THE NAME MIXED FLOUR."

The name "mixed flour" is a name that was established by Congress in 1898 when the Spanish War tax mixed-flour law was enacted. The Rainey bill has simply adopted that definition in so far as it relates to the products of grain. It stipulates that a product sold under the name of "mixed flour" shall be a product made wholly from grain and not from grain and other materials. Therefore, it has improved upon the existing law in these two very important respects, limiting of the term "mixed flour" to grain products and the requiring of a statement of percentages on the label.

But the opponents of the Rainey bill object to this term "mixed flour." They, however, induced Congress in 1898 to adopt the definition of mixed flour that is contained in the existing law. If that definition was correct then, it must be correct now.

If the Government has collected taxes during all of these years through the medium of a law containing an untrue definition of mixed flour, then the Government must have been a party to a fraud and must have been the recipient of the revenue derived therefrom. It can not be conceived that anyone should seriously entertain such a notion.

Congress by adopting at the suggestion of the millers a definition for mixed flour in 1898 thereby recognized a commodity existing under the commercial designation of "mixed flour," and it has so been dealt in ever since. Throughout the hearings before your honorable committee the product has been spoken of by all parties concerned as "mixed flour." It is the common appellation of the product. It is the name by which it is known in commerce. It is the name that distinguishes it from wheat or any other flour. The objection to this name is but a mere quibble. Those who are making the objection are doing it for the sole purpose of forcing those who ask for a repeal of the old law to go out and establish a new trade name. Undoubtedly they feel that if the monopoly they have had of the materials used in bread making is to be taken away from them they want to place as many obstacles as they can in the way of those who will compete with them hereafter if the bill is passed.

Bread is one of the most important foodstuffs. Should one industry be permitted to monopolize the manufacture of the materials entering into it?

THE PRESENT MIXED-FLOUR LAW AND REGULATIONS ARE BURDEN SOME.

We claim that the existing laws and regulations thereunder are burdensome and amount to a prohibition of the manufacture and sale of mixed flour on a commercial scale.

Aside from the tax of 4 cents a barrel and the occupation tax of $12 a year, we desire to point out the following burdensome features:

REGISTRATION RETURN AND SPECIAL-TAX STAMP.

Section 36: Every manufacturer, packer, or repacker of mixed flour, before commencing business (or at least within the month in which liability to the special tax commenced), must register with the collector of the district in which the business is to be carried on his name or style, place of residence, business, and the place where such business is to be carried on, and make return, duly signed and sworn to, and procure a special-tax stamp, which he is to place and keep conspicuously posted in his establishment or place of business; and on the 1st day of July in each year, if continuing business, he will again so register, make return, and procure a new special-tax stamp and post it as above stated. 3233, 3239, R. S.)

PENALTY FOR FAILURE TO COMPLY.

(Secs.

Whenever any person engaging in or carrying on business for which a special tax is required by law refuses or neglects to render the return therefor required by law, the Commissioner of Internal Revenue is required to assess the tax due and to add 50 per cent to such tax. In case of a false or fraudulent return he is required to add 100 per cent to the tax due. The amount so added will be collected in the same manner as the tax. (Sec. 3176, R. S.)

ADVERTISING ON CONTAINERS.

Sections 37 and 38: If a manufacturer desires to place his name or advertising matter of any kind upon the package, he may do so, provided such brand

be placed upon some part of the package remote from the Government brand. One head of barrels or half barrels will be reserved for the purposes of the Government, and no other matter can be placed thereon. Private marks must therefore be placed upon the other end or upon the sides of the package. In the case of bags it must be placed upon the side opposite to the Government brand. It must in no case be of such size or nature as to overshadow or subordinate the brand prescribed by law and by these regulations, and it must not be of such character as to deceive the consumer as to the contents of the package.

THE "CAUTION" LABEL.

