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tax was put on the product itself in the same way that the 4-cent tax is imposed, so that it would, in effect, give the same revenue?

Mr. Rowe. I think, in response to our questionnaire, the wholesale grocers should state that we would handle it, we do not handle margarine, but would handle it if the bill were passed. I think that in that case it would have in mind both the removal of the wholesalers' tax and the retailers' tax, and also the 10-percent coloring, that is, colored-margarine tax.

Senator ELLENDER. You mean a 10 cents per pound?

Mr. RowE. Ten cents per pound. I think we had butter in mind as well as this, because, frankly, it is a merchandising problem.

Senator ELLENDER. Did your association ever give any thought to that suggestion?

Mr. RowE. No; that was what you asked Mr. Johnston about. But, in all fairness, I think our people would answer that they would handle it if the taxes were taken off the merchandise. Frankly, as far as we are concerned, it is a merchandising problem.

Senator ELLENDER. I understand. I would like to ask you if you would agree that if the tax were paid on the article itself, that is, simply that it be placed on the margarine rather than the licensing taxes for the handling of it, would you find that more desirable?

Mr. Rowe. Yes. We do not like these licensing taxes. If there is a straight 10-cent tax on the product, there would not be that would not be as bad as having this licensing tax for the wholesaler and for the retailer.

Senator ELLENDER. The reason for my asking that is that there were several witnesses who testified that the reason why they thought that margarine is not handled by wholesalers and retailers is because of this licensing tax that is put on the wholesaler and upon the retailer. Mr. RowE. Yes; I think that is true.

And I would say that it carries over into both.

Senator ELLENDER. I understand. Do you have any further questions, Senator Aiken?

Senator AIKEN. Is the wholesaler's margin of profit approximately the same upon a pound of butter as it is upon a pound of margarine? Mr. RowE. The O. P. A. fixes that. We do not attempt to set our profits any more, the Government tells us what we can or cannot make. I believe that it is the same, but I would not be able to say without looking at O. P. A. Regulation No. 421. I would not be able to say. That is all fixed by the O. P. A. There are so many of those regulations, I would not dare to express an opinion unless I had the regulation in front of me and knew it was the current one.

Senator ELLENDER. Thank you very much.

Mr. RowE. Thank you for your courtesy, Senator.

Senator ELLENDER. We are glad to have you here, and receive the benefit of your testimony, Mr. Rowe.

(The following supplementary statement submitted by R. H. Rowe in accordance with the request of committee:)

UNITED STATES WHOLESALE GROCERS ASSOCIATION, INC.,

Senator ALLEN J. ELLENDER,

Washington, D. C., June 9, 1944.

Chairman, Senate Subcommittee on Oleomargarine Taxes,
Senate Committee on Agriculture and Forestry,

Washington, D. C.

DEAR SENATOR ELLENDER: According to your request, I am supplementing my testimony given at the hearing on June 8.

I am enclosing copy of the analysis of results of questionnaire sent out by our association on May 24, 1944, to our members, supplemented by two additional columns, namely the total wholesale grocery establishments in the States from which replies were received and also our total membership establishments in those States. Appended to the analysis are certain explanations of abbreviations and figures.

Thomas' Grocery Register of Wholesale Grocers, 1942, gives the total number of such establishments as 4,938. Of this number 3,448 are entered under Thomas' definition A of wholesalers. This latter figure is the number of wholesale grocers in the United States of approximately the type we represent.

I would like to supplement my testimony further by clarifying my remark on the wholesale grocers' mark-up for margarine and butter. Service and delivery wholesale grocers' mark-up for oleo under maximum price regulation No. 421 is 14 percent over their net cost. The mark-up of the wholesale grocer or jobber for butter is 12 cents per pound if bought from the creamery through a primary distributor. If bought direct from the creamery it is 2 cents a pound. These markups are established by Maximum Price Regulation No. 289 (dairy products). Very truly yours,

UNITED STATES WHOLESALE GROCERS' ASSOCIATION, INC.,
R. H. ROWE, Executive Vice President.

Analysis of results of questionnaire on margarine mailed on May 24, 1944, by the United States Wholesale Grocers' Association, Inc., to its members

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1 These omitted address on returned questionnaires. We do not know the States in which they are located. 2 This figure does not represent all the wholesale food and grocery outlets in the States named but only those establishments we consider wholesale grocers, generally speaking, the service and delivery wholesaler as classified by the Office of Price Administration. 3 Total replies to questionnaire received.

Mr. ELLENDER. The names of Mr. Tyre Taylor, general counsel for the National Association of Retail Grocers; and of Mr. F. E. Mollin, of the American National Livestock Association, of which he is the

secretary, have been handed to me as those who could not be present this morning because of traveling difficulties. The committee has agreed to place in the record at this point the written statements of those two parties when they are presented.

