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Washington, D. C. The committee met, pursuant to call, in room 326, Senate Office Building, at 10 o'clock a. m., Senator Charles L. McNary (chairman) presiding.

Present: Senators McNary (chairman), Capper, Norbeck, Frazier, Gould, Thomas of Idaho, Townsend, Walcott, Ransdell, Kendrick, and Wheeler.

Present also: Senator Millard E. Tydings, of Maryland.

The CHAIRMAN. The committee will come to order. We are called to consider H. R. 6, to amend the definition of oleomargarine, passed by the House on the 6th day of February of the present year.

A similar bill was introduced in the Senate by Senator Norbeck, a member of this committee. The bill before us was introduced by Congressman Haugen, substituting, now, the House bill for the Senate bill.

My mind has been refreshed with reference to the fact that hearings were had on a similar bill by this committee on March 27 and 28, 1928. I think we are all familiar with the general purposes of the bill and the opposition that has been directed toward it, and I express the hope, as chairman of the committee, that those who are appearing this morning will not duplicate that which is already in the record.

The House also held voluminous hearings on a similar measure about the same year; I think it was in the spring of 1928.

The bill, you will observe, members of the committee, is to enlarge the definition of oleomargarine by including other products, such as vegetable oils and fats.

(The bill referred to, H. R. 6, is here printed in full, as follows:)

[H. R. 6, Seventy-first Congress, second session]

AN ACT To amend the definition of oleomargarine contained in the act entitled "An act defining butter, also imposing a tax upon and regulating the manufacture, sale, importation, and exportation of oleomargarine," approved August 2, 1886, as amended

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 2 of the act entitled "An act defining butter, also imposing a tax upon and regulating the manufacture, sale, importation, and exportation of oleomargarine," approved August 2, 1886, as amended, is amended to read as follows:

SEC. 2. That for the purposes of this act certain manufactured substances, certain extracts, and certain mixtures and compounds, including such mixtures and compounds with butter, shall be known and designated as "oleomargarine," namely: All substances heretofore known as oleomargarine, oleo, oleomargarine oil, butterine, lardine, suine, and neutral; all mixtures and compounds of oleomargarine, oleo, oleomargarine oil, butterine, lardine, suine, and neutral; all


lard extracts and tallow extracts; and all mixtures and compounds of tallow, beef fat, suet, lard, lard oil, fish oil or fish fat, vegetable oil, annatto, and other coloring matter, intestinal fat, and offal fat; if (1) made in imitation or semblance of butter, or (2) calculated or intended to be sold as butter or for butter, or (3) churned, emulsified, or mixed in cream, milk, water, or other liquid, and containing moisture in excess of 1 per centum of common salt. This section shall not apply to puff-pastry shortening not churned or emulsified in milk or cream, and having a melting point of one hundred and eighteen degrees Fahrenheit or more, nor to any of the following containing condiments and spices: Salad dressings, mayonnaise dressings, or mayonnaise products.

SEC. 3. This act shall take effect six months after the date of its enactment.

The CHAIRMAN. At the request of Mr. Murdock, of Chicago, I have notified him of the meeting, and he is present. I also notified Senators Metcalf and Tydings, who are in opposition to the bill, to be here this morning. The representatives of the department I think are here.

Mr. Murdock, you appeared here before in opposition to the extension or expansion of the definition of oleomargarine. How long do you desire to address the committee to-day?

Mr. MURDOCK. May I just ask one question? Are both sides represented this morning, or just those in opposition to the bill?

The CHAIRMAN. As I stated a moment ago, we are not opening the hearings generally, because the committee has already held hearings on it. It is simply because of the House bill, and your expressed desire to be heard, that you have been notified.

Would you like to have a statement made by Mr. Loomis, or some one here representing the dairy industry?

Mr. MURDOCK. If they care to; yes. There will be only three in opposition to the bill.

The CHAIRMAN. Can you not cover the whole matter?

Mr. MURDOCK. Hardly, Mr. Chairman. Mr. Higgins simply has a statement. Mr. O'Dea has some remarks as a manufacturer, and I want to cover it for all in that business.

The CHAIRMAN. Mr. Loomis, do you desire to make a brief statement as to the reason for the modification of the bill and the expansion of the term "oleomargarine" and the changes in the current law?