Section 39: The label in which the above notice is to be printed is required to be not less than 4 and not more than 6 inches long, and not less than 24 inches in width, and the printing thereon must be in plain, open, and legible letters, in black ink on white paper, and, in addition to the matter prescribed in the law, must contain the official form number and the words "For mixed flour," so as to read thus:

Notice. The manufacturer of the mixed flour herein contained has complied with all the requirements of the law. Every person is cautioned not to use either this package again or the stamp thereon again, nor to remove the contents of this package without destroying said stamp, under the penalty provided by law in such cases.

The label must be securely affixed, by paste, or printed horizontally across the side of the package in such a way as to be exposed to public view and easily read, and it must not be placed over or upon the Government brand.

Section 40: The tax-paid stamp must bear the signature of the collector and show thereon the date of the payment of the tax, the number of the factory, and the name of the person by whom or for whom it was canceled.

LABEL TO BE AFFIXED TO PACKAGE.

On the withdrawal of a package the proper tax-paid stamp must be affixed thereto by the manufacturer, packer, or repacker. In the case of barrels or half barrels it must be securely pasted over at least two parts or sections of the head of the barrel, using for this purpose the Government head. In the case of cloth bags it must be pasted over the seam which closes the bag, and in the case of paper bags over the string or other fastening which holds the top of the bag together. In the case of other packages the stamp must be affixed in such a way that opening the package will destroy the stamp.

CANCELLATION OF LABEL.

The stamp having been affixed, it must be immediately canceled. For the purpose of cancellation the manufacturer will use, in the case of wooden packages, a stencil plate of brass or copper in which will be cut five fine parallel waved lines, long enough to extend beyond each side of the stamp onto the wood of the package. The imprinting from this plate must be with blacking or other durable coloring material over and across the stamp, and in such manner as not to deface the reading matter on the stamp--that is, so as not to daub and make it illegible.

In the case of packages other than wooden packages, and especially if the stamp can not be so affixed that the opening of the package will effectually break or destroy the stamp, it must be canceled by the manufacturer, packer, or repacker writing or imprinting on it his registered number and the date of use. A rubber roller may be used for cancellation in all cases where the surface is of a character to make the imprint plain and legible.

RECORD OF DAILY TRANSACTIONS.

Section 41: Every manufacturer, packer, or repacker is required to enter daily in a book form (Form 442) the quantity of materials used for the production

of mixed flour, the quantity of materials otherwise used, the number of packages and pounds produced, the number of packages and pounds sold or removed, and the name and the place of business or residence of each person to whom sold or consigned. Model blank form furnished by the Commissioner of Internal Revenue.

This book must always be kept at the manufactory, and be always open to the inspection of any internal-revnue officer or agent.

All transactions must be entered in the order of time in which they occur, the records as to one day's business being completed before those of the next day are commenced.

The number of pounds to be entered in this book must be given for each statutory package, as the size of the package determines the rate of tax.

Tax-paid mixed flour returned to factory by purchasers of the same may be destroyed by the manufacturer without any record being made upon the Government book (Form 442) of its return or final disposition. The presence of an officer to witness such destruction will not be required.

When tax-paid mixed flour which has been returned to the manufacturer by the purchaser is taken up in the manufacturer's material account, is must be entered as a separate item upon the Government book and treated as new material. The stamps on such packages must be entirely destroyed when the packages are emptied.

Packages of tax-paid mixed flour returned as above which are sold again must be noted on the Government book when received back and when resold.

MONTHLY REPORTS.

*

Every manufacturer of mixed flour is required to make monthly a report, in duplicate, on Form 443 *, stating the quantity of materials used in the manufacture or packing of mixed flour, the quantity of materials otherwise used, the number of packages and pounds of mixed flour produced, the number of packages and pounds of mixed flour sold or removed, and the name and the place of business or residence of each person to whom sold or consigned.

