Editor’s Note: This article is part of a monthly series on the history of Webster City, written by local historian, Nancy Kayser.
While the Baby Boom generation has fond memories of squeezing the color into a bag of white oleomargarine, it was their mothers’ complaints about this required task which precipitated the change in oleo sales laws.
Oleomargarine (oleo, oley or margarine) was invented by a French chemist in 1869. The new blend made its way to the U. S. by 1874. It wasn’t long after its importation the butter-oleo battle began.
Dairy farmers and farm groups pushed for legislation immediately to protect their product and to protect the consumer from buying yellow oleo made from questionable ingredients believing it to be butter. Yellow, the dairymen explained, was the trademark color of natural butter. Shoppers would be confused when this product of science was also sold as a yellow colored spread.
Congress responded with the 1886 Federal Margarine Act which put a two-cent tax on oleo along with branding and annual license fees from oleo producers, wholesalers and retailers. A 1902 amendment to the act added a ten cent tax if the product sold colored yellow with only a quarter cent tax if sold uncolored. Another amendment in 1931 tightened the laws.
Many states, including Iowa, added their own laws to protect butter producers and consumers.
To get around the federal tax on already added color, oleo manufacturing companies included packets of yellow dye so the buyer could mix the two items in a bowl at home to produce the butter look-alike.
The June 15, 1894 issue of the Webster City Tribune commented on a new patent to manufacture oleo. They concluded, “The cow has evidently outlived her usefulness in this country”.
Even with the restrictions, demand for oleomargarine grew as the country evolved from an agrarian to an industrial society with higher city populations.
Gustuson Market at 905 Seneca Street appears to be the first local store to advertise oleo in the Webster City Tribune newspapers. Their January 19, 1914 advertisement urged shoppers to “Try our Oleomargarine and Cotosuet”. Cotosuet was compound lard made of cottonseed oil and beef fat.
The butter-oleo battle continued with the dairy industry lobbying to protect their product and to protect consumers against fraud. Major packing companies expanded to use their by-products in oleo production. Bootlegging of oleo sold as butter grew with federal prosecutors sending offenders to jail.
World War II urged producers of all agricultural products to expand to feed the country and the troops. Farmers complied to meet war needs. Iowa farmers also expanded production of the newest grain crop, soybeans, during this period. Use of soybean oil in oleo production grew and became competitive with cottonseed oil.
More than 650 products were rationed and under price controls during World War II including butter and oleo. In 1945 oleo sold for 29 to 32 cents a pound and needed 2 red points for purchase. Iowa shoppers bought nearly 7 million pounds of oleo that year. Butter sold in the 90 cents per pound range. These products continued under government controls until November of 1946. In the next six months, inflation rose 12.3 percent.
In mid-1947 the Cudahy Packing Company of Chicago developed an oleo product to ease the drudgery of mixing yellow coloring into white oleo. Their Delrich brand margarine was marketed in an E-Z Color Pak which the company advertised to “end mixing bowl mess”.
The white colored Delrich margarine was sealed in a Pliofilm bag developed by Goodyear of Akron, Ohio, along with a “color berry” capsule containing a dye. Buyers were directed to pinch the capsule and knead the bag to distribute the color. When the margarine attained full yellow color, the bag was placed back in the product box and chilled until it became a solid.
By 1948, Webster City grocery stores were advertising several brands of oleo such as Blue Bonnet and Nucoa, along with Delrich. All the brands sold in the 38 to 49 cents per pound range. Many groceries offered lower sale prices on the product as a loss leader to bring shoppers into their stores.
Butter prices continued high with Forrester’s Dairy, Cleveland Dairy or Williams Creamery butter advertised between 76 and 89 cents per pound.
Soybean proponents banded with the southern cotton interests and homemakers to begin the lobby to remove the federal tax and color requirements in early 1948.
The Associated Press reported the group claimed “the tax is discriminatory, favoring one wholesome food against another. Removal will help the housewife by reducing cost and ending the color stirring chore”. The Dairy groups argued the repeal of the tax and color rules “will play havoc with the dairy economy and the oleo manufacturers get the benefit of the repeal, not the housewife”.
The repeal passed the House but stalled in the Senate. The measure was discussed again in 1949 and finally passed in 1950. The federal tax of 10 cents per colored pound of oleo and the licensing fees were eliminated.
Webster City butter prices were down to 67 to 72 cents per pound by 1952. Oleomargarine sold for 20 to 25 cents per pound.
A five-cent per pound tax continued in Iowa. Five other states also had strict oleomargarine laws. One by one the oleo tax states began approving the sale of colored oleomargarine. When South Dakota eliminated laws on colored oleo in February 1953, the Associated Press reported that one state senator said “it was a case of satisfying either thousands of housewives or a handful of dairymen”.
Iowa fell into line too in 1953 as the legislature began the year with a joint hearing on the matter. Each side was allowed one hour of testimony and 15 minutes of rebuttal. The dairy industry stood alone as the state’s agricultural commodity groups aligned in support of removing the tax. By this time, soybean oil was a prime ingredient in the manufacture of oleo.
Two Hamilton County farmers, Ralph Olson and Albert Kooloff, instrumental in establishing the Boone Valley Soybean Processing plant in Eagle Grove, testified in favor of removing the tax for the benefit of Iowa’s soybean producers.
Des Moines housewives testified in support of each position.
The bill passed and went into effect July 4, 1953. The five cent tax was removed. Yellow colored oleo could be sold as long as the word “oleo” was stamped four times on each segment.
Minnesota and Wisconsin did not lift their oleo restrictions until 1963 and 1967 respectively. Their late response was a boon to the northern tiers of Iowa counties as residents of those states crossed the border to buy from Iowa stores and “smuggle” cases of colored oleo back home.
Iowa newspapers and radio stations affiliated with the Associated Press voted the oleo-butter battle as the top Iowa news story in 1953. It was estimated the “battle” took up 100 days of the legislature’s time.
And, according to Mrs. Richard Pugh, a Des Moines housewife who testified at the 1953 legislative hearings, Iowa housewives “gained back 2.5 million hours a year by not having to color their table spread”.
But the removal of the oleomargarine color tax in Iowa cost many Iowa kids the fun of squishing the color around in a bag of white oleo. There would be no more oleo-in-a-bag memories for the next generation.