[Paleopsych] Public Choice at the Dawn of the Special Interest State: The Story of Butter and Margarine.
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Public Choice at the Dawn of the Special Interest State: The Story of Butter
California Law Review, 89.1
77 Calif. L. Rev. 83
Geoffrey P. Miller
Associate Dean and Professor of Law, University of Chicago Law School; A.B.
1973, Princeton University; J.D. 1978, Columbia University.
I would like to thank the participants at faculty workshops at Washington and
Northwestern University Law Schools for their helpful comments, Linda Brinker,
Brian Hedlund, and Leon Greenfield for valuable research help, the John M. Olin
Foundation for financial assistance, and Randall R. Lee of the CALIFORNIA LAW
REVIEW for outstanding editorial work.
... Yet for over three quarters of a century, between the 1870s and the
1950s, margarine was the victim of a sustained and concerted pattern of
discrimination by the national government and almost every state in the union.
... In 1873 the dairy industry experienced the first stages of a profound
technological change that would revolutionize American dairying: the growth of
the factory system for processing milk into cheese and butter. ... The dairy
industry entered politics in earnest in 1877, when margarine began to challenge
the hegemony of butter in the nation's diet. ... In a unitary system, the dairy
industry might have eliminated margarine through system-wide prohibitory
legislation that could have been enforced against manufacturers throughout the
country. ... Still, a tax of ten cents per pound was unlikely to raise much
revenue because it would increase the cost of margarine to the point where it
could not compete with butter. ... The margarine and butter forces descended on
the White House with a vengeance, the former claiming that the bill was the
worst sort of class legislation, the latter proclaiming the absolute necessity
of the bill as a means of protecting the dairy farmer against ruinous
competition from counterfeit butter. ... If the dairy industry could be
protected against margarine, then cotton might seek protection against wool, or
one grade of butter against another grade of butter. ...
HIGHLIGHT: Nothing on earth, save the virtue of woman, is more susceptible to
scandal than butterfat.
W.D. Hoard 1
[*83] Few substances seem as innocuous as the prosaic table spread and
shortening agent oleomargarine. Yet for over three quarters of a century,
between the 1870s and the 1950s, margarine was the victim of a sustained and
concerted pattern of discrimination by the national government and almost every
state in the union. The antimargarine laws that resulted were the construct of
a powerful, highly sophisticated special interest: the American dairy industry.
The story of these laws -- and of the margarine industry's struggle against
them -- in many respects epitomizes the growth and development of special
interest politics in the United States. Indeed, the initial battles in the
margarine war provide some of the earliest examples of special interest
lobbying by one domestic industry for federal protection against competition
from another, less powerful, domestic industry.
This Article provides a history of the first battle in the margarine war, 2
which culminated in the passage of the federal Oleomargarine Act [*84] of 1886.
3 Intended as an application of the theory of public choice to one [*85] set of
historical and industrial circumstances, this Article illustrates the subtle
and complex interplay among politics, technology, markets, and law in American
This study highlights three important problems in the theory of public choice.
4 First, it confronts the classic problem of explaining the formation of large
groups. 5 Public choice theory posits that political interest groups are much
more likely to arise when the number of interested parties is small because the
costs of organizing a large group are much higher than the costs of forging a
small coalition. Furthermore, the free-rider effects 6 that plague any
organizing campaign multiply as the size of the group in question increases. In
short, returns diminish in scale as the number of constituents in an interest
group grows. 7
A simplistic application of public choice theory would predict that the dairy
lobby could never have been created, due to its sheer size. That lobby
represented approximately five million dairy farmers and thousands of factory
owners and middlemen. The costs and free-rider effects of organizing this
massive group into a cohesive political force would seem prohibitive. Yet such
a lobby was indeed created at the dawn of the special interest state in this
country. How was this development possible?
This Article explains the creation of the dairy lobby by examining [*86] its
origins. It theorizes that the dairy industry drew on a preexisting structure
of state, regional, and national organizations when it finally entered
politics. These institutions, originally established to combat certain industry
economic problems, enabled dairy leaders to overcome the organizational and
free-rider costs that otherwise might have doomed their campaign. This pattern
explains a seeming anomaly, which has perplexed public choice theorists.
A second issue in public choice theory highlighted in this study is how the two
basic structural principles of American government -- federalism and separation
of powers -- affect the growth and efficacy of special political interests.
This Article posits that, in the case of the margarine controversy, federalism
benefited the dairy industry, while separation of powers hindered it.
The existence of a federal system benefited the dairy lobby because the
industry could initiate campaigns for state legislation, where free-rider and
organization costs were low relative to national politics. Legislation could
easily be obtained in states with powerful dairy constituencies, providing
impetus for the enactment of similar legislation in other states. The industry
could use the states as "laboratories" -- not in Brandeis' positive sense of
controlled environmental settings for the creation of anticompetitive statutes
designed to serve narrow special interests.
Once state legislative campaigns were underway, the industry could marshal its
resources to obtain federal legislation. State statutes provided models for
such federal action. Even setbacks in the dairy industry's campaign at the
state level, such as unfavorable judicial rulings, could stimulate lobbying at
the federal level. Federal legislation provided a body of protections that
overlapped and supplemented the state statutes and held the promise of
eliminating margarine manufacture entirely. If the federal law proved
inadequate for any reason, the industry could launch a new state-level
To be sure, federalism did not wholly benefit the dairy industry, because the
resources necessary to achieve protection at two levels were potentially
greater than those required in a unitary system, and because certain states
could serve as havens for margarine manufacturers. On the whole, however,
federalism facilitated the growth of the special interest state.
Separation of powers, on the other hand, tended to hinder the dairy industry's
campaign. To achieve its goal of eliminating competition from [*87] margarine,
the industry needed the active cooperation of all three branches of government
at both the state and federal levels. Merely enacting legislation was not
enough, because legislation needed enforcement to have effect. In fact, the
dairy industry encountered resistance from both the judicial and the executive
branches of government in its campaign. Prosecutors failed to enforce the
antimargarine laws with any vigor. Even when prosecutors brought enforcement
actions, courts often threw them out on technical or constitutional grounds.
The effect of separation of powers is not entirely clearcut, because the
splintering of authority among three branches allowed the dairy industry to
focus its organizational resources on the government arm in which the industry
was likely to have the most influence -- the legislature, where five million
votes carried significant force. In a unitary system, the dairy industry could
not have concentrated its fire in this fashion. Nevertheless, the effect of
separation of powers generally inhibited the development of the special
This Article highlights a third aspect of public choice theory: the question of
how economic conditions in an industry affect an interest group's readiness to
lobby for protective legislation. In the case of the dairy industry, it appears
that political activity increased in times of adverse economic conditions.
Dairy lobbying was more intense when butter prices were low and less intense
when butter prices were high -- even though low butter prices also meant low
margarine sales because margarine is a substitute for butter. Why an industry's
anticompetitive activity should be more intense in times of economic downturn
than in prosperous times is something of a puzzle. Enhanced lobbying in times
of downturn might have reflected either reduced fears of new entry into the
industry (which would otherwise dissipate the benefits derived from lobbying),
or dairy farmers' willingness to pay more to protect a benefit they had than to
purchase a benefit that they did not have. 9
These observations about the growth of large group lobbies, the effects of
government structure, and the relevance of economic conditions may have
validity across a range of industries and time periods. This Article, however,
focuses on a single industry during a limited period. Whether the effects
posited here exist elsewhere must await further research.
Part I of this Article describes the origins of the dairy lobby by examining
the structure of the industry, the growth of factory dairying, and the
establishment of precursors to the dairy lobby in the form of private
associations. It then examines the origin of the margarine industry [*88] and
compares the resources available to the dairy and margarine industries at the
outset of the political struggle. Part II discusses the dairy industry's early
state campaigns and describes the first antimargarine laws. Part III examines
the industry's federal campaign that culminated in the Oleomargarine Act of
1886. The Article concludes by examining the antimargarine campaign from the
perspective of public choice theory, relating the controversy to some of the
broader themes outlined above.
ORIGINS OF THE BUTTER LOBBY
The dairy industry in the early 1870s showed no indication that, in less than
two decades, it would become one of the nation's most potent political lobbies.
To be sure, dairy farmers represented a huge potential voting bloc. They were,
however, almost entirely disorganized. No single farmer had an interest in
organizing the industry to reduce price fluctuations or develop markets. The
free-rider problems that plague any attempt to organize an interest group were
especially severe in the case of the dairy industry. 10
Moreover, the establishment of an industry lobby had little precedent in either
the farming sector or elsewhere in the economy. No federal programs for farmers
existed, 11 nor were there any significant state programs. Dairy farmers
believed more in the virtues of sound management and hard work than in
salvation through government intervention. 12 Although the dairy farmer, like
other American agriculturalists, was swept up by the granger crusade of the
1870s, 13 the granger movement then focused on broad questions of national
policy and did not contemplate organizing dairy farmers into an interest group
capable of forcing its special agenda on the nation's political institutions.
Nevertheless, within little more than a decade the industry had become a
powerful and organized special interest lobby. How the lobby evolved is a
question of some historical interest. Its answer may shed light on the United
[*89] States' transformation into a special interest state during the last part
of the nineteenth century.
A. Structure of the Dairy Industry
Profound technological and economic changes in the 1870s and 1880s transformed
dairying from a cottage industry into a sophisticated, industrialized area of
commerce. The industrialization of American dairying, moreover, facilitated the
creation of a national political lobby when margarine threatened to replace
butter as a staple of the national diet.
1. Dairy Farming in 1873
By the time commercial production of margarine started in the United States in
1873, 14 dairy farming was already one of the largest domestic industries. As
many as five million farmers owned at least one milk cow during this period. 15
Unlike other large industries such as the capital-intensive mills and
railroads, dairying was still an industry of small producers. 16 Probably a
majority of dairy farmers kept a cow to supply personal needs. They sold milk
on the market mostly during the peak production period in the spring and early
summer, if at all. 17
Dairy products were almost wholly processed on the farm. The farmer sold a
portion of the raw milk he produced and converted the rest into butter or
cheese, sending it to market in stone jars, soap and candle boxes, tobacco and
candy pails, and barrels of all sizes. 18 The quality of the dairy products
depended on the skill of the individual farmer. 19
Dairy farms were spread out over every state and territory during this period.
This wide geographic dispersion of American dairying was due, in part, to the
ecological flexibility of the milk cow, able to survive in all sorts of
climates and on various kinds of feed. The lack of centralization also
reflected the technological difficulties of bringing fluid milk to markets. A
notoriously perishable commodity, fluid milk could sour or, [*90] worse, become
infected with disease if not consumed within a few days after production. With
refrigeration still in its infancy, pasteurization decades in the future, 20
and relatively primitive transportation systems beyond the railroads' path,
milk had to be produced very close to its markets. 21
Dairy farming was not uniformly distributed throughout the country, however. A
vast dairy belt about 150 miles wide, extending from New England westward for
about 1800 miles, produced most of the nation's milk, cheese, and butter. 22
New York led the nation in butter production by far, followed by Pennsylvania,
Ohio, Illinois, Iowa, Michigan, Wisconsin, and Minnesota. 23 The fastest
growing butter producing states were Iowa, Wisconsin, and Minnesota, where
farmers were turning from wheat production to the tending of milk cows. 24
Southern states were relatively weak dairy producers.
