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of the Secretary of Agriculture. It cannot function without his request. As I read it-although I may be mistaken-I think industry, if they have something different to submit, if it does not meet up to the so-called "present accepted standards", if they so state it does not, but it will do so-and-so and show a method of testing and proving that it will do this, I think they should have a right to appeal to that committee and ask that committee to consider their claim.
Senator COPELAND. Doctor, look at the bill on page 14, line 5. Suppose it read there," or by a testing method prescribed by regulations as provided by section 22", then the static condition that you speak of would be done away with?
Prof. SMYTH. Not if this is left in-let us read this back again. It reads:
And when tested by methods simulating as nearly as practicable the conditions of such use, or in the absence of such methods, when tested by a standard method, it does not have the germicidal effect within the duration so prescribed of a 1-to-80 dilution of phenol used by a standard testing method for 10 minutes at 37° centigrade. All testing methods-
This standard or others
for the purposes of this paragraph shall
For showing whether it will act and whether its action will be equivalent to phenol in that time
shall be prescribed by regulations as provided by section 22.
It does not give the committee power, as I read it, to do anything but devise different methods of using phenol, 1 to 80, 10 minutes, as your yardstick.
The CHAIRMAN. We will next hear from Mr. James Vernor, Jr., of Detroit.
STATEMENT OF JAMES VERNOR, JR., DETROIT, CHAIRMAN OF THE LEGISLATIVE COMMITTEE OF THE AMERICAN BOTTLERS OF CARBONATED BEVERAGES
Mr. VERNOR. Mr. Chairman and gentlemen of the committee, preceding witnesses have voiced the general objections of the food industries to the pending legislation which are shared in the main by the bottled carbonated beverage industry, but I wish to go further and specifically emphasize the injury and extreme hardship to this industry that would result if certain provisions of this bill are enacted into law.
The bottled carbonated beverage industry and its national association, the American Bottlers of Carbonated Beverages, which I am here representing, has no quarrel with the object of this bill to improve and strengthen the Federal food and drug laws, although in the quality and purity of our products and the sanitary conditions under which they are produced, our industry acknowledges no superior. But we believe this purpose can be accomplished without disorganizing and disrupting this and other industries in the food trade.
And let me add on this point that an industry such as ours which daily competes for the favor and patronage of millions of people
must meet other standards than those fixed by mere laws. These standards are fixed by a discriminating public, and no higher ones will ever be created by statute.
Among the products of this industry are a number of so-called "specialty drinks" which are either a distinctive flavor or are sold under a distinctive name. Under existing law, wholesome beverages of this type which are known under their own distinctive names may not be held to be misbranded, but this exemption is omitted in the pending legislation which means that the protection now afforded these specialty drinks will no longer exist if it becomes a law.
In this respect, the Copeland bill prescribes that the label shall bear the common or usual name of the food and the name of each ingredient in the order of predominance by weight, except that flavors and artificial color may be designated as such without naming each flavor and artificial color. This requirement would apply to all soft drinks for which the Secretary of Agriculture fails to establish a definition of identity. But few such definitions now exist and it is obvious that if this legislation were to become effective immediately upon enactment, many of the crown caps and labels now in use would become obsolete overnight, causing heavy losses to thousands of our members.
This hardship would be accentuated by the stipulation in section 7 (c) that the word "imitation" on imitations of other beverages must be declared in type of the same size and prominence as the name of the articles imitated. Few crown caps or labels for beverages regarded by the Department of Agriculture as imitations now comply with this requirement.
Serious damage to the industry also might result from section 7 (a) (1) of the bill, declaring misbranded any food "if (1) its container is so made, formed, or filled as to mislead the purchaser or (2) its contents fall below the standards of fill prescribed by regulations." Under this provision many of the bottles used in this industry might be outlawed. These are the bottles which manufacturers have had designed for their merchandise, not with any intention of deceiving the public as to the volume of their contents, but to increase the individuality of their products and to protect themselves against the loss of their property because most of these bottles are never sold but merely loaned to the consumer, and where no identification is possible it is often difficult for a beverage manufacturer to reclaim his bottles. This part of the bill apparently contemplates the standardization of containers. The 6 months extension of the effective date is too short to accomplish such a reform in our industry.
Section 6 (b) of the Copeland bill requires a label on all beverages to contain the name and place of business of the manufacturer, seller, or distributor. There is no similar requirement in the present law, it requiring merely that if the name of the manufacturer, seller, or distributor is stated, it must be correctly stated.
