.

It has been maintained, falsely, that butter is no longer a major factor in the dairy industry. It so happens that the experience in seven States answers this false assumption with complete and utter finality. I refer to the States of Minnesota, Iowa, North and South Dakota, Nebraska, Kansas, and Oklahoma." These States accounted for 50 percent of our total creamery butter production in 1946 and half or more of the milk from their dairy herds is sold in the form of farm-separated cream. The repeated impacts of Government discriminations against butter production during the war were felt most strongly in these seven States. Butter production declined and has not yet recovered.

Senator HAWKES. I recall the other day the statement of the decrease in production of butter and the increase in the sale of milk in its natural form. That does not quite fit in with what you just said a moment ago.

Mr. McLATCHEY. I am referring to these particular States, Senator, in these seven States.

Senator HAWKFS. You are only referring to those seven States, not the over-all picture of the country.

Mr. McLATCHERY. Not in this sentence, in this clause here.

Senator HAWKES. Do you dispute the over-all picture of the country as stated here, I think by Senator Fulbright, who gave some figures on that? Have you read those ?

Mr. McLATCHEY. I believe I heard some discussion about it a few minutes ago in regard to the total milk production. That is own. It is less than it was a few years ago.

Senator HAWKES. I am referring more particularly to the sale of milk as milk or milk products, rather than the sale of cream to go into butter. In other words, he showed if I recall correctly, and the chairman I am sure was here, he showed that the production of butter had decreased very substantially in the last few years, whereas the sale of milk as milk products, not butter, had gone up very substantially, and the purpose of the testimony was to show that the repeal of these taxes would not injure the dairyman.

I was wondering whether you agree with that or not.
Mr. McLATCHEY. Not altogether.
Senator HAWKES. That is in the record.

Mr. McLATCHEY. The consumption of fluid milk has increased in the cities.

Senator HAWKES. On the other hand, has butter gone down?

Mr. McLATCHEY. Consumption of butter has gone down because we have not had the butter.

Senator HAWKES. I am very much interested in your problem. I want to know about the thing. Has the over-all picture injured the dairy farmer, the sale of more milk in the form of milk products, and less butter?

Mr. McLATCHEY. I would say that in the United States as a whole, it has not. It has in the seven Štates.

Senator HAWKES. It has in the seven States?
Mr. McLATCHEY. I think it has in the seven States
Senator HAWKES. Thank you very much.

Mr. McLATCHEY. The numbers of dairy cattle in those States declined 17 percent between January 1, 1942, and January 1, 1948, while dairy cattle in the rest of the country increased slightly in number. That reduction in dairy herds was an actual, not a theoretical result, of an unfavorable market for butter. If butter is not a necessary outlet for so-called seasonable surpluses of milk, why did the dairy farmers in these States dispose of their cows? The new dry-wholemilk industry, the evaporated and condensed milk industry, and the ice-cream industry did not offer profitable outlets. The dairy farmers in these seven States did not turn to such outlets, because they did not exist in practical form when and where the dairy farmers wanted them, and because they do not offer satisfactory and profitable outlets and because they will not solve the surplus-milk problem.

It can be seen that expansion of our fluid milk production does not take place when dairy farmers are deprived of their butter outlets. On the contrary, many farmers who milk from 3 to 6 cows would be forced to dispose of their herds under these circumstances. Carried to its logical conclusion, this procedure could only result in increased scarcities of milk and meat, since 40 percent of our beef and veal supply comes from dairy herds. It is not certain that the repeal of Federal taxes on oleomargarine would result in lower prices of oleomargarine. It is quite probable, however, that a reduction in dairy herds would result in higher prices for our important milk and meat supplies. Any possibility of savings from tax-free oleo would inevitably be outweighed by price increases many times as great, if dairy herds are reduced in number.

More than 1,250,000 farm families depend on butter for almost their only source of cash income.

The creamery check pays the taxes and buys goods in town when the bottom falls out of other markets. In turn, the economic stability of these farm communities depends upon the continued welfare of these dairy farmers.

Regardless of the efforts of men to prevent it by artificial means, whether legislative or otherwise, we have alternating good times and bad times. In the thirties, the cream checks pulled many a farmer through financial difficulty. That was particularly true on the farms where there were only a few cows and where they did not specialize in dairying. There are many such farms in the South and in the Mississippi Valley.

If we drive those people out of the butter business now, will they offer thanks to Congress the next time bad times roll around?

Another 114 million farm families sell fluid milk for which butter is the balance wheel. Dairy farms produce more milk during the flush than during the slack season. In order to maintain a consumer's supply in fall and winter it is necessary to produce more milk than the market can absorb during the spring and summer months.