2. Growth of Factory Dairying
In 1873 the dairy industry experienced the first stages of a profound
technological change that would revolutionize American dairying: the growth of
the factory system for processing milk into cheese and butter.
The first dramatic shift in dairy technology occurred with the production of
factory cheese after the Civil War. Factory cheese had numerous advantages over
farm cheese. It generally had a higher quality because expertise in cheese
making could be concentrated in the factory. 25 The factory could develop more
effective marketing methods 26 and could produce cheese in quantities
sufficient for sale in national and foreign markets. Cheese factories sprang up
across the dairy states during the 1860s; 27 by 1899, 94.5% of the nation's
cheese was produced in factories. 28
The industrialization of butter production lagged about a decade behind that of
cheese. Initially, the process of making butter in factories (known as
"creameries") differed little from the process on the farm. Compared to farm
butter production, creameries earned only relatively minor returns to capital.
29 Thus, creameries existed exclusively as [*91] adjuncts of
cheese-manufacturing plants. 30
In 1878, however, the invention of the centrifugal cream separator triggered a
revolution in butter making. 31 The centrifugal separator proved much more
efficient at removing the butterfat from milk than the older method of gravity
separation. 32 Because centrifugal separators required a substantial capital
investment and could process milk in bulk, they were suitable only for factory
use. 33 Butter produced in factories ("creamery butter") quickly gained a
reputation as having a better taste and a more consistent quality than farm
butter 34 -- connotations that attach to the term "creamery butter" even today.
The relative market prices of creamery and farm butter reflected the strong
consumer preference for the former. In 1878, Wisconsin creamery butter sold for
38 to 40 per pound compared with only about 13 per pound for farm butter. 35
These technological and market developments facilitated an explosive rise in
creamery manufacture of butter. 36 Virtually nonexistent in 1869, Wisconsin's
creamery butter production rose to 489,000 pounds in 1879, 14,060,000 pounds in
1889, 61,814,000 pounds in 1899, and 103,885,000 pounds in 1909. 37 Nationwide,
factory butter constituted an insignificant percentage of total butter
production in 1870. It rose to 3.6% in 1880, 14.9% in 1890, and 28.2% in 1900.
B. Precursors of the Dairy Lobby
Dairying's factory system stimulated the establishment of formal and informal
organizations that would eventually serve as building blocks in the creation of
a national lobby. Although these groups took a variety of forms and represented
differing interests, they all served the goal of improving and expanding dairy
markets. The most important groups were (1) factory owners, (2) producer
associations, (3) boards of trade and produce exchanges, and (4) producer and
[*92] 1. Factory Owners
With the growth of factory-produced cheese and butter, a new figure assumed a
leading role in the politics of dairying -- the factory dairyman. As
entrepreneurs, factory dairymen set up butter and cheese factories to exploit
the profit opportunities introduced by the new dairying technology. Although
they professed solidarity with dairy farmers and swore allegiance to the ideals
of animal husbandry, factory dairymen were more manufacturers and businessmen
than farmers. While many factory owners maintained herds of milk cows in the
early days of factory dairying, their interest in milk production gradually
became secondary to their manufacturing businesses. 39
The interests of factory owners and dairy farmers conflicted in certain
respects. Factory owners monitored the operations of their suppliers to improve
product quality. They explored new means of production and constantly
encouraged farmers to improve operations -- a call that many farmers strongly
resisted. 40 As purchasers of the dairy farmer's product, they inevitably
bickered over terms such as price, quality, and risk. 41 Moreover, farmers who
manufactured their own butter or cheese competed directly with factory owners.
Despite these tensions, factory dairymen were well-qualified for the role of
industry champions. First, their interests coincided with those of dairy
farmers on issues affecting the industry generally. Both groups, for example,
wanted to stave off competition from nondairy products. Farmers could trust
factory dairymen to represent them in a campaign focused on eliminating
competition from butterfat substitutes.
Second, factory owners had stronger incentives to organize the industry than
did farmers because margarine threatened them more than it did farmers. Factory
owners wanted to protect their capital investments, which were both larger and
less diversified than the investments of dairy farmers. 42 The dairy farmer
could market raw milk in fluid form or for cheese; if milk production became
unprofitable he could send his cows to the stockyards and convert land to other
productive use. In contrast, the creamery owner faced ruin if butter making
became unprofitable. In addition, the relatively small number of factory owners
alleviated the pervasive free-rider problems that hampered the organization of
an undifferentiated mass of small dairy producers.
[*93] Third, factory owners generally possessed intellectual and
organizational abilities well-suited for industry leaders. 43 Aware of the
rapid growth of industry and science in the United States and of the
far-reaching consequences these trends portended for dairying, the owners
participated in wholesale markets for cheese and butter that were national and
even international in scope. Involvement in these markets gave factory dairymen
a broad overview of the dairy industry's problems and a network of contacts
with dairy leaders in other states.
These qualifications enabled factory owners to spearhead the industry's early
campaigns against margarine. They masterminded the industry's overall strategy
and directed its day-to-day operations. This relatively cohesive cohort of
specially qualified and motivated leaders helped crystallize the industry into
a powerful lobby in the legislative battle for protection against margarine.
2. Dairy Associations
A variety of county, state, and national dairy associations represented a
second important precursor to the national dairy lobby. These associations
attempted to expand regional markets for dairy products. They responded to two
important market needs: 1) coping with a perceived problem of "overproduction";
and 2) policing against opportunistic behavior by members.
Dairy farming, like other areas of agriculture, was often said to suffer from
"overproduction." 44 Repeated constantly at industry meetings, the bugbear of
overproduction haunted dairy farmers. Yet dairymen seldom explained exactly
what they meant by the term. It implied that simply too much milk was on the
market. Presumably, the concern was based on the following postulate: In a
system of factory dairying, with interlinked geographic markets, any
exogenously caused rise in the supply of dairy products would drive prices
down. Faced with lower prices, dairy farmers would have to step up production
to break even. Their efforts would be futile, however, because the more they
produced, the more prices would fall and thus the less they earned for their
This concept of overproduction makes little economic sense. Prices in dairy
markets are functions of supply and demand. An unexpected increase in supply or
decrease in demand will cause prices to fall, perhaps even to the point where
the farmer suffers an outright loss. This situation will not last, however,
because some farmers will leave the market. Supply [*94] will contract, driving
prices back to levels at which farmers can earn competitive returns on their
capital investment and labor. Under traditional market theory, a sustained
condition of overproduction in an unregulated competitive market is impossible.
As applied to conditions in dairying in the late nineteenth century, references
to overproduction were more accurately complaints about the industry's lack of
barriers to entry. 46 Low butter prices cut into farmers' profits and reduced
the value of their herds. During these periods farmers were indeed
overproducing, in the sense that the industry no doubt operated on low profit
margins. But low prices in one period must have been balanced by high prices in
another, when farmers earned good profits on their investment in farm and herd.
Indeed, despite the variability in butter prices, the total number of dairy
cows increased in linear fashion over the entire period, growing from
approximately ten million cows in 1870 to approximately fourteen million cows
in 1886. 47 The increase in the number of cows suggests that dairy farming was
not unprofitable relative to other occupations during this period. Thus, it
seems apparent that references to "overproduction" were often disguised
complaints about the lack of protection against competition. 48
The problem of overproduction (or lack of supercompetitive profits) could be
mitigated either by reducing output or by increasing demand. Output could be
reduced by forming a cartel. The free-rider and organizational costs of
cartelizing the butter industry as a whole, however, were probably prohibitive,
given thousands of dairy factories shipping butter [*95] into geographically
extended markets. 49 Increasing demand represented a more feasible alternative
because butter produced in areas with good reputations sold for more than
butter from other areas. 50 A region's farmers and factory owners could raise
prices by increasing the reputation of their product relative to products from
other regions. Although the benefits of increased demand would partially
dissipate over time through new entry, supercompetitive profits were possible
in the short term. Even in the long run, profits were unlikely to be completely
dissipated because the potential for cartels was stronger in narrowly segmented
A basic technological limitation in dairying rested in the difficulty of
assessing the quality of dairy products on simple inspection. 51 Butterfat
content and resistance to spoilage principally determined the value of dairy
products. Neither quality could be measured directly. No simple measure of
butterfat content existed until the introduction of the Babcock butterfat test
in 1890. 52 Grading of milk and cream did not become commonplace until early in
the twentieth century. 53 As to perishability, almost anyone could detect
spoiled cheese, rancid butter, or sour milk, but it was virtually impossible to
ascertain how long a fresh dairy product would remain fresh. Middlemen,
retailers, and exporters assumed spoilage risk while the products rested in
their control. 54
These technological shortcomings created a classic form of market failure which
George A. Akerlof terms the "market for lemons." 55 The difficulty in directly
measuring the quality of dairy products subjected dairy markets to severe
informational asymmetries in which the seller knew more about the quality of
the product than did the buyer. In such conditions, buyers must rely on some
statistic as a proxy for qualities [*96] that cannot be directly measured. The
nature of that statistic in the dairy industry depended on the market in which
the dairy product was sold. In raw milk supply markets, the volume of milk
supplied by the farmer served as the operative statistic. 56 In wholesale and
retail markets for processed dairy products, the statistics were weight,
variety, and geographic origin. Hard cheese might command a higher price than
soft; Wisconsin butter might sell for more than Iowa butter, and so on. 57
But the use of statistics in place of direct quality measures invites
selsellers to behave opportunistically, which creates the market for lemons.
Akerlof describes the problem as follows:
There are many markets in which buyers use some market statistic to judge the
quality of prospective purchases. In this case there is incentive for sellers
to market poor quality merchandise, since the returns for good quality accrue
mainly to the entire group whose statistic is affected rather than to the
individual seller. As a result, there tends to be a reduction in the average
quality of goods and also in the size of the market. 58
In the dairy industry sellers could, and did, behave opportunistically.
Farmers, knowing they would be paid on a volume basis, supplied milk that was
watered or partly skimmed, fed their cows on inadequate fodder, or simply used
inferior animals that produced milk low in butterfat. 59 Owners of cheese
factories, knowing that their product would sell in foreign markets at the same
price as all other American cheese of the same type, manufactured cheese out of
skim milk laced with vegetable oil. 60 Butter manufacturers, knowing that their
product was sold by weight, churned it with water to produce "overruns" 61 and
failed to maintain high standards of cleanliness and care. 62 Middlemen,
knowing that the value of processed dairy products depended on geographic
location, obtained cheap butter or cheese from one state and passed it off as
premium merchandise from another state. 63 Butter factories contrived to insert
the word "Elgin" in their names, hoping consumers would mistakenly associate
their product with Elgin butter, widely known as the [*97] nation's finest.
n64Retailers sold margarie and "renovated" butter to customers at premium
butter prices. 65 The list could be extended. 66
Although informational asymmetries existed in the dairy industry prior to 1876,
the growth of industrialization in dairying severely aggravated the lemons
problem. In dairying's days as a cottage industry, buyers often obtained their
butter, milk, and cheese from a farmer whose reputation depended on the quality
of his product. 67 Knowing that buyers would go elsewhere if his products
turned out to be inferior, the farmer supplied goods of reliable quality. In
contrast, the factory system separated buyers and sellers by several layers of
middlemen such as wholesalers, jobbers, and retailers. 68 Moreover, goods of
different suppliers were consolidated into common pools and sold as fungible
units. Producers pooled milk for sale to factories; factories sold cheese and
butter into markets where price was determined by the factory's location; and
dairymen across the country operated in a world market where the price for
american butter and cheese depended on its general reputation for quality.
