careful deliberation based on the evidence presented during these hearings, agreed that candy and confectionery should not be subject to tax from which other similar foods are exempt. For the record we respectfully refer you to these published hearings.

We do not wish to burden the committee with voluminous documentary evidence from leading authorities, establishing candy's recog nized importance as a food. However, if the committee so desires, we will be very glad to furnish additional evidence to support this conclusion.

To exempt from taxation milk products, sugar products, and cocoa products, and then single out candy and confectionery and make these the one exception would be to discriminate against candy and confectionery in relation to other wholesome foods and to work an injustice upon the consumer and the candy industry itself. It is, therefore, urged that this discriminatory provision be deleted from these two bills.

Mr. Chairman, I would like very much to have you hear a brief statement from Mr. C. E. Steidel, vice president of the Fannie May Candy Co., Inc., a local manufacturer.

Mr. BATES. We will be glad to hear from him.

STATEMENT OF C. E. STEIDEL, VICE PRESIDENT, FANNIE MAY CANDY CO., WASHINGTON, D. C.

Mr. STEIDEL. My name is C. E. Steidel. I am vice president of the Fannie May Candy Co., 1010 E Street, NW., Washington, D. C. Our company manufactures candy in the District of Columbia and sells it through its own retail stores within the District of Columbia.

Our company has been operating in the District of Columbia for 29 years.

The candy industry is an extremely complex industry. Its products consist of innumerable types of candies, packaged in many sizes.

I would like to present as evidence a chart showing the distribution of candy sales, by type and price, as prepared by the Department of Commerce and based on an annual survey which the Department makes covering confectionery sales and distribution throughout the United States.

(The chart referred to appears on the opposite page.)

You will note from this chart that 65 percent of all candy is sold to the public for pennies, nickels, and dimes and 3.9 percent is sold in the form of gift packages. Our business, and that of numerous other concerns, is predominantly in the plain-package field, which represents 10.3 percent of the total volume of business.

The retail-sales-tax bills, which are before you are not only discriminatory with respect to nonconformity of taxes on all foods but also are discriminatory with respect to taxes on candy.

Section 3 (b) authorizes the Commissioners

to exempt from the taxes imposed by this title any and all sales, the cost of which amounts to 50 cents or less.

This is a gross discrimination against different segments of the candy industry, in that the sale of candy as bars and low-weight packages could be exempt from the tax at the discretion of the Commissioners, but the purchase of bulk or boxed candy in excess of 50 cents would be taxable.

The Distribution of Candy Sales
by Type and Price, 1945

Our candies are purchased primarily for home consumption. They are recognized as family boxes, the sales of which are higher on Friday and Saturday than other days of the week because the family wants candy in the house over the week-end.

Obviously, to place a tax on the products sold by our type of retail candy outlet is unfair, when there are so many other types of candy, as well as retail outlets, which sell candy on which there might be no sales tax.

Mr. Chairman, you will find on your record Mr. Philip Gott, who is vice president of the National Confectioners' Association, who has come from Chicago to present to you very briefly several facts pertaining to confectionary, if he may.

Mr. BATES. Mr. Gott.

STATEMENT OF PHILIP P. GOTT, PRESIDENT, NATIONAL
CONFECTIONERS' ASSOCIATION

Mr. GoTT. I would like to set up this exhibit, if I might, Mr. Chairman, to facilitate the presentation.

My name is Philip P. Gott, president of the National Confectioners' Association, with headquarters in Chicago, with members in the District of Columbia and throughout the country.

I am here because our members are located in Washington and the District of Columbia and because many of their products, although their plants are located outside the District of Columbia, are shipped into the District and sold in the District of Columbia.

Even those candy manufacturers who are not located in the District of Columbia are vitally interested in this proposed legislation because certainly any law that is passed by Congress may be used as a model for States, and we feel that discriminatory legislation of this type would be extremely detrimental to the industry.

I have gathered together here just a few illustrations, charts indicating the character and scope of the industry and its importance in our agricultural economy and economy in general.

This is merely a picture of fruits and nuts and sugars of various types, corn sirups that are used in the manufacture of candy. Mr. Smith spoke of that.

I think it is rather significant that it takes about 1,574,000 acres of our farm land to produce the agricultural products in the terms of corn and peanuts and sugar used by the agricultural industry as well as the products of some 185,000 cows and nearly 2,000,000 hens, which are purchased by the candy manufacturers, and therefore we recognize that we constitute a market for the products of the farm, and which are consumed in a form in which they would not otherwise be consumed.

You can eat just so much of any one of these agricultural products in its natural state, but if you are able to mix them together, put a little sugar or chocolate on them, you will sell a little more of these agricultural products.

Therefore, we feel that we constitute an enlarged outlet for agricultural products.

All of you are familiar with this slogan during the war, "Break Out the Candy," as a theme that developed in one of the early naval battles in the Pacific. When there was a lull in the battle, the boys said: "Break Out the Candy."

We have heard many stories about the boys in foreign lands making friends with candy. It has been a morale builder. It has been a builder of friends throughout the years.

We have here an illustration of the various combat rations, as was pointed out today by Mr. Peyton, in which candy, chocolate, and various types of confectionery are incorporated.