From the standpoint of the bottled carbonated-beverage industry this is perhaps the most objectionable feature of the bill. The softdrink business is a 5-cent business, although popular conception may be contrary. Nearly 90 percent of our business is done in drinks that retail for 5 cents a bottle. For this bottle, the bottler receives
on the average a little more than 2 cents. This fractional sum must pay the entire cost of production and distribution and his profit. Operating on such a margin, it is obvious that a fraction of a cent in his costs is of the utmost importance to every bottler. Most bottlers of nickel drinks cannot afford labels. Many have their names or their trade marks blown in the bottle, but most of them use only plain bottles, putting their names and trade marks and flavors on the crown caps. There are others who use nothing but plain bottles and plain crowns, which simply designate the flavor.
If the effect of this section would be to prohibit the sale of beverages in this class which do not bear labels or crown caps showing the name and place of business of the maker and an adequate description of the contents as required by other sections of the bill, this would work an irreparable injury on many bottlers because a third of their investment is represented by bottles. Many of these bottles, by reason of their individual design, are unsuitable for paper labels, even though the bottler should be able to afford a labeling machine.
The situation undoubtedly would force many small bottlers doing business across State lines out of business.
Should all of these provisions in the judgment of the committee and Congress remain unchanged, we believe that the effective date. of the act should be advanced from 6 to 18 months. Our industry now has a tremendous investment in supplies of crowns, labels, and bottles, and to make the changes required in the bill within the time. now specified would be an exceedingly expensive proposition which might be ruinous in many instances.
The CHAIRMAN. There is one very modest witness here. I am going to call him. He only wants 3 minutes, and we will hold him to that. Mr. Francis L. Whitmarsh, New York. If he is in the room we will be glad to hear him.
STATEMENT OF FRANCIS L. WHITMARSH, REPRESENTING THE NATIONAL-AMERICAN WHOLESALE GROCERS ASSOCIATION
Mr. WHITMARSII. Mr. Chairman, I represent the National-American Wholesale Grocers Association that have a membership of about 1,700 members, and for more than 25 years we have advocated uniform pure food laws throughout the United States and various States. We are not opposing the underlying principles of the pending bill. However, we are filing a memorandum which sets forth our objections to a few sections of the bill, but at this time, because of the fact that most of these objections have already been discussed, I am just going to bring out one point that so far has not been covered.
Section 25 of the bill provides that the measure shall take effect 6 months after approval.
Distributors of food contract to purchase, and actually do purchase, products long in advance of their sale. It is necessary that packages and labels be prepared and purchased far ahead of their actual use. Millions of dollars now are invested in merchandise, labels, and containers which are in the warehouses and on the shelves. of wholesale distributors and merchants. Six month's time would
be wholly inadequate within which to dispose of food products, labels and packages on hand.
In 1913, when Congress enacted the Gould weight or measure branding amendment to the present statute it recognized that it would be necessary to allow distributors sufficient time to dispose of their goods on hand. It was provided that the act should take effect from and after passage, but that no penalty should be enforced as to domestic products prepared, or foreign products imported prior to 18 months after passage.
I might say here that in our own company, we have over 1,500 different labels of one brand. Many of those would be used up within 6 months. Many would last well beyond 18 months, depending on the type of the product on which they are put. We therefore respectfully urge that at least 18 months be granted, in place of the 6.
Senator COPELAND. January 1, 1935, would help you a good deal, wouldn't it?
Mr. WHITMARSH. On the majority of things, yes; but there would still be quite a number of slow-selling items, probably some important ones, but the majority would be disposed of by that time, I know.
Senator COPELAND. Of course, you do not want to be in the position of putting over the operation of a health measure for 18 months? Mr. WHITMARSH. The suggestion was also made by some of our members that if no further labels could be purchased, but labels on hand, providing they conform to the present pure food law could be used up.
Senator COPELAND. Would January 1, 1935, suit you a little better? Mr. WHITMARSH. No, sir; our labels are all bought for 1934, and in many instances those labels, because of marketing conditions, won't be used up-probably a 2-years' supply.
Senator COPELAND. You have had warning of this bill since last spring.
Mr. WHITMARSH. We have already taken advantage of that. I mean, we have taken cognizance of it, but in spite of that, I think you will find that throughout the country, there would be quite a loss in labels. May I file this memorandum?
