Mr. ANDRESEN. Was that after this new package came on the market, or before?

Mr. GILBERT. Oh, I think that was actually after the new package came out on the market, but I assure you that there was absolutely no connection between the two. If you want to know our feeling about the new package, I will be very glad to explain it to you, because Mr. Peters made certain statements and at least he implied certain things about our company.

The new package is not as simple as some of you gentlemen may think it is. It so happened that when Mr. Peters had his first, or one of his first meetings with representatives of my company, by chance I was in Chicago on that day, and I attended that meeting. He told us about that package. We took that package back to New York, and we had our quality and research department, our quality control and research department, investigate that package.

Leaving aside all elements of cost, not only the royalty to Mr. Peters but what the manufacturers charge for that, which has to be paid by the consumer, leaving aside all elements of cost and the fact that additional machinery, new machinery, has to be built and put in to fill that, our major concern was that our quality and research department told us that as a result of the use of that package the quality was reduced. You have an inferior quality as the result of that package.

Mr. ANDRESEN. That is what your scientists said?

Mr. GILBERT. That is right. And in view of our obligation to the American consumer, we certainly could not go into that package. We are trying to make our product as good as possible and not trying, after all of these years, all of these improvements, to reduce the quality of that product.

Mr. ANDRESEN. I will accept your explanation on that.

Now, can you tell us something about the indirect expenditures that you have had in connection with this legislative campaign?

Mr. GILBERT. I might say I overlooked one direct expenditure. There probably have been some, but I did not come prepared to talk about those things. I have been an interested observer here. Dr. Deuel mentioned the other day that we paid his expenses from Chicago here and from here to Cincinnati. Yes. We paid for that. I might say he spent 1 night here. He expected to appear on Monday and he did not appear until Tuesday, and he had a $6 hotel room. We paid for that, too. Also his meals while he was here. We did not pay for his meals on the train coming here and going west.

Mr. ANDRESEN. And then you did not pay for his studies in preparation for his statement here?

Mr. GILBERT. Let me explain about Dr. Deuel. Contrary to what some of the people here who are not as well versed in science as some other people are saying, Dr. Deuel is probably one of the most outstanding experts in this country in the field of food facts. He probably has done more personal experimental work in that field than any living man in this country.

Our company, in connection with quality control and investigation, years ago adopted a policy of trying to find out everything possible about the nutritive qualities of fats, of margarine, and so forth. From time to time we have given grants to universities to make investigations, which is not an uncommon thing, as you know. Numerous

companies, not only commercial but noncommercial companies, give grants for research work.

Our own research department does work also, but we realize that at least to some of my acquaintances in this room that if work came from our own research department it might be somewhat suspect.

Mr. ANDRESEN. Did you give a grant to Dr. Deuel?
Mr. GILBERT. We did not give a grant to Dr. Deuel.
Mr. ANDRESEN. Or to his school?

Mr. GILBERT. We gave a grant to the University of Southern California. They in turn assigned to us the competent people within that university, and Dr. Deuel is the head of that department. The grant is also made on the direct understanding that the results of any work can be published, regardless of the outcome.

Mr. ANDRESEN. Did you give a grant to the medical man who made the investigation in Chicago?

Mr. GILBERT. No, sir; not any part of that.

Mr. ANDRESEN. Do you know what they got in the grant from any source?

Mr. GILBERT. I do not know how that worked, but I think there is a footnote in their work, which is published.

Mr. TRUITT. I made a statement on that. That grant was made by the National Association of Margarine Manufacturers subject to the same conditions that Mr. Gilbert outlined with the University of Southern California; in other words, published irrespective of results. Mr. GILBERT. I read that work, and that is published. That is stated right in the work.

Mr. ANDRESEN. Have you made any grant or gift or donation to any of these women's organizations that have appeared here?

Mr. GILBERT. No, sir. I did not know what women's organizations would appear here until I heard them.

Mr. ANDRESEN. You ought to join Mr. Truitt's association, and then you would know.

Mr. GILBERT. He has been asking me to join for some time, but we have not done so yet.

Mr. MURRAY. I want to clear something up.

The CHAIRMAN. Mr. Murray.

Mr. MURRAY. I never saw Dr. Deuel before, but I grant that he has a right to his opinion. I do not claim to be a nutritionist, but at least I can read the English language and I went to school a few days. He said they ought to be using more oleomargarine for cooking right in the face of the fact that today oleomargarine will sell for 70 percent more than lard and right in the face of the fact that the lard has got 22 percent more calories. That is No. 1.

