The times dispatch. [volume] (Richmond, Va.) 1903-1914, 1913-03-10
DEFENDS ruling
INFAMOUS CASES
Macveagh Explains Acceptance
of $4,000 From Oleomar-
garine Dealers.
NO FRAUD WAS CHARGED
Whole Controversy Brought
About by Technically as
to Coloring.

Chicago, March. 9.-Frankltn Mao
veagh. former Secretary OF the Treas
ury, to-day issued a statement, in
which he defended his ruling in the
oleomargarine prosecutions. which re-
suited in the governments acceptance
OF s123.o00 in settlement OF alleged
frauds through which the government,
it is clnimed. was defrauded OF ST.
100000.
Mr.. Macyeagh asserted that no in
territorial fraud existed In the cases,
and that the settlement was on rec
concentration of the Bureau Of In
ternal Revenue.
"As the oleomargarine compromise
cases have been more or less misun-
derstood." he said II am quito willing
to state the facts:
These were not fraud cases. No
fraud was charged by the government.
No fraud was committed, and no fraud,
therefore. was compromised. There
are oleomargarine cases and oleomar-
garine cases. Those of which the pub
lie has heard most are fraud cases
cases In which the oleomargarine law
was fraudulently evaded. The cases in
question. however, are not in that
category.
Outline of Cuses.
THE outline of these cases is this:
The manufacture of two kinds OF cleo
margarine is permitted by law. One
Kind may be artifcially colored, as
butter and cheese may. This kind
must pay a tax of 10 cents pound.
The other and usual kind is taxed at
quarter of a cent q pound. and must
not be artificially colored 1t may be
naturally colored by tho colors nat
urally In it's permitted Ingredients
There is constant effort to obtain nat
ural color in the permitted ingredients.
This effort is. of course. an entirely
legitimate enterprise and within the
Law.
TT happens that cottonseed oil. Is
one of the chief ingredients of cleo
margarine, and also that this oil in It's
crude state is colored. III the process
Of refining cottonsced OIL however, for
use In o!comargarine, the color has
been lost, at least in any process not
too expensive to be commercially avail
able. Thus. the manufacturers nre
searching for process of refining
cottonsced oil by an economical pro-
cess without losing It's color.
Now, an Ohio chemist claims to
have iG6ented method that solves the
problem, and an oil company In Louis
ville--not an oleomargarine company
used this invention. and In 1911 pro-
duced oil with some color that was
claimed to be natural. This oil was
offered to oleomargarine manufacture
ers.
The oleomargarIne people brought
the oil to tho attention OF the Bureau
of Internal Revenue. The oil then was
tested throughout many weeks by the
chemical laboratory OF tho bureau, by
me laboratories OF the oleomargarine
manufacturers and by private labora-
tories. No ono could find any artificial
color.
| Certain of Legality.
FINALLY the manufacturers OF oleo-
margarine connected with these cases
N Ia .N,I..
| legality of this oil that they began to
use II with the knowledge OF the Blu
| reau or Internal Revenue, but without
the bureaus final decision
The bureau meant still to keep It's
mind open, but was at the end OF ,ts
resources at tho time. The oil had thus
been openly used in larger or smaller
| quantities for some months when the
bureau. by new chemical Inquiries be-
camo satisfied that the oil, after ALL
was nrtihcially colored by sulphur
| When this was announced all manufac-
turers of oleomargarine quit using tho
oil.
"It must BIO understood that manu-
faoturers of oleomargarine We're not
manufacturers of oil. They were
merely purchasers of 1t, and knew
nothing about 1t which tho government
did not know. IT also should be I'M
derstood that the governments conten-
| ton that the oil is artifcially colored
| is disputed
| The question between the oleomar-
sarine manufacturer and the Bureau of
! internal Revenue was not one of fraud
| 1T WAS question of technical liability.
The amounts of these compromises,
totailing s123000. were proposed by
the parties after the bureau had de-
cided that they could not be released
from tax liability. and 1t was found
that these amounts were all the gov
ernment's evidence would enable il to
enforce and probably more. The Of
fers were for that reason accepted
The reference TO n much larger sum
Say, 0.G00-ns an amount the
parties might have been compelled TO
pay, grew probably out of the pro
forma claims. There never was a real
million dollars in the bureaus mind.
Fro forma claims are like figures in
suits for damages.
| Not EIcvcnth-Hour Action.
one other mistaken impression is
mat the action was an eleventh hour
one. The case had been before the
department for number of months
It reached me ready for approval in
| November. In December, when was
about TO approve the settlements. I
suddenly learned that Judge Lands,
in the Federal Court in Chicago, pur-
posed TO take cogniZance OF cases and
refer them to II grand jury.
withheld my signature purely In
formal Difference to the court. / could
have approved the settlements at any
time and ended the matter for these
cases are administrative and rest with
the Treasury Department.
Il waited, however. II considerable
time and held the matter open still
longer to enable committee of Con-
J gress to make an inquiry and report.
| 1 did not finally act until 1t was evil
dent that Congress would not con-
slider the report"