suggested the advisability or the wisdom of seeking to protect the cotton industry by imposing a tax on synthetic production.

Mr. WIGGINS. I think I could say that the Treasury would be opposed to the imposition of a tax.

Mr. PACE. For the very same reasons?

Mr. WIGGINS. For the same reasons.

Mr. PACE. Do you feel, though, to be consistent, that if the Congress is going to protect the dairy industry with a tax on margarine, it should protect the cotton industry with a tax on synthetic fibers? Mr. WIGGINS. That is a little bit out of my field as Under Secretary of the Treasury. Privately, I could talk at length along that line and generally agree with your conclusions.

The CHAIRMAN. Mr. Wiggins, it seems to me while there may be an analogy between rayon and oleomargarine, there is this distinction, that olemargarine is a product which is made in imitation of butter and sold as a direct substitute for butter and made to resemble butter as nearly as can be done. I have never understood that the manufacturer of rayon made any attempt to produce a rayon that could be mistaken for cotton. In fact, I think their contention is that they are producing a product which is superior to cotton for many purposes. There is that essential difference there, that rayon is not made in imitation of cotton nor for the purpose of substituting it for cotton under the theory that it was being purchased as cotton. You admit the validity of that distinction, do you not?

Mr. WIGGINS. Mr. Chairman, I think the synthetics are put up in many forms to take the place of competitive fibers. There are a great many types of synthetic fabrics that are quite similar to wool and many of them have the characteristics of cotton or are mixed with cotton, so that competitively, there is a very sharp competition, certainly from the standpoint of the consumer's dollar, between the various products.

The CHAIRMAN. I agree with you on that. However, the manufacturers of rayon do not attempt to imitate cotton as far as appearance and structure and that sort of thing are concerned to the extent that the manufacturers of oleomargarine have attempted to imitate butter. Is that a fair statement?

Mr. WIGGINS. Well, I think it departs a little bit from my taxation approach, but my feeling is that they are two different products, that oleomargarine is not sold under any attempt to mislead the public that it is butter. It is sold on its own merit.

The CHAIRMAN. It is manufactured, however, so as to have the appearance of butter as nearly as can be done and it is true, is it not, that as far as colored oleomargarine is concerned it so nearly resembles butter that you nor I nor perhaps no one in this room could tell the two apart by looking at them?

Mr. WIGGINS. It is very difficult for most people to distinguish between good oleomargarine and good butter.

The CHAIRMAN. Are there any further questions?
Mr. ZIMMERMAN. I would like to ask a question.
The CHAIRMAN. Mr. Zimmerman.

Mr. ZIMMERMAN. When you speak of butter and margarine, as to color, I would just like to know whether butter is white or yellow? Mr. WIGGINS. I am not a dairy expert, Mr. Zimmerman, but I

understand that a great deal of butter is not yellow in its natural state and is colored yellow in order to meet the consumer's taste.

Mr. ZIMMERMAN. During the winter months on the farm we churned butter in the old-fashioned way, and I have churned many a pound of it. During the winter months it would be perfectly white. When spring would come and the cow got out and got some clover, it would turn yellow.

It just depends on what the cow eats as to what the color of the butter will be, and of course what you put into the margarine is going to have a lot to do with its color also, is it not?

Mr. WIGGINS. That is true. Some margarine is yellow when it is manufactured from certain products and, as I understand it, they are required to bleach it out white in order to escape the penalty tax.

Mr. ZIMMERMAN. I have one other question. When my friend, Mr. Andersen, speaks about the butter being yellow, that is just a figment of some man's imagination, is it not? In other words, he has just created that term because part of the time it is white and part of the time it is vellow.

Mr. GROSS. Will the gentleman yield?

Mr. ZIMMERMAN. Yes.

Mr. GROSS. It depends on the breed of cattle and the feed they eat. The yellow strains of cattle give yellow butter even in the winter.

Mr. ZIMMERMAN. You do not discriminate against all these cattle, do you?

Mr. GROSS. No; but I wanted to get the record straight that the feed has a very tremendous influence on the color as well as the breed and you also find the variation in the color of the yolks of eggs of chickens, depending on the feed they eat. The yellow in a chicken's egg is reflected in the color of her legs. We do not raise a row about the yolks of eggs.

Now, the coloring in butter has been resorted to in making a uniform product and not in deceiving anybody, but in making a uniform product due to the fact that at certain seasons of the year and certain breeds of cattle give a higher colored product.

