The detailed report of this investigation is not yet available, but data from two States, Texas and Wisconsin, has been made public. Results of the Texas investigation were published in Bulletin No. 629 (April 1943) of the Texas Agricultural Experiment Station. The report shows that the sample found to be lowest in vitamin A was one collected in January 1942. This sample had a potency of 20.7 international units of vitamin A per gram, or approximately 9,315 units per pound.

In the synopsis of the Texas bulletin the vitamin A content of butter collected in January (low point of year) was shown as ranging from 20.7 to 48.5 units per gram (9,315 to 21,825 units per pound).

from

The average vitamin A content by months was shown to range 31 units per gram (13,950 units per pound) in April to 42.6 (19,170 units per pound) in October. The average for all samples was 36.9 units per gram (16,605 units per pound).

These reports are significant in view of testimony introduced at this hearing which implies or indicates the possibility that the vitamin content of butter in the winter season drops to 3,000 or 4,000 units per pound. Information coming to hand from many of the States participating in this investigation gives cause to believe that the national average of butter as a carrier of natural vitamin A will be shown as much higher than generally anticipated with instances of winter-made butter dropping to a level below 9,000 units isolated and confined to areas representing a very small proportion of the total production in the United States.

ABOUT THE FRAUD FACTOR

Supporters of H. R. 2400 have consistently minimized or failed to discuss the element of fraud or deception which is the real issue. The oleomargarine tax laws are antifraud laws. The record leaves absolutely no question on that score.

Witnesses for H. R. 2400 have stated that fraud in the sale of yellow colored oleomargarine was an occasional occurrence in the far distant past. This is a classic understatement.

Persons interested in securing the facts on this point would have had little difficulty in learning that before enactment of the Grout bill in 1902 virtually all oleomargarine was colored yellow in imitation of butter. The record before the House Committee on Agriculture was a long and lurid story of open and deliberate fraud.

Witnesses for the National Dairy Union at that hearing gave this summary of deception which is now referred to as "occasional":

Despite the strong support these laws (State and Federal) receive in the upper courts, during the fiscal year ended July 1, 1899, the Treasury Department figures show that 62,825,000 of the 83,000,000 pounds of colored oleomargarine made were sold in violation of the laws of these States (House evidence, p. 20) and that of the 9,068 retail dealers doing business in the United States for the year ending July 1, last, 7,073 were violating the various anticolor laws of the United States and only 1,995 were doing business as permitted by the laws. Of the 107,000,000 pounds of oleomargarine produced in the United States for the year ending July 1, 1900, 66,820,196 pounds were produced in States which prohibit the manufacture and sale of colored oleomargarine and 40,240,859 pounds were produced in those States which permit such production. (Senate evidence, p. 463.)

The oleomargarine law (1902) was effective in dealing with fraud. The following summary of oleomargarine tax receipts (internal reve

nue) during the period covered and immediately following reflects the change that occurred:

The contention that color is added to butter for the purpose of deceiving consumers was exploded 40 years ago, but is kept alive in oleomargarine propaganda and has been injected into the present hearing. The chief reason color is added to butter is to maintain a uniform, standard. That the natural color of butter varies according to the feed consumed by dairy cows is well known. Adherence to a standard of color has been advocated at times in the butter industry for the purpose of maintaining a color contrast with oleomargarine, but never as a matter of deception.

Neither has the butter industry stressed the yellow color of the product as being related to vitamin A value. The fact that the shade of yellow color of butter has been permitted to grow progessively lighter during the past 20 years and the quantity actually colored to decline negates any charge that the butter industry is utilizing color for purposes of deception.

Much other testimony introduced in support of H. R. 2400 attempts to revive points that are antiquated and shopworn, including the charge that the dairy industry supports the Federal oleomargarine laws for the purpose of forcing its product on the consumer, denying low-income consumers a pure, wholesome product.

This type of story is revived each time the oleomargarine industry elects to make a move against the Federal system of tax regulation. Actually there is no important manifestation of public dissatisfaction with the regulatory system for oleomargarine. Such examples of dissatisfaction as have appeared in publicity and other channels lack a background of substantial public concern.

