and soybean as a sort of an over-all plasticizer to smooth out and round out the over-all melting range, or plasticity range of the material. Now, years ago they used to make a large amount of margarine oil, and margarines, out of coconut oil. Now, coconut oil you could put in the icebox and sometimes it will be very firm and you can take it out of the icebox and leave it outside, and it would be soft very quickly. In other words, it has a sharp break, as we call it. Now, a hydrogenated cottonseed oil has a buttery consistency. Hydrogenated peanut oil has a buttery consistency. Hydrogenated soybean oil has a buttery consistency. Now, you can take a margarine made out of 100-percent hydrogenated cottonseed oil or soybean oil, or products of that type, and it has a tendency to form what we would call not as dry a product. It is rather limited in its range of workability and plasticity. However, the addition of a small amount of, say 10 or 15 percent of hydrogenated peanut oil plays a marvelous point or adds marvelous details as concerns the over-all range and plasticity, and adaptability, as to creaming and spreadability. Mr. PACE. I know that it has probably one of the highest smoking points, and it does not turn rancid nearly as quickly as other oils. Mr. DAVIDSON. That is correct. Mr. PACE. And we have looked upon generally peanut oil and olive oil as probably the two finest vegetable oils. Mr. DAVIDSON. That is right. Another reason for that, as far as I can recall, is this, there has been a substitution after all of a tremendous amount of coconut oil for the bakery industry and the confectionery industry, and so forth, and the only oil that I know of today that would do as satisfactory a job is what we call a slightly higher hydrogenated peanut oil to substitute for coconut oil which is 67° melting point. Mr. PACE. Mr. Phillips. Mr. PHILLIPS. I had a couple of questions, Mr. Chairman, which I had saved up to ask Mr. Davidson, but I guess I have waited too long. We have been listening to these witnesses for several days, and I take it for granted that they are the outstanding representatives of the industry, and I have heard the commodity called margarin, margarin, margarin, margarine, oleomargarine. I wonder if the industry has decided what it is that they are manufacturing and what is the preferred name for it. I would really like to know. I do not know what to call it myself and I am a little embarrassed at times. Mr. DAVIDSON. I would say in interpreting that, if you want to define the product individually-for example, in all of the calculations and the figures it is called margarine, and there is a tremendous amount of margarine produced for the baking trade. Mr. PHILLIPS. That is produced as margarine. Mr. DAVIDSON. I use the word "margarine." Mr. PHILLIPS. Is that what you want to call it? Is that what the trade wants it called? Mr. DAVIDSON. In other words, that is what I call it. That is what the trade calls it. Mr. PHILLIPS. Is that what you want it called on the grocers' shelves? Mr. DAVIDSON. In other words, I would say it should be called margarin. There is a large number of products produced in the margarin field, and so forth. Mr. PHILLIPS. You do not have to go into that. I just wanted to know what it is called. I have used the word "margarine," and I wonder if I am wrong. Mr. DAVIDSON. It is difficult for me to answer, because I concede the differentiation as between the bakers' product, which is made up of animal fats and vegetable fats, and that technically speaking, according to Webster's dictionary, is oleomargarine, but the definition that is given in Webster's dictionary today would never infer what the meaning is or the details as to oleomargarine or margarine as served in the household. It says in there, as I recall it, that it is the stearine fractions of animal fats. Now, the stearine fractions would be the higher melting fractions of animal fats. Now, the bulk of margarine that is sold in the trade today, the domestic trade and the household trade, is made out of vegetable oils. Mr. PHILLIPS. The other question is this: I have been reading this booklet here, and I notice that Canada, which is a progressive country, as far as I know-Canada apparently prohibits the sale of it altogether. Is that so? Why would they prohibit it altogether? Mr. DAVIDSON. I would not know, unless it is a matter of protecting the butter industry. That is all I can say. I can answer that a lot of ways. I am getting into fields that I should not get into, but as to Canada, I think the United States gave Canada a tremendous amount of oil a short time ago, which they have now and are having difficulty trying to hydrogenate