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to the consumer there has to be a stamp put on it representing the full payment of the tax. Now, this, at present, is the only stamp, the only evidence of payment of the tax, this pink slip. That is put on when it leaves the bonded warehouse in a bottle approved by the Government. This other stamp that you see down here (indicating] is the District stamp. That shows this came out of a District store. Where the liquor is made by a licensed distiller-and it should be-or by an unlicensed distiller, when the liquor, under my plan, goes to the consumer, there is a 50-cent stamp on a quart of liquor.

Senator BARKLEY. If a retailer was to buy liquor from an illegal manufacturer, say a bootlegger, a wholesale bootlegger, he would pay a tax on it?

Senator COPELAND. Yes, sir.

Senator BARKLEY. So it would legitimize the bootleg transaction between the retailer and the bootlegger?

Senator COPELAND. It would make certain that the Government of the United States receives 50 cents on that bottle of liquor.

Senator BARKLEY. And give to the bootlegger the respectable standing which he does not now enjoy.

Senator COPELAND. I do not know about that. I would not say that. I have no desire to help the bootlegger. Indeed I have been accused of trying to hurt him. I think all the answers to the questions which have been asked by Senator Barkley and others will be made by Mr. Greenhut.

Senator King. Senator Murphy, you and Senator Overton desire to be heard this morning. We will hear you and Senator Overton now, whichever wishes to speak first.

Senator OVERTON. Senator Murphy is the proponent of the amendment.

Senator KING. Gentlemen, Senator Murphy has offered an amendment to the pending bill and he desires to be heard for a few moments. I asked him to come this morning. Proceed, Senator.

STATEMENT OF HON. LOUIS MURPHY, UNITED STATES SENATOR

FROM THE STATE OF IOWA

Senator MURPHY. Mr. Chairman and members of the committee, my amendment is known as an amendment to the Federal Alcohol Administration Act. [Reading:]

For the purposes of the Federal Alcohol Administration Act the Food and Drug Acts, as amended, and of any act of Congress amendatory of or in substitution for either of said acts of Congress, no product shall be labeled or advertised or designated as “neutral spirits", which is a synonym for alcohol, whisky, or gin, or any type thereof, for nonindustrial use, if distilled from materials other than grain, or if the neutral spirits contained therein are produced from materals other than grain. The term “neutral spirits” includes ethyl alcohol.

(b) The fifth paragraph of section 605 of the Revenue Act of 1918 is hereby repealed.

Now the fifth paragraph of section 605 of the Revenue Act of 1918 reads as follows:

All distilled spirits or wines taxable under this section shall be subject to uniform regulations concerning the use thereof in the manufacture, blending, compounding, mixing, marking, branding, and sale of whisky and rectified spirits, and no discrimination whatsoever shall be made by reason of a difference in the character of the material from which same may have been produced.

That amendment first appeared in the Revenue Act of 1917 and subsequently appeared in the Revenue Act of 1918, and rides on.

Now the food and drug division of the Department of Agriculture, which was charged under the Food and Drug Act of 1906 with requiring truthful and informative labeling on certain articles, including whisky, shipped in interstate commerce, considered this language as being a revenue statute only and that as such it applied to the Revenue Department in its operations of collecting the tax on the spirits and had no application to the labels placed upon the bottled spirits. No reference is made in the statute to labeling and bottling. “Marking” and “branding” are words which, through long usage in revenue statutes, have come to mean the information which must be placed upon the barrels and packages under the internal revenue law. Consequently the food and drug officials continued to hold after the passage of this act that a mixture of whisky and neutral spirits distilled from molasses was not in fact whisky but a mixture that must be labeled a compound of whisky and molasses spirits. This construction of the law was agreed to by the Bureau of Internal Revenue for it issued no regulations covering the labeling of such spirits.

The foregoing interpretations of this statute appear of particular importance because the statute was first enacted as part of the Revenue Act of 1917, following which it was given the above interpretation by the two departments mentioned. It would therefore seem to follow that in reenacting this identical section of law, Congress intended to accept and approve the administrative construction placed upon the language of the first statute by the two Government departments. Dr. Campbell, head of the Food and Drug Department, has consistently taken the position that section 605 has no application to the labels on distilled spirits and his position in this matter is well known to the Treasury Department.

