Inasmuch as it has been stated here that it is a food, and I think myself separate from the butter. If I had the privilege and could buy the butter, I would pay 10 cents a pound more for it. Maybe it is just imagination that I think it is better than oleo. At the same time, if I could not get butter, I take it as the next best. In regard to the duties of this committee, you seem to be in a position where you must take sides. Your interest, of course, is to get the taxes for the Government. Next, you are to defend the producers of the article, and next you are to defend the consumers of the article, and like the million and one taxes we have now, I think it is a useless tax and the cost to the Government of collecting it is a whole lot more than the revenue that comes from the taxes. Mr. ZIMMERMAN. We certainly thank you for your appearance. Now, shall the committee hear Mr. Holman for 5 minutes? Mr. POAGE. What would be gained by hearing Mr. Holman now? Let the defense put on what they please when they get ready to put on their case. Mr. ANDRESEN. It is the wish of the committee. I thought he might make a 5-minute statement outlining the position of the dairy groups, so that some of these men who have not made up their minds, like the gentleman from Texas, might have a little advance information. Mr. POAGE. I will be here when he takes the stand on the 15th. STATEMENT OF MRS. ANNIE GAREN, HOUSEWIFE Mrs. GAREN. Mr. Chairman, I am merely a bystander, a mother of three sons who are serving their country. I have been most of my life at the head of a household of 10 members. I have served as purchasing agent for that family, and so on. The objection I have to this tax is not to paying the tax, so much, as to the work that is required to collect the tax. Oleomargarine should not be taxed. It should not have to pay a Federal tax. Anyone trying to sell oleomargarine has to have clerical help and accountants and what not to figure up how much he should pay, and I am sincerely opposed to a tax on oleomargarine. Mr. ZIMMERMAN. We thank you for your appearance and your state ment. Now, so far as I know, that concludes the hearings for the proponents of this bill. We are going to meet, I believe, as we announced the other day, on Thursday morning to consider further the citrus question. Mr. PHILLIPS. Was the sugar beet question finished? Anyway, it is sugar beets and citrus. Mr. ZIMMERMAN. And at this point, Mrs. Wheeler, the chair wishes. you to get in touch with the gentlemen representing the O. P. A. who were here on Monday, and ask them to be here tomorrow morning to show cause, if any there be, why they will not produce the plan which this committee asked them to submit to it, and which they have submitted to Mr. Vinson for his approval. Mr. ANDRESEN. And I understand also that it has been agreed that we meet here Friday morning at 10 o'clock, on H. R. 2400, to consider the departmental recommendations made on this bill and such other matters as may come before the committee. Mr. ZIMMERMAN. Well, that may be understood, but there was objection. Mr. McCORD. The gentleman is correct. We did agree on that. However, I will now make a motion to that effect, that the committee meet at 10 o'clock, Friday, for that purpose. Mr. ZIMMERMAN. Without objection, it is agreed that the committee so meet, and the secretary will take notice of it. The committee stands adjourned until tomorrow morning at 10 o'clock. (Whereupon, at 12:35 p. m., the committee adjourned to meet at 10 a. m., Thursday, November 4, 1943.) Hon. H. P. FULMER, Chairman, Committee on Agriculture, WAR FOOD ADMINISTRATION, Washington, September 25, 1943. House of Representatives. DEAR HAMP: In response to your request of June 21 to my predecessor for a report on your bill, H. R. 2400, he asked certain men in the Department who had made a study of taxes on oleomargarine to prepare a factual analysis on the subject. This has just come to my attention in connection with your request to me of September 13 and a copy of this statement of the economic effects of the bill is enclosed for the consideration of your committee. The prevailing taxes upon oleomargarine are a part of the permanent law enacted by Congress and the matter of repealing or reducing these taxes, or of possibly suspending them for the duration is a question which, in my judgment, should be determined by the Congress. The Bureau of the Budget advises that it has no objection to the submission of this report. Sincerely, MARVIN JONES, Administrator. ECONOMIC EFFECTS OF H. R. 2400 H. R. 2400 is a bill "to eliminate the provisions of the Internal Revenue Code relating to taxes on domestic margarine and relating to license taxes upon manufacturers, wholesalers, and retailers of margarine." It would repeal all Federal taxes based on the domestic manufacture and sale of oleomargarine, including the manufacturers' excise taxes of one-fourth cent per pound on uncolored and 10 cents per pound on colored oleomargarine sold for domestic consumption and the special annual taxes of $600 on manufacturers of oleomargarine, $480 and $200 on wholesalers of colored and uncolored oleomargarine, respectively, and $42 and $6 on retailers of colored and uncolored oleomargarine, respectively. The provisions of the present law relating to the excise of 15 cents per pound on imported oleomargarine