it. In other words, to build up the melting point of that oil. Then they do not have oils up there to make these fed products. Mr. PHILLIPS. I do not think that they have to worry about getting it. Mr. DAVIDSON. Sir? Mr. PHILLIPS. I do not think, if that is a fact, that they would have a law prohibiting its sale. Mr. DAVIDSON. No; unless it is a matter of protecting the butter industry or protecting the cheese industry. Mr. PACE. It may be, of course, that they have none of the ingredients, because they are shipping out American imports. Mr. DAVIDSON. That may be. Mr. PACE. Has everyone concluded? Have you concluded? Mr. DAVIDSON. Yes, Mr. Chairman. Thank you. Mr. PACE. Thank you. The committee will stand adjourned until 10 o'clock Monday morning, when you will recall that we are to hear the witnesses designated by Mr. Kleberg. We will resume the hearings on this subject on Tuesday morning at 10 o'clock. (Thereupon, at 5:15 p. m., the committee adjourned, as above indicated.) OLEOMARGARINE TUESDAY, NOVEMBER 2, 1943 HOUSE OF REPRESENTATIVES, The committee met at 10 a. m., pursuant to adjournment, Hon. Orville Zimmerman, presiding. Mr. POAGE. Our chairman is not here yet, but I think we had better get started. The first witness is Mr. Hines, representing the American Federation of Labor. Mr. Hines, if you will give the reporter your name and address, you may proceed with your statement. FEDERATION STATEMENT OF LEWIS G. HINES, NATIONAL LEGISLATIVE REPRE- Mr. HINES. Mr. Chairman, my name is Lewis G. Hines. I am national legislative representative of the American Federation of Labor. The American Federation of Labor desires to register its approval of H. R. 2400 which proposes to eliminate taxes on domestic margarine and relating to license taxes upon manufacturers, wholesalers, and retailers of margarine. We feel that these taxes are discriminatory in that they impose a hardship on our low-income groups which is unwarranted and unjustified. The imposition of a tax of 10 cents per pound on yellowcolored margarine is admittedly a discriminatory tax in favor of the butter producing interest, while at the same time it deprives the consumer in the low-income groups of an opportunity to purchase at a reasonable price a healthful table spread containing ingredients of nutritional value. The imposition of a tax upon manufacturers and the definition of manufacturers deprives many of our people of the benefits of a table spread who are patrons of popular-price restaurants. We disagree with those who advocate that a high tax, or any tax, on margarine will prevent the processing and the distribution of an wholesome product, as well as resort to misbranding and other forms of chiseling. While we are strenuously opposed to the imposition of taxes on margarine at any time, we call particular attention to the unfairness of the imposition of such taxes at this time when it is estimated that the total consumption of both butter and margarine will drop during 1943 to approximately 18 pounds per person as against 20 per person in recent years, and when the estimated increase in the consump tion of margarine will be approximately 5 pounds per person as against the maximum of 3 pounds during the past three decades, and the consumption of butter in turn will have decreased to an estimated figure of 13 pounds per person as against 18 per person during the past three decades. This would indicate that there is a sharp rise in the use of margarine in 1943 and a sharp reduction in the consumption of butter during that period. This means that in addition to all other taxes the working men and women of our Nation are paying, there is a heavy imposition of taxes in this one item alone-margarine. We ask that you pass this bill and eliminate all tax restrictions on margarine and allow it to compete freely with other forms of table spread, particular butter. Mr. HOPE. Mr. Chairman. Mr. ZIMMERMAN. Mr. Hope. Mr. HOPE. I would like to ask you a question. You refer to the taxes which the working people are paying and implied at least they are paying a 10-cent tax on oleomargarine. Now, as a matter of fact, there is not any considerable amount of aleomargarine upon which a tax of 10 cents is collected. Mr. HINES. There is some. Mr. HOPE. There is not any great amount of that sold. The taxes that they pay on 99 and a fraction of a percent of oleomargarine is just one-fourth of 1 cent. Mr. HINES. There does not seem to be any reason why margarine cannot be put out in colored form. The imposition of a 10 cents a pound tax against one article, per pound, is a subterfuge to keep oleomargarine in the form that people do not like to use it. It is for the purpose