The report is practically a transcript of the Government record (Form 442) mentioned on page 20, and the blank is arranged substantially the same, excepting that it contains, in addition, a form of recapitulation for the detailed statements of production and original withdrawals; likewise a form of recapitulation for receipts and withdrawals of "returned" mixed flour. It also contains a form of affidavit to the effect that the statements are true.

The report must be made to the collector on the first day of the month, or within five days thereafter, covering the transactions of the preceding month. The report must be sworn to and signed. When the person swearing to and signing a return is not the manufacturer, packer, or repacker himself, or a member of the firm, ** collectors may * * exact from persons signing for principals residing in a district other than that in which the business was transacted powers of attorney, or other paper writings, conferring upon such persons the necessary authority to make and sign the returns.

*

The returns from this law, according to the Internal-Revenue Department, have not equaled the cost of administering it. For years the revenue derived therefrom has been constantly decreasing until last year, when the abnormal conditions created by the European war were responsible for a slight increase in the amount of mixed flour produced.

These figures prove more eloquently than any argument that the tax on mixed flour has operated to practically stamp out the industry.

THE STAMP.

Our opponents seem to express a divided opinion as to the revenue stamp that the existing law requires to appear on a sack of mixed flour. Some of them, on the one hand, would have you believe that it is a guaranty of purity, and others of them, on the other hand, that it stamps the product as a thing to be shunned.

Let us analyze this double-headed argument. If Government stamp conveys to the purchaser the idea that in some way the Government has guaranteed the integrity of the product, bearing in mind the allegation that the product is in effect an adulterated one--a product that the public should not be permitted to consume then there is no escaping the logical conclusion that the stamp tends to deceive. If such is the case, the Government is a party to a fraud. If, on the other hand, the Government stamp brands the product as a thing to be shunned, then there is no escaping the conclusion that the stamp tends to create a prejudice against the product, and in that respect is unfair. Νο matter which one of the alternatives is accepted, the logical conclusion must follow that the enforced use of the stamps is wrong as applied to a wholesome food product. We can all agree that it is unbelievable that the Government should be a party to a fraud. On the other hand, it is not right nor fair to compel a product to bear a mark or brand that will create a prejudice against it.

We have not singled out the stamp as being in itself the thing that has militated against the sale of mixed flour any more or less than anything else in the regulations or the existing law. But Mr. Miner said of it that—

"It is necessary to put these stamps on, so that the package can not be opened without breaking the stamp, and it is practically impossible, if the requirements of the revenue law are absolutely carried out, and it would prevent entirely the shipping of this mixed flour in muslin sacks."

Great stress was laid on the fact that the stamp would serve as a notice to the ignorant. Gov. Lind said on this point that the ignorant negro in the South, the ignorant foreigner in the lumber camp in his State or in the mines in Pennsylvania or elsewhere, will see this stamp and will understand that it is mixed flour. In answer to this we have to say, in the first place, that courts have repeatedly held that the fairness of a label can not be judged by what effect it will have on an ignorant man. Ignorance is a misfortune that is to be deplored, but it has never been the policy of this Government or of any other Government to place a premium on ignorance by passing laws that will be burdensome on the majority. And if, as is our contention, this law tends to deny to the masses a cheaper breadstuff, then it does work to the disadvantage of the many for the protection of the ignorant few. But however this may be, the fact remains with respect at least to the negroes of the South the stamp does not afford protection. We make this assertion for the reason that the ignorant, as a rule, are poor, and the poor buy, as a rule, in small packages at retail. Under this internal-revenue law the stamp is not required to be on small packages, nor is it required to be on goods that are sold in bulk at retail. It is just this kind of sales that are made to the ignorant negro of the South, and perhaps to the lumberman and the miner of the North. They are not provident; certainly not the negro. They do not lay in stores of food. They do not buy at wholesale. They live from hand to mouth, as a rule.

PARTIES INTERESTED.