These developments meant that the price a supplier could obtain no longer
wholly depended on the quality of his product.
Accordingly, the problem of opportunistic behavior in dairy markets became
acute after the advent of factory dairying. The lemons markets that developed
posed a threat to the industry at all levels of production and distribution. As
Akerlof points out, a lemons market is a market in breakdown. 69 Because buyers
expect that sellers will behave opportunistically, the amount they are willing
to pay drops below the amount demanded by sellers of higher quality goods.
Thus, inferior goods tend to drive superior ones off the market in a peculiar
manifestation of Gresham's Law. 70 Because social and private returns differ,
the consequence is a deadweight social loss. 71
[*98] c. The Growth of Dairy Associations
Factory dairymen and other dairy industry leaders responded to these two
problems of dairying -- overproduction and informational asymmetry -- by
organizing the industry on a county-wide and eventually state-wide basis. 72
Small groups of producers and factory men formed the first dairy associations
in order to enhance the prestige of dairy products from their region. These
associations aimed to mitigate the lemons problem and increase demand by
establishing a reputation for quality in dairy products produced by the
associations' members. Dairy association activities typically included entering
the products of their region in fairs and expositions, encouraging the use of
modern dairying techniques by local farmers, and preventing opportunistic
behavior by their members. 73
Associations developed first at the local level because organizational costs
and free-rider effects are lower in small groups than in large groups. Once in
place, however, these local associations greatly reduced the costs of statewide
organization because a state association could be constructed out of the local
groups. Accordingly, dairy associations quickly grew to statewide proportions.
In 1866, a group of New York cheese makers formed the American Dairymen's
Association, which -- although purportedly national in scope -- essentially
operated as a New York organization. 74 Vermont (the greatest dairy state in
milk produced per square mile) 75 organized a dairy association in 1869. 76
Likewise a small elite principally concerned with the expansion of the factory
interest in their state formed the Wisconsin Dairymen's Association. 77 In
addition to general dairy associations, specialized organizations with broad
geographic scope sprang up for the purpose of enhancing the value and prestige
of particular dairy cow breeds. 78
These broader associations originally intended to increase domestic consumption
of their members' products and exploit the possibilities of entering foreign
markets. 79 In other words, the associations helped dairymen maintain
supercompetitive profits through continuous expansion of markets. State dairy
associations also informed dairy farmers [*99] about market conditions and new
developments in dairy science through association gatherings, county fairs, and
publications. These educational activities improved the quality of dairy
products produced within the states. 80
Various dairy newspapers serving different parts of the country were loosely
affiliated with the state dairy associations. 81 The most influential
periodical in Wisconsin was the Jefferson County Union, published by William D.
Hoard, a prominent spokesman for the factory interests, later Governor of
Wisconsin, and ultimately leader of the industry's national campaign against
margarine in 1900-1902. 82 The Rural New Yorker exerted similar influence in
New York and New Jersey. 83
The activities of the state dairy associations were not explicitly political at
first, except for a few isolated incidents of petitioning state legislatures
for protection against particular, defined evils. 84 However, organizing the
industry into unified groups focused on a common end naturally facilitated the
exercise of political power; the dairy leaders' goals, moreover, were such that
they could be accomplished through legislation.
3. Boards of Trade and Produce Exchanges
Boards of trade and dairy produce exchanges made up a third key building block
in the national dairy lobby. As the factory system expanded, wholesale
merchants began to play an important role in the distribution of butter and
other products. To facilitate their operations, merchants organized into boards
of trade and produce exchanges such as the New York Mercantile Exchange, the
Chicago Butter and Egg Board, the Elgin Board of Trade, the Chicago Produce
Exchange, and the Baltimore Produce Exchange. 85
These bodies facilitated dairy product transactions in extended geographic
markets by allowing buyers and sellers to convene in a centralized location at
which prices could be set quickly and accurately. They defined classes and
grades of butter to encourage quality standardization. 86 Most [*100] initiated
inspection programs for grading particular lots of butter. 87 In addition to
grading, inspectors often counseled producers on improving the quality of their
products. 88 By standardizing the product, they widened the geographic scope of
dairy markets, inducing other dairy groups to organize at regional and national
levels. As preexisting organizations of dairy merchants, boards of trade and
produce exchanges readily enlisted in the campaign against margarine.
Cartels of buyers and sellers of fluid milk became a fourth organizational form
that contributed to the antimargarine campaign. Because of its extreme
perishability, fluid milk could be marketed only in limited geographic areas or
in areas served by efficient rail transportation. This natural market
limitation reduced the number of participants in milk markets and thereby
facilitated cartelization. Both buyers' and sellers' cartels formed during this
period. 89 Around 1880, producers began to band together into regional
associations to control prices paid by dealers. 90 The president of the Orange
County Milk Producers' Association of New York described how organizing into a
county-wide association gave the farmers enhanced bargaining power in the milk
[F]or a number of years prior to the year 1883 business had been depressed,
from the fact that the men with whom the farmers were dealing were sharp and
unscrupulous in their business ways and had succeeded in reducing the prices of
milk to a figure that made the business unprofitable. In 1882 we formed an
organization of the producers of milk for the New York market, an organization
of farmers in that particular section, for the purpose of mutual protection. We
succeeded in 1883 in forming a strong association of some eight hundred
members, and became an incorporated body, and succeeded by the withholding of
milk, or by what was known at that time as the Orange County Milk War, in
increasing the price of milk to the farmers of our county so that they received
in the years 1883 and 1884 nearly a million dollars more for their product than
they had received prior to that time. . . . 91
Purchasers of fluid milk also established their own buyers' cartels. In
response to the growth of the Orange County Milk Producers' Association, the
creameries and larger milk dealers in the New York City milkshed organized the
New York Milk Exchange Limited, which attempted to control the industry through
overt price fixing. The bylaws of the [*101] exchange required members to
adhere to specified rates paid to dealers and charged to consumers. 92
Producer and purchaser associations thus organized the dairy industry into
groups that could easily become politically active when the need arose.
Although the producer associations' goals were initially adverse to those of
factory owners and milk dealers, there was no reason why these different
interests could not cooperate on matters of mutual concern. Margarine, because
it threatened the interests of dairy farmers as well as factory owners,
provided an obvious rallying point for the whole industry.
The factory system created a high degree of economic interdependence among
dairymen, stimulating the formation of various associations and groups at
different geographical levels. It took but a small step to turn these groups to
political action once the appropriate issue arose. Accordingly, when the
leaders of the dairy industry decided to counter the margarine threat through
political action, they did not face the daunting task of organizing five
million farmers and a substantial number of middlemen, retailers, and factory
owners from scratch. Rather, the dairy lobby crystallized out of powerful but
previously nonpolitical bodies which themselves had been organized in response
to the factory system in dairying.
C. Origins of the Margarine Industry
Although the dairy industry established a base for organized political action
by the mid-1870s, only an external threat finally galvanized the industry's
leaders into entering politics in earnest. That threat arrived on the scene in
the form of margarine, an unanticipated technological development that
irrevocably altered the political organization of the dairy industry.
A French chemist, Hippolyte Mege-Mouries, invented margarine sometime in the
late 1860s. He made the product from oleo (refined caul fat of beef) churned
with milk, salt and a few other ingredients. 93 Mistakenly believing that his
invention contained margaric acid, Mege-Mouries called it "oleo-margarine," a
name that quickly achieved universal [*102] acceptance. 94 The product was a
smashing success. When colored with vegetable dye, margarine was a dead ringer
for yellow butter. It had a buttery taste, 95 could be substituted for butter
in cooking or as a spread, and had similar qualities of perishability and
digestibility. Above all, margarine could be sold at about half the price of
The commercial potential of margarine immediately became apparent.
Entrepreneurs around the world eagerly sought to exploit the product.
Commercial margarine production in this country began when Mege-Mouries
obtained a United States patent on his invention and sold it to the United
States Dairy Company. 97 The invention, however, proved impossible to protect;
competitors filed over 180 patents in the ensuing years that designed around
the Mege-Mouries claim by specifying slightly different procedures for treating
the fat or including minor ingredients not contained in the original patent. 98
Soon margarine producers operated in a number of states, shipping their
Margarine manufacture remained a fairly concentrated industry during this
period. Fifteen margarine factories operated in 1880, twelve in 1890, and only
twenty-four by 1900. 99 Among the first major margarine producers were the
great Chicago meat packing firms. 100 These firms enjoyed important advantages
over other producers: ready access to meat fats, an efficient rail
transportation system, centralized facilities for manufacture and shipment, and
nationwide marketing networks. The meat packers enhanced their advantage when
they discovered in the 1870s that they could increase quality and lower
manufacturing costs by substituting neutral lard (processed hog fat) for some
of the oleo oil. 101 Chicago quickly became an important center of
oleomargarine manufacture. 102
One additional technological development became important to the subsequent
politics of margarine: the practice of some margarine producers to substitute
small amounts of cottonseed oil for some of the oleo or neutral lard.
Cottonseed oil was considerably cheaper than these other fats, although it
could not be used in quantity because the taste could not be completely
neutralized and because the oil adversely affected margarine's [*103] melting
qualities. 103 The use of cottonseed oil, however, gave the Southern cotton
states an interest in promoting the margarine business, an interest which later
proved politically significant in the national struggle over margarine.
D. Political Resources of the Dairy and Margarine Interests
As the struggle between butter and margarine began, the two industries enjoyed
fundamentally different political resources; these resources dictated each
industry's political strategy. The dairy industry's resources favored
legislative action, while the resources of the margarine forces favored
executive and judicial action (or inaction).
A representative legislature clearly favored the dairy industry for three
reasons. First, the industry enjoyed the support of the nation's five million
dairy farmers who sold on cash markets, coupled with middlemen and factory
owners whose livelihoods depended on butter. These voters had a strong personal
interest in protecting butter markets against competition from margarine
because their capital was not highly diversified. This was especially true of
middlemen and factory men who dealt specifically in butter rather than dairy
products generally. Second, the various private industry organizations could
monitor elected officials and mobilize their constituencies to reward pro-dairy
votes and punish pro-margarine votes. Finally, the presence of dairy farmers in
every state allowed the industry to mobilize on a national level, while the
relative concentration of dairying in New York, Wisconsin, Pennsylvania, and
Vermont gave the industry sufficient power in certain states to overcome local
lawmakers' initial resistance to new and unfamiliar legislation.
The margarine industry enjoyed far less direct voting power. In contrast to
butter production, margarine production was capital-intensive, with only a few
thousand people working directly in that business. Only in Chicago was the
direct voting support for margarine manufacturers a significant factor.
Nationally, livestock and cotton interests were aligned with the margarine
manufacturers because meat fats and cottonseed oil were used in margarine
manufacture. However, their interest in protecting margarine manufacturers was
relatively slight. While livestock owners could profit from margarine, their
livelihoods did not depend on it, since margarine added only marginally to the
total value of a head of beef or a hog. As to cotton interests, the
technological problems of using cottonseed oil in margarine left the value of
margarine largely unrealized.
In one sense the margarine interests were allied with the largest voting bloc
of all, the general public, since the public undoubtedly benefited [*104] from
the availability of a cheap and palatable butter substitute. Immigrants and
blue collar workers, who could not otherwise afford to put butter on their
tables, were the most obvious beneficiaries. Despite their size, however, these
segments of the public were completely unorganized. Thus, while the several
million dairy farmers organized into an effective political power group, the
many millions of immigrants and blue collar workers almost never participated
actively in the controversy.
