Ellen E. Zirpel and Edith P. McDermott each for herself being duly sworn deposes and says that on the 8th day of June 1944, in company of each other, they did purchase at the Vita Health Food Co. 1228 H Street, NW., Washington, D. C. 1 pint of soya butter;

That the label upon the carton of said soya butter stated that the product was manufactured at Cedar Lake, Mich.;

That the said pint carton of soya butter contained 131⁄2 ounces of said product according to the label thereon;

That the cost of said pint of soya butter was 59 cents;

That no ration points were required for the purchase of said soya butter;
Further deponents saith naught.

ELLEN E. ZIRPEL.
EDITH P. MCDERMOTT.

Subscribed and sworn to this 9th day of June 1944 before me, a notary public in and for the District of Columbia.

[SEAL]

My commission expires January 31, 1946.

ELLEN M. DASHILL.

Mrs. TAYLOR. This container, which contains 131⁄2 ounces, sells in Michigan for 36 cents and no points. In Washington the purchase price was 59 cents and no points. There seems to be some confusion regarding points and very little system in the sale because when Mr. Skiver, who testified yesterday, tried to buy some at the same store he was asked for 6 points. We later sent two young ladies down to purchase it, and the store sold it to them for 59 cents without any points. Two days ago a colored woman who is connected with the janitor service in our building went in to the store and bought a package without any points.

The Bureau of Internal Revenue does have authority to prosecute; but both the Bureau and the State of Michigan have been enjoined from taking action and the company continues to operate while the case is pending.

The Food and Drug Administration, as has been said, is powerless in intrastate fraudulent operations and cannot protect the consumer. One of the recent cases which I may cite as an example is the famous Louisiana case. I quote from the combined annual reports of the Food and Drug Administration for the period from July 1, 1941, to June 30, 1943, on page 38:

One of the most flagrant cases of spurious butter encountered concerned an individual known to have made at least $15,000 in the 10-month period prior to fat rationing through buying oleomargarine at from 16 to 22 cents a pound, coloring it, wrapping it in quarter-pound sticks, and selling it as country butter at 45 cents a pound to small retailers who sold it at 60 to 65 cents a pound. These operations, entirely local in scope, resulted in actions by both the State where the fraudulent butter was packaged and marketed and the United States Treasury Department which charged evasion of the oleomargarine tax regulations.

This is again a case where the Pure Food Administration was powerless but the Internal Revenue Bureau could act.

Senator ELLENDER. On account of the internal revenue tax?
Mrs. TAYLOR. On account of the definition also.

Senator ELLENDER. Yes, the definition involved the tax.
Mrs. TAYLOR. Yes.

Following action on each of the oleomargarine bills which have been before the Congress this session-I am referring to the Fulmer bill which was killed by the House Committee on Agriculture last fall and

the Maybank bill which failed of paassage on the floor of the Senate las January-I received a flood of literature blaming the farm bloc and the farm lobby for the defeats.

The same expressions, such as "powerful dairy bloc," "farmer lobby," ""once again the farm bloc," and "pressure of dairy interests" are repeated over and over, showing that they must have had

a common source.

They come to me mostly in the form of reprints mailed by the National Association of Margarine Manufacturers, the National Cotton Council, the Association of Southern Commissioners of Agriculture, and professional publicity people. I have some of them here. Some research work in connection with the laws on oleomargarine in other countries proved rather interesting. The Congress of the United States passed the original oleomargarine bill in 1886. About the same time, during the years 1885 to 1888, the following countries passed laws governing butter substitutes: Sweden, France, Russia, Germany, England, and Denmark. Denmark in 1888 made a distinction between "margarine" and "oleomargarine" and required different-shaped containers.

I was rather interested in that, and I wondered just why, and I understand the same condition holds in other countries.

Senator ELLENDER. Without wanting to interrupt you, and without knowing what you would say about these different-shaped containers, I suggested to some witness yesterday or the day before, whether it would be advisable to have the law amended so that the element of fraud could be done away with by forcing the margarine to be packed in a certain-shaped container, whereby the contents of that container could not be transferred from that container to one containing butter.

What would you say to that?