Not until after 1917, when this amendment was passed, were neutral spirits distilled from blackstrap molasses not used in the manufacture of whisky. Whisky is historically a product of grain distillation. No one ever thought of whisky as being other than the product of grain distillation. It is like thinking of castor oil as a product of castor beans.

The purpose of this amendment, as indicated very clearly, related to the purposes of revenue, and it was not intended to open the door to a degrading of the standards of food and drugs. Now if you open the door to a degrading of the standard of whisky, if you destroy all of that historical background of whisky, if you substitute a bland substance, such as neutral spirits, or alcohol, distilled from blackstrap molasses, you merely cooperate to fool' the public in the product that it is getting:

They have just found, for instance, after a great deal of chemical research, that a product from tea is being substituted in olive oil. It took years for them to identify this particular product in olive oil.

Senator COPELAND. The product of what, Senator?

Senator Murphy. Tea. Why should not we, with just as good intention, permit the substitution of that bland substance in olive oil as permit the introduction of alcohol made from blackstrap molasses into whisky?

Senator CLARK. Senator, may I ask a question? Is it your contention that the neutral spirits made from blackstrap is deleterious to health?

Senator MURPHY. There is no contention made as to that. The chemical research that has been conducted to date has not established that it is deleterious to health. The only thing that is really established to date is that it affects the flavor.

Senator CLARK. It is not as good whisky, in other words?

Senator MURPHY. It is not a good whisky. In terms in which we understand whisky as a beverage, it is not a good whisky.

In the chemical process of making whisky there are a great many oils which have not yet been identified chemically, all embraced in the general term of "fusel oil", which is a deleterious substance. It was the grain distilled overnight and put out the next day, in the days of prohibition, that we used to recognize by the term "rotgut."

Now this whole subject of permitting the substitution of alcohol distilled from blackstrap molasses for alcohol distilled from grain strikes at the very integrity of all our regulations governing food. Certainly if it is right in principle to permit the substitution in the case of whisky it is right in principle to permit the substitution in the case of food, because the substitute is not proven harmful to health, but nevertheless substitutes serve a purpose commercially that ought not to be served, as in the case I pointed out, and which might be multiplied with other illustrations. If those who want gin distilled from blackstrap molasses are told frankly what they are buying, we haven't any objection to it.

Senator King. May I ask you a question, Senator?
Senator MURPHY. Yes, Senator King.

Senator King. Assume that a chemical analysis has been madeand that connotes, of course, that it is made by competent chemistswould that show any difference in the chemical qualities, in the elements, between liquor made from blackstrap molasses and liquor made from grain?

Senator MURPHY. No; it would not, Senator.

Senator King. There would be the same number of atoms or molecules in each?

Senator MURPHY. It would be what would be described, Senator, as ethyl alcohol. I mean the United States Pharmacopoeia commercial test there would show no discoverable difference between the two of them. It would not be possible to take whisky made of ethyl alcohol distilled from blackstrap molasses and whisky made from ethyl alcohol distilled from grain and tell the difference. That is my understanding of the chemistry of it. There is a difference, however, Senator, in the flavor of whisky that contains the two.

Senator King. Well, a connoisseur then would easily detect the difference?

Senator MURPHY. He need not even be a connoisseur, as I understand it.

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Senator King. Well, if it can be detected by drinking, why not permit a man to buy it, if he wants to buy the blackstrap?

Senator MURPHY. That is perfectly all right, Senator, if you will put it on the label that it is imitation whisky. Then there is no false pretense about this thing.

Senator CLARK. In other words, if a man wants to drink whisky made out of blackstrap, he has a right to do it providing he knows what he buys?

Senator MURPHY. That is about right.

Senator BARKLEY. What is the proportion of whisky of which this blackstrap product is a part as compared to the total consumption of the total product?

Senator MURPHY. The best answer I can make to that question, Senator, is this, that of blackstrap molasses there is four times as much imported as there is produced domestically. We get blackstrap molasses from sugar. As a matter of fact you can get alcohol from anything that will ferment.

Senator BARKLEY. I. was wondering what proportion of distilled spirits which is consumed in this country is blended or manufactured from blackstrap as compared to the whole amount of consumption. Is it a considerable part or not?

Senator King. Mr. Hester, do you know?

