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TABLE 3.-Production and withdrawals of colored and uncolored oleomargarine, fiscal years 1934-47

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TABLE 4.-Number of taxpayers of special taxes on manufacturers of and dealers in oleomargarine, fiscal years 1934-47

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The CHAIRMAN. Before the committee questions Mr. Wiggins, the Chair would like to say that we have a great many witnesses this week, more than we can hear, in all probability. The number we can hear will depend to a great extent upon the amount of questioning there is from the committee. The Chair does not wish in any way to curtail the committee in their questioning because that is one way of bringing out information that will be valuable, I am sure, but on the other hand, I think anyone who is familiar with the procedure in Congressional committees knows that there is a great deal of duplication in the questioning and in some cases a good deal of argument,

which takes time but does not bring about a great deal of enlightening information.

In this particular case, when our time is so limited, the Chair would like to request of the committee that as far as possible the questioning be held within as brief a compass as can be done and still bring out the information.

Mr. Andresen has a question.

Mr. ANDRESEN. Mr. Wiggins, surely there can be no question in the minds of members of the committee but what the Treasury is on the side of the oleomargarine end of this controversy? That is quite clear to you?

Mr. WIGGINS. Our position, I think, is clearly stated, Mr. Andresen. Mr. ANDRESEN. Does the position reflected by your statement for the Treasury Department, to the effect that the 10 cents per pound tax on oleomargarine colored yellow to make it look like butter, reflect the views of the administration?

Mr. WIGGINS. My statement and the position of the Treasury has been made formally in letters and other communications in previous years as well as this year, and have the clearance of the Bureau of the Budget, which represents the administration.

Mr. ANDRESEN. So the administration then favors the removal of the tax that will permit the oleomargarine to be colored yellow to make it look like butter?

Mr. WIGGINS. It favors the removal of the tax.

Mr. ANDRESEN. What tax?

Mr. WIGGINS. All of the taxes, unless it seems desirable to impose a nominal tax for regulatory purposes only.

Mr. ANDRESEN. The oleomargarine can be colored any other color than yellow without paying any tax, is that correct, except a quarter of a cent per pound?

Mr. WIGGINS. The present tax, as I understand it, of ten cents, is only on oleomargarine colored yellow.

Mr. ANDRESEN. So oleomargarine colored pink or orange or green or some other color would only be taxed a quarter of a cent a pound? Mr. WIGGINS. That would be my understanding of the present law. Mr. ANDRESEN. Why is it that the administration wants to permit the coloring of oleo yellow and have the tax removed on that?

Mr. WIGGINS. Because yellow is a color that the American people are accumstomed to and as a spread the people prefer it over any other color.

Mr. ANDRESEN. What spreads?

Mr. WIGGINS. Butter and oleo. They prefer the butter to be colored yellow, as well as oleo.

Mr. ANDRESEN. Then the administration favors the coloring of oleo yellow to make it look like butter?

Mr. WIGGINS. I am speaking from the tax standpoint, Mr. Andresen.

Mr. ANDRESEN. Oh no, if I had the time, I would review your statement. You were talking about the competition between the two and you think that the discrimination should be removed. As I understand it, you made it quite clear that the administration favors the coloring of oleomargarine yellow to make it look like butter and therefore you urge the removal of the tax on yellow colored oleo.

Mr. WIGGINS. We have recommended the removal of the tax so that oleomargarine can be colored yellow and sold without penalty. Mr. ANDRESEN. Well, why does the consumer want it yellow? Mr. WIGGINS. You will have to ask the consumer.

Mr. ANDRESEN. You are a consumer? Why do you want it colored yellow?

Mr. WIGGINS. Because a white spread is not as appetizing as a yellow spread.

Mr. ANDRESEN. We have peanut butter. Is that colored yellow?
Mr. WIGGINS. It is yellow all right.

Mr. ANDRESEN. Is it? It seems to me it is a sort of brown.
Mr. WIGGINS. Well, it is brownish-yellow.

Mr. ANDRESEN. Would it be satisfactory for the Treasury Department if we permitted oleomargarine to be colored the same as peanut butter?

Mr. WIGGINS. If the consumer wanted it brown, yes; I should see no justification for a tax if the consumer wanted that color. Mr. ANDRESEN. Does the consumer want it colored yellow because it looks like butter when it is colored yellow?

Mr. WIGGINS. I think it is because it is more appetizing.
Mr. ANDRESEN. Then the historic color of butter is yellow?

Mr. WIGGINS. That is right, and as I understand it, when butter is not yellow, it is colored yellow to make the butter look more appetizing.

Mr. ANDRESEN. I am sure that 5,000,000 dairy farmers of the country will be glad to hear what the administration has to say and the position the administration has taken.

Mr. GRANGER. Will the gentleman yield there?

Mr. ANDRESEN. I do not want to take any more time.

Mr. GRANGER. I want you to yield to me.

Mr. ANDRESEN. Yes.

Mr. GRANGER. I am just a little confused about the administration here. Who is talking and who is listening for the administration on this problem?

Mr. ANDRESEN. The witness said that his statement had cleared with the Bureau of the Budget and put forth the administration's views.

Mr. GRANGER. I did not know the administration had any support anywhere. I do not know whether Mr. Wiggins is speaking for them

or not.

Mr. ANDRESEN. He said he was. Is that not right, Mr. Wiggins? Mr. WIGGINS. I said the position of the Treasury has been cleared by the Bureau of the Budget, which speaks for the President. Mr. ANDRESEN. Yes.

The CHAIRMAN. Mr. Zimmerman.

Mr. ZIMMERMAN. The gentleman has already answered my question. The CHAIRMAN. Mr. Murray.

