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Senator Lucas. All of these regulations would remain in full force and effect?

Senator FULBRIGHT. Yes.
Senator Lucas. Regardless.

Senator FULBRIGHT. This is the Pure Food and Drug Act. This proposed repeal of these taxes in no way affects these laws.

will be noted that these provisions, prohibiting misbranding and adulteration, extend to the point where the food is "held for sale after shipment in interstate commerce.” Contrary to the impression of many people, this point actually extends to the final sale of the article of food. The recent decision of the United States Supreme Court in U.S. v. Sullivan (68 Sup. Ct. 331), decided in January of this year, makes this point clear.

In the Sullivan case, a retail druggist in Georgia had purchased a bottle of properly branded sulfa tablets from a wholesaler who purchased them in interstate commerce. The retail druggist took some tablets from the bottle, put them into a paper bag, and sold them across the counter in his store. This paper bag was not labeled as provided by the act and the defendant was charged with misbranding and a violation of section 301 (k).

The CHAIRMAN. I think an important element of the case is that the retailer accused purchased the tablets from the consignee. In other words, under old-time conceptions, the interstate feature of the transaction ended when it reached the consignee.

Senator FULBRIGHT. Yes.

The CHAIRMAN. This retailer bought the sulfathiazole tablets from the wholesaler-consignee, and then proceeded to sell them in a box of his own which merely had the word "sulfathiazole” on it, and did not have either warnings or directions.

Senator FULBRIGHT. Which only emphasizes the extent to which you can follow it.

The CHAIRMAN. If you can bring the case into analogy with food, then you have a rather powerful precedent.

Senator FULBRIGHT. The defendant claimed that section 301 (k) was not applicable since the transaction involved was entirely local, not involving interstate commerce, and that, furthermore, even if the act were applicable, then the transaction was beyond the constitutional power of Congress.

The Supreme Court upheld the conviction under the act and ruled that since the act was enacted to protect the consumer with respect to any food, drug, or cosmetic which had been shipped in interstate commerce, section 301 (k) is definitely applicable. Furthermore, the Court held that Congress has the power to cover this type of situation, since it is an aspect of regulating interstate commerce and protecting the consumer with respect to articles which move in interstate commerce.

It could be pointed out that the matter of whether section 301 (k) extends so far as to cover a completely local transaction-on which the Supreme Court has already ruled—will probably become academic, since the Miller bill, H. R. 4071, has already been reported out to the Senate and appears slated for passage. This bill makes it clear, by statutory language, that section 301 (k) applies to a local transaction of the kind being discussed, since the statutory language would

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be amended to cover specifically any action done while the article is held for sale, whether or not the first sale, after shipment in interstate commerce and which act results in the article being adulterated or misbranded.

Of course it will be contended that these provisions do not protect the consumer in purely intrastate cases. This is true, although these cases are very limited and are not properly matters for the consideration of Congress at any rate.

The CHAIRMAN. I should like to suggest, if I may, that you have the opportunity to expand your argument by basing yourself on the Food Adjustment Act cases on the marketing decisions, and on the Shreveport cases.

Senator FULBRIGHT. I did not want to overstate the case. I agree, and I think what you have already suggested could well be true, which merely strengthens our position, that the power of the Congress through the pure food laws is quite sufficient to handle this situation. Would that not be the conclusion?

The CHAIRMAN. I have nothing but a tentative opinion on the subject. I am merely making a suggestion of a matter which might become of interest to the committee.

Senator FULBRIGHT. I think the Senator is quite right, and as so often happens, he knows a little more about this matter than I do, but I think the conclusions in the direction that there is the power now existing in the Government to control the matter, this is the point I am really trying to make: that this whole business should be handled directly through regulations under the fure food laws and not through a tax on it.

Senator BARKLEY. That reasoning follows not only the decision of the Court, but the Transportation Act of 1920 and other acts regulating railroads, in which intrastate rates, purely intrastate, that were a burden on interstate transportation were subject to regulation by Congress and action by the ICC.

If it can do that with regard to the means of transportation, it tainly can do it in regard to the things transported.

Senator FULBRIGHT. I think so. I certainly agree. However, as I have said, this objection is met adequately by the laws of the States. Furthermore, as every margarine producer is dependent upon markets in several States, as a practical matter he and his distributors are obliged to comply with the Federal laws on the subject of fraudulent sales.