and its enforcement would be changed only to delete references to the provisions to be repealed. The manufacturers' excise tax of one-fourth cent per pound on uncolored oleomargarine represents about 1 percent of the present United States average retail price of oleomargarine. From July 1939 to June 1942 the annual license on manufacturers and distributors of oleomargarine amounted to about 0.4 cent per pound of oleomargarine withdrawn for consumption in the United States, less than 2 percent of the present retail price. The excise of 10 cents per pound on colored oleomargarine, on the other hand, is equivalent to more than 40 percent of the current retail price of oleomargarine and to more than 50 percent of the retail price in pre-war years. Annual consumption of colored oleomargarine in the United States in 1940-42 averaged a fraction of one-hundredth of a pound per capita, compared with 2.7 pounds of uncolored oleomargarine. Repeal of the taxes on domestic margarine and on manufacturers and dealers would tend to lower prices of uncolored margarine slightly (probably less than 1 cent per pound) and probably would make it possible to sell colored margarine at about the same prices as uncolored. The existence of competition between uncolored oleomargarine and butter is indicated by the fact that year-to-year changes in the consumption of butter are usually accompanied by changes in the opposite direction in the consumption of uncolored oleomargarine. No data exist for determining the degree of competition that might exist between butter and colored oleomargarine. The quantity of butter available for civilians in the period July 1943 to June 1944 is estimated at about 12.7 pounds per capita, about 3.5 pounds under the 1940-42 average. To make up part of this decrease it is planned to provide about 3.8 pounds of oleomargarine per capita for civilian consumption in the same period, about 1.2 pounds more than the average 1940-42 consumption. In a survey of food consumption in nonfarm households in one week in the spring of 1942, larger purchases of oleomargarine were reported by families at low-income levels than by those at the higher levels. Families with incomes from $500 to $1,000 reported twice as much oleomargarine purchased as families with incomes from $2,000 to $3,000.1 In 1940 and 1941 nearly 90 percent of the facts used in oleomargarine were of domestic origin, consisting chiefly of cottonseed oil, soybean oil, and oleo oil. With use of coconut and other imported oils in oleomargarine prohibited during most of 1942, the percentage of domestic fats and oils increased to 98 in that year. The following tables show for recent years the relative importance of the principal fats and oils used in the manufacture of oleomargarine and the importance of oleomargarine as an outlet for these fats and oils. Oleomargarine: Percentage contributed by principal items to the weight of facts and oils used in manufacture, United States, 1938-42 Bureau of Agricultural Economics. Computed from reports of the Bureau of Internal Revenue. Production of specified fats and oils in the United States, and quantity used in the manufacture of oleomargarine as a percentage of production, 1940-42 Bureau of Agricultural Economics. Computed from reports of the Bureau of the Census and the Bureau of Internal Revenue. 1 The survey was made by the Bureau of Human Nutrition and Home Economics and the Bureau of Labor Statistics jointly. Families with incomes from zero to $499 annually purchased less oleomargarine than families with incomes from $500 to $1,499 but more than those with incomes of $1,500 or more. Hon. H. P. FULMER, FEDERAL SECURITY AGENCY, House of Representatives, Washington, D. C. DEAR MR. FULMER: In Mr. Campbell's absence I am acknowledging your letter of September 30 in which you inquire regarding the extent of the Food and Drug Administration's authority in policing the manufacture, labeling, and sale of oleomargarine. Interstate shipments of this product are subject to the requirements of the Food, Drug, and Cosmetic Act. In conformity with the provisions of section 401 thereof, a definition and standard of identity for oleomargarine has been promulgated and is being enforced by us. This standard is set forth starting on page 2761 of the enclosed copy of the Federal Register of June 7, 1941. In connection with the application of the act factory inspections are made of manufacturers to determine whether the product is being made from wholesome ingredients in clean establishments and whether the finished product complies with the standard. This is further checked by the collection of official samples from shipments which have moved in interstate commerce. Where violations are found action is taken by way of criminal prosecution or seizure as provided in the law. Insofar as labeling is concerned, you will note that the standard specifies precisely the manner in which the information required by the standard is to be set forth in conjunction with the name of the product. Of course, all mandatory information must, under the general provisions of the law, appear conspicuously. You are no doubt familiar with the fact that the Bureau of Internal Revenue of the Treasury Department also exercises control over the manufacture and sale of oleomargarine in the light of certain revenue statutes pertaining