Butter is the form in which the butterfat content of this surplus milk can best be stored. It is not generally known that butter will keep its freshness and flavor for as long as 2 years under proper storage conditions, and that in this respect it keeps and ships better than any other dairy product. The economics of the dairy industry throughout most of the country require a butter market to accommodate milk surpluses.

Dairy products were a No. 1 food requirement, both for our armies and allies in two world wars. With cow numbers down, as they are

at present, the dairy industry would be hard pressed to meet another national emergency. It has been estimated that we will lose another 21,2 million milk cows within the next 3 years if butter is subjected to unfair competition from colored oleomargarine. We are not now prepared to meet the demand for dairy products even among our own people. If any further reduction in cow numbers takes place, we will not be able to supply our children and workers even on an emergency basis. The butter market should be encouraged rather than discouraged at this time for reasons of national defense and security.

There is a place in the American economy for both butter and oleomargarine. Each should be sold for what it is, however, and not masquerade under false colors. If we keep the butter industry and add to it the oleomargarine industry, we have a net gain. If we tear down the one industry in order to replace it with the other, we have no net gain. In fact, we have a net loss because dairying is essential to the preservation of the topsoil, the value of which in our national food economy has been emphasized repeatedly by many authorities. Consider the difference between building up the fertility of the soil over a period of years by dairying as contrasted with robbing the soil of fertility by the growing of soybeans and cotton.

Ân injury to the dairy industry would jeopardize diversified farming. It is only a few years back that all States of the Union, and especially the Southern and Central States, were promoting diversified farming with an emphasis on dairying. It is difficult to understand why they should now try to undo what they so laboriously built up.

It is worth while remembering that butter is a natural food made of fresh milk and cream. Throughout the entire course of processing and handling it must be treated with extreme care and with every regard to sanitation. Our dairymen and creameries have learned how to apply this care which is the foundation upon which the distribution of all our milk products is based. No artificial preservatives are allowed in the manufacture of butter. No artificial flavoring may be used. Only 25 percent of the butter made is ever colored, and then only during the winter months when cattle are on dry feed. When butter is colored it is for purposes ot uniformity and not to make butter resemble something which it is not.

Many creameries never use color at all under any circumstances, but their butter is unmistakably yellow just the same. I quote from a letter by Mr. Henry J. Hoffman, chief dairy chemist, State of Minnesota :

To the best of my knowledge and from 33 years of experience in analyzing many thousand samples of butter, no commercial creamery butter at any time of the year and in its natural color from the State of Minnesota would be below 1.6 degrees of yellow, or of yellow and red collectively, but with an excess of yellow over red, measured in terms of Lovibond tintometer or its equivalent.

Recognizing the climatic conditions existing in Minnesota with a relatively short pasture season and the necessity to feed dry forage during many winter months, it can be assumed that Minnesota produces the lightest color natural creamery butter in the United States.

The Lovibond tintometer is the official instrument to measure the color intensity of any food product.

By contrast the manufacturers of oleomargarine are allowed to use benzoate of soda as a preservative, although this is forbidden to the manufacturers and processors of dairy products. Artificial flavoring is added to oleomargarine in the form of diacetyl, to make it taste like butter. The coloration of oleomargarine to imitate butter would be the final step which would allow its widespread substitution for butter. The results would inevitably be fraud and deception on the part of dishonest dealers.

In January and February of this year a national research organization found that oleomargarine sales were 54 percent of the combined sales of oleo and butter, surpassing butter sales for the first time. Before the war oleomargarine enjoyed only 23 percent of the combined market. It is evident that governmental taxes and restrictions have not hindered the increasing sales of oleomargarine, which have more than doubled since 1941.

The statement was made at this hearing yesterday that the combined fat and oil intake in the United States was below the nutritional standard. The Food Nutrition Board, in its Bulletin No. 118, recommends that the total dietary fat consumption be 68 pounds per person per year, consisting of 28 pounds of visible fat and 40 pounds of invisible fat. Visible fat includes oleomargarine, lard, shortening, salad and cooking oils. 42.3 pounds of visible fats were consumed per capita in 1945; 42.3 pounds per capita in 1946; and 44.3 pounds in 1947. This is far in excess of the recommended minimum. The invisible fat is supplied by foods other than those listed above.

In this hearing yesterday, Under Secretary of the Treasury Wiggins testified that total Federal taxes and license fees on oleomargarine in 1947 approximated 1 cent per pound for the industry as a whole. Since our per-capita consumption of oleomargarine was only 5 pounds during the year, the tax per user amounted to about 5 cents.

At current prices the difference between a pound of oleomargarine and a pound of real butter is approximately 50 cents. One fraudulent sale of colored oleomargarine to a butter purchaser then would cost the consumer more than

the price of 10 years' insurance against fraud and deception.