The CHAIRMAN. Certainly.
(The memorandum filed by Mr. Whitmarsh is as follows:)
MEMORANDUM IN BEHALF OF NATIONAL-AMERICAN WHOLESALE GROCERS' ASSOCIATION
First. Section 2 (e) of the bill defines the term "interstate commerce" to mean commerce between any State or Territory and any place outside thereof. It is true that section 20 would permit exportation of food products which meet the specifications of the foreign purchaser, and comply with the laws of the country to which they are exported, but such products are required to be labeled with the words "for export."
Packers and distributors now prepare and label their products to meet the requirements of the foreign countries to which they ship. If these merchants are to retain such export trade as they now have, they must meet the requirements of the foreign countries to which they ship. To require containers of food to be labeled For export" would impose unnecessary and expensive packing and labeling requirements on food packers and distributors. It is urged that the provisions of section 2 of the existing Federal Food and Drug
Act' be substituted for section 2 (e), section 20 (d) and section 17 of the pending bill with respect to interstate commerce.
Second. Section 7 (f) provides in effect that food products for which no definitions and minimum standards of identity have been established shall be labeled to indicate the name of each ingredient in the order of predominance by weight, except that spices, flavorings, and colorings may be designated as such.
This provision would require many wholesome food products, packed under ideal conditions, and sold under their own distinctive names, to be labeled so as virtually to reveal the private formula of the packer or seller. The provision would absolutely destroy valuable goodwill (built up by packers and distributors over a long period of years at great expense) in many high-grade wholesome food products sold under their own distinctive names. The disclosure of private formulas to unscrupulous competitors would result in great loss to the proprietors of these distinctive name foods and trademarks without corresponding benefit or protection to consumers. The other provisions of this strict bill are more than adequate to safeguard the public without thus penalizing honest manufacturers and merchants by arbitrarily turning their property and their valuable formulas over to competitors.
Third. Section 12 is entitled "Permit factories." It provides that whenever the Secretary of Agriculture finds that the distribution in interstate commerce of any class of food may, by reason of conditions surrounding the manufacture, processing or packing thereof, be injurious to health, and such injurious nature cannot be adequately determined after such articles have entered interstate commerce, he is authorized to promulgate regulations governing conditions of manufacture and requiring manufacturers to hold permit. Any officer designated by the Secretary would have access to any factory or establishment operating under such permit.
In other sections this bill makes ample provision for seizure of products which do not comply with the proposed act. The issuance of permits is wholly unnecessary insofar as protection of the public is concerned.
Fourth. Section 13 of the pending bill provides that, in order to regulate interstate commerce in food, officers or employees designated by the Secretary of Agriculture, after first making reasonable request and obtaining permission of the owner, operator, or custodian, would be authorized: (a) To enter factories, warehouses, or establishments in which food is manufactured, packed, or held for shipment; and (b) to inspect such factories, warehouses, and establishments, and all equipment, materials, containers, and labels there used or stored.
The district courts of the United States would be given jurisdiction to restrain shipment in interstate commerce, or delivery after receipt in interstate commerce, of any food from any factory, warehouse, or establishment, if the owner, operator, or custodian thereof had denied permission, after reasonable request, to inspect the premises.
It is submitted that this section in effect compels the manufacturer and merchant to submit to inspection of his premises. To grant the district courts jurisdiction to restrain shipment in interstate commerce of food because the owner had not granted permission to inspect his premises imposes severe penalties, when as a matter of fact, the food packed and distributed by such owner might be wholesome and properly labeled.
It is provided in section 17 (g) that any person who uses to his own advantage or reveals, other than to the Secretary of Agriculture, or to his officers or employees, or to the courts, any information acquired under sections 12 and 13 relating to permit factories and factory inspection, respectively, concerning any method or process which is entitled to protection as a trade secret shall be guilty of a felony. While this section is designed to afford protection to the manufacturer and distributor, it does not seem at all necessary to establish permit and inspection systems in view of other sections of the proposed statute which give the Secretary of Agriculture ample authority to prevent interstate commerce in adulterated or misbranded food products.
The crucial point is that the private formula and property of manufacturers and processors would be thrown open to inspection and examination. We should bear in mind that inspectors and investigators do not remain indefinitely in the service of the Government. It, therefore, seems entirely unfair to the trade that the valuable private property and processes of manufacturers should be disclosed, unless there is definite evidence that methods inimical to the public