INFLUENCE OF FOOD AND DRUG REGULATION

The third major contention advanced by the proponents of H. R. 2400 is that with oleomargarine defined by the Federal Security Administration (June 5, 1941) under provisions of the Federal Food, Drug, and Cosmetic Act, 1938, consumers are protected from the fraud of oleomargarine sold as butter.

Actually, the chief effect of the standard of identity for oleomargarine is to pattern the composition of that product and to set up labeling provisions. This standard of identity, while accepting a wide

degree of flexibility in the ingredients of oleomargarine, in effect standardizes that product as a more specific imitation of butter. It also sanctions the use of benzoate of soda, artificial flavors and color, emulsifiers, and vitamins in the product.

The Food and Drug standard for oleomargarine is the creation of an administrator utilizing broad powers conferred by Congress in enacting the Federal Food, Drug, and Cosmetic Act. It was promulgated over the protest of representatives of several national organizations of dairymen. This standard of identity and the regulations promulgated under it are subject to revision under broad terms of authority vested in the administrator. Congress might well inquire as to whether the Members intended the administrative powers conveyed in the Food and Drug Act to be interpreted in the maner represented by the oleomargarine standard of 1941.

Congress wrote the original official definition of oleomargarine when it described the product for tax purposes in the act of August 2, 1886, amended by section 1, act of July 10, 1930. If H. R. 2400 is enacted, Congress in so doing will automatically withdraw its definition leaving the matter of defining oleomargarine, including the naming of the product, solely a matter of interpretation by the Federal Security Administrator. One court, the United States Circuit Court of Appeals, Eighth District, has upheld the authority of the administrator to define oleomargarine as now provided.

It has already been shown that in promulgating the standard of identity for oleomargarine the Federal Security agency exhibited an extremely liberal attitude toward the product. The standard was approved in the face of testimony of a witness from the Food and Drug Administration to the effect that in his experience in law enforcement he had found that the consumer often gets the impression of a product by its looks or flavor or other characteristics, which impression is not removed by label declaration.

But more important than this is the question of the Federal Food and Drug Division's actual authority and capacity to deal with fraud in the distribution and sale of oleomargarine.

Again, reference to the findings of the House Committee on Agriculture, more than 40 years ago, is pertinent.

So far as the identification of the commodity (oleomargarine) is concerned, the law of 1886 has been successful. So far as the identification of the commodity to the consumer is concerned, the law of 1886 is of little value * *

The principle involved in 1901 is the same principle involved today. The Food, Drug and Cosmetic Act is an interstate regulatory measure subject to limitations inherent in such statutes. Food and drug officials lack the scope of authority as well as the facilities to function in the local and intrastate channels where butter-oleomargarine frauds are most likely to occur. Witnesses, appearing for H. R. 2400 have offered not one scrap of evidence to support the argument that food and drug regulation will reach abuses of a local or intrastate nature.

The ease and facility with which yellow colored oleomargarine can be passed off for butter is not equalled with respect to any other imitation food or product. That is the answer to the oft repeated statement that other imitation products are not regulated by Federal Tax. The large volume of product served in the public eating establishments where the consumer is especially vulnerable must be reckoned with.

Estimates of the United States Department of Agriculture place the quantity of farm-made butter to be produced this year at 500,000,000 pounds or fully 25 percent of the total. Virtually all of this butter is made and distributed locally in the form of country rolls or crocks. None of this butter comes within the jurisdiction or is subject to the requirements of the Federal Food and Drug Department. Only when the food moves across State borders does it become accountable to that authority. Food and Drug has promulgated regulations applicable to the branding and marking of butter and oleomargarine which move in interstate commerce. After these products enter local or intrastate distribution the force of this agency is largely spent.

LABELING INADEQUATE SAFEGUARD

The suggestion has been advanced that food and drug labeling will protect consumers because of the high proportion of oleomargarine which is now sold in cartons carrying federally prescribed information. It is true that under the safeguards now surrounding the manufacture and sale of butter and butter substitutes, a large quantity of both products moves in interstate commerce and is merchandised in package style. This was the case long before the Food and Drug Act of 1938 was enacted. Compliance with food and drug labeling is largely a matter of routine. There is reason to believe, however, that this is not due to Food and Drug influence alone, but to the effectiveness of internal revenue tax regulation as well.

