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Senator GEORGE I do not believe it is going to be quite as bad as

you think.

Mr. HOUSEHOLDER. I do, Senator.

Senator GEORGE. Let me assure you that it will not. Milk and milk production and products of milk are not going to disappear in America.

Mr. HOUSEHOLDER. Nobody argues that.

Senator GEORGE. They are going right on and you have to meet this competition as you are meeting it.

Mr. HOUSEHOLDER. We will meet every fair competition.
Senator GEORGE. You will have to meet it for oleomargarine.

Mr. HOUSEHOLDER. We are meeting it today on a basis that we are entirely satisfied with because it is forced to identify itself.

Senator GEORGE. You are meeting it at a cost to other things which are being produced in this country and which made contributions to this country even to the winning of the war.

The CHAIRMAN. Mr. Householder, I notice you also refer to the yeilow trade-mark. Are you referring to it in the legal sense?

Mr. HOUSEHOLDER. Senator I am referring--I presume you are a lawyer?

The CHAIRMAN. I was vaccinated but I do not know whether it ever took.

Mr. HOUSEHOLDER. In Colorado any road that has been used for 20 years is a public highway, it becomes a road by usage and it is established whether it was ever established by law or not and butter is entitled to the yellow trade-mark by 10,000 years of usage.

If you ever get time to read your Bible you will see that that is the first time yellow was used in connection with butter.

The CHAIRMAN. I am still pressing whether you have used it in a : legal sense.

Mr. HOUSEHOLDER. If common sense is legal sense, that is the sense in which I refer to it.

The CHAIRMAN. Getting back to the carton, do you feel that the carton gives you legal protection against a similar carton used by the oleo?

Mr. HOUSEHOLDER. The oleo has taken the butter shape and butter color and in innumerable times putting pictures of dairy cows on the carton, and that is what I refer to. If that is not usurping butter's carton, then I would not ask for it.

The CHAIRMAN. We have asked for a legal memorandum on the subject whether such a right in butter exists.

Mr. HOUSEHOLDER. Do you not agree with me that through usage butter has the yellow trade-mark?

The CHAIRMAN. I do not agree to anything because I am not answering the questions.

Thank you, Mr. Householder.
The CHAIRMAN. Mr. Peters?

STATEMENT OF LEO PETERS, EVANSTON, ILL. The CHAIRMAN. Mr. Peters, will you be seated and identify yourself?

Mr. PETERS. My name is Leo Peters from Evanston, Ill.

I have had the misfortune, Senator Millikin, to invent a package that is surrounded with political implications. I have been asked to demonstrate it to your committee.

it is the cap

The CHAIRMAN. Is that a bomb of the type referred to by a previous witness?

Mr. PETERS. This is probably the detonator, not the bomb itself;

This package packages margarine in a plastic film and the color is on the inside. To color it a woman just squeezes it and kneads. She can break the capsule simply by a little pinch like that.

The CHAIRMAN. She milks the package instead of the cow?

Senator GEORGE. You are making crime easy from the standpoint of our dairy interests.

Mr. PETERS. From the standpoint of the consumer. It takes about 2 minutes to color the package.

The CHAIRMAN. How do you keep the color separated from the rest of it?

Mr. PETERS. It is in a capsule.
The CHAIRMAN. That breaks how, just by pressure?
Mr. PETERS. Just by pinching it, it is a gelatin capsule.
This eliminates all waste, it eliminates the lengthy time in coloring.

From the standpoint of the sequence of events as they are now before Congress I think it can be stated with a fair interpretation of the historical sequence that you would not be sitting here today if it were not for this invention.

I will elaborate on that a little later.

The CHAIRMAN. We would be sitting here today but we would have other business.

Whatever put that invention in your head?

Mr. PETERS. The recognition of a problem and the effort to do something about it.

The CHAIRMAN. You certainly did it, did you not?
Mr. PETERS. It looks that way.
Senator GEORGE. How much does that cost the consumer per unit?

Mr. PETERS. It costs her today 2 cents more than the old-style package.

Senator GEORGE. Two cents more?
Mr. PETERS. Yes.

Senator GEORGE. Plus the muscular exertion of the housewife to get it mixed ?

Mr. PETERS. That is right.