to that article. In addition, of course, oleomargarine which contains animal fats must be manufactured under the supervision of the Meat Inspection Division of the Food Distribution Administration, Department of Agriculture, in the light of the provi sions of the Meat Inspection Act. Possibly you may desire to contact these two agencies for additional information. If we can be of any further service to you in this matter, do not hesitate to call upon us. Sincerely yours, P. B. DUNBAR, Associate Commissioner of Food and Drugs. Hon. H. P. FULMER, House of Representatives. WAR FOOD ADMINISTRATION, DEAR MR. FULMER: Reference is made to your letter of October 18 relative to the extent of authority exercised under the Federal Meat Inspection Act in the manufacture, labeling, and sale of oleomargarine containing animal fat. The Meat Inspection Act covers meat and meat food products in the channels of interstate trade and that which is exported to foreign countries. Oleomargarine containing animal fat is classed as a meat food product and as such is subject to the act and must be prepared in an establishment operating under Federal meat inspection if entered in interstate or foreign commerce, with the exception of certain exemptions provided in section 21 of the act, as amended, with respect to farmers, retail butchers, and retail dealers. The meat inspection regulations as they apply to oleomargarine provide for manufacture of the product in a sanitary establishment with suitable equipment, use of clean, wholesome ingredients, which includes identification of all animal fats as being derived from animals federally inspected and passed, preparation of the product with ingre dients normal to oleomargarine, and identification of the finished article with informative labels bearing no misleading features. The enclosed copy of Circular Letter 2319, issued June 24, 1941, by the Bureau of Animal Industry when the Meat Inspection Division was part of that organization, contains the standard of identity for oleomargarine which is adhered to in federally inspected establishments. Meat inspection records show that 60,057,659 pounds of oleomargarine containing animal fat were prepared at federally inspected establishments during the fiscal year 1943. There are no provisions of the Meat Inspection Act governing transactions of sale. Sincerely, Hon. H. P. FULMER, Chairman, Committee on Agriculture, ROY F. HENDRICKSON, Director. DEPARTMENT OF LABOR, OFFICE OF THE SECRETARY, Washington, October 23, 1943. House of Representatives, Washington, D. C. DEAR CONGRESSMAN FULMER: In your letter of September 25, 1943, in which you acknowledged receipt of my report as to the effect of H. R. 2400 on the cost-ofliving index, you requested me to furnish you with an additional report as to the effect of that bill on the supply of oleomargarine available to the low-income group in our population, and the potential importance of margarine in the consumption of low-income families. I should like to call your attention to the special interest of the Department of Labor in child health and to the special concern which the Department therefore feels in nutrition at the lowest economic levels. It is in these groups that one finds the largest number of children. The future well-being of the country depends upon the vigor and health of these children. Normally the Department of Labor would recommend that the first step toward improved nutrition is to make essential foods available at as low a cost as would be consistent with a fair return to efficient producers. This would be as true of fortified margarine as of any other food. If food costs are at a high level, it becomes wise to provide special programs for the feeding of children, as for example through school lunches. As you know, the consumption of certain amount of fat is essential to good nutrition. Both butter and fortified margarine meet the requirements for fat and in addition provide essential vitamins. You will notice from the table below that margarine made up 18 percent of the butter and margarine purchased at low economic levels as against 5 percent among the upper third of the wage earner population. Those of us who are interested in the nutrition of low-income families are, therefore, necessarily concerned with the amount of both these products which is consumed and the prices at which they are available. At the present time, because of the shortage of butter, margarine is being consumed by all income groups in most parts of the country. The production of margarine and withdrawals of both colored and uncolored margarine have increased strikingly since the beginning of the war period. Preliminary figures from the Bureau of Internal Revenue show that the production of uncolored margarine in 1942-43 was almost 30 percent greater than in 1938-39. The production of colored margarine (which is, of course, much less than that of uncolored margarine) was in 1942-43 almost 85 times that of 1938-39. The increase in the production of both colored and uncolored margarine from the pre-war year to the year ending June 1943 was 64 percent. A Nation-wide survey made by the Bureau of Labor Statistics in 1934-36 showed that among families of employed wage earners and clerical workers in large cities, the annual per capita consumption of butter and margarine was as follows: |