It should also be remembered that should these taxes be repealed, this will in no way affect the power of the States to regulate intrastate commerce in oleomargarine. This power, in spite of Federal laws on the subject—which might be held to take the matter out of the hands of the States—is especially reserved to the States under the terms of title 21, section 25, United States Code, as follows: “Oleomargarine

transported into any State or the District of Columbia, and remaining therein for use, consumption, sale, or storage there, shall

be subject to the operation and effect of the laws of such State or the District of Columbia, enacted in the exercise of its police powers to the same extent and in the same manner as though

produced in such State and shall not be exempt therefrom by reason of being introduced therein in original packages or otherwise.

The effect of this provision is to remove any doubt as to whether Congress intends to foreclose State action in the realm of regulation

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of margarine. This provision is not, of course, affected by H. R. 2245.

Thus the only conceivable avenue for fraud-meaning the sale of colored oleomargarine as butter-occurs in restaurants and other public eating places, where yellow margarine could be sold as butter. I do not regard this as of particular importance for several reasons: In the first place, there is nothing in Federal law now, before the enactment of this bill, which would prevent a restaurant owner from purchasing colored margarine and serving it as butter, unless the Pure Food and Drug Acts are so interpreted, and these acts are not affected by the bill. So the repeal of the oleomargarine taxes will not affect the problem, except to save him 10 cents per pound of margarine. Even this, in view of the present cost of butter, would not increase the likelihood of such a fraud, since it would clearly profit the restaurant owner to buy colored oleomargarine and serve it now.

Senator TAFT. Could he not buy it without coloring!

Senator FULBRIGHT. I mean he could buy it colored and still be making a big profit. The motive to do it from the profit point of view exists now.

It is true, however, if he bought the white now and colored it, the restaurant would be classed as a manufacturer and have to pay $600 excise, but he can buy it straight as yellow and pay the 10 · cents a pound and serve it now.

Senator Tart. Still if he is willing to violate the law in serving it, he will be willing to violate the law by mixing the yellow.

Senator FULBRIGHT. That may be true.

Senator Lucas. I should like to ask Senator Fulbright one question at this point. I have received suggestions that all public eating houses should be compelled to properly identify margarine from butter, so that the guests would know exactly what they were eating. Do you make any suggestion ?

Senator FULBRIGHT. That is just what I am coming to right at this moment. There is just one more page of this statement.

Senator Lucas. You started talking about it, and I note you had left the subject, and that is the reason I asked you that point.

Senator FULBRIGHT. In the second place, the laws of 40 of the States require that public eating places give notice to their customers when they serve margarine.

Also, it might well be argued that if the customer himself does not know what he is eating, it makes little difference, since margarine is nutritionally the equal or superior of butter.

Senator BUTLER. I bring up the same question there that I did before. Do you contemplate in amending this law to provide for prosecuting butter manufacturers or other people who imitate the superior qualities of margarine!

Senator FULBRIGHT. It might come to that some day. The great progress they have made in the development and refining of margarine might result in that, but we are not insisting on it yet.

Incidentally, in using the need for the protection of the restaurant customer as an argument for retention of the taxes, the defenders of those taxes are placing themselves in the position of claiming that margarine is of vastly inferior taste, which they do claim, yet contending that the restaurant consumer is unable to discern this.

However, assuming such protection is desirable, it can be accomplished by amendment to the Federal Food, Drug, and Cosmetic Act, extending the definition of “acts which result in misbranding."

This is the point which I believe the Senator from Illinois is interested in.

This procedure will bring the entire question of fraud in the sale of oleomargarine under the provisions of that act, which now contains adequate provision for protection to all consumers, except patrons of public eating places.

Section 301 (k) of the act, as I have said, prohibits acts which result in misbranding while an article of food is held for sale after shipment in interstate commerce.

Section 303 (a) provides for penalties for acts of misbranding; imprisonment for not more than 1 year, fine of $1,000, or both.

Section 403 provides that "a food shall be deemed to be misbranded" when, as defined in subsections (a) through (k), various acts of misbranding occur.