The CHAIRMAN. I have not been timing you; how long does that take?

Mr. PETERS. It takes 2 to 212 minutes. You see it is colored now.

This spot here, that represents broken fragments of the capsule and it does not create a heavier spot of color at that point. After you put it back in the carton that reshapes it, you see.

I have offered to sell this package to the margarine industry for the total consideration of $1 if the industry would agree with the Government never to produce or sell any more yellow oleo for domestic use.

The CHAIRMAN. Would you mind repeating that so that the audience can hear you?

Mr. PETERS. I made an offer and I repeat it here that I will sell all my patent rights on this package for $1 if the oleomargarine industry will agree voluntarily with the Government never to produce or sell any more yellow-colored oleomargarine for domestic use.

The CHAIRMAN. Have you another invention up your sleeve?

Mr. PETERS. Well I have some but I do not need this to make my, living. I like a good income like you do but I do not want you to think that this offer is a quixotic one and that I am one of these socalled crack-brained inventors the way some people look on some inventors; that they do not have a balanced judgment on life.

I was confronted with this situation when I decided to take that, course of action.

In 1947, after a number of years of experimentation, in the beginning of that year, my package was introduced to the American public, and at the beginning of that year also the margarine makers in a formal resolution in their association decided not to make any more attempts to change the Federal regulation on margarine. The reason they did that, one of the reasons they did that, was because the Republicans were back in control of the Congress and the traditional position of the Republican Party was against any change. This was in the spring of 1947.

Not until the summer of 1947 did my package make a serious impact on the national market and then it began taking a very sizable piece of the total margarine market.

Some of the manufacturers who were not using it became alarmed at their competitive position. In the fall of 1947, on December 4, in Chicago—and I am not speaking from gossip now, but I am speaking from facts which I can back-Mr. Paul Truitt stated before the manufacturers gathered there that Best Foods, who was not a member of their association and never had been, would like them to reconsider their policy regarding a change in Federal regulation.

Mr. Paul Truitt stated that Best Foods was prepared to make an initial contribution of $50,000. He asked the members of the association, comprised of about 20 members to contribute $7,500 each, bringing the total sum, if it were all contributed, to $200,000 to be used in efforts directly to change the present Federal law.

The whole tenor of the meeting from remarks made indicated that if it had not been for the competitive impact of this package the meeting would not have been called. When I realized that, I realized that I was contributing to a fight which in my estimation would be harmful to the dairy industry, seriously harmful.

I realized that that was going to be a fight to the finish this time because some business lifeblood was at stake. That was one of the reasons I was motivated to speak up.

I had another reason. In testimony before your Agricultural Committee of the House in 1943 and in testimony again before the Senate Committee on Agriculture and Forestry in 1944 the margarine manufacturers' association made clearly and without equivocation statements that oleomargarine manufactured from cottonseed and soybean oils is a natural yellow if it is not bleached. Those statements were not true. Those statements during the ensuing years were picked up by reputable periodicals and newspapers; and again in the November issue of Fortune magazine of 1944, a few months after the Senate hearings, Mr. Paul Truitt made the statement in that magazine, and I can quote it.

The CHAIRMAN. Which magazine is this?

Mr. PETERS. This is Fortune magazine of November 1944. In that magazine Mr. Truitt stated, and I quote:

The Federal law requires that margarine-oil ingredients be bleached so that the resultant product will be artificially white. The natural color (of margarine) is a yellow tint.

The CHAIRMAN. Will you let me look at that case in which the package came?

Mr. PETERS. Yes.
The CHAIRMAN. Go right ahead with your statement.

Mr. PETERS. Since those statements in 1943 and 1944 the public press is replete with examples of similar statements, and the margarine manufacturers' association even submitted as a part of the record at the House hearings in March of this year editorials and periodicals making the identical statement.

Now I knew that the statements were false. When you attend oil chemists' meetings in this country in the past they have all bellyached and grumbled about those statements—it disturbs them. Apparently the dairy industry was not informed.

Knowing what I had contributed to the fight in the way of this package, knowing what I did about these statements that had filled the records, I ask you what would you have done if you would have been in my position? Would you have kept your mouth shut or have spoken out?

The CHAIRMAN. I will answer that one; being a Senator I probably would have talked.