The dairy industry's advantage in raw voting power was offset somewhat by the
margarine industry's greater access to capital. Margarine manufacturers tended
to be large corporations with substantial cash incomes. 104 They could raise
the funds necessary to combat the dairy industry's campaign with ease and could
treat the expenditures as an ordinary cost of doing business. Firms in the
dairy industry tended to be smaller, and therefore enjoyed considerably less
access to ready capital. 105
Moreover, margarine interests suffered less from agency and freerider effects
than did the dairy industry. Although the farmer might be willing to write
constituent mail or to vote as recommended by dairy leaders, he was much less
likely to send hard-earned cash to somebody who might not use it as the farmer
wished. Margarine manufacturers, on the other hand, spent their capital
themselves, thereby reducing agency costs. Unilateral expenditures by margarine
manufacturers did raise free-rider problems, but the relatively high degree of
concentration in the industry mitigated these concerns. 106 Expenditures by
Armour and Swift, for example, would rebound largely to their own benefit
because of their large market shares.
At the outset of the battle over margarine, therefore, the two industries
possessed different strengths and weaknesses. The next Part describes how the
competing industries used these resources in the first skirmishes of the
THE DAIRY INDUSTRY ENTERS POLITICS
The dairy industry entered politics in earnest in 1877, when margarine began to
challenge the hegemony of butter in the nation's diet. The industry's policy
was clear from the start: Do everything possible to ensure that margarine did
not compete freely with butter.
The butter interests' search for protection hardly seems surprising from the
perspective of today's political environment, where special interests routinely
vie for government favors. In its era, however, the dairy industry's battle
against margarine was unusual. It was among the first national campaigns by one
domestic industry to enlist the government to crush competition from another.
In a sense, the first shots in the margarine war mark the birth of the modern
special interest state.
A. The Initial Dairy Industry Response
Although margarine posed an obvious threat to butter, the dairy interests did
not immediately organize effective political opposition to the product. The
industry's initial hesitation resulted principally from a belief that margarine
did not threaten the factory interests. When margarine first appeared in the
United States in 1873, creameries were still in their infancy. Most dairy
factories produced only cheese, a product that margarine did not threaten.
Those factory owners who had moved into butter production may well have seen
margarine as more a blessing than a curse. "Creamery butter" had begun to
command a significantly higher price than farm butter. 107 If margarine
displaced butter at all, it would drive out farm butter, 108 to the advantage
of commercial butter producers. Quite possibly, inferior farm butter created
something of a lemons market that depressed the prices of creamery butter. If
margarine eliminated farm butter, the position of creamery butter could
improve. This view of margarine may explain why some industry leaders regarded
the product with apparent equanimity during its first years on the market. 109
In addition, favorable conditions in the dairy industry between 1873 and 1877
assuaged concerns about competition from margarine. Dairy farming had been
profitable since the Civil War. Butter prices increased [*106] threefold
between 1861 and 1866, 110 presumably as a result of wartime shortages.
Although prices dropped after 1866, they remained well above their prewar
levels. 111 After 1872, prices began to rise again. The average price of butter
in Wisconsin was 18 per pound in 1873, a major improvement over the 14.6 per
pound of the previous year. 112 By 1874, Wisconsin butter had jumped to 21.8
per pound; and prices remained relatively high through 1877. 113 Moreover, the
number of milk cows increased significantly during this period, with only a
slight decline in the average price per cow. 114 Although high butter prices
undoubtedly enhanced margarine sales, 115 this fact, if observed at all,
apparently did not disturb the industry's general sense of well-being. Given
the prosperous times, the absence of any significant dairy industry clamor
about imitation butter is not surprising.
Industry leaders, however, had sorely underestimated the margarine threat. If
unscrupulous dealers could palm farm butter off on consumers as creamery
butter, they could do the same with margarine and earn equal or greater profits
from their fraud. The lemons problem would be exacerbated, not improved.
The problem of fraudulently representing margarine as butter was well-known by
the mid-1870s. Mark Twain's Life on the Mississippi, published in 1874, records
the boasts of an early oleomargarine salesman overheard on a Mississippi
'Now as to this article,' said [the salesman], 'it's from our house; look at it --
smell of it -- taste it. Put any test on it you want to. Take [*107] your own
time -- no hurry -- make it thorough. There now -- what do you say? Butter,
ain't it? Not by a thundering sight -- it's oleomargarine! Yes, sir, that's
what it is -- oleomargarine. You can't tell it from butter; by George, an
expert can't! . . . We supply most of the boats in the West; there's hardly a
pound of butter on one of them. We are crawling right along -- jumping right
along is the word. We are going to have that entire trade. Yes, and the hotel
trade too. You are going to see the day, pretty soon, when you can't find an
ounce of butter to bless yourself with, in any hotel in the Mississippi and
Ohio valleys, outside of the biggest cities. Why, we are turning out
oleomargarine now by the thousands of tons. And we can sell it so dirt-cheap
that the whole country has got to take it -- can't get around it, you see.
Butter don't stand any show -- there ain't any chance for competition. Butter's
had its day -- and from this out, butter goes to the wall.' 116
Twain's report boded ill for the dairy industry, although it would be a few
years before industry leaders fully realized that a grain of truth might lie
behind the boasts of the oleomargarine salesmen.
The threat posed by margarine became apparent, however, when the relative
prosperity that had prevailed through 1877 gave way late in that year to a
disastrous downturn in prices. Average wholesale Wisconsin butter in 1877 was
only 16.3 per pound and falling. 117 By 1878, Wisconsin butter had dropped to
13.2 per pound, recovering only slightly to 13.6 in 1879. 118 As the following
graph illustrates, national butter prices reflected a similar downturn, falling
from approximately 20 per pound in 1877 to approximately 14 per pound in 1879.
119 The average value of milk cows fell rapidly during this period as well,
dropping from [*108] about $ 27.50 in 1877 to approximately $ 21.50 in 1879.
120 The resulting hardship for dairy farmers and factory owners energized the
forces of opposition to margarine. 121 [SEE ILLUSTRATION IN ORIGINAL]
B. State Antimargarine Laws
By 1877, margarine's rapidly growing acceptance in cities across the country
represented a serious threat to the dairy industry. When dairy industry leaders
awoke to the threat, they quickly drew on the preexisting structure of industry
organizations to press for legislative action.
1. First-Generation Statutes
State dairy associations, led by New York's association, first pressed for
antimargarine protection in the form of labelling statutes sometime in 1877.
New York's leadership in the first years of the campaign against margarine
resulted from a combination of factors. First, the leading American margarine
producer during the earliest years, the United States Dairy Company, was
located in New York. 122 Second, New York City, the state's primary butter
market, was particularly vulnerable to competition from margarine because of
its large blue collar and immigrant population. Third, New York's large share
of the butter market minimized the free-rider inhibitions against being the
first to start a campaign against margarine. The dairymen of the first state to
act against margarine would perform a free service for their fellow dairymen in
other states by drafting proposed legislation, adducing evidence necessary to
support the proposal, developing a model of effective political organization
that dairy interests in other states could emulate, and demonstrating that
antimargarine legislation could actually be obtained. Because New York was the
nation's leading dairy state, its dairymen would capture a greater percentage
of the gains from their organizing efforts than would the dairymen from any
other state. It was not surprising, therefore, that New York led the early
battles against margarine.
New York enacted an antimargarine law in 1877 at the direct urging of the
butter interests. 123 Missouri followed suit the same year. 124 Six states
adopted labelling laws in 1878: California, 125 Connecticut, 126 [*109]
Maryland, 127 Massachusetts, 128 Ohio, 129 and Pennsylvania. 130 Three more
states passed legislation in 1879: Delaware, 131 Illinois, 132 and Tennessee.
133 Others soon fell into line; by 1886, thirty-four states and territories had
enacted some version of margarine labelling legislation. 134
These first-generation antimargarine statutes ostensibly countered the problem
of palming-off by requiring proper labelling, prescribing penalties for
fraudulent misrepresentation, or both. 135 The original Wisconsin law, for
example, required that imitation butter made with tallow (beef fat) be labelled
"oleomargarine" in half-inch letters, and, if made with lard, be labelled
"butterine." 136 Some statutes required hotels, restaurants, and boarding
houses to post public notices if they served margarine to guests. 137
These statutes were designed to eliminate a particular lemons problem in retail
butter markets. If consumers could not easily distinguish margarine from
butter, then sellers would have an incentive to substitute margarine for the
more expensive product. The first-generation statutes, if effectively enforced,
could alleviate this market breakdown. Accordingly, the dairy interests had
little trouble portraying the measures they sought as protecting the public
Although the first-generation statutes appeared justifiable as public interest
measures, 138 the dairy industry's support for these laws was no [*110] doubt
also motivated by a less benign purpose. As late as 1886, members of the
industry professed the view that most consumers would not knowingly eat
oleomargarine if given the choice. 139 Presumably those sentiments were even
stronger in the earliest days of the conflict between margarine and butter.
Dairy industry leaders probably believed that the first-generation laws would
not only inform consumers, but would also effectively drive margarine out of
Unfortunately for the dairy industry, the first-generation statutes failed to
accomplish either their explicit purpose of eliminating market fraud or their
implicit purpose of destroying the margarine industry. First, neither the
executive nor the judicial branches of the government vigorously enforced the
antimargarine laws. Judges often sympathized with the plight of retailers
charged with purveying a harmless food item. 140 Prosecutors were reluctant to
pursue margarine cases which were time-consuming and expensive, requiring the
services of undercover agents and analytic chemists as well as lawyers. 141
Accordingly, law enforcement officials typically devoted little time or effort
to enforcing the margarine laws. 142
The low penalties for violations posed an additional enforcement problem. Even
when prosecutions did occur, margarine distributors could afford to simply pay
their fines and continue in business. 143 Presumably even a low probability of
prosecution could have achieved significant deterrence, if high penalties for
violations of these statutes were [*111] imposed. 144 However, increased
penalties would probably have been counterproductive; judges, juries and
prosecutors would have even greater incentives to nullify the antimargarine
laws. Accordingly, under a system of separation of powers in which the laws
were enforced by prosecutors and judges of general jurisdiction, the dairy
industry could not achieve an acceptable level of enforcement. Palming-off
apparently continued to be a serious problem. 145
A second major problem was consumers' continuing demand for margarine over
butter, due in part to a significant price differential. Although statistics on
margarine production are not available for this period, the evidence indicates
that the margarine trade was booming. Margarine prices increased from 11 per
pound in 1879 to 13 per pound in 1880, 146 suggesting an increase in demand.
The jump in butter prices between 1879 (14 per pound) and 1880 (17 per pound)
also suggests increased margarine demand 147 since margarine is a substitute
for butter and increases in butter prices undoubtedly increased the demand for
margarine. The rapid increase in margarine sales between 1880-1886 indicates
that margarine quickly gained consumer acceptance.
2. Prohibitory Statutes
Despite the increased margarine trade, dairy forces failed to undertake any
significant new initiatives during the period from 1879 to 1883. 148 This may
be explained by the profitability of dairying during this period. Butter prices
rose to 20 per pound in 1881 and remained close to that level through 1883. 149
Butter exports surged from 21.5 million [*112] pounds in 1878 to 39.5 million
pounds in 1880. 150 Just as the depressed condition in the industry
precipitated the initial campaign of 1877, the ensuing prosperity of 1880-1883
dampened any desire to continue an aggressive campaign.