Mr. LOOMIS. I do not think I care to take any time of the committee. It is fully set forth, Senator, in the report of the House committee which is before you. Rather than to take the time of the committee, if I may have permission to file a brief for publication in the hearings, that is all I care to do.

The CHAIRMAN. If the committee will examine one document before them, which is the House report, you will observe the changes in the current law shown in italics.

Mr. Campbell, can you state in a word, that we may have a background, those of us who did not attend the hearings, what change you propose to effect by this bill?


Mr. CAMPBELL. My name is W. G. Campbell. I am director of regulatory work, Department of Agriculture.

The oleomargarine act, as you know, imposes a tax of 10 cents on colored oleomargarine and one-fourth of a cent a pound on uncolored oleomargarine.

Senator RANSDELL. Please speak just a little louder.

Mr. CAMPBELL. The oleomargarine act imposes, as you know, a tax of 10 cents a pound on oleomargarine which is colored to give it the appearance of butter, and one-fourth of a cent a pound on uncolored oleomargarine.

The purpose of this amendment is to include in the oleomargarine act a class of products that are put on the market as cooking fats. They are packed in pound cartons and, in turn, subdivided into onequarter pound pieces.

Senator FRAZIER. You mean, to take the place of butter?

Mr. CAMPBELL. Allegedly to use for shortening purposes.
Senator FRAZIER. Instead of butter?

Mr. CAMPBELL. Or lard or other types of cooking fats, like cottonseed oil products, hydrogenated oil products.

But this article is put on the market in a way that lends itself to sale and use as butter.

I understand that investigations were made, presumably by the Treasury Department, which has charge of the enforcement of the oleomargarine act, and it has been shown that this product actually has been sold and represented to be an article that can be used in lieu of butter and has extensively been employed in lieu of butter.

The character of the existing legislation is such that it has been held by the courts in two instances that the tax does not apply to this particular type of product. It is an article that is admittedly made out of fat other than milk fat. Under ordinary circumstances and in the opinion of the enforcing agencies it is subject to the tax imposed in the oleomargarine act, but the courts have held that it did not apply because of the construction that was placed on a clause in the oleomargarine act which would be remedied by the amendments now proposed.

Senator TOWNSEND. The object is to strengthen the existing law? Mr. CAMPBELL. Precisely. The only purpose it has is to bring it under such control as is now imposed through the medium of taxation; or, in other words, to require this class of products to meet the tax that is imposed on oleomargarine products which they are wholly escaping right now.

There is no question in the world, I understand, about the evidence that has been developed to show the extensive use of the product as and for butter, although it is not labeled as oleomargarine and it is not labeled as butter. But the character of sales that have been effected has been on the basis of representations that it very easily can be employed for that purpose. It is colored to look like butter; but, contrary to what is actually the case with respect to all shortening fats, whether lard or hydrogenated oils, like Crisco, which are practically free from moisture, this product has the degree of moisture that will be found in butter or oleomargarine. It contains 10 per cent or more of moisture, while lards and cooking fats have, in fact, less than 1 per cent of moisture.

The CHAIRMAN. What quantity of fats that you call cooking fats, not coming within the definition of oleomargarine, is used in the country annually.

Mr. CAMPBELL. Mr. Chairman, I am sorry, but I have not the figures in mind on that. I think probably they can be procured. There is an enormous amount of cooking fats, vegetable oil products,

like Crisco and other articles of that sort, that are sold in the country


The CHAIRMAN. What are the constituent elements of these fats? Mr. CAMPBELL. They are just pure vegetable fats.

The CHAIRMAN. What vegetable oils are used?

Mr. CAMPBELL. Cottonseed oil is the one most extensively used in the preparation of such fats.

The CHAIRMAN. I thought coconut oil was used also.

Mr. CAMPBELL. That is true in the case of these particular products. The CHAIRMAN. That is what I mean.

Mr. CAMPBELL. Oh. I thought you meant cooking fats.

The CHAIRMAN. I do not want to confine this to any particular article. We are trying to expand our definition of oleomargarine, and let us discuss that in all its phases.

Mr. CAMPBELL. The product in question, which would be included in this tax law if it is amended, is made largely, if not exclusively, of coconut fats. The cooking fats that are on the market and that are not subject to the law and that are sold for exclusively shortening purposes are largely made of cottonseed-oil fats.