STATEMENT OF TYRE TAYLOR, GENERAL COUNSEL, NATIONAL ASSOCIATION OF RETAIL GROCERS, BEFORE A SUBCOMMITTEE OF THE SENATE COMMITTEE ON AGRICULTURE AND FORESTRY

Chairman Ellender and gentlemen of the committee, my name is Tyre Taylor; my address, 712 Jackson Place, Washington, D. C. I appear before you on behalf of the National Association of Retail Grocers, 360 North Michigan Avenue, Chicago, Ill. For more than 50 years this association has been the recognized spokesman for the independent retail grocers of the United States, and its membership is presently comprised of more than 60,000 individual grocers and some 475 affiliated State and local associations.

The opposition of the independent retail grocers of the country to the unjust and unnecessary Federal license taxes and restrictions imposed on the sale of oleomargarine is of long standing. For more than 40 years our members have expressed in recurring national conventions-the most recent of which was held in Chicago this week and with virtual unanimity-their conviction that the special license taxes on oleomargarine are not only wrong in principle but are indefensible from any point of view.

The Federal oleomargarine law was originally enacted in 1886 and amended in 1902, 1930, and 1931. The original purpose of the legislation was to prevent the manufacturers and distributors of this product from resorting to fraudulent practices. There can be no doubt but that during the eighties and nineties the adulteration of food products was practiced to a greater or lesser extent the country over. However, today's conditions, some 38 years after the enactment of the Federal Food and Drug Act of 1906, are a far cry from the days when wooden nutmegs were freely circulated; when wheat flour was adulterated with corn flour and buckwheat with wheat middling; when Vermont maple sirup was made from the sap of trees that grew in the heart of Chicago; when strained honey was produced without any strain of any sort on the bees; when milk was robbed of its cream and filled with lard-and so on. From this standpoint, it would seem that the special oleomargarine laws are as unnecessary today as would be a stray-stock law in the District of Columbia. In this connection, I might add that the product is sold in its original containers, and I know of no basis for a presumption that the retailers of oleomargarine are not as honest as the manufacturers of butter.

Independent retail grocers oppose these special taxes and restrictions on the sellers of oleomargarine because they are not necessary to protect the public health or morals as in the case of other special Federal occupational taxes, with which the dealer in oleomargarine is classified, such as dealers in distilled spirits, narcotics, marihuana, and firearms. There can be no such danger in the unlimited sale of oleomargarine. On the contrary, the Department of Agriculture has attested that margarine has the identical digestibility of butter, both being rated at 97 percent. The Department further states that margarine and butter have the same caloric or energy-producing content. Yet, in spite of the fact that there is now a nutrition front almost if not quite as important as the war front-and that there has existed a severe butter shortage-retail sales of this low-priced essential food commodity continue to be thwarted and suppressed through the operation of State and Federal laws.

Various governmental agencies such as the Office of Price Administration, War Food Administration and others of a similar nature, are presently engaged in a program of limiting civilian consumption of certain foodstuffs and at the same time are endeavoring to hold consumer prices at as low a level as is consistent with our present system of distribution. Retail grocers have been and are now cooperating wholeheartedly with this program and will continue to do so. However, they are convinced that the special taxes on margarine today are purely nuisance taxes which have outlived their day. These grocers need the widest variety of trading commodities in order to continue in business and make a fair living. They submit that they should not be taxed out of the sale of oleomargarine.

Of course a $6 annual license tax does not sound like much money. And it isn't for the larger operators, including the chains and supermarkets. At the same time, the latest pre-war figures we have show that 72 percent of all retail food stores in the United States had sales in 1940 of less than $20,000; that 52 percent had sales of less than $10,000; and that about 37 percent had a gross annual

sales volume of less than $5,000. On an average.net profit of 5 percent of sales, the owners of these stores realized approximately $83, $42, and $21 monthly, respectively.

Assuming there has been some increase in volume of sales by these stores as a result of increased purchasing power attributable to the war, operating costs have also gone up, so it is safe to conclude that the net profits of this type of distributor are still so small that a $6 license tax-plus the trouble and red tape involvedoperates as a substantial deterrent to their handling this product. This conclusion finds additional support in the fact that more than two-thirds of the Nation's food retailers do not now deal in margarine; also, that notwithstanding the enormous increase in consumer demand, the number of licensed dealers has increased by only 1,357 during the 3-year period, 1940-43.1

In this connection, the following figures on New York State are illuminating. They were furnished to me by A. F. Guckenberger, executive secretary of the New York State Food Merchants Association.

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'According to the 1939 census of business of the United States Department of Commerce there were 40,222 groceries, combination food stores, and other types of stores handling food in New York State. Of these, 34,326 were independent grocers and 5,860 chain stores. In this same year, according to the report of the collector of internal revenue, there were 12,272 stores licensed to handle oleomargarine. Of these licensed stores 5,300 were chain outlets, representing 90 percent of the number of chain stores operating, while 6,972, or only 20 percent, of the independent stores had such licenses.

"In a survey recently completed among our members it was disclosed that of these not having oleo licenses, 96 percent would sell the product if there were no license fee attached. Those stores not having licenses further disclosed that 92 percent of their nearest chain competitors sold oleomargarine.

"These figures would, therefore, indicate that the present retail license is detrimental to the independent retail type of food distribution."