Sometime in 1883, however, butter prices began to break, falling to 18 per
pound in 1884, 17 per pound in 1885, and 16 per pound in 1886. 151 The
situation in export markets was also troubling. Margarine exports, which had
risen rather steadily since 1877, exceeded butter exports for the first time in
1882. By 1883, margarine exports had risen sharply (from 21 to 31 million
pounds) while butter exports had plummeted (from 14.5 to 12.5 million pounds).
Although butter exports recovered somewhat after 1883, rising to over 20
million pounds in 1885, 153 they remained far below margarine exports. The one
unambiguously positive sign for dairy farmers was the price of milk cows, which
rose sharply between 1879 ($ 21.50 per cow) and 1884 ($ 31.50 per cow). 154 The
value of milk cows dropped during the following two years, however, falling to
$ 29.50 in 1885 and $ 27.50 in 1886. 155 Accordingly, dairy farmers' complaints
about the industry's depressed conditions increased between 1883 and 1886. 156
The economic downturn sparked a new round of antimargarine [*113] activity by
the dairy lobby, even though the decline in butter prices evidently suppressed
the margarine trade during those years as well. 157 To counter the continued
threat of margarine, dairy interests in several states obtained progressively
more stringent antimargarine laws. These laws represented a major shift in
regulatory philosophy, moving away from labelling legislation toward
prohibitory legislation that outlawed margarine altogether. 158
The movement for prohibitory legislation quickly gained momentum. By 1886 nine
states had enacted prohibitory statutes: Maine, 159 Michigan, 160 Minnesota,
161 Missouri, 162 New Jersey, 163 New York, 164 Ohio, 165 Pennsylvania, 166 and
Wisconsin. 167 New Hampshire whimsically required that margarine be colored
pink. 168 Not surprisingly, most of the states enacting prohibitory legislation
were among the nation's leading dairy states in 1886. 169
Prohibitory legislation held a number of advantages over the earlier labelling
laws. It was easier to enforce because it could be applied against a small
group of manufacturers and wholesalers rather than a large, dispersed, and
shifting retail class. More importantly, if effectively enforced, it not only
eliminated the problem of fraud but also threatened to eliminate competition
from margarine altogether. Many of these second-generation [*114] state
statutes included viable enforcement mechanisms to remedy the notorious
inefficacy of the labelling legislation. Again New York took the lead,
establishing in 1884 an office of dairy commissioner specifically charged with
uncovering and prosecuting violations of the margarine law. 170 The State
provided the commissioner with a generous budget, a force of inspectors, and
staff experts to document whether substances sold as butter were actually
The legislative creation of independent departments specifically charged with
enforcing the margarine laws provided a means of circumventing some of the
obstacles to effective interest group activity created by the separation of
powers. To be sure, the dairy commissions did not exercise judicial or
legislative functions: their role was to detect and prosecute offenses of
existing law before courts of general jurisdiction. Their functions were purely
executive in nature. However, their specific legislative mandate -- focused as
it was on one particular industry -- substantially undercut the prosecutorial
discretion that had stymied earlier efforts to enforce the margarine laws.
Created to enforce the antimargarine laws with vigor, the commissioners
responded to the expectations of the dairy interests. In this respect the dairy
commission was a precursor of the independent regulatory agency, a device that
grew in later years to circumvent the barriers to interest group activity under
a system of separation of powers. 172
From the dairy interests' viewpoint, prohibitory legislation's principal
advantage lay in its elimination of all competition from margarine. At the same
time, however, this effect also weakened the legal case for such legislation.
Prohibitory legislation was obviously overinclusive if its goal was to attack
fraud. In stamping out fraud, it would also prevent legitimate competition from
margarine. The dairy industry therefore began to supplement the fraud
contention with the argument that margarine was dangerous to the public health.
Legislation banning the product outright could be justified easily if margarine
were shown to be unhealthful.
In support of its public health claim, the dairy interests charged that
margarine caused dyspepsia and a host of other ailments. 173 The industry
fomented claims that margarine contained diseased or putrid beef, [*115] dead
horses, dead hogs, dead dogs, mad dogs, and drowned sheep. 174 In New York,
dairy interests engineered an investigation into margarine by the state
senate's public health committee. 175 Managed by friends of the dairy industry,
the investigation proved little more than a witchhunt. The committee received
"evidence" that margarine was made with the worst sorts of filthy grease, that
workmen had lost toenails because of the process, and so on. 176 Just as the
committee heard all kinds of far-fetched charges, the case in favor of
margarine's healthfulness was suppressed. Eminent authorities, such as
Professor Charles I. Chandler of Columbia College, a former president of the
New York City Board of Health, were interviewed but not called before the
committee when it became evident that they would testify to the healthfulness
of margarine. 177 Not surprisingly, the committee recommended total prohibition
of margarine. 178
The charge that margarine was unhealthful, however, was exceedingly weak.
Margarine and butter were virtually identical in chemical composition. 179 Even
the dairy commissioner of New York failed to uncover any evidence that the
components of margarine were harmful, despite having expended several years and
much money in efforts to do so. 180 The fact that margarine was nothing more
than a mixture of ingredients universally recognized as healthful demonstrated
the futility of the task. Nor was there merit to the charge that the fat of
decaying or diseased animals was used in margarine. Recognized nutritional
scientists testified that only the freshest and highest quality fats could be
used in manufacturing margarine. 181
Moreover, the dairy industry's charges were somewhat hypocritical given the
unsanitary conditions prevailing in that industry at the time. Raw milk was
produced on thousands of farms across the country where sanitation was unknown.
182 Flies, straw, and dung contaminated many milking stalls. Milk arrived at
creameries in cans containing an inventory [*116] of daily farm life -- bars of
soap, dishrags, potatoes, parsnips, and hairpins, together with the product of
the cow that lent such fertility to its pastures. 183 Health experts nurtured a
strong -- and ultimately justified -- suspicion that dairy products often
transmitted tuberculosis, a major cause of human mortality. 184 Not
surprisingly, microscopists who testified about the existence of bacteria in
margarine were not invited to investigate butter similarly. 185
Even so, the industry successfully maintained its bogus charges against
margarine for a time. A House of Representatives committee concluded that
margarine was "detrimental to the public health, being the fruitful cause of
dyspepsia and other diseases." 186 The United States Supreme Court accepted
findings that margarine might be dangerous to health in upholding
Pennsylvania's prohibitory statute. 187
Prohibitory legislation held the promise of effectively denying consumers
access to margarine even if they affirmatively desired to buy the product.
Nevertheless, prohibitory legislation at the state level was not wholly
satisfactory to the dairy interests. For one thing, prohibitory legislation was
much more difficult to obtain than labelling laws. States with weak dairy
lobbies were unlikely to enact such legislation. As noted above, 188 by 1886
such legislation had passed only in those relatively few states with strong
dairy interests. Thus, a strategy directed solely at enactment of prohibitory
legislation at the state level would not effectively prohibit margarine
Second, prohibitory legislation, while relatively easy to enforce against
in-state manufacturers of margarine, could not bar the production of margarine
in other states. Out-of-state manufacturers easily could ship margarine to
wholesalers in states with prohibitory statutes, which could then be
distributed to retailers for sale to the public. 189 Enforcing prohibitory
legislation against these in-state retailers and wholesalers proved exceedingly
difficult. Not only was detecting margarine sales by retailers expensive, but
even if the retailer were prosecuted, [*117] the chances of conviction were low
because of sympathetic judges and juries. 190
The failure of state prohibitory legislation to cut off interstate commerce in
margarine illustrates how the system of federalism, otherwise beneficial to the
dairy industry, inhibited its campaign in one respect. In a unitary system, the
dairy industry might have eliminated margarine through system-wide prohibitory
legislation that could have been enforced against manufacturers throughout the
country. In a federal system, however, the industry could not prohibit
margarine completely. Prohibitory legislation in individual states would not
eradicate in-state margarine sales if the substance could be manufactured
elsewhere -- especially if (as the Supreme Court later ruled) 191 the commerce
clause limited state power to restrain interstate shipments. Furthermore, even
federal prohibitory legislation would not eliminate all manufacture if (as the
Court also later ruled) 192 the federal government had no right to regulate
manufacturers within a state. 193
The danger of judicial invalidation proved to be another drawback of
prohibitory legislation. Effective enforcement of the prohibitory laws required
judicial, as well as executive, action. Although the problem of executive
enforcement could be remedied to some extent by legislation establishing
specialized agencies with strong enforcement incentives, it proved much more
difficult for the dairy industry to elicit cooperation from the judiciary.
Constitutional prohibitions could not be overturned by legislation. It was
difficult, even in states with elected judiciaries, to bring direct political
pressure to bear on state judges. Thus, the dairy industry's voting power was
relatively ineffective in stimulating favorable judicial action.
In People v. Marx, 194 the margarine forces finally achieved the constitutional
victory they had sought. 195 The New York Court of Appeals declared a
prohibitory statute unconstitutional as interfering with liberty [*118] of
contract. 196 On the basis of expert trial testimony, the court found that
margarine was both healthful and virtually indistinguishable chemically from
butter. 197 Moreover, the court took judicial notice that the law's purpose was
to suppress the manufacture and sale of margarine, that the law had been passed
at the behest of the dairy industry, that it effectively expropriated the
capital of margarine producers, and that as a consequence of the prohibition,
"such of the people of the State as cannot afford to buy dairy butter must eat
their bread unbuttered." 198
The Marx opinion recognized that the challenged legislation represented
something new in the politics of the state -- a phenomenon that if allowed to
develop into a trend would carry pernicious consequences for the public at
large. The sole reason for the New York statute, said the court, was to keep
butter prices high by suppressing competition from margarine. 199 According to
the court, "[m]easures of this kind are dangerous even to their promoters," 200
because if the principle of protectionism were constitutionally sustained, its
reach could not be limited to any particular industry. On the contrary,
margarine manufacturers could suppress the dairy industry if they obtained
enough legislative clout. 201 The court warned that "[i]llustrations might be
indefinetely multiplied of the evils which would result from legislation which
should exclude one class of citizens from industries, lawful in other respects,
in order to protect another class against competition. We cannot doubt that
such legislation is [unconstitutional]." 202
The Marx case significantly set back dairy interests. A decision by the highest
court of the nationhs largest dairy state, especially one written in such a
tone of moral outrage, was damaging enough. More immediately, Marx opened up
the massive New York City market to the margarine business -- a potentially
devastating blow to the powerful dairy interests in Orange County and elsewhere
in the state. The dairy industry responded, as seen in Part III, with a renewed
effort to check margarine production on the federal level.
THE FEDERAL STATUTE OF 1886
A. The Proposed Statute
Federal legislation had been on the agenda of various dairy leaders [*119]
since about 1880. The National Association for the Prevention of the
Adulteration of Butter (NAPAB), a group of dairymen and butter merchants formed
in 1879 and headquartered in New York, 203 spearheaded the initial efforts.
Although it focused most of its efforts in New York, this group also lobbied
dairy state representatives in Congress. In 1880 204 an Illinois congressman
introduced a bill to tax margarine at 10 per pound. A House committee held
hearings on the subject in 1882 and recommended passage of antimargarine
legislation. 205 These initiatives were rather desultory; no powerful national
campaign against margarine existed prior to 1885.