Mr. MURRAY. I cannot follow several parts of your testimony, I wish to say to my good friend. For example, you are giving us the impression of being righteous one minute this morning and the next minute thinking of unfair taxation and yet for year after year the Treasury Department has not seemed to worry about taxing the people wearing sheepskin coats 20 percent. If they happen to want to wear a sheepskin coat, they are taxed on that. When we get into

this matter of taxation on commodities, I am sure we could enter into a pretty broad field. Has the gentleman ever heard of the Steagall amendment?

Mr. WIGGINS. Of the Steagall amendment?

Mr. MURRAY. Yes; the support program.

Mr. WIGGINS. Yes, sir.

Mr. MURRAY. Does the gentleman know that this administration has, up to this hour, never announced the support price of milk?

Mr. WIGGINS. That, Mr. Murray, is not in my field. I am engaged in taxation.

Mr. MURRAY. The reason I am getting at that, evidently the price of butter has entered into this picture. My contention is that the reason the price of butter has been what it is is because the Steagall amendment has not been in force in connection with the spirit of the law itself. To make that clear I might say that the Administration last year put about a 10 cents a pound floor on skimmed milk powder. That means that even under the days of the OPA, which was supposed to be bad, they allowed it to sell for 45 percent more, but this Administration comes along and puts a 10-cent floor on it.

If this administration had put the floor on powdered skimmed milk anywhere in keeping with the spirit of the Steagall amendment, any relationship between what is above the cream line and what is below the cream line in a bottle of milk, 10 cents a pound could have been taken off this butter and it would have conformed to the law. If butter has been too high, is it not comparable to other agricultural products? Do you think that a cotton shirt, for example, that sells for $4 to $5 is any cheaper than a pound of dairy products?

Mr. WIGGINS. Mr. Murray, I am testifying to the tax feature of this legislation before you and not on the agricultural or support policies of the Department of Agriculture or the administration.

Mr. MURRAY. You are not claiming that this is one of the purposes, so that they can lower the price of milk? You would not want those fluid milk farmers to get less for their milk, would you?

Mr. WIGGINS. I think you and the other gentleman know that I am very much for the farmers.

Mr. MURRAY. Certain ones. Anyway, here is what this paper says. The margarine lobbies have worked smoothly this year. I guess there is no question about that. You speak about action by Congress and the President.

Now, if the margarine people get what they want, it may have some repercussions elsewhere in the United States farm economy. Further inroads by margarine into the butter market would undoubtedly weaken butter prices. This, in turn, might bring down fluid milk prices. In other words, that is the analysis by Business Week. It is not a butter-oleo controversy. The whole dairy industry is in jeopardy as a result of this piece of legislation. Until you do something about those sheepskin coats and charge 20 percent excise tax on them under the guise that they are fur, I am not going to have my good friend from South Carolina influence me too much as to what he thinks the tax should be on oleo and butter. Is there not an import tax on imported oils?

Mr. WIGGINS. Yes.

Mr. MURRAY. It has recently been reduced from 2 cents to 1 cent. Mr. WIGGINS. I am not familiar with it at the moment.

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Mr. MURRAY. Is there an excise tax on oil used after it is imported into the United States?

Mr. WIGGINS. There is a 15-cent-a-pound tax on oleo that is imported.

Mr. MURRAY. The import duty has been reduced from 14 to 7 cents within the last few weeks. In addition, there is a 15-cent-perpound excise or internal tax on oleo made from imported oils. Now, I would like to know how we are going to have byproducts of the dairy industry if people do not eat butter. No one has ever answered that question yet. They speak of the wonders of skim milk. Some people would have you believe it is better than whole milk. How are you going to have byproducts of skim milk if you do not the butter that goes along with it, unless you have a skim-milk cow.

Here is a letter from the Department that came in Saturday. It is the same old story. There is a part that tells about the milk sugar that is being imported. Here is one that says the casein market has gone to pieces in this country due to Argentine imports.

Two and a half million pounds of casein are on the way from the Argentine. We are going down hill fast enough in this dairy industry without doing anything at this time to pull the rug out from under them any more. I am very much disappointed in my good friend to

think that after he has been with the bankers all over the United States for so many years, now is the hour when we must say good-bye. That is all, Mr. Chairman.

Mr. WIGGINS. I would like to add, Mr. Murray, if I may, that nothing I have said is intended in any way to be against the interests of dairy farmers. I am speaking from a tax standpoint and from the right of the consumer to make his free choice..

Mr. PACE. Mr. Chairman.

The CHAIRMAN. Mr. Pace.

Mr. PACE. Mr. Wiggins, the substance of the Treasury's position in this matter, I assume, is in your statement that these taxes on margarine distort the competitive position of two domestic industries. Do we not have in this country a quite similar situation with regard to the cotton industry? That situation is that through the years there has grown up a competing domestic industry, the manufacture of synthetic fibers, which, according to the last figures I recall on the rayon synthetic fiber, the production equals that of about three million bales of cotton. Would there not be as much justification for the Congress to seek protection for the cotton industry by imposing a tax on synthetic fibers as there is in the dairy industry imposing a tax on margarine?

Mr. WIGGINS. It would seem to me, Mr. Pace, that the principle is largely the same.

Mr. PACE. The cases are comparable.

Mr. WIGGINS. To a great extent they are comparable.

Mr. PACE. And they are particularly of interest here because on the one hand cottonseed oil, which is one of the principal ingredients in margarine, is burdened, its use is restricted to an extent by the imposition of the margarine tax, while on the other hand the synthetic fiber has become highly competitive with cotton. So on the one hand you have a tax that burdens the cotton grower on account of the commodity he produces and on the other, of course, none of us have

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