Mr. ZIMMERMAN. I now yield to Mr. Abernethy.

Mr. ABERNETHY. In view of what the gentleman from Pennsylvania has said, I wondered if he would favor the imposition of Federal taxes, expecially such punitive taxes as are imposed on oleomargarine, on cows that give white butter in favor of those that give yellow butter?

Mr. GROSS. There are no cows that give white butter. Holstein cows usually give a lighter butter than other breeds. The gentleman does not understand.

Mr. JOHNSON. Will the gentleman yield to me?

Mr. ZIMMERMAN. I want to get through my questioning.

The CHAIRMAN. Will the gentleman yield to the gentleman from Illinois?

Mr. ZIMMERMAN. Yes.

Mr. JOHNSON. I was a butter manufacturer for many years. I have churned many hundreds of thousands of pounds of butter. I have never yet seen a churn of butter that was not yellow.

Mr. ABERNETHY. Then why do they manufacture butter color? Mr. ZIMMERMAN. I wanted to ask one further question. I think

we can go into that a little later. You spoke of taxes that were imposed upon margarine by States. What kind of a tax is that? Mr. WIGGINS. Table 1 of the four tables which I asked to have inserted in the record lists the taxes by the various States that have excise and license taxes on oleomargarine, both colored and uncolored.

The stars in the first column entitled, "Excise Tax, Colored," indicate that the sale of colored margarine is prohibited in those 23 States.

Mr. ZIMMERMAN. Yes. Now, I see that all these various States like Minnesota, from which my friend Mr. Anderson comes, and Wisconsin, from which my dear friend Mr. Murray comes, all prohibit the sale entirely. Is that right?

Mr. WIGGINS. Minnesota prohibits the sale of colored oleomargarine, period.

Mr. ZIMMERMAN. What about Wisconsin?

Mr. WIGGINS. Wisconsin does the same thing.

Mr. ZIMMERMAN. What tax is imposed on the sale of ordinary white margarine?

Mr. WIGGINS. In Wisconsin it is 15 cents a pound for uncolored margarine. Apparently there is no tax in Minnesota, no excise tax on the sale of uncolored margarine.

Mr. ZIMMERMAN. This is additional to the tax imposed by the Government, is it not?

Mr. WIGGINS. Additional tax; yes.

Mr. ZIMMERMAN. Oh, the margarine boys get it in the necks twice as much in these States, is that right, both by the Federal Government and the State Government?

Mr. WIGGINS. That is true, and in some 23 States the sale of colored oleomargarine is prohibited altogether.

Mr. ZIMMERMAN. I believe up in Wisconsin the boys would like to get rid of that tax as discriminatory and unjust. Do you know anything about that?

Mr. WIGGINS. I do not.

Mr. ZIMMERMAN. Do you know, Mr. Murray?

Mr. MURRAY. The gentleman who sat at the table at the dairy banquet with me said they were going to remove part of that State tax, but that is just one man's opinion and the legislature is not in session, so he had a right to make a statement if he wanted to. I still believe in States' rights.

Mr. ZIMMERMAN. You represent the dairy interests, do you not? Mr. MURRAY. No.

Mr. ZIMMERMAN. Do you not?

Mr. MURRAY. No.

Mr. ZIMMERMAN. Here is the third point: Who collects this Federal tax?

Mr. WIGGINS. The Bureau of Internal Revenue.

Mr. ZIMMERMAN. If a grocery man wants to handle margarine, colored or white, he has to make reports to the Government, does he not?

Mr. WIGGINS. That is correct. If either a wholesaler or retailer he has to file an application with the collector and pay the special Federal tax. Wholesalers have to keep specified records and make reports thereon.

Mr. ZIMMERMAN. I do not know whether you were before this committee about 3 years ago when this question was thoroughly explored, but a lot of people testified that they did not want to handle the product because of the inconvenience of making reports to the Government and being sure that they paid this Federal tax and rather than be bothered with that, they would not handle it at all and people could not get it. Do you know anything about that situation?

Mr. WIGGINS. I think practically a number of people do not handle it because of the trouble that they have with their reports.

Mr. ZIMMERMAN. Small people where they have little profit in handling a small amount of it, rather than to handle it at all and pay this tax, just refuse to handle it at all and it deprives the people of any chance to buy oleo in many communities.

Mr. WORLEY. Will the gentleman yield?

Mr. ZIMMERMAN. Yes.

Mr. WORLEY. Do you have any idea of how much it would cost in overhead to collect these taxes?