In 1885, however, several forces combined to stimulate a successful campaign
for federal antimargarine legislation. First and most important, dairy industry
conditions suffered a downturn. In 1883, butter sold for 19 per pound but
dropped the following year to 18 per pound, and in 1885 to 17 per pound. 206
The situation became especially serious in Wisconsin, where prices dropped from
19.2 per pound in 1882 to 14.1 per pound in 1885. 207 At the same time, the
value of milk cows dropped by almost a quarter. 208 Large numbers of cows were
slaughtered in the Chicago stockyards because they were worth more as carcasses
than as milk producers. 209
Second, by 1885 margarine had become a major industry. Estimates of nationwide
margarine production in 1886 ranged from two hundred million pounds per year
(the dairy industry's figure) 210 to between thirty-two and thirty-five million
pounds (a margarine manufacturer's estimate). 211 Whatever the actual figures,
margarine production was clearly big business in 1886.
Margarine also gained a strong competitive position in the export market during
this time. In 1880, approximately forty million pounds of butter were exported
as compared with twenty million pounds of margarine. By 1885 their positions
were almost perfectly reversed; butter exports had fallen to only approximately
twenty-two million pounds while margarine exports had increased to over
thirty-seven million [*120] pounds. 212
Decided in June of 1885, the Marx case provided the third and perhaps most
immediate stimulus to the dairy industry's federal campaign, convincing
industry leaders that they could not rely upon state governments to protect
their interests adequately. 213 They required a national strategy as well.
Although, as will be noted, 214 federal prohibitory legislation also faced
constitutional difficulties, the industry had reason to hope that the federal
taxing power could accomplish what the state police power had failed to do in
New York. 215
To organize a federal campaign, the American Agricultural and Dairy Association --
successor to the New York organization formed twenty years earlier 216 --
called a national convention of dairymen in New York City early in 1885. 217
Delegates came from twenty-six states and all sectors of the industry. Their
numbers included representatives of state governors, delegates from state
agricultural societies and boards of agriculture, state and local dairy
associations and granges, and representatives of the produce and mercantile
exchanges of New York and other cities. 218
Under the leadership of a New York dairyman, the convention agreed to a bold
plan of seeking federal legislation designed to suppress the margarine
industry. 219 As it emerged from the House Committee on Agriculture, their
legislation combined both prohibitory and regulatory aspects. The prohibitory
part of the bill involved a tax of ten cents per pound. 220 The tax would raise
the price of margarine at least as high as that of creamery butter, destroying
margarine's commercial viability. The proposal's regulatory aspect required
that margarine be labelled as such. 221 Margarine found to contain ingredients
deleterious to human health would be confiscated and forfeited. 222 The bill
required manufacturers, wholesalers, and retailers of margarine to obtain
licenses to carry on their trade, for which they had to pay large fees: $ 600
for manufacturers, $ 480 for wholesalers, and $ 48 for retailers. 223 The bill
also imposed [*121] fines and criminal penalties for violations, and charged
the Commissioner of Internal Revenue with responsibility for collecting the tax
and for prescribing regulations fleshing out the statutory requirements. 224
A sophisticated piece of legislative drafting, the bill drew on prior state
legislation, borrowing those features that had been successful and scrapping
the parts that had proved ineffective. Consequently, it was cleverly framed to
emphasize the dairy industry's asserted public interest rationales for limiting
margarine. The labelling requirements were ostensibly designed to deter
fraudulent sales of margarine as butter, while the inspection and forfeiture
provisions were supposedly intended to deal with the alleged unhealthful
conditions of margarine manufacture. The taxing and licensing features could be
presented as revenue measures designed to support the costs of enforcing the
regulatory provisions. The taxing provisions of the bill also provided a
rationale for vesting enforcement responsibility in the Commissioner of
Internal Revenue, an official who enjoyed a considerable reputation for
vigorous enforcement of the revenue laws. 225
At the same time, the bill seemed reasonably calculated to survive
constitutional challenge. The federal government's power to prohibit margarine
outright was questionable. For one thing, express prohibition would be subject
to the same type of substantive due process objections that had doomed the New
York statute in that state's highest court. 226 Perhaps more important, an
absolute prohibition on all margarine sales and manufacture would almost
certainly have run afoul of the commerce clause as then interpreted. 227
On the other hand, the Supreme Court's decisions suggested that the taxing
power provided a broader source of federal authority than the commerce power.
228 The federal government's taxing authority was not limited to matters in
interstate commerce. Thus Congress could tax the manufacture and intrastate
sale of margarine even if it could not regulate these matters directly under
the commerce clause. Moreover, the Supreme Court had already upheld a statute
imposing a prohibitory federal tax on state bank notes, 229 suggesting that
even a prohibitory margarine tax might be upheld.
[*122] B. Congressional Consideration
The dairy industry had no difficulty finding willing sponsors for its proposal
in the House of Representatives. 230 The political pressures brought to bear by
the dairy industry were remarkable for the time and respectable even by the
standards of today's Congress. The dairy interests in the various states
organized a massive letter-writing campaign, generating over 104,000 petitions
for the bill. The most intense pressure, as might be expected, came from the
big dairy states: New York (21,923 petitions), Pennsylvania (15,487), Iowa
(11,601), Ohio (10,081), Minnesota (8,282), Illinois (7,533), and Wisconsin
(6,482). 231 The bill was heavily lobbied by state and local granges, national
producer groups such as the National Butter, Cheese and Egg Association, the
American Agricultural Association, the American Agricultural and Dairy
Association, 232 state and local producer or creamery groups, 233 dairy
merchants and produce exchanges, 234 the New York Dairy Commission, 235 a
leader of a producers' cartel, 236 and individual factory dairymen. 237 In this
manner, many of the dairy organizations described earlier in this Article 238
contributed to the political pressure in favor of the proposed federal statute.
The bill's opponents included margarine producers, western cattlemen anxious to
protect a market for beef fat, various boards of trade, labor organizations,
and cotton producers who wanted to protect an incipient market for cottonseed
oil. 239 But unlike the well-organized butter [*123] forces, the promargarine
interests found themselves unable to muster a powerful and concerted defense of
their product. One company, Armour & Co., which at that time was the largest
margarine producer nationwide, organized much of the opposition to the bill.
240 The margarine interests proved ineffective because they had not developed
patterns of cooperation and joint action. Aside from their desire to protect
the margarine business, livestock owners, cotton growers, and margarine
manufacturers shared few interests.
The bill's proponents mustered a variety of ostensibly legitimate arguments on
its behalf. First, they charged that margarine was a threat to the public
health 241 -- an argument that had already been extensively rehearsed in
battles with the margarine interests at the state level. The pro-dairy
legislators dutifully repeated the familiar slanders about dead animals and
Bright's kidney disease. 242
In addition, someone in the pro-dairy camp looked up the various patents for
margarine, all of which listed slightly different ingredients to avoid
infringing on the original Mege-Mouries process. The ingredients listed in the
patents for these different margarines included a variety of revolting and
dangerous substances, including nitric acid, sulphuric acid, carbolic acid, and
caustic soda. 243 Proponents of the margarine tax read from this list in the
congressional debates to suggest that margarine was unhealthful. 244 In fact,
however, few of these patents were actually used in margarine production, and
most of the offensive ingredients were simply acids used in the processing of
the animal fat and formed no part of the substance ultimately purveyed to the
[*124] Second, proponents urged that the bill was necessary to prevent the
fraudulent passing-off of margarine as butter. 246 Although this argument could
have supported the labelling provisions, it could not easily justify taxation,
the feature most desired by the dairy industry. Further, the bill's proponents
did not explain convincingly why state legislation was not the more appropriate
means of preventing fraud.
Third, proponents urged that the bill was legitimately framed as a revenue
measure. 247 The need for extra revenue seemed debatable, however, because the
government had enjoyed a surplus the previous year. 248 There was some reason
to believe that 1887 would bring a revenue shortfall. 249 Still, a tax of ten
cents per pound was unlikely to raise much revenue because it would increase
the cost of margarine to the point where it could not compete with butter.
Opponents of the measure thus repeatedly denounced the purported revenue
justification as sham. 250
Fourth, proponents claimed that the bill was needed to preserve the dairy
industry, a "great national industry" and "one of the chief industries of the
country." 251 They failed to explain, however, why the dairy industry merited
special protection, particularly when protecting the dairy industry would
inflict harm on another domestic industry.
Opponents charged that the measure was obviously intended to stamp out the
margarine industry to protect and benefit the dairy industry. 252 They claimed
that such a motive was morally illegitimate and constitutionally suspect.
Although proponents usually denied that they intended to enact class
legislation designed to protect one domestic industry against competition from
another, the charge had considerable substance. A contemporary political
scientist, Henry C. Bannard, observed that House and Senate leaders "rushed the
bill through, with the avowed determination of enhancing the price of butter
for the sole benefit of those engaged in the manufacture of this one article."
Even the bill's proponents admitted in candid moments that it constituted class
legislation. In the words of Congressman Scott of Pennsylvania, a chief
supporter of the bill, "[h]aving done this much for itself without the
fostering aid of class legislation, the great farming interest [*125] may
rightfully insist upon a hearing when it appeals for protection against an
insidious foe whose further advancement must inevitably destroy its chief
support." 254 Others were equally frank. One New Yorker remarked that "[t]his
oleomargarine business is a bad business . . . and the sooner it is
exterminated the better it will be for us." 255 A member from Wisconsin opposed
any reduction in the proposed tax, arguing that a lower tax "might not
accomplish the object that I am free to say inclines me to the support of the
measure under consideration, for I fly the flag of an intent to destroy the
manufacture of the noxious compound by taxing it out of existence." 256
Confronted with overwhelming political support for the dairy cause, the
margarine interests realized that they could not stop passage of some form of
antimargarine legislation. They adopted the strategy of trying to amend the
bill to eliminate or drastically reduce its most offensive feature -- the
prohibitory tax. 257 On balance, this strategy proved quite successful. The
House halved the margarine tax to five cents per pound, 258 and the Senate
dropped the tax to two cents per pound. 259 In other respects, however, the
bill emerged from Congress much as the dairy industry had proposed, with
provisions for labelling, forfeiture, and licensing. It passed the House by a
vote of 177 to 101 260 and the Senate by a vote of 37 to 24. 261
The bill was then presented to President Cleveland for his signature. The
margarine and butter forces descended on the White House with a vengeance, the
former claiming that the bill was the worst sort of class legislation, the
latter proclaiming the absolute necessity of the bill as a means of protecting
the dairy farmer against ruinous competition from counterfeit butter. 262 Many
petitioners did not even bother to disguise their motives as public-spirited;
as the President dryly observed, "those on both sides of the question whose
advocacy or opposition is based upon [*126] no broader foundation than local or
personal interest have outnumbered all the others." 263 One Washington paper,
in a humorous editorial, pictured the President listening to a barnyard
convention in the White House back lot, describing his sensations as he
listened to the cackle of the hens and the lowing of the cows and overheard
their discussions of how they would punish him politically if he did not sign
the measure. 264 The press showed intense interest in the bill, with
speculation rife as to whether the President would sign or veto. 265 Opinion
was evenly split between the view that the President favored the bill but was
going to veto it, and that he was conscientiously opposed to it but had decided
to sign it. 266
Eventually the President signed the bill, issuing an explanation that
courageously managed to credit the arguments made by all sides to the
controversy. 267 The President acknowledged that if the matter were presented
to him as an initial matter he might doubt the need for additional taxes, and
he agreed that if the real purpose of the measure were "to destroy, by the use
of the taxing power, one industry of our people for the protection and benefit
of another," he would doubtless veto the measure. 268 But, said the President,
in this context his function involved deference to a coordinate branch of
government, and he was not entitled to indulge any suspicions of improper
motives on Congress' part. After bowing to the margarine forces, the President
then paid his respects to the butter interests by mouthing the usual platitudes
about hard-working farmers and the virtues of butterfat. 269 One waggish
newspaper declined a reader's request that the President's message be
reproduced in full, observing that the full text could be summarized as
follows: "For many obvious reasons this bill should not become a law. I
therefore return it approved to the body in which it originated." 270
C. The 1886 Statute in Perspective
Prosaic as it may have been in subject matter, the Margarine Tax Act of 1886
represents something of a watershed in American politics. It was among the
first instances of federal legislation in which one domestic industry sought to
enlist the government's coercive power to stamp out [*127] competition from
another domestic industry. The involvement of smaller banks in Andrew Jackson's
campaign to abolish the Second Bank of the United States might provide the
closest analogy. 271 That campaign, however, was not spearheaded by smaller
banks as an organized group. 272 Tariff legislation, with its long history of
discrimination against foreign industry for the protection of domestic
interests offers another analogy. 273 But tariff laws had always been directed
against foreign interests, and are thus distinguishable from a statute designed
to protect one domestic industry against competition from another. The
margarine tax also bore a certain resemblance to the various types of federal
sumptuary legislation that discriminated against items or activities considered
to be morally questionable, such as alcohol and tobacco. 274 But this type of
legislation targeted products that were at least arguably harmful in their own
right. In the case of margarine, once the bogus health argument was put aside,
the only harm involved was the weakening of the butter market. Advocates of the
bill also cited laws banning counterfeit currency 275 -- a spurious analogy, at
best, to a proposal taxing margarine (or "counterfeit butter") out of
The bill's opponents repeatedly emphasized its unusual nature. 276 They warned
that if the statute were enacted, the principle of protection would have no
logical stopping place. 277 If the dairy industry could be [*128] protected
against margarine, then cotton might seek protection against wool, or one grade
of butter against another grade of butter. As the bill approached passage, its
opponents sought to delay matters by introducing facetious amendments for the
protection of various items of commerce against competition by new technology.
