Evening star., 1933-10-07
Prober to Quiz Baltimore
Lawyer on Representing
Dairy, Producer.
WALLACE CALLS HEARINGS
TO FIX PROCESSING TAX
One Cent Per Pound on Butter Fat
Considered to Bring in More
Than SEC, 900, ,OOO Annually.

The milk marketing agreements thus
far placed in effect by the Agricultural
Adjustment Administration we're drafted
by the dairy trust" Elwood H. Seal.
the Senate District Committees special
milk investigator, charged yesterday.
Meanwhile, Secretary of Agriculture
Wallace took formal action toward
levying processing taxes on milk, but
ter, cheese and oleomargerine to finance
a broad production control program for
the dairy industry.
Seal announced he would subpoena
Allan Saurwein, prominent Baltimore
attorney, who, he said. represented
both producers and distributors when
the code for that area was promulgated.
Saurwein is counsel for the National
Dairy Products Co., and represented the
producers of the Baltimore area in the
code hearings. Seal declared. He will
be asked to testify before the District
Committees milk hearings late this
month.
Tax Hearings Called.
In paving the way for processing
taxes, Secretary Wallace called two
hearings for October is, the first to
determine the rate of the tax on milk
and its products, which include oleo-
margarine and some animal and vege-
table fats and oils.
The rate of tax under consideration
is cent pound on butter fat, which
it is estimated, would produce from
s26.000.C00 to S30,000,000 annually.
This would amount to cents in the
case of 100 pounds of milk with 4 per
cent butter fat content. For pound Of
butter, this rate would provide tax
about four-fifths of a cent, as butter
is about 80 per cent butter fat
Processing taxes are already in effect
on wheat. cotton and the major tobacco
types with another for hogs and corr
expected to be announced soon. How
ever. the processing tax on dairy prod
ucts will affect more farmers than any
other
The Farm Adjustment Administra-
tion has yet to determine exactly how
proceeds of the tax will be spent, al
be about November l.
A substantial slice Of the proceeds
will be used to buy surplus milk and
butter for disposal to the needy through
the Relief Administration. Another
/ portion may be spent to purchase low
producing COWS to cut output. 1t il
planned that the meat also would b,
distributed to the needy.
Full Rate Unlikely.
| Under the far,-a act the rate Of
processing tax Is automatically tn
| equal Of the difference between currenl
farm prices for the commodities and
parity prices, based on pre-war aver
age prices, unless it is believed that this
tax rate would result In retarding con-
sumption and increasing surplus.
| Wallace said he believed this result
| would follow levying of the tax at the
| full rate and availed himself of a pro-
vision of the act authorizing him to call
a hearing to determine the rates in
| such an event.
1t will be the purpose of farm ad-
| mn1stratorS to determine after the
hearing exactly how high a tax rate
can be fixed without trimming con-
| sumption and piling up unsold supplies
| The dairy products are regarded a,
in direct competition with a number O,
substitutes. and the second hearing.
which will be conducted at the same
time. will be devoted to determining the
potential competitive advantages that
substitutes would gain over milk and
lLS products when the latter are taxed
Ihe tax en- these substitutes can be
levied at rate which Wallace believes
VIII offset the competitive disadvan-
tages 10 the butter industry