Senator FULBRIGHT. There was this one point: In the 10-year period from 1936 to 1946, total butter production, including both creamery and farm manufacture, declined from 2,131,000,000 pounds to 1,501,000,000 pounds, or approximately 29 percent. That is the way that butter production has declined even with these taxes. Total milk production for all purposes, including butter, increased from 102,410,000,000 pounds in 1936 to 120,276,000,000 pounds in 1946. There was more milk available for butter manufacture, but the percentage of this milk being made into butter decreased from approximately one-third in 1936 to one-fifth in 1946. That is a very important point as to what the significance of these taxes has been to the protection of the dairy industry.

I developed that point at some length in the statement which I give for the record of the committee. There are many other statistics on various States and the use of milk for butter in a great many States has been declining over the past years.

Mr. Chairman, there is in addition to these facts one argument which has persisted down through the years, and which even today is constantly brought to the defense of the margarine taxes. This argument, I believe, is the only one remaining which is seriously relied upon. I refer to the contention that these taxes are needed to protect consumers from the possible fraudulent sale of yellow margarine as butter. I shall devote a few minutes to an attempt to demonstrate that this argument, even if true 62 years ago, when the original margarine taxes were enacted, is certainly not true today.

There were no pure-food laws when Congress passed the antimargarine laws 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the possibility that margarine would be sold fraudulently to any widespread extent if these discriminatory taxes were repealed.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 marking requirements to achieve even greater safeguards.

The CHAIRMAN. Is there any law against breaking a properly labeled tub of margarine and selling it piecemeal without labels? Senator FULBRIGHT. I think that that would be a misbranding or misrepresentation under the Food, Drug, and Cosmetic Act. I am assuming it is interstate commerce, which practically all of it is.

As a practical matter no margarine is shipped by manufacturers in tub form. It is all shipped in the same kind of carton that you buy it in. It is all branded and the present pure food laws require that branding or labeling, and even after it comes into the hands of a retailer in the State, if he changes or removes the carton, it would be a violation of the existing pure food laws, in my opinion.

I go into the pure food laws. That is the principal theme of this whole statement.

I am sure all Senators 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.

This was a little different period from the period cited by the Under Secretary of the Treasury, but these figures were taken from the records.

In only two cases was margarine seized for contamination, filth, addition of foreign matter, decomposition, or similar reasons. Butter was 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 four to five 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 thus 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 believe it is the only food product that has that special treatment.
The CHAIRMAN. By express exemption.

Senator FULBRIGHT. In the Pure Food, Drug, and Cosmetic Act.
The CHAIRMAN. In the Pure Food and Cosmetic Act?
Senator FULBRIGHT. That is correct.

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 interest 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.

I am sure that most Senators, as well as the public generally, have a genuine respect for what are called the pure food and drug laws. They are not only so regarded by the Congress and the public, but they are likewise appreciated by the people whom they most directly affect in the commercial world; the manufacturers, distributors, and retailers.

I would like to discuss, briefly, the provisions of these laws with respect to the protection they give the consumer against the fraudulent sale of margarine, white or colored, as butter.

Section 301 of the Federal Food, Drug and Cosmetic Act includes these prohibitions, which have application to margarine :

The introduction or delivery for introduction into interstate commerce of an adulterated or misbranded food.

The adulteration or misbranding of any food while in interstate

commerce.

The receipt in interstate commerce of a misbranded or adulterated food.

The alteration, mutilation, destruction, obliteration, or removal of the whole or any part of the labeling of, or the doing of any other act with respect to a food, if such act is done while such article is held for sale after shipment in interstate commerce and results in such article being misbranded.

In addition this section prohibits the refusal of access to or copying of records, and entry or inspection of premises, provided in sections 703 and 704. These sections are as follows:

SEC. 703. For the purpose of enforcing the provisions of this Act, carriers engaged in interstate commerce, and persons receiving food, drugs, devices, or cosmetics in interstate commerce or holding such articles so received, shall, upon the request of an officer or employee duly designated by the Administrator, permit such officer or employee, at reasonable times, to have access to and to copy all records showing the movement in interstate commerce of any food, drug, device, or cosmetic, or the holding thereof during or after such movement, and the quantity, shipper, and consignee thereof; and it shall be unlawful for any such carrier or person to fail to permit such access to and copying of any such record so requested when such request is accompanied by a statement in writing specifying the nature or kind of food, drug, device, or cosmetic to which such request relates.

SEC. 704. For the purposes of this Act, officers or employees duly designated by the Administrator, after first making request and obtaining permission of the owner, operator, or custodian thereof, are authorized (1) to enter, at reasonable times, any factory, warehouse, or establishment in which food, drugs, devices, or cosmetics are manufactured, processed, packed, or held, for introduction into interstate commerce are held after such introduction, or to enter any vehicle being used to transport or hold such food, drugs, devices, or cosmetics in interstate commerce; and (2) to inspect, at reasonable times, such factory, warehouse, establishment, or vehicle and all pertinent equipment, finished and unfinished materials, containers, and labeling therein.

All these provisions, prohibiting adulteration or misbranding of food from the time of its manufacture until its sale to the consumer, and permitting full powers of inspection and accounting, certainly guarantee, as fully as is possible under the Constitution, that margarine in interstate commerce shall be sold for exactly what it is.