No. 2 is that his experiments that he tried to show his conclusion on would not stand up as shown by Dr. Sommers' testimony today, because it is not fair to go and say that vegetable oil is equal to an animal fat when you have to go and doctor your vegetable oil with two different dairy products in order to run your experiment.

Mr. GILBERT. Mr. Chairman, I will only answer Mr. Murray in one respect. It is not my purpose to try to set him up as against me or me against him as to which of us is the greater nutritional expert. However, I will say that any comment you make about Dr. Deuel is probably disproven by Dr. Sommers himself, because in his testimony he did not in any way criticize the work or the testimony of Dr. Deuel.

I will quote from Dr. Sommers' testimony today. He said: Nutritional equivalency is difficult to prove or disprove. Dr. Deuel and other nutrition experts

He calls them experts

unquestionably agree with this statement. Dr. Deuel brought this out very forcibly when he cited experiments with rats carried through 20 generations. Yet he seriously departs from this principle when he accepts and cites the study by Leichenger, Eichenberg, and Carlson.

Then Dr. Sommers goes on and discusses Dr. Carlson and the other gentlemen's work. In no way did Dr. Sommers even attempt to show that the work of Dr. Deuel was not the finest scientific work on animal fats.

Mr. MURRAY. If you will look up the record, you will find I did not say that. I said to read Dr. Sommers' testimony, and that is what I meant.

Mr. GILBERT. Here is his testimony. Find it.

Mr. MURRAY. I read the testimony. I was going to ask Dr. Deuel if he would put his professional reputation on that experiment, that phony experiment out in Chicago. Any child should know that the Chicago experiment will not stand analysis.

Mr. GILBERT. Dr. Deuel testified as to his own work

Mr. MURRAY. Oh, no.

Mr. GILBERT. Wait a minute, Mr. Murray. Let me finish. Even at a basketball game when the whistle blows you can complete the shot. I am in the middle of a sentence.

Dr. Deuel testified on his own work, copies of which he submitted for the record, and he told this committee the conclusions to be derived from those experiments.

In reviewing the literature, or part of the literature, he referred to the work done by these three doctors in Illinois.

Mr. MURRAY. That is right.

Mr. GILBERT. And in response to a question, he stated that in his opinion there was no finer scientist in this country than Dr. Carlson, who was one of the gentlemen who was in on that experiment.

Mr. MURRAY. But the point is that Dr. Deuel gave his blessing, evidently, to the Chicago experiment, which is absolutely a phony experiment in any man's language.

Mr. GILBERT. Because you say so.

Mr. MURRAY. No, because I know it is so.

Mr. GILBERT. Well, let the scientific world decide whether Dr. Carlson or Mr. Murray is right.

Mr. SIMPSON. Mr. Chairman, I would like to ask the president of Best Foods

Mr. GILBERT. I am not the president.

Mr. SIMPSON. You represent Best Foods?

Mr. GILBERT. Yes, sir.

Mr. SIMPSON. Do you sell your product to the retail stores? Mr. GILBERT. In part we do. Our system of distribution is twofold. We have independent distributors in various localities throughout the United States. They are independently owned. They are local businesses. We also have in certain areas of the United States what we call wholesale branches, which is part of our same company, and those wholesale branches sell to retail stores direct.

Mr. SIMPSON. Can you tell the committee whether or not this discrimination exists, if your wholesale concern calls on a wholesale grocery merchant and takes an order for 6 cases of margarine to be delivered on Monday, when your truck or the wholesale truck comes to the store with the 6 cases of margarine, can you deliver him 12 if he wants it?

Mr. GILBERT. No, sir. Since the gentleman has asked that question, may I explain the answer in full?

Mr. SIMPSON. Yes.

Mr. GILBERT. Gentlemen, Mr. Simpson has pointed his finger at something which has not come out in these hearings. There are so many burdens in this Federal tax law on margarine that affect dealers. and affect everybody in the business, going right to the distribution. One of the positions is that unlike any other food product the wholesaler's truck cannot come up to the retailer's store and say how much margarine can they take today and then go to the truck and deliver the margarine.

Mr. SIMPSON. Do you have to take an order in advance?
Mr. GILBERT. You have to take an advance order.