The CHAIRMAN. Are some of the substitutes for oleomargarine, not included in the definition so far as the courts have held, made out of copra?

Mr. CAMPBELL. That is right. A large percentage of the oleomargarine that is on the market now is made out of coconut-oil fats, just as this product is made, but they are sold as oleomargarine, pay the tax as oleomargarine, while this particular product is not sold as oleomargarine, and it escapes the tax on oleomargarine. Yet it is packaged and prepared like oleomargarine and is represented as effective for use as oleomargarine.

The CHAIRMAN. What are the constituents of this particular article about which you are speaking, and what is its trade name?

Mr. CAMPBELL. There are several such products.

Mr. LOOMIS. They are listed completely in the report of the supplemental hearings.

The CHAIRMAN. I understand; but we certainly ought to have some testimony without reference to that.

Mr. CAMPBELL. I will introduce samples of this

The CHAIRMAN. Let us have this developed by some of those who are here defending the bill.

Senator RANSDELL. May I ask the witness a question before he leaves the stand?

The CHAIRMAN. Certainly. I want to say this, however. I would like to know the composition of this particular article of which you now speak.


Mr. CAMPBELL. Let me tell you this, Mr. Chairman. We have dealt with that class of products under the food and drugs act to find out whether or not they are misbranded, but we have not found those products misbranded under the terms of the law, and we ourselves in the Department of Agriculture, through the enforcement of any the regulatory statutes there, are not required to give extensive attention to these matters. This is an amendment to a law enforced by the Treasury Department. But had I known an hour before I was coming up that you wanted material of that sort, I could easily have gotten it. I am sorry I do not have it for you.

The CHAIRMAN. Will you produce it for the committee?

Mr. CAMPBELL. Very gladly, sir.

Senator RANSDELL. Is the purpose of this change to safeguard the public against articles which may be put on the market as a substitute for butter or as a substitute for oleomargarine? Are you trying to protect the public, or are you trying to protect oleomargarine by this change? I understood you to say that these articles would compete with oleomargarine, and yet would escape the tax which oleomargarine is obliged to pay.

Mr. CAMPBELL. They do.

Senator RANSDELL. Then, I take it, its object is to protect oleomargarine?

Mr. CAMPBELL. As well as butter.

Senator RANSDELL. Is it possible that some of these commodities might be used in lieu of butter?

Mr. CAMPBELL. Oh, they are.

Senator RANSDELL. And the people believe that they are using butter when they use them? Are they put up in such a way as to deceive people? That is what I am trying to get at.

Mr. CAMPBELL. They are put up in pound cartons, like butter is put up, and the content of that carton is divided into quarters and each quarter wrapped.

Senator RANSDELL. Just like butter is packaged?

Mr. CAMPBELL. Yes, sir.

Senator WHEELER. It is not marked "Butter" at all. I mean, nobody would buy it, would they, thinking they were buying butter? Mr. CAMPBELL. I do not imagine so.

Senator WHEELER. And they do not use it except for cooking purposes?

Mr. CAMPBELL. Oh, I think the testimony shows it is used as oleomargarine is used, as a spread, or as butter is used. I do not think anyone would buy oleomargarine in the belief that it was butter. I think the character of labeling would show what it was.

Senator WHEELER. They used to buy it and think it was butter, as a matter of fact?

Mr. CAMPBELL. Yes; but the character of labeling, I think, would make it quite clear that it was oleomargarine, and I think it would make it quite clear that this product is not butter.

Senator WHEELER. Why do you want a tax upon it?

Mr. CAMPBELL. The point is that it is used exactly in the same way that oleomargarine is used.

Senator WHEELER. The people that want this tax imposed are the people who sell oleomargarine? It comes in competition largely with oleomargarine, and they want the tax placed on it because of

that fact?

Mr. CAMPBELL. I have not talked with the oleomargarine people about it, but I imagine they take the position that if there is merit at all in the requirement to impose a tax on oleomargarine, a tax should be imposed upon this product which is made like oleomargarine; and I imagine that the butter people also think that since this product is sold for and used in lieu of butter, it should be subjected to the same restrictions as oleomargarine is subjected to.

Senator WHEELER. Have any of the butter people asked that a tax be put on?

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