Mr. WIGGINS. That would be almost impossible to determine because it is handled by a division that handles other excise taxes. It would be difficult to allocate the cost of collecting this 6 or 7 million dollars a year.

Mr. ZIMMERMAN. The gentleman who was former president of the American Bankers Association is pretty closely related to rural life in South Carolina, is that not true?

Mr. WIGGINS. I am very proud to say it is.

Mr. ZIMMERMAN. In other words, that is the 1eputation that you have always had, of a very close relationship to the rural life of this country.

Now, I will ask you if it is a fact that the average country grocery man, the grocery man way down on the corner, who keeps books on his cuff, so to speak, and uses a lead pencil, is not going to keep an account of the tax of the little margarine buyers and make these reports to the Government, but he will stay out of the business of selling margarine rather than to go to that trouble, is that not right?

Mr. WIGGINS. Some of them do.

Mr. ZIMMERMAN. A great many of them.

The CHAIRMAN. Mr. Fuller has a question.

Mr. FULLER. Mr. Wiggins, this is what you state: The taxes increase the cost of the product. They interfere with the consumer's freedom of choice in satisfying personal wants. How do you feel about the taxes on cigarettes from the standpoint of the smokers? Do those interfere with satisfying your taste?

Mr. WIGGINS. No; you can buy any brand you want with the same So far as the choice of brands, I do not think it interferes at all. Mr. FULLER. During your tenure of office, have you ever before appeared before any congressional committee and appealed or asked them to take off a Federal tax of any commodity?

Mr. WIGGINS. No excise tax, that I know of, in the 13 months that I have been here. We have not asked the removal of an excise tax until the present time.

Mr. FULLER. You have never before had the pleasure of appearing before a committee and begging them to take off a tax, is that correct? Mr. WIGGINS. That is correct, as far as I am concerned.

Mr. FULLER. But you feel that this time it is your duty and at the

request of the present administration to appear here and ask this committee to take it under consideration, you have done so?

Mr. WIGGINS. The Treasury Department for years has asked that this tax be removed and we are merely following the same policy position that is the historical position of the Treasury Department for many years.

Mr. FULLER. Do you know of any other tax that they ever felt that way

about?

Mr. WIGGINS. I have been trying to think of any other punitive tax and I do not recall that there are other punitive taxes.

Mr. FULLER. Let us leave the word punitive out and just leave it. yellow.

Mr. WIGGINS. We regard this as a punitive tax which distinguishes it from ordinary regulatory taxes and revenue taxes. We consider this neither.

Mr. FULLER. But it is an annoyance, is that it?

Mr. WIGGINS. Yes.

Mr. FULLER. I hope that our present administration will remember that in some of these other taxes that some of us have been trying to get off, we cannot do it.

Mr. ABERNETHY. Will the gentleman yield to me?

Mr. FULLER. Yes.

Mr. ABERNETHY. I would appreciate it if the gentleman would submit that recommendation to the Republican Representatives in control of the Ways and Means Committee.

Mr. FULLER. We are trying to do that every day.
The CHAIRMAN. Mr. Cotton has a question.

Mr. COTTON. Mr. Wiggins, referring again to Mr. Pace's analogy between the bier and the cotton, certainly I do not want to do anything to hurt cotton, but there is another difference, is there not? If the cotton farmer ceased to raise cotton, none of us would probably freeze to death or go out in the streets naked, but if the dairy industry is given to curtailing its production materially so we feel it in the milk market, somebody is going to suffer. Is there not that difference in the two cases?

Mr. WIGGINS. I think all of us agree that it would be desirable if more milk were produced and more milk consumed.

Mr. ABERNETHY. May I ask a question there, Mr. Chairman?
The CHAIRMAN. Mr. Abernethy.

Mr. ABERNETHY. I hope I have not misread all of this literature sent out to our offices by the National Cooperative Milk Producers Association, the director of which, incidentally, is my friend and happens to have been born down in my district in Mississippi. But, as I understand this literature which consists of seven or eight pamphlets and bulletins here, it is not the position of the milk producers that they are trying to keep anyone from producing margarine. It is their position that they only desire to prevent oleo from being put on the market as a product comparable to their product. They do not take the position that this would put them out of business. They take the position that the oleo people would practice a fraud on the American people by selling oleo as butter.

Now, I submit in answer to that, Mr. Wiggins, that that is not a function of the milk people or the producer of any other commodity. It is the function and the duty of the Department of Justice and the