The millers and the bakers stand practically alone in opposition to the Rainey bill. This clearly shows the selfish interest they have in this matter. Against this consider those who asked you to repeal the tax. There are represented on our side of this controversy the consumer, the poor, the corn growers, State boards of agriculture, scientific and technical men, economists, the housewife, commercial organizations, such as the Wholesale Grocers' Association, the National Confectioners' Association, and many others, in addition to the manufacturers of cornstarch and corn flour. The press of the country, so far as we have been able to see, is on our side of this controversy.

The manufacturers of corn products are here, of course, representing themselves primarily. But in asking for the repeal of the existing law they are

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voicing the sentiment of practically the whole corn-raising industry of the Nation, as well as that of others who favor the repeal. A glance at the letters and resolutions contained in this record will show that the agricultural interests of several of the States have gone on record by resolutions of their boards of agriculture as favoring the repeal of this tax. Farmers' associations and other organizations have done likewise. There are also many letters and telegrams in the record favoring the repeal of this law from people who are interested and who are not manufacturers of corn products. Therefore, you have before you a diversified demand for the repeal of the tax coming from varied sources. The record shows very clearly that the millers do not want practicable regulation of the manufacture and sale of mixed flour. What they want is regulation" which will amount to absolute prohibition of its manufacture. They will not, for instance, concede that it is proper to use the word flour for a mixture of cornstarch and wheat flour, no matter how that name may be qualified. They explain this by saying that it is a mixture of flour and starch. If they were to stop here they might have at least a color of plausibility for their argument, but they make the same objection to a mixture of corn flour and wheat flour; and also to wheat flour and rye flour; in fact, they object to a mixture of wheat flour with any other flour. They refuse to admit that there is any flour of any kind except wheat flour. They are not willing to permit the word "flour" to be used at all on a label, no matter how qualified, unless the product is composed entirely of wheat flour. There can be but one explanation of such an unreasonable stand, and that explanation is that they are not willing to have the subject of labeling regulated at all. They want prohibition of the manufacture of mixed flour, and they are raising every point they can to accomplish their end. The Rainey bill calls for a labeling that anyone must admit is fair. It can not be successfully criticized as a labeling measure, and so they raised the point of adulteration, claiming that the product ought not to be put on the market, no matter how labeled. That is what their argument amounts to. In short, their contentions all the way through the record show that what they want is prohibition, not regulation. The present law is prohibitory and confiscatory, and that is why they are willing to let it stand.

ATTEMPTED PREJUDICE.

At the very outset of this hearing and all the way through it the millers and bakers lost no opportunity to endeavor to create a prejudice against the manufacturers of corn products. They talked of corn flour as simply the dust that accumulated in the corn mill, or something of that kind. They talked of chemical processes and acids used in making cornstarch. In this connection it should be borne in mind that the making of bread is a chemical process in that carbonic-acid gas and alcohol are generated by the action of the yeast on the ingredients in the dough. They referred to a Government suit in equity pending against one member of our association. In fact, they lost no opportunity to try to prejudice the issue against us. They even went so far as to point to our greatest cereal, corn, as the cause of pellagra. Quite different was the testimony of Miss Laura Cauble, who has a nation-wide reputation as a dietician and whose whole life is devoted to the betterment of the condition of the poor of our great cities. She said:

"America is a child among the nations and she is one of the strongest and greatest nations, and the gift of corn was one of the greatest gifts that America has given to the world."

THE RELIEF WE ASK.

It has been maintained that there is a market for wheat and the products thereof and a market for corn and the products thereof, each considered separately, and the point is readily granted. But our contention is that there is a real demand and a waiting market for an honestly labeled mixture of these two cereals and their products if such mixture be offered to the housewife in a convenient form ready for making leavened bread. The market for corn flour or cornstarch as such is not in issue; it is for the right to market cornstarch or corn flour as one of the components of mixed flour that we contend. The existing mixed-flour law by its strangulatory restrictions denies us this right and it is for relief from this situation that we appeal to you, gentlemen of the Congress of the United States.

Respectfully submitted.

THOMAS E. LANNEN.