The tendency of these restrictions to favor monopoly and penalize the small retailer is even more strikingly illustrated by the figures on sales of colored oleomargarine for which a $48 license is required. The last figures I have late 1943-reveal that only 34 such licenses are outstanding and in force and this notwithstanding the fact that sales of colored margarine have increased from approximately 65,000 pounds in August 1942, to approximately 248,000 pounds in August 1943. Of course other factors which operate to keep those smaller retailers from handling colored margarine is the 10-cent excise tax and the low purchasing power of their customers. Nevertheless, we believe that the repeal of these license taxes will help restore equality of opportunity among all retail grocers, both large and small.

The total revenue from the excise tax and the license tax is not substantial. For the fiscal year ending June 1940, the revenue from these taxes was 2.01 million dollars; for 1944 (estimated) around 3 millions. The greatest amount collected from these taxes during the past decade was 2.7 million dollars in 1931, and the least amount was 1.3 million dollars in 1933. About half the revenue from oleomargarine taxation (45 percent in 1940) comes from the annual license fee on retail dealers. These taxes do not play an important part in our revenue system.

We submit that every legitimate food product should be permitted to find its place on the open market on the basis of economic law, individual merit, and consumer acceptance. We see no valid reason why either the retail grocer or the consumer should be compelled to pay a special tax for giving any food product that privilege.

The National Association of Retail Grocers has consistently opposed the retail dealers' oleomargarine license tax on the ground that it is an unfair and wholly unnecessary tax upon the functions of distribution; that it is an unnecessary tax on his right to do business in a legitimate food product; that it directly increases his cost of doing business and tends to deprive many of the small independent dealers of handling a wholesome and low-priced food product for which there is a public demand and social need.

By way of summary, we respectfully urge the committee's favorable consideration of the legislation which repeals the retail dealer's occupational tax on the sale of oleomargarine because such tax: (1) Bears no reasonable relation to the public health; (2) is not justified as a revenue measure; (3) operates injuriously against the independent retail grocer, because (a) it increases his overhead and diminishes his profits, (b) it is particularly prejudicial to the small merchant in that it gives a competitive advantage to the large and wealthier corporate chains;

1 163,791 as of fiscal year ending June 30, 1943;162,434, 1940.

and (4) it operates to the injury of the poorer class of consumer by increasing the price of an essential food item, and, in many cases, even denies him the privilege of purchasing the product.

Í thank you.

STATEMENT OF MR. F. E. MOLLIN OF THE AMERICAN NATIONAL LIVE STOCK ASSOCIATION

Hon. ELLISON D. SMITH,

OFFICE OF EXECUTIVE SECRETARY,
Washington, D. C., June 13, 1944.

Chairman, Senate Committee on Agriculture,

Washington, D. C.

DEAR SENATOR SMITH: I regret that I was unable to be present last week when S. 1744, introduced by yourself, was under consideration. I would therefore appreciate it if you would file this letter in the record as evidencing our interest in the passage of said bill.

Fat is one of the important byproducts of the beef-cattle industry. Until the passage of the Brigham bill, in 1941, calling for a 10-cent tax on oleomargarine even though made of naturally colored domestic fats, the oleomargarine industry provided a substantial outlet for this byproduct. We do not think there is any justice in taxing one domestic product for the benefit of another, and for that reason we strongly urge that the various taxes which interfere with the natural use of these products should be repealed.

We do not believe there should be any controversy between the dairy industry and the oleomargarine industry in this regard. There is room for both and if the amount of time, money, and effort that has been wasted in controversy over this subject was devoted to improving the product manufactured by both of these industries, I think the industries themselves and the consuming public would be far better off.

Very truly yours,

AMERICAN NATIONAL LIVE STOCK ASSOCIATION, By F. E. MOLLIN.

Senator ELLENDER. I will now call on Mrs. Otto Hahn.

STATEMENT OF MRS. OTTO HAHN, PRESIDENT OF THE HOMEMAKER'S FORUM, INC., AND HONORARY CHAIRMAN OF THE NEW YORK CITY FEDERATION OF WOMEN'S CLUBS, NEW YORK CITY, N. Y.

Senator ELLENDER. Will you give us your name and occupation, please, Mrs. Hahn?

Mrs. HAHN. My name is Mrs. Otto Hahn. I sign a great many of my articles as Eleonore F. Hahn.

Senator ELLENDER. I understand that you are connected with the New York City Federation of Women's Clubs and the Homemaker's Forum?

Mrs. HAHN. That is correct.

Senator ELLENDER. Will you tell us what those are, and what they think about this bill.

Mrs. HAHN. Excuse me. First, Mr. Chairman, I would just like to say that, being accustomed to women's organizations, how delightful it is to be here with men in the majority. [Applause and laughter.] I am president of the Homemakers' Forum, Inc. It has been in existence since 1913. Its purpose is to, and it is engaged in, studying the problems of the home particularly with regard to the legislation for pure food and the problems of the consumer in general.

We are affiliated in New York City with the New York City Federation of Women's Clubs, which is composed of perhaps 400 clubs, so

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