The proposed amendment would add a new subsection and thus a new "act of misbranding," as follows:

(L) If it is oleomargarine containing artificial coloring and is served by a restaurant or other public eating place, whether or not a separate and distinct charge therefor is made, unless a conspicuous sign in, or a prominent notice on the daily bill of fare or menu, of such restaurant or public eating place states that oleomargarine is served. The labeling requirements of this Act shall not apply to oleomargarine containing artificial coloring served by a restaurant or other public eating place if such restaurant or other public eating place fully complies with the provisions of this paragraph.

That is the proposed amendment.

The CHAIRMAN. Would there be an objection if butter is served in pats in public eating places?

Senator FULBRIGHT. Pats of butter?

The CHAIRMAN. I mean pats of oleo. Would there be any objection to putting some sort of imprint on the pat itself, just as housewives shape a pat into a rosebud or something else—put some kind of a mark on it to show that it is oleo?

Senator BARKLEY. You could not get much on a little tab of butter or margarine either, that they serve in the restaurant.

The CHAIRMAN. I am afraid you are right.
Senator Taft. Put rosebuds only on margarine.

The CHAIRMAN. My thought was not to have it look like a rosebud, but of course, that would only be giving the rose another name. My thought was that the pat be imprinted with an initial or something that would show it was oleo.

Senator FULBRIGHT. I think, of course, as a practical matter perhaps in the Carlton or Shoreham they do make fancy little pats, but the average ordinary restaurant, it would be an intolerable burden to have to do that.

The CHAIRMAN. You think it would be impractical?

Senator FULBRIGHT. I think of no way that an ordinary small restaurant could have the mechanical means of doing that in any reasonably efficient manner. That is my only objection. If you think so as a practical matter, I see no objection. It seems to me it is the easiest way, and the way they already conform to it-40 States already make them do this—is to merely say that in some manner, some reasonable manner, notice must be given to the people that they are serving margarine. That is already, as I say, in effect, and causes very little trouble with the average small restaurant, and that seemed to us the most practical way to follow that in the experience at least in the States. It seems to have dictated that as being the best way.

The CHAIRMAN. I am not proposing this. It has been suggested along with change in shapes and all sorts of things, and I wanted your

opinion. Senator FULBRIGHT. This is a relatively small item in a restaurant, and to require any extraordinary effort in the preparation of the butter or the margarine is simply another way of saying you shall not serve it. That is what it amounts to. If you wanted to expressly prohibit it, that is another matter. That could be considered.

Senator Taft. I suppose your provision here, the labeling requirement shall not apply to oleomargarine, if this is on it.

Senator FULBRIGHT. If this is on?

Senator Taft. I do not suppose the labeling provisions of the act apply to any food served in the restaurant, and you cannot label the pork chop or beans or anything else.

Senator FULBRIGHT. Of course there is no doubt about pork chops.

Senator Tart. You are not exempting oleomargarine here from any general requirements in that section!

Senator FULBRIGHT. Not that I know of. You see, all of this merely is another further definition of misbranding. They say if

you

sell it without this, it amounts to a misbranding.

That is the effect of that.

The CHAIRMAN. This is another way of saying you do not have to serve it in a restaurant in an original container.

Senator TAFT. That is true of all food.
The CHAIRMAN. That is what you are saying there.
Senator FULBRIGHT. You have to give notice if you serve it.

The CHAIRMAN. When you waive the labeling requirements, you are waiving something that is on the container.

Senator FULBRIGIIT. Yes.

The CHAIRMAN. Obviously you cannot serve butter in a container to the individual customer.

Senator FULBRIGHT. As I understand the present pure-food laws, there is a provision giving discretion to the Administrator where it is not practical, he makes that decision, to waive the requirement of a label. I think that would be true under existing law, that it has not been deemed to be practical to make an imprint, we will say, on the butter. I think he probably has the power to do that. So that their proposed amendment would relieve him of that discretion.

Senator Taft. You have the alternative, if you do not put the sign on, you could still serve the pat of oleo if it had the proper labeling requirements on it. If it were wrapped separately that would relieve you of the necessity of putting it on the menu, is that right?

Senator FULBRIGHT. I would think certainly as a practical matter that would be compliance.

Senator Tarr. It has been one of the suggestions that it be served in a triangular form, which I suppose would require wrapping.

Senator FULBRIGHT. That was the trouble. That was suggested in the House. I believe that someone submitted an amendment in the House requiring that, and it was voted down on the ground that it is not practical as a way to reach it.

Senator Taft. An alternative could be that if you did not want to say that, you could do that.

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