Mrs. TAYLOR. Of course, that would help enforcement, but my point here was why do they distinguish between the terms "margarine" and "oleomargarine"?

They are apparently two different products. Here we are trying to change the name of oleomargarine to "margarine" when abroad they apparently consider them as two different products. I do not know the answer. I just came across this last night. Margarine in Denmark, for example, must be oval in form and clearly marked "margarine," and oleomargarine must have the form of a frustum of a cone, the height of which shall be at least 1% times that of the greatest diameter. They are two different products.

Senator ELLENDER. I am of the firm belief that every precaution should be taken in order to prevent anybody from selling margarine as a butter product, and so far as I am concerned, speaking for myself, I will cheerfully promote any law that would punish anyone selling margarine as butter, because I think it is absolutely wrong, and if margarine cannot stand on its own bottom, then they ought to quit making it.

Mrs. TAYLOR. I was rather interested, and I would like to know what was the distinction between the two products and why the oleomargarine interests are interested in changing the name.

Senator ELLENDER. As I recall, from the list that was furnished us of the ingredients included in oleomargarine, they were oleo oils, and that is probably where it got its name, margarine or oleomargarine.

I don't believe it makes much difference, as far as the name is concerned, just so long as it is sold as margarine and not as butter. Mrs. TAYLOR. Well, that is just one of the points in this bill that I was interested in.

Continuing with our research work, we found that the following countries still have laws regulating the manufacture or sale of butter substitutes. Although it has been impossible to obtain definite information on these laws since the outbreak of the present war from Axis and Axis-occupied countries: Germany, Denmark, Czechoslovakia, Netherlands, Sweden, Norway, Belgium, Finland, Italy, France, Canada and South Africa, New Zealand, and Australia. Senator AIKEN. Did you read Belgium?

Mrs. TAYLOR. Yes, sir; Belgium is named.

Senator AIKEN. Belgium is 85 or 90 percent urban population. Mrs. TAYLOR. But every country that permits the manufacture and sale of oleomargarine has laws which indicates that it is an economic problem and not put forth by just some pressure group, some farm-minded group in the legislative body. Surely the farm bloc or the farm lobby is not responsible for all these laws. Practically every country which permits the manufacture or sale of oleomargarine have laws, which indicate that an economic problem is involved.

I have here a chart. This has been distributed to the members of this committee. It is published by the National Association of Margarine Manufacturers, Munsey Building, Washington, D. C. It says that oleomargarine is a farm product of 44 States, purporting to show that oleomargarine is an important farm product that builds income for farmers.

The chart shows symbols superimposed on various States. These symbols lable these States as leading corn, cotton, soybean, peanut, and cattle-producing States.

This chart has been studied to see just what oleomargarine means to the farmers of these various States. It has been assumed, as the chartmakers have assumed, that each State gets no proportionatne share of income from ingredients used by the oleomargarine industry. In our study, statistics compiled by Bureau of Agricultural Statistics for 1942 were used.

This analysis includes a study of the States which are represented by members on this subcommittee in addition to the home State of the sponsor of the bill, S. 1744. I will take Vermont first:

Vermont is listed as a leading corn-producing State.

In 1942 Vermont produced 2,800,000 bushels of corn.

The farm value of this corn was $2,744,000.

Vermont farmers in 1942, however, sold off their farms only 2,000 bushels of corn.

The oleomargarine industry in 1942 used a total of 1,690,000 pounds of corn oil.

One and a half pounds of corn oil is produced from a bushel of corn. Vermont's share of the corn used by the oleomargarine industry in 1942 was 3.8 bushels of corn or 5.7 pounds of corn oil.

At 12.7 cents per pound, the wholesale value of that corn oil was 72 cents. The farm income from the corn used in oleomargarine from Vermont as indicated by this chart totaled 52 cents.

Here is the other side of the story. Farm value of milk produced in Vermont...

If you subtract the 52 cents for Vermont's oleomargarine ingredients_-_

The balance in favor of milk is

$39, 469, 000. 00

· 52

39, 468, 999. 48

On the basis of similar calculations the other States show the fol

lowing:

Iowa:

The value of oleomargarine ingredients from cattle, soybean,
and corn was..

The farm value of milk was..