One Congressman proposed to impose a punitive tax on the manufacture and sale
of glass eggs, so "that the great American hen may be properly protected." 278
Although these remarks were humorous, they served the serious purpose of
illustrating the effects of protecting one domestic industry against
competition from another more technologically advanced industry, if taken to
its logical conclusion.
These dangers were not merely theoretical. Political scientist Henry C. Bannard
warned that legislation of this sort was already gaining favor in state
legislatures. A bill introduced into the Ohio legislature would have prohibited
the consumption of beef slaughtered and dressed outside the state. In Illinois,
the coopers' union sought the passage of legislation prohibiting the use of
second-hand flour barrels and butter firkins. 279 Once lawmakers opened the
Pandora's box of domestic protection, the types of legislation sought would be
If protectionist legislation of this sort were allowed, the power of special
interest political lobbies would obviously be greatly enhanced. Several members
of Congress commented on the power that the special interests had already
gained in the legislative process. As one Congressman remarked:
I am amazed, I lack words to express my astonishment, that the American
Congress could be absolutely converted, deliberately converted, into a great
wrestling-ground, a gymnasium where all the business athletes of the country
come to wrestle for supremacy, a prize-ring where jobbers come to blows and
where the big jobs knock the little jobs out." 280
Members of Congress understood that the sudden emergence of the dairy lobby
represented something new in American politics. Several members lamented the
fact that power was seeping away from members who voted according to their
individual consciences to groups of constituents who pressured their
representatives. Senator Vance was not far from the mark when he punned that
"butter, like conscience, [had] made [*129] cowherds of them all." 281 Another
Senator who voted for the measure said that "it is an outrageous bill, but we
have got to vote for it. We do so in the hope and belief that the Supreme Court
will declare it unconstitutional." 282 Political scientist Henry Bannard agreed
that this legislation was unprecedented, observing that "[t]his enactment . . .
marks a new era in our political history. It widens the sphere of sumptuary
legislation, emphasizes the interference theory of government, and extends the
doctrine of protection to domains never before reached in our history." 283
As one of the first successful efforts by one domestic industry to obtain
federal legislative protection against competition from another, the margarine
tax statute of 1886 marks the birth of the modern special interest state. The
period between 1875 and 1900 constituted the great formative era of industrial
interest groups: meat packers, 284 cattlemen, 285 wool growers, 286 butchers,
287 coopers, 288 and many other industrial groups formed associations during
this period, all of them dedicated to protecting their markets from competition
through the application of government force. Before 1875, interest groups in
the modern sense were unusual; after 1900 they were ubiquitous.
Why was this quarter-century the formative period for modern political lobbies?
Two forces may have produced the growth of special interest groups: first, the
rapid industrialization of the American economy during this period, which
disrupted established livelihoods and occupations; 289 and second, the return
to normalcy following the Civil War and Reconstruction, which encouraged a
focus on narrow self-interest that had been temporarily set aside during the
war's cataclysmic events. The growth of special interest politics during this
period is a topic that might usefully be addressed in a study broader in scope
than this Article.
The dairy industry's early campaign against margarine illustrates the complex
interplay of markets, technology, politics, and law in American [*130] society
of the time. Among the first efforts by a domestic industry to stamp out
competition from another domestic industry, the story of that campaign presents
a useful case history for the theory of public choice.
This Article has analyzed the early antimargarine battles to explore three
fundamental questions. First, given organizational costs and free-rider
effects, how did a mass of five million dairy farmers and many thousands of
factory owners and merchants coalesce so quickly into a potent political
interest group? This Article shows that the industry succeeded in forging an
effective lobby by drawing on a well-developed set of preexisting institutions,
such as factory owners, state and local dairy associations, boards of trade and
produce exchanges, and at least one producers' cartel, which had been formed
for nonpolitical purposes such as stimulating demand for dairy products or
correcting market failures.
Second, how did the basic structural features of the American political system --
federalism and separation of powers -- affect the growth and development of
special interest lobbies? The Article demonstrates that federalism generally
facilitated interest group activity, because states could act as laboratories
for the development of anticompetitive legislation, and because the interest
group could achieve two layers of protection in a federal system. The effect of
federalism was not unambiguous, however, because states could provide havens
for margarine manufacture and because two levels of protection may have
required greater resources than a unitary system. On the other hand, separation
of powers generally hindered interest group activity because the group seeking
protection had to enlist the active cooperation of three separate branches of
government. Again, however, the effect was not unambiguous because the
splintering of government authority into three branches allowed the interest
group to concentrate its fire on the branch where the group's political
resources were likely to be most influential.
Third, how did economic conditions in the industry affect the level of interest
group activity? This Article suggests that the level of interest group activity
was generally higher during depressed times than during prosperous times. The
dairy industry initiated its antimargarine campaigns during times of falling
butter prices: 1877 (first-generation state statutes), 1884 (second-generation
state statutes), and 1886 (the federal statute). The industry did not initiate
campaigns in times of relatively high butter prices (1874-77, 1881-83), even
though margarine sales were also high during these periods. Once a campaign had
been initiated, however, the industry was able to sustain some momentum even in
prosperous times, as demonstrated by the continuous enactment of
first-generation statutes in various states between 1881 and 1883.
These observations, of course, are based on events in a single industry [*131]
during a limited time frame. The Article, then, leaves open whether they hold
true for other industries and other time periods. How these theories fare in
other situations may provide a potentially fruitful subject for further
n1. G. RANKIN, WILLIAM DEMPSTER HOARD 180 (1925) (quoting William Dempster
Hoard, Governor of Wisconsin from 1888 to 1891 and a leading nineteenth-century
n2. Surprisingly, there appears to be no general history of the margarine
controversy. The matter is treated in passing in E. LAMPARD, THE RISE OF THE
DAIRY INDUSTRY IN WISCONSIN: A STUDY OF AGRICULTURAL CHANGE 1820-1920, at
257-66 (1963). This outstanding work, however, focuses only on the
controversy's aspects affecting Wisconsin dairy interests. A few works discuss
the controversy in general comparisons of margarine and butter. See W. PABST,
BUTTER AND OLEOMARGARINE: AN ANALYSIS OF COMPETING COMMODITIES (Studies in
History, Economics and Public Law No. 427, 1937); K. SNODGRASS, MARGARINE AS A
BUTTER SUBSTITUTE (Fats and Oils Studies No. 4, 1930); E. WIEST, THE BUTTER
INDUSTRY IN THE UNITED STATES (Studies in History, Economics and Public Law No.
165, 1916); see also W. MCCUNE, THE FARM BLOC (1943) (describing the dairy
lobby's campaign against margarine in the early 1940s); M. OKUN, FAIR PLAY IN
THE MARKETPLACE 250-86 (1986) (describing aspects of the controversy relevant
to the battle over pure food and drug laws, especially in New York); S. RIEPMA,
THE STORY OF MARGARINE (1970) (reviewing the subject in a general treatise on
margarine as a commodity from a promargarine perspective). A few law review
articles examine the matter from the standpoint of legal doctrine. See Storke,
Oleomargarine and the Law, 18 ROCKY MTN. L. REV. 79 (1946); Note, Oleomargarine
and the Constitution, 10 MONT. L. REV. 46 (1949); Note, The Oleomargarine
Controversy, 33 VA. L. REV. 631 (1947). A useful compendium of margarine
statutes is found in S. Zwick, The Effects of Certain Supreme Court Decisions
upon State Margarine Policies (1950) (unpublished master's dissertation).
n3. Oleomargarine Act of 1886, ch. 840, 24 Stat. 209. See infra text
accompanying notes 203-270.
The dairy industry's campaign against butterfat substitutes lasted from the
1870s through the 1950s (and even into the 1960s in a few major dairy states).
When the legislation described in this Article proved ineffective, the dairy
industry organized a new campaign at both the state and federal levels intended
to discourage margarine sales by regulating the product's color, either by
forbidding yellow margarine or by mandating that margarine be colored pink. See
K. SNODGRASS, supra note 2, at 90-91. The federal Oleomargarine Act of 1902,
ch. 784, 32 Stat. 193, imposed a prohibitive tax on colored margarine, thus
effectively requiring that margarine sold in interstate commerce remain in its
"natural" (white) color. This law hampered the margarine industry because
consumers would not buy white margarine. However, the industry circumvented
these "white" laws by using special fats that gave margarine a naturally yellow
tinge, by including small dye packages in the bricks for use in coloring
margarine at home, and at least initially by simply disobeying the federal
statute. See K. SNODGRASS, supra note 2 at 62-76; 1911 COMM'R ANN. REP. 17-19.
Additionally, an omitted comma in the 1902 statute, coupled with the
development of hydrogenation as a technique for solidifying vegetable oils,
allowed the development of a huge industry in margarine made from coconut oil,
a product not subject to the federal statute and which therefore could be sold
in colored form. K. SNODGRASS, supra note 2, at 78-84. Congress brought "nut"
margarine within the federal statute in 1930. Act of July 10, 1930, ch. 882, 46
Stat. 1022. Congress closed the loophole for "naturally" colored margarine in
1931. Act of Mar. 4, 1931, ch. 520, 46 Stat. 1549. Meanwhile, disastrous
Depression conditions stimulated a new round of repressive state legislation in
the form of heavy margarine taxes. See Storke, supra note 2, at 84.
