OLEOMAKGAEINE. 5 



been delivered by Mr. Justice White, as 1 remember, in which the 

 authority of State law is recognized. So there can be no question on 

 that score, I think. 



This feature of the bill has been pending in the two Houses for 

 several years. I introduced the first section of the bill in the House 

 six or eight years ago, certainly, and four years ago this very winter, 

 I think, the first section of the bill passed the House. I am speaking 

 now of the first section of the present bill. It passed the House and 

 came to the Senate, but was not acted upon by this body. 



In addition to that, there is the second section of the bill, which puts 

 a tax of 10 cents a pound on all oleomargarine made in imitation of 

 butter, and reduces the present tax of 2 cents per pound to one-fourth 

 of 1 cent a pound on all that is left in its natural, uncolored state. 

 The great objection thus far to this bill has been to the second section. 

 Very few complain of the first section, but it is to the second section 

 that objection is principally leveled. 



I am not going into any long statement here. Read the testimony 

 which we have submitted, and you will see that the testimony is 

 abundant on all sides that oleomargarine is sold constantly for butter. 

 You will learn from that testimony that the manufacturers arrange 

 with the retailers to sell it they do not say as butter in their circulars, 

 but to sell it. They know very well that the retailer will sell it for 

 butter that is a part of the programme but he is to sell it, and they 

 will stand between him and all State laws for payment of fines, costs, 

 and damages, this being substantially the language used in their 

 circulars. You will find that in the printed hearings before the House 

 committee. There is no question about this. They in fact make no 

 reply to it, or have thus far made no reply, and I presume they will 

 not undertake to do so. 



Only a small portion of oleomargarine relatively, however, as I 

 believe, is really sold through the retailers. There are no statistics 

 on the subject, because it is a matter wholly within the knowledge of 

 the manufacturers. The great body of it is worked off through hotel 

 keepers and restaurant and boarding-house keepers, who buy directly 

 of the manufacturers; if not, perhaps they buy of some intermediary 

 wholesale dealer this stuff, and palm it off upon their guests as butter. 

 The great share, I believe, of the article is marketed in that way. 



Now, the oleomargarine men claim, or have claimed, that they are 

 not parties to this fraud, that persons buying it know just what it is. 

 This is undoubtedly true of the hotel man and the restaurant and 

 boarding-house keeper. They know what they are buying, but the 

 manufacturer knows that they intend to palm it off on their guests 

 as butter. There is no question about this, and it makes them, morally 

 at least, parties to the fraud. 



Senator ALLEN. How are you going to sustain the constitutionality 

 of the second section? 



Mr. GROUT. In what respect, if you please, sir? 



Senator ALLEN. In respect to its being a tax to destroy an industry. 



Mr. GROUT. The decisions are all one way, as undoubtedly the Sen- 

 ator knows. You may go back to an early decision by Chief Justice 

 Marshall, in which the Supreme Court denied itself the power to 

 inquire into, "to review," to use the language of that authority, the 

 discretionary power of the legislature to tax. The tax must be laid 

 alike, of course, upon the same class of articles. The legislative power 