Regarding this little package up here, if I had the time, I would like to tell you the story how it was developed as an air-crew ration in order to save the lives of the boys returning from bombings over Europe.

After they had completed their bombings over Europe they found they were so fatigued that they could not properly land, and they developed this air-crew ration which they ate on their return.

Certainly, as Mr. Smith said, the Government did not put confectionery of various kinds into rations just to make the boys feel good. It is recognized by doctors generally that it is a quick "upper." It gives you vitality, and it is absorbed into the blood very readily. These are two pamphlets which describe the rations.

This is a survey made by our organization during the war period. Four plants were surveyed in different sections of the country repre

senting some 60,000 employees; 63.6 of the employees eat candy every day, recognized it as an important part of their diet.

We interviewed a certain number of personnel men in the large factories.

I will not take the time, but there are presented statements by the personnel men showing they feel it is a vital part of the equipment along with their wagons and lunch counters, whatever they have, in the plants. It is a vital part of the equipment in the plant in order to maintain morale.

These are merely pictures showing again that after the stenographer eats her lunch or when the housewife packs a lunch for the man in the factory, she may put, and does put, a candy bar in there as a dessert for the employee, for the worker.

If you wish to get into the technical discussion as to the nutritional value of the candy, there is considerable information on this chart. showing the various caloric protein value, calcium, iron, and so forth, in these various kinds of foods, whether it is the ready-to-eat cereals, cinnamon rolls, or various types of candies.

You will find there that candy averages about the same caloric value as many of these other desserts and foods in which it is in competition.

Candy is recognized as an important item in many of these schools. I am sure, if you go into the restaurants of city schools here or into the restaurants in many of the Government buildings, you will find candy is an item which you buy on the way out.

This is an article of Mrs. Pendergast, of Detroit public schools. She points out the importance of candy to the school children when it is properly consumed.

This is more evidenced by nutritionists and others as to the proper place of candy.

Now, it must also be recognized that candy is a grocery-store item. This is a picture, prewar, it is true, because we have not had enough candy to show up that well during the war period, but this is a prewar picture showing a tremendous display of candy alongside of a lot of other so-called grocery items, food items.

These others are pictures of food shops, grocery stores where candy is sold.

Now, the E. I. du Pont de Nemours & Co., anxious to know where the market is and what outlets are being used, made a survey last year in Easton, Pa., a moderate-sized community, and found there were 159 food stores in Easton, Pa., carrying candy, 18 drug stores, 5 variety stores, 20 candy and tobacco stores.

Those food stores accounted for the largest percent of candy volume sold in the city of Easton. That is what happened in 1946.

The food stores were dispensing the majority of the volume of candy in Easton, Pa.

Another survey made prewar, which was a survey of the sales of chain grocery stores, indicates that the consumer spent $1 in candy for every dollar he spent in peas, beans, and rice. They spent 28 percent more for candy in chain grocery stores than they did for cheese.

They spent twice as much for candy in chain grocery stores as they did for spaghetti and macaroni.

Therefore, the grocery outlets for the chains and independents, the food outlets, recognize candy is a very important food item in their distribution.

It is true those figures were before the war. Candy consumption in 1941 was 19 pounds per capita. Few of us realize that the public consumed more pounds of candy before the war than it did chickens, grapefruit, or peaches, or canned tomatoes, but for cereals, or dried fruits, lamb, and mutton.

Lamb and mutton represents 6 pounds per capita, yet the public consumed candy at the rate of 19 pounds per capita. That was prewar. What would this same survey in Easton, Pa., show? They interviewed a large number of housewives and they found that 38 percent of the consumers, because the supply of candy was not there, said that they were buying cookies, peanuts, cakes, potato chips, pretzels, raisins, popcorn, dried fruit, in place of candy. So it is competitive with other foods and therefore should be given the same recognition in our tax legislation.

Mr. Steidel referred to that chart. I do not think I need refer to it further.

That information is presented merely to show that we have in our economy developed a method of working together various farm products in various foods. This proposal would segregate candy and confectionery as only one type of food and say that should be subject to taxation and yet exempt from taxation practicaly all of the other foods.

We feel that it is a type of discrimination and injustice to a particular industry which we are sure this committee will not support. Let me add just one thing to show the difficulty, the unfairness of it: We stopped on the way down here and bought a box of peanuts. I do not know what the Commissioners would rule as to whether or not peanuts are a food under this proposal, but here are some ordinary salted peanuts. They have been cooked, roasted we will call it, in a little grease.

Now, if you will take those same peanuts and run them through, put some chocolate coating on them, they become candy.

In one case these peanuts, at least according to one ruling, would be tax-exempt, putting grease and salt on them; but if we want to put chocolate or a coat of sugar on them, they would be subject to a

tax.

We think that is a type of discrimination which Congress should not support.

Thank you very much.

If there are any questions, I shall be glad to answer them.

Mr. BATES. Mr. Gott, in the sales tax that has already been established throughout the country, what is the difference, if any, between the bills that are law and the bills introduced here?

Mr. GOTT. I am not a tax authority. Mr. Smith indicated what happened in Ohio. Ohio Legislature passed a retail sales tax.

The State collector attempted to collect the tax on candy. The case was taken to the Ohio State Supreme Court, and they ruled they could not assess the tax on candy.