Mr. PETERS. I felt that if I talked, the finger of self-interest would have immediately been pointed at me, and even though I was not motivated by self-interest, it still would have been leveled, so I decided to tell what I knew. In crder to avoid having the finger of self-interest pointed at me, I decided to make the offer I did.

The CHAIRMAN. Have you any licensees to your patent?
Mr. PETERS. At present there are eight licensees.
The CHAIRMAN. Have they the perpetual right?
Have they a right to the patent during its life extensions?
Mr. PETERS. Yes, sir. There are no extensions of the patent.
The CHAIRMAN. Can you not improve it!
Mr. PETERS. Yes; but then they are new patents.
The CHAIRMAN. Do they have the right to improvements ?
Mr. PETERS. Yes, sir.
The CHAIRMAN. What then would you be selling for the dollar?

Mr. PETERS. I would be selling royalty-free rights to their usage, to the usage of the patent.

The CHAIRMAN. To those who have your patent at the present time?
Mr. PETERS. Yes.
The CHAIRMAN. They would no longer have to pay you?
Mr. PETERS. That is right.
I was further motivated by this, Senator Millikin.

The CHAIRMAN. May I ask you, if you do not mind, what is your business when you are not inventing?

Mr. PETERS. I am an engineer and in the past I have not worked at my profession entirely, I was with one of the big packers for 10 years, 4 of which were spent in their research department and at present this patent and some others that I have take my entire time.

The CHAIRMAN. If your offer were accepted would your patents then become the common property of everyone that wanted to use them without royalty of any kind to anyone?

Mr. PETERS. "That would be all right with me.

The CHAIRMAN. I mean, would that be the effect? Would your present licensees give up whatever right they have?

Mr. PETERS. They would have to pay the royalties to the new owners which in this case would be the entire oleo industry.

Now if the oleo industry wished to divorce any further payment of royalty they might wish to do that.

I was further motivated in this position by this standpoint. In reading past testimony on this problem the oleo industry has never presented any testimony from the standpoint of the general welfare, showing the impact thắt any reversal of these laws or showing what the present laws have upon our over-all economy.

The dairy industry on the other hand has made very serious attempts to present careful analyses showing how our over-all general economy is affected both pro and con.

The CHAIRMAN. We had testimony to that effect this afternoon.
Mr. PETERS. From the oleo industry?
The CHAIRMAN. No, from the dairy industry.
Mr. PETERS. I see.

From my standpoint I do not see how the principle of free enter. prise could continue.

The CHAIRMAN. I might say that we have asked the oleo people to give us a memorandum on the economic impact of the ramifications of their business.

Mr. PETERS. I see.

When I was with Armour for a while I was a district manager for them in the Southwest, and I had part of Texas, Oklahoma, Kansas, Arkansas, and Mississippi. In that territory most of the farmers who milk cows depend on the sale of cream for the maintenance of those cows, and if this market is taken away from them, I do not like to contemplate what will happen to literally hundreds of thousands, and if I have been a party to bringing that on, I would not sleep good.

The CHAIRMAN. Any questions, Senator George?
Senator GEORGE. No questions.

PROBABLE ECONOMIC EFFECTS ON THE DAIRY INDUSTRY OF REPEAL OF ANTIMARGARINE

LEGISLATION

During the debate in this Congress on the bills to repeal the Federal antimargarine laws, opponents of this legislation have frequently contended that the consequences of repeal would be harmful not only to the producers of butter but to the dairy industry generally. The Congress and the people have been told that, if antimargarine laws are repealed, a considerable number of dairy cattle will have to be slaughtered-a number which, depending upon the zeal of the speaker, is estimated variously from 2 to 5 or even 10 million.

We are told that dire consequences would naturally follow repeal of antimargarine legislation because such repeal would result in (1) the widespread substitution of margarine for butter ; (2) a consequent loss of a great portion of the present butter market; and (3) eventual economic injury or ruin to great numbers of dairy farmers, and injury, as a result, to our entire economy.

A careful scrutiny of these arguments will show that they all have one quality in common-there has been an almost total failure to clothe the bare statement with substantiating fact, statistics, historical analogies, or any of the more accepted modes of proof. We have been asked to take on faith this basic argu

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