Mr. HESTER. The answer is "No", Senator. A great deal of it is used in the blending of neutral spirits that is made from molasses. A great many of the larger operators claim they make it entirely from grain alcohol. We do not know and I do not know whether our figures would show.

Senator. MURPHY. This is about the nearest answer I can make to your question, Senator. The molasses alcohol which was tax paid was only about 4 percent of the molasses alcohol produced. As nearly as this research agent whom I had could determine, more than 40 percent of the molasses used in making alcohol came from domestic sources, including insular possessions.

Senator BARKELEY. Of course 96 percent of the alcohol produced from molasses goes into other uses than liquor, as I understand it?

Senator MURPHY. Oh, yes. There are other uses for this alcohol, naturally. Except as to gin, molasses never had the market that this section gives it, or the interpretation put on this section by the Secretary of the Treasury. It was adopted in 1917, and we got prohibition in 1919. They did not have time to get under way with

. the production of this blackstrap molasses for alcohol. Prohibition came and there was not any legal manufacture of alcohol. When prohibition was repealed, to meet a temporary need they permitted The use of alcohol, the Federal Alcohol Control Administration permitted the temporary use of alcohol distilled from blackstrap molasses in the making of whisky. That was only temporary, however. The Alcohol Control Administration took the view that the Food and Drug Administration had taken persistently, that it was not properly an ingredient of whisky.

Now, when the market's immediate needs were supplied, on August 10, 1934, the Federal Alcohol Control Administration issued regulations relating to the standards of identity which prohibit the use of spirits distilled from any material, except grain, in any product labeled whisky, unless that word is preceded by the word "imitation." Now, as to the background and the justification for the argument I made—that this attacks the very integrity of all our regulations affecting standards of food—there is the decision of Mr. Justice Butler in United States v. 95 Barrels of Alleged Apple Cider Vinegar.

Mr. Justice Butler, in an exhaustive consideration of the subject of adulteration, said:

The statute is plain and direct. Its comprehensive terms condemn every statement, design, and device which may mislead or deceive. Deception may result from the use of statements not technically false or which may be literally true. The aim of the statute is to prevent that resulting from indirection and ambiguity, as well as from statements which are false. It is not difficult to choose statements, designs, and devices which will not deceive. Those which are ambiguous and liable to mislead should be favorably read to the accomplishment of the purpose of the act. The statute applies to food and the ingredients and substances contained therein. It was enacted to enable purchasers to buy food for what it really is.

Now the Food and Drugs Act as amended down to July 8, 1930, provides that,

In the case of articles labeled, branded, or tagged so as to plainly indicate that they are compounds, imitations, or blends, and the word "compound”, "imitation", or "blend", as the case may be, is plainly stated on the package in which it is offered for sale,

There isn't any defense in ethics, there isn't any defense if we regard the standards we have established in connection with food and drink as related to health, as related to good faith with the buyer, as related to complete information to him of what he is buying, as to the integrity of the product if we suffer continuance of the deception. So why should we permit the sale of a product as whisky without any indication that it is a compound — an imitation whisky, when it is made of substances other than ethyl alcohol distilled from grain products? That is upsetting all the history that we have on the subject.

Now, as I have said, the blackstrap molasses interests never had the market except as to gin which I am seeking to protect in the interest of the grain producers. We are not depriving the blackstrap molasses interests of anything they have had heretofore. We are trying to save our own grain interests from being deprived of a market they had prior to prohibition, and I personally feel I am under deep obligation to make the very fight I am making, because, when I went out in the 1932 campaign for election in the State of Iowa, an agricultural State, an overwhelmingly Republican State, and presumably a dry State, I put the issue up to the farmers on the economic basis. They knew that their market had been taken for their surplus products, and here was an opportunity to restore to them a market which they previously had had for the sale of their grain.

Senator KING. How many bushels are annually used in the manufacture of whisky!

Senator MURPHY. Senator, prior to prohibition, in 1917 the consumption of corn for whisky was 36,400,000 bushels.

Senator King. That would be a very small percent of the production of wheat or corn, would it not?

Senator MURPHY. It is a relatively small percent of the production of corn, Senator, but, if you please, it is not quite looking at the issue from all sides to look merely at the production. What affects our price of corn? Of our entire production of corn aproxi

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