Butter is a quality product traditionally served to guests as a symbol of good living. The housewife is entitled to get butter when she pays for butter, and this can only be guaranteed by practical Federal supervision of oleomargarine manufacture and sale.

The CHAIRMAN. Thank you very much.

Mr. McLATCHEY. I would like the privilege of offering for the record in opposition to the proposed oleomargarine legislation the following statements: One from Mr. Earl Gilmartin, of Spokane, Wash.; Mr. John Burnham, executive secretary of the North Dakota Dairy Industries, and Mr. C. O. Jacobson.

The CHAIRMAN. You wish those put in the record at this point or for the file?

Mr. McLATCHEY. For the record. May I read the wire from C. O. Jacobson?

Authorizing you to represent the Oklahoma Butter Institute in opposition to oleomargarine legislation. Oklahoma ranks eleventh nationally in butter manufacture. Any change in oleo law will deal a severe blow to the dairy interests of Oklahoma and strangely but true also to the cotton farmers.

(The statements follow :) STATEMENT OF EARL GILMARTIN, OF SPOKANE, WASH., SUBMITTED TO THE SENATE

FINANCE COMMITTEE ON OLEOMARGARINE LEGISLATION My name is Earl Gilmartin. I am general manager of the Commercial Creamery Co., of Spokane, Wash. We manufacture butter, condensed milk, and other related dairy products. I am speaking for my company in opposition to the proposed bill H. R. 2245.

The repeal of the present oleomargarine laws will have a detrimental effect upon the agricultural welfare of the State of Washington. More than 29 percent of the farms within our State reporting products valued at $600 or more sell farm-separated cream for butter making. To allow an imitation product such as oleomargarine to compete unfairly with butter will be harmful to dairy farming in the State of Washington.

The market enjoyed by the 15,000 dairy farmers who now sell farm-separated cream for butter making will be undermined. Because butter is a product that is concentrated and permits shipment to far distant urban centers it affords the only developed market available to dairy farmers living in areas that have no concentrated urban population. Practical economics establishes the fact that there is no other market available for dairy products from producers in these areas.

To a large extent the butter-manufacturing industry consists of small inde pendent units. These are generally located in rural areas in small farm towns and villages. Frequently the creamery company is the principal employer of local wage-earning citizens and as such has a great effect upon the economic welfare of the town. In the State of Washington almost one-half of our population is rural. The welfare of these people in terms of gainful employment is seriously effected by the proposed oleomargarine repeal legislation.

In our State much of the topography is such that the dairy cow affords the best method of utilizing much of the land. The dairy cow is able to produce nature's most nearly perfect food from this pasture crop and provide for our citizens a highly desired nutritious food. Discouraging this type of agriculture through oleomargarine repeal legislation is undermining the sound structure of our American agriculture.

STATEMENT OF JOHN BURNHAM, EXECUTIVE SECRETARY, NORTH DAKOTA DAIRY

INDUSTRIES ASSOCIATION, TO SENATE FINANCE COMMITTEE, MAY 18, 1948, AT A HEARING TO WEIGH THE MERITS OF PROPOSED REPEAL OF CERTAIN TAXES LEVIED ON VEGETABLE OIL SUBSTITUTES FOR BUTTER

Mr. Chairman, and members of the committee, as a newspaperman I shall make this statement factual concise, and analytical. We, as champions of the butter industry, are not hostile to any food product, nor do we uphold punitive taxes and fees levied against any food product. However, we do believe that every food product offered the American people be sold on its own merits, without discrimination but also without access to facilities for substitution or imitation of other food products. We favor only such taxes as shall protect the consumer from such substitutions and imitations.

Let's weigh both butter and oleomargarine from the standpoint of the three groups of Americans involved : 1, producers; 2, processors; and 3, consumers. (I place them in that order, not because it is the order of importance, but because that is the natural flowage of goods and services.)

1. Producers.—Butter is made from cream produced on 5,000,000 American farms, farms in every State of the Union. All the component parts of butter are produced domestically. These farmers also produce milk used for all other dairy products—fluid bottled milk, condensed milk, ice cream, dried-milk products, cottage cheese. Butter, however, always has been the balance wheel of dairying. Butter takes the surplus milk in times of seasonal surplus. Without a copious market for butter, all milk production would be cut to the average needed for other uses. This would result in severe fluid-milk shortages in our urban centers at seasons of slack production. Oleo has found its friends among northern Senators from our large cities. May I point out to them and to their constituents, in a friendly way, that a blow at butter today may take away the baby's milk bottle next winter. That is not emotion; that is a prediction based on an appraisal of statistically correct factors of production and marketing.

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