The balance in favor of milk.

Oklahoma:

The farm value of milk was..

The value of oleomargarine ingredients from cattle, peanuts,
corn, and cotton___.

The balance in favor of milk is

$3, 327, 627

111, 156, 000

107, 828, 373

53, 511, 000

841, 226

52, 669, 774

Senator ELLENDER. You would not have the figures to show what the difference would be in butter and margarine, exclusive of the value of milk, would you?

Mrs. TAYLOR. I haven't them here, but we could produce them for you.

Senator ELLENDER. Well, I would not put you to that trouble, but I thought, since you had gone into the subject, it might be well to have it from that angle, so as to give both sides of it. But if you do not have it, I will not insist on it.

Mr. HOLMAN. Senator, it will be no trouble. We will be glad to file it.

Senator ELLENDER (addressing Mrs. Taylor). Suppose you file that in connection with your statement. Give us a complete picture of it. Senator AIKEN. Professor Staples gave those figures for Louisiana. Senator ELLENDER. You mean milk or butter?

Senator AIKEN. For butter.

Mrs. TAYLOR. We will be very glad to do that.

Senator AIKEN. Since you have gone into that, we would be glad to have you send it to us.

You do not need to be in a hurry about it, but when we prepare all of this data for the permanent record, we will put it in in connection with your testimony.

Mrs. TAYLOR. We will also be very glad to file this chart-I mean in regard to milk.

Senator AIKEN. You can make the comparison as complete as you. desire.

Mrs. TAYLOR. I also have Georgia, Louisiana, and South Carolina here if you care to have me follow them through. We thought that would be a fair selection.

Shall I continue?

Senator ELLENDER. Yes.

Mrs. TAYLOR. I will next take Georgia:

The farm value of milk was.

The value of oleomargarine ingredients from cotton, corn, peanuts,

and soybeans was..

The balance for milk was.

$38, 103, 000

1, 134, 051

36, 968, 949

Louisiana:

The farm value of milk was.

The oleomargarine ingredients from cotton, corn, peanuts, and soybeans was.

The balance for milk was_

$21, 861, 000

739, 648

21, 121, 352

South Carolina:

The farm value of milk was.

The oleomargarine ingredients from cotton, corn, and peanuts.

The balance for milk was..

22, 405, 000

758, 403

21, 380, 670

We are prepared to furnish the committee with the details of every other State after this study is completed. I believe, however, that the illustrations that I have presented show conclusively that the chart was distributed with the intention of befogging the issue and winning farm support.

Mr. A. G. Hopkins gave some advice to the butter manufacturers in his testimony on Tuesday. He suggested that they "concentrate their efforts on making better butter" instead of "fighting the sale and distribution of margarine." He added that "their butter business would be in much better condition than it is today and margarine would get much less free advertising."

I would like to give some advice to the oleomargarine manufacturers. If the oleomargarine manufacturers honestly want to give the consumer a lower priced oleomargarine, I would suggest that they reduce their profits and sell the product at a lower price instead of spending so much of their profits on propaganda telling the consumer that the removal of the tax on colored oleomargarine will reduce the retail price on oleomargarine. I might add that I know of no product that needs "free advertising" less.

I recently saw some figures in the Report of the United States Census of Manufactures for the year 1939 which indicated that the oleomargarine manufacturers enjoy a very large profit. The figures given for the oleomargarine manufacturers, exclusive of the packing companies who manufacture the product, show that in 1939, after paying for the cost of materials, supplies, fuel and containers, together with wages, they still had a balance equal to 50.9 percent of the cost of the raw materials as compared to only 13.5 percent left for butter manufacturers. This would seem to explain how the oleomargarine industry can spend large sums for organized propaganda. Katherine Snodgrass, in her book Margarine as a Butter Substitute makes the statement that "With most manufacturers, advertising costs are an appreciable element of total costs, probably at least 10 percent."

I am advised by a competent advertising executive that the advertising expenditures for such food products as bread and butter normally are about 1 percent and rarely exceed 2 percent of the retail price.

In connection with my work I have traveled extensively, visiting our member associates. I have talked with many people, producer members of our organizations and their wives. I have attended food

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