of keeping it off the market. I might say that I myself have been using margarine for the last 8 or 9 months, because with a family of 5, I cannot buy butter, because of the large number of points that is necessary to purchase butter and because of the fact that butter has been very, very scarce. We buy the uncolored margarine. We take it home, most of the time, and it is my job to color that margarine. I would like to have that phase of the thing eliminated. I do not see any point to it. I do not see any point in making any housewife or me, for instance, and it takes thousands and thousands of hours of time to do it, to do something that the manufacturer can very readily do and very easily do. Mr. POAGE. Do it much better than you can. Mr. HINES. I think so, because the color varies and sometimes the children want to know whether this is the rich butter or the other kind. I will say very frankly, if my opinion is worth anything, that the margarine that I have been using, which is composed principally and largely of vegetable oils, is far superior to some types of butter that we have been able to buy during the past couple of years. Mr. POAGE. Mr. Chairman. Mr. POAGE. Mr. Hines, you suggested, and Mr. Hope said, that there was a tax on this margarine. The very fact that the Federal Government does not get the tax, but that the tax is merely an aggravation makes it worse than if it really were a revenue measure, does it not? Mr. HINES. That is right. Mr. POAGE. Would you not rather pay a tax that the Government actually got, and would not the public prefer to pay a tax from which the Nation at least received some benefit, than be subjected to all of the disadvantages of taxes without the Government getting any appreciable amount of revenue out of it? Mr. HINES. Of course. The point is made that very little of the margarine pays the 10 cents tax per pound and that a very little of that is sold indicates that the Government derives practically no revenue from that source of distribution of margarine. It is not a revenue raising proposition. It is a discriminatory tax to eliminate margarine in what you may term its natural form, and I say that advisedly, because when it goes to the table for personal consumption, it is colored and it is to eliminate that and to handicap the sale of margarine in the interest of butter. That is all. Mr. POAGE. And, you have heard the gentlemen along here suggesting day after day that the one-fourth of 1 cent does not amount to anything. You have heard the repeated suggestions that the tax on uncolored margarine was immaterial. Mr. HINES. That is right. Mr. POAGE. But, you have not heard any of them suggesting that they put such a tax on butter, have you? Mr. HINES. Well, it all bears out what I have said already, that this is a discriminatory tax. Mr. POAGE. Why, certainly; and as a matter of fact, the tax, the one-fourth of 1 cent, is not what they are interested in, is it? I hold in my hand regulations of the United States Treasury Department, Regulation No. 9, relating to taxes on oleomargarine, and there are 59 pages of the regulations which must be complied with by any dealer, processor, or even a great many consumers. Mr. HINES. All summed up, it is a form of legislation enacted in the interest of the few to the detriment of the many. Mr. POAGE. That is right. Mr. HINES. That is exactly what it is. And I am speaking now in the interest of millions of wage earners, many of whom are in the low-income groups, who are unable to get butter, and who feel that there should be no tax upon a substitute for butter; but that there should be an open competitive basis upon which butter, margarine, or any other kind of table spreads, are sold. Mr. POAGE. Mr. Hines, as a matter of fact, the experience of the past has shown when you allow margarine to be sold freely, that you do not reduce the consumption of butter. And am I correct in assuming that that simply means there are a good many people who have felt that they are unable to buy butter, but who would like to buy margarine if they could buy it without governmental interference? Mr. HINES. According to the figures I have seen, the maximum production of butter has totaled about 18 pounds per person per year. Give the workers enough money to buy butter, remove the point restrictions, and the consumption would jump almost 100 percent; that is, the consumption of butter. Mr. POAGE. And no matter how much margarine is offered for sale. Mr. HINES. Now, they are forced to use margarine because of the high price of butter, and at this particular time the restrictions that are placed on the purchase of butter through the point system. There 92417-43- -15 |