Actually, there is nothing in the Food and Drug law or regulation which requires oleomargarine to be packed or sold to consumers in cartons or wrappers. Nor is there such a requirement for butter.

Large quantities of both butter and oleomargarine are shipped in interstate commerce in bulk tubs or boxes. This type of packaging is generally utilized in the movement of the products from manufacturers to wholesalers and distributors. Both products move under the same railroad tariff and rate classifications. Specific labeling is required by the Food and Drug Administration on bulk containers of butter moving in interstate commerce and presumably also for oleomargarine. Distributors in turn, handling interstate products, use federally approved individually labeled or nationally branded consumer packages.

This works nicely so long as Internal Revenue stands guard. Remove this safeguard. turn yellow colored oleomargarine loose again inadequately supervised in consumer channels, however, and the situation will be something very different. Immediately the incentive for fraud and cheating will be restored. Immediately the tendency is likely to be away from labeled, cartoned goods back to bulk goods and consumer service in the wooden dish or the individual retailer or distributor package. Once more the dishonest retailer or distributor as in 1900, may buy the properly labeled bulk goods from the factory but the consumer will again be exposed to the fraud which is among the oldest and most insiduous of all.

It must be considered also that butter and oleomargarine are today cut and printed on the same kind of machines and are packed in identical type cartons. The ease with which the contents of an oleomargarine package can be switched to a butter package is obvious. The ability of Food and Drug to cope with this form of fraud is subject to serious question. And that is not all.

In addition to the 500,000,000 pounds of farm butter produced and sold outside the jurisdiction of the Federal Food and Drug Department there is a large production of factory or creamery butter sold within the individual states of manufacture. The volume of butter falling in these two catagories now represents, by conservative estimate, from 35 to 40 percent of the total output of the Nation. Since the oils used in the manufacture of oleomargarine can be shipped to any part of the country for processing as oleomargarine, the potential production and sales within individual States of butter substitutes, removed from the authority of Food and Drug, is also large. Repeal of Federal tax regulation of oleomargarine might very readily furnish the encouragement for greater intrastate or local production of that product as a means of avoiding Food and Drug Authority. This would complicate both Federal and State policing as it did years ago, leave a field of confused authority, and supply a fertile condition for the development of deception. These influences, operating on a Nation-wide scale, could have a demoralizing effect on the existing efficient national standards of manufacture and distribution associated with both butter and oleomargarine.

With the difference in price between oleomargarine and butter now ranging from 20 to 25 cents per pound removal of Federal tax regulation would make the bootlegging of yellow-colored margarine one of the most lucrative pursuits conceivable, one virtually certain to attract the attention of those unscrupulous elements quick to avail themselves of new opportunities for exploitation.

Experience has proved that regulation by Food and Drug, the United States Department of Agriculture, and State law-enforcement agencies provides the maximum of protection for consumers and producers of butter and maintains fair trade practices in the manufacture and sale of butter and oleomargarine when the activities of these agencies are backed by Internal Revenue regulation. In actual practice, the State and Federal regulatory agencies now utilize Internal Revenue cooperation and authority in securing compliance with State and Federal regulations. The Federal tax-control system is the foundation rock on which the whole structure of butter and oleomargarine trade practice stands.

The suppression of oleomargarine fraud under existing laws is reasonably complete, yet so strong is the impetus for deception that violations are even now not uncommon. Enact H. R. 2400 and there is the very great likelihood that fraud will increase many thousand fold. Some persons who hold that Federal Food and Drug authority extends to intrastate operations as to oleomargarine would be the first to condemn as an invasion of State's rights a general application of this principle. Our Nation is now undergoing the experience of greatly expanded national powers as a matter of wartime emergency. Dairymen as a class are as solicitous of their local and State sovereignty as any class of citizens in the United States. They were driven to ask relief in the Federal tax system after all other methods failed and the Nation's food resources of butter were faced with extermination. They did this not last year, or the year before, but 50 years ago. They accepted the same principle willingly as the means of controlling the evils of adulterated and process butter. Unusual problems call for unusual treatment and experience plainly proved that nothing short of tax regulation would cope with the vicious and elusive fraud of yellow-colored oleomargarine.