Penalties imposed for the violation of these provisions, including refusal to permit inspection and access to records, are imprisonment for up to 1 years or fine of $1,000, or both. For a second conviction or upon violation with intent to defraud or mislead the penalties are 3 years imprisonment and fine of $10,000 or both.

Furthermore, the Federal Government has the power of seizure of any food adulterated or misbranded, while it is in interstate commerce, or at any time thereafter.

Senator TAFT. That is not set by that last line, "or at any time thereafter"?

Senator FULBRIGHT. No.

The CHAIRMAN. It is sustained by the Sullivan case.

Senator FULBRIGHT. I think the Sullivan case sustains that. Senator TAFT. We have a bill on the calendar purporting to restore this condition.

Senator FULBRIGHT. That is the Miller bill. I refer to that later. Is that not what the Senator has in mind? But the Sullivan caseSenator TAFT. Which said you could not seize adulterated food after

Senator FULBRIGHT. The Sullivan case I discuss a little later, which involved the taking of sulfa tablets out of a properly labeled package, and sold in the sack without any label on it, after it had come into the hands of the retailer, if that is what the Senator has in mind.

Senator TAFT. The case I refer to that this bill was intended to correct, if it could, there was a case holding that the Federal Government could not seize food which deteriorated after it had passed out of interstate commerce.

Senator FULBRIGHT. Perhaps after it was no longer held for sale. Senator TAFT. It spoiled after it had come to rest.

Senator FULBRIGHT. I am not sure about that case. I do refer to the Sullivan case later in this statement.

The CHAIRMAN. The Sullivan case threw some doubt on whether it would apply the same rule to food as it did to drugs. It seemed to have been brought to the attention of the court, could, for example, a merchant-a corner-grocery storekeeper-be brought under regulation and penalty if he took a box of candy sticks, the box being properly marked and labeled as to content, and broke the box and put the separate candy sticks into the showcase and sold them without any kind of marking or branding-whether that sort of a transaction would come under the rule.

My memory is that the court declined to go into that, and said in effect, "We will consider that when we come to it," which may pose the question as to the extent of that decision.

Senator TAFT. The case I refer to is the Phelps Dodge Mercantile Co., which held that foods and drugs that become filthy, debased, deteriorated, after interstate transportation, could not be seized by the Government. In other words, if they were in proper condition, if they came through in interstate commerce, and then spoiled after they reached the point of destination for retail sale, the Government could no longer seize them.

Senator FULBRIGHT. I believe the Senate report on the Miller bill that I referred to stated that the Sullivan case came subsequent to that case, and that they thought it might overrule that interpretation that it was beyond the power of the Government to seize, but the Miller bill, as I understand it, is designed to make clear and definite the power to seize. It was designed to meet the situation which arose under the Phelps-Dodge case.

The CHAIRMAN. I think it should be be said that in the Sullivan case the Supreme Court did not cast any doubt on the constitutionality of a measure that would follow a food product through in the way in which you have described it.

Senator FULBRIGHT. Yes, sir.

The CHAIRMAN. The question being if the Congress should decide to go along that kind of a route, whether the present law is sufficient, or whether it needs amendment.

Senator FULBRIGHT. That is correct.

The CHAIRMAN. I think also, Senator, you may be coming to it, but also there is a line of cases in connection with the Food Marketing Act, and in connection with the Price Adjustment Act, where the transactions were purely intrastate but if they throw economic burdens on interstate transactions, or have a tendency to disrupt interstate controls, they can be brought under judicial control.

Senator FULBRIGHT. They can be. Of course, I mention later that practically all of the States have restrictions as onerous as this is and they have been in effect and will continue to be in, that is, if they want to do that. There is a specific exemption in the law with regard to occupying this field, that is, in our Federal statutes, that that specifically permits States to go ahead and regulate these matters even though the Federal Government has undertaken regulation also. The CHAIRMAN. The chairman is hopeful that during the discussion of both sides that the possibilities of constitutional regulation in this field will be rather thoroughly explored.

Senator FULBRIGHT. I doubt that I could add anything to the chairman's great knowledge of that aspect of it or anybody could, but I will give you a suggestion later here.

The CHAIRMAN. I have just been passing my coals to Newcastle. Senator FULBRIGHT. The Federal Security Administrator has the power to promulgate regulations fixing and establishing for any food a reasonable definition and standard of identity, designating the ingredients which shall be named on the label. Under this power, he has established a Definition and Standard of Identity for Oleomargarine, prescribing its ingredients and labeling requirements.

The act includes many additional provisions which broaden its scope, and make very clear the protection afforded the consumer. For example, section 403 provides that a food shall be deemed to be misbranded-making violation subject to the penalties I have mentioned—

1. If its label is false or misleading in any particular.

2. If it is offered for sale under the name of another food. That is one I would say particularly they are concerned about in this legislation.

3. If it is in imitation of another food, unless so labeled. 4. If its container is so made or filled as to be misleading. 5. Unless it bears a label containing the name and place of business of the manufacturer, packer, or distributor; and an accurate statement of the quantity of the contents.

6. If any word, statement, or other information required by the act to appear on the label is not placed with such conspicuousness and in such terms as to render it likely to be read and understood by the ordinary individual under customary conditions of purchase and use.

7. If it purports to be or is represented as a food for which a definition and standard of identity has been prescribed, unless it conforms to such standard, and its label bears the name specified by the standard.

8. If it contains any artificial coloring, flavoring, or chemical preservative, unless its label so states. This provision, incidentally, is expressly inapplicable to butter, cheese, or ice cream.