Mr. SIMPSON. And go back to the warehouse and then you deliver it the following day or on a later trip?

Mr. GILBERT. At some subsequent time, only that amount may be delivered.

Mr. SIMPSON. You can only deliver what the grocery has previously ordered?

Mr. GILBERT. That is right.

Mr. SIMPSON. Personally, I think that is a hardship and is discriminatory.

What other discriminations, as far as the retail merchant is concerned, exists?

Mr. GILBERT. Well, let me show you what happens then just on that one with the consumer. That happens pretty regularly. The retailer has not enough products to sell to the consumer because the retailer has to anticipate what he will need and give these advance orders. Now, let us say he sells out more than he had expected. There has only been delivered what he previously ordered.

Mr. SIMPSON. I can understand that part of it.

Mr. GILBERT. And therefore the consumers suffer from that.
Mr. SIMPSON. I can understand that hardship.

Now, notwithstanding the fact that the State of Illinois does not allow the sale of colored margarine within the State, that same condition would exist in my State. For instance, if that condition exists from a Federal law, it could not happen in the State of Illinois. I mean it does happen in the State of Illinois. It would be just the same Mr. GILBERT. Oh, surely, yes. Remember, the Federal law is under the tax power.

Mr. SIMPSON. What other similar hardship, if any, or discrimination exists similar to the one I pointed out?

Mr. GILBERT. Let me show you another thing that happens right in the retailer's store.

Mr. SIMPSON. I mean the inconvenience to the retailer in handling it, besides the $48 tax. That is what he pays, is it not?

Mr. GILBERT. If he wants to sell yellow, he pays $48.
Mr. SIMPSON. In a State that allows it.

Mr. GILBERT. Quite.

Mr. SIMPSON. What other unreasonable discrimination exists? Mr. GILBERT. The retailer can only get it in a case. We call it a shipping case. It is 10, 12, or 24 pounds, and so forth. Naturally, he wants to keep that refrigerated. He may not have any single pound of oleomargarine taken out of the shipping case until the time of sale. Do you see what I mean?

Mr. SIMPSON. No. I do not.

Mr. GILBERT. Well, he cannot take that case of margarine and dump out 12 individual 1-pound cartons, take them out of the case, and then put them wherever it sets in his refrigerator. He must keep them in that big shipping case, which may have 12 pounds or 24 pounds. Mr. SIMPSON, I see.

Mr. GILBERT. A single pound cannot be taken out of the shipping case until time of sale.

Mr. SIMPSON. How does he display it?

Mr. GILBERT. He cannot do it. The only way he can display it is to take it out of the refrigeration and even when he then displays it he must still keep it in the case, and this gets very technical. There are so many of these, and I hope I will not get too technical on it. Mr. SIMPSON. Pardon me at this point.

Mr. GILBERT. He must then cut the case in a certain way and keep the goods in that case.

Mr. SIMPSON. That is like breaking the seal on a package of cigarettes, or a cigar box?

Mr. GILBERT. That is right.

The CHAIRMAN. Let the Chair suggest that we have had statements here from the Retail Grocers Association and from the Wholesale Grocers Association in which I think that was all brought out. It is in the record from the statements furnished by the representatives of those organizations, so I hardly see that it is necessary to repeat at this late hour.

Mr. SIMPSON. That is all.

The CHAIRMAN. If there are no further questions, we thank you very much.

Mr. GILBERT. You are welcome, sir.

The CHAIRMAN. That competes the witnesses, except Mr. Holman is coming back for some cross-examination by Mr. Poage. Will you come forward, Mr. Holman?

FURTHER STATEMENT OF CHARLES W. HOLMAN, SECRETARY, NATIONAL COOPERATIVE MILK PRODUCERS FEDERATION

Mr. POAGE. Mr. Holman, I want to read a little article. It says: Dairy plants are being asked to contribute a sizable amount of money to a fund which is designed to circumvent the efforts of the oleomargarine industry to deceive Congress and the Nation's consumers

to deceive Congress and the Nation's consumers

with respect to the vital issues involved in the existing contoversy. The fund is being created by three national organizations, the American Butter Institute, the National Cooperative Milk Producers Federation, and the National Creameries Association. It is intended to meet not only the current situation but the anticipated future efforts of the oleomargarine interests for the dairy industry knows full well that if the oleo crowd is beaten this year it will be back again before the next session of Congress.