The political equilibrium changed dramatically in the following years.
Technological developments permitted cottonseed and soybean oils to become
important ingredients in margarine by the late 1930s, see S. RIEPMA, supra note
2, at 124-26, creating a powerful domestic constituency in favor of margarine.
Butter shortages during the Second World War led to increasing consumer
complaints about restrictive margarine legislation. Id. Public interest groups
lobbied for repeal of the margarine laws. Id. After a protracted battle,
Congress repealed the federal oleomargarine tax in 1950. Act of Mar. 16, 1950,
ch. 61, 64 Stat. 20. Margarine legislation was also repealed or judicially
invalidated in most states, with the last holdout, Wisconsin, repealing its
statute in 1967. Act of May 31, 1967, ch. 42, 1967 Wis. Laws 44. Today,
margarine outsells butter by more than two to one. BUREAU OF THE CENSUS, U.S.
DEPT. OF COMMERCE, STATISTICAL ABSTRACT OF THE UNITED STATES 114 (1988) (10.8
pounds of margarine and 4.9 pounds of butter consumed per capita in 1985).
In addition to battling against margarine, the dairy industry stoutly resisted
competition from milkfat substitutes in the fluid milk and cheese markets.
Congress imposed a prohibitive tax on "filled cheese" (skimmed-milk cheese
laced with vegetable oil) in 1896, Act of June 6, 1896, ch. 337, 29 Stat. 253,
and outlawed the sale of "filled milk" (evaporated skim milk laced with
vegetable oil) in 1923, Filled Milk Act of 1923, 21 U.S.C. §§ 61-64. The
federal filled-cheese statute was repealed in 1974. Act of Oct. 26, 1974, § 3,
88 Stat. 1466. In addition, despite having been twice upheld by the Supreme
Court, see Carolene Products Co. v. United States, 323 U.S. 18 (1944), United
States v. Carolene Products Co., 304 U.S. 144 (1938), the filled-milk statute
has been declared unconstitutional by a federal district court. Milnot Co. v.
Richardson, 350 F.Supp. 221 (S.D.Ill. 1972). It is no longer enforced. See
Miller, The True Story of Carolene Products, 1987 SUP. CT. REV. 397 (1987);
Strong, A Post-Script to Carolene Products, 5 CONST. COMM. 185 (1988).
n4. For introductions to public choice theory see I. MCLEAN, PUBLIC CHOICE: AN
INTRODUCTION (1987); D. MUELLER, PUBLIC CHOICE (1979).
Mueller defines public choice as "the economic study of nonmarket
decisionmaking, or simply the application of economics to political science."
D. MUELLER, supra, at 1; see also Brennan & Buchanan, Is Public Choice Immoral?
The Case for the "Nobel" Lie, 74 VA. L. REV. 179, 179 (1988) ("the application
of the theoretical method and techniques of modern economics to the study of
political processes"); Tollison, Public Choice and Legislation, 74 VA. L. REV.
339, 339 (1988) ("economic theory of legislation"); J. Macey, Public Choice:
The Theory of the Firm and the Theory of Market Exchange (1988) (unpublished
manuscript) ("the application of game theory and microeconomic analysis to the
production of law by legislatures, regulatory a agencies and courts").
n5. In the words of Robert D. Tollison, a leading public choice theorist:
A basic principle as well as a basic conundrum underlies the demand for
legislation. The principle is that groups who can organize for less than one
dollar in order to obtain one dollar of benefits from legislation will be the
effective demanders of laws. The conundrum is that economists have little idea
of how successful, cost-effective interest groups are formed. That is, how do
groups overcome free rider problems and organize for collective action so as to
be able to seek one dollar for less than one dollar? The plain truth is that
economists know very little about the dynamics of group formation and action.
Tollison, supra note 4, at 341-42 (footnote omitted).
n6. A free rider is someone who takes advantage of the beneficial activities of
others but who does not contribute her fair share to the cost of these
activities. A standard example is the sailor at sea who navigates with the help
of a lighthouse on shore, the upkeep of which is paid by others. For
exposition, see D. MUELLER, supra note 4, at 14-18.
n7. For accounts of the economic theory of groups, see M. OLSON, THE LOGIC OF
COLLECTIVE ACTION: PUBLIC GOODS AND THE THEORY OF GROUPS 53-65 (1965); Stigler,
Free Riders and Collective Action: An Appendix to Theories of Economic
Regulation, 5 BELL J. ECON. & MGMT. SCI. 359 (1974); Stigler, The Theory of
Economic Regulation, 2 BELL J. ECON. & MGMT. SCI. 3 (1971).
n8. See New State Ice Co. v. Liebmann, 285 U.S. 262, 310-11 (1932) (Brandeis,
J., dissenting) ("It is one of the happy incidents of the federal system that a
single courageous State may, if its citizens choose, serve as a laboratory; and
try novel social and economic experiments without risk to the rest of the
n9. See Miller, supra note 3, at j26-27 (1987) (discussing the correlation
between economic conditions and the dairy industry's campaign against filled
n10. For a classic discussion of how free-rider problems can interfere with
effective political organization, see M. OLSON, supra note 7.
n11. In contrast, today's farm lobby recently obtained the most costly federal
farm subsidies in history during a period of overall retrenchment in government
spending. See Schneider, Cost of Farm Law Might be Double Original Estimate,
N.Y. Times, July 22, 1986, at 1, col. 4 (cost of new farm legislation might
reach $ 35 billion in fiscal year 1986).
n12. See J. WILLIAMS, THE EXPANSION OF RURAL LIFE 10-11 (1926) (discussing
"sentiment of liberty" among American farmers in 1874, which included a
"sentiment of economic independence" and a "sentiment for freedom from
political regulation, an attitude of free enterprise"). Leaders of the dairy
industry preached "an austere discipline of technical and intellectual fitness
for a competitive universe in which the only sure token of grace was 'extra'
prices." E. LAMPARD, supra note 2, at 340.
n13. See E. LAMPARD, supra note 2, at 338-39.
n14. E. WIEST, supra note 2, at 234. This date is only an estimate; the actual
point at which commercial margarine production started in the United States is
not precisely known. S. RIEPMA, supra note 2, at 110.
n15. See J. SCHLEBECKER, A HISTORY OF AMERICAN DAIRYING 4 (1967); Testimony
Taken Before the Senate Comm. on Agriculture and Forestry in Regard to the
Manufacture and Sale of Imitation Dairy Products, 49th Cong., 1st Sess. 2
(1886) [hereinafter 1886 Hearings] (statement of Joseph H. Reall, President of
the American Agricultural and Dairy Association).
n16. See U.S. DEP'T OF JUSTICE, MILK MARKETING: A REPORT TO THE TASK FORCE ON
ANTITRUST IMMUNITIES 19 (1977) [hereinafter JUSTICE REPORT].
n17. See id. at 19-20.
n18. See 1886 Hearings, supra note 15, at 256 (statement of H. W. Henshaw).
n19. See E. GUTHRIE, THE BOOK OF BUTTER: A TEXT ON THE NATURE, MANUFACTURE AND
MARKETING OF THE PRODUCT 188 (1923).
n20. See JUSTICE REPORT, supra note 16, at 20-21.
n21. Id. at 19.
n22. 1886 Hearings, supra note 15, at 3 (remarks of L. I. Seaman).
n23. See E. WIEST, supra note 2, at 78 (figures for 1870).
n24. See 1886 Hearings, supra note 15, at 4 (Minnesota); E. LAMPARD, supra note
2, at 47-56 (Wisconsin); E. WIEST, supra note 2, at 78.
n25. E. LAMPARD, supra note 2, at 94.
n26. See id. at 97-98.
n27. See id. at 94-96.
n28. See E. WIEST, supra note 2, at 11-13.
n29. E. LAMPARD, supra note 2, at 204; E. WIEST, supra note 2, at 40. Perhaps
for this reason, creameries were relatively small throughout the nineteenth
century. See E. GUTHRIE, supra note 19, at 4.
n30. E. LAMPARD, supra note 2, at 110; see E. WIEST, supra note 2, at 20.
n31. See E. GUTHRIE, supra note 19, at 57; E. LAMPARD, supra note 2, at 204-08.
n32. See E. GUTHRIE, supra note 19, at 54-55; W. PABST, supra note 2, at 14-15.
n33. See J. SCHLEBECKER, supra note 15, at 25-26; E. WIEST, supra note 2, at
40. The creamery's advantages in separation technology were reduced a few years
later by the introduction of hand separators suitable for use on the farm. See
E. GUTHRIE, supra note 19, at 65; E. WIEST, supra note 2, at 28-29.
n34. See E. GUTHRIE, supra note 19, at 189; E. WIEST, supra note 2, at 16; 1886
Hearings, supra note 15, at 4 (remarks of L. I. Seaman).
n35. E. LAMPARD, supra note 2, at 111.
n36. See E. WIEST, supra note 2, at 39 (tying growth of factory system to the
introduction of power and hand separators, extension of railroad service, and
superior quality of creamery butter).
n37. E. LAMPARD, supra note 2, app. at 453.
n38. See E. WIEST, supra note 2, at 38.
n39. See E. LAMPARD, supra note 2, at 101-05 (describing the importance of
factory owners to the growth of Wisconsin dairying).
n40. Id. at 97-99, 105.
n41. See id. at 98-99.
n42. Factory dairymen needed to purchase a fairly wide variety of equipment
that could not realistically be turned to other uses. See E. GUTHRIE, supra
note 19, at 54-83 (separators), 123-26 (power churns), 155-59 (cutters), 183-85
(cold storage facilities).
n43. E. LAMPARD, supra note 2, at 104-46.
n44. See id. at 121.
n45. See J. DOLL, V. RHODES & J. WEST, ECONOMICS OF AGRICULTURAL PRODUCTION,
MARKETS AND POLICY 263-82 (1968).
n46. In the twentieth century, by contrast, "overproduction" typically
describes the surplus that can be expected to accompany government price
support programs for farm products. See generally THE OVERPRODUCTION TRAP IN
U.S. AGRICULTURE (G. Johnson & R. Ruance eds. 1972).
n47. [SEE ILLUSTRATION IN ORIGINAL]
n48. See 1886 Hearings, supra note 15, at 25 (statement of W. P. Richardson)
(complaining that competition from other milk producers had disrupted a
n49. See generally G. STIGLER, THE THEORY OF PRICE 230-37 (1966).
n50. See infra notes 63-64 and accompanying text.
n51. See E. GUTHRIE, supra note 19, at 84-87.
n52. See E. LAMPARD, supra note 2, at 197-202; J. SCHLEBECKER, supra note 15,
at 31. Dairy leaders unanimously agreed ont he revolutionary effects of the
Babcock test. In the words of William Dempster Hoard, the test came "none too
soon to enable some dairymen to correct certain practices of which they had
been guilty and which, if continued, would have barred them from passing
through the portals where Saint Peter stands as the faithful sentinel." G.
RANKIN, supra note 1, at 161.
n53. See E. GUTHRIE, supra note 19, at 86 (cream first graded in 1905).
n54. The spoilage problem became particularly acute in the export market for
cheese, where domestic manufacturers had taken to "filling" cheese made from
skim milk with various animal or vegetable fats. Filled cheese, which could not
readily be distinguished from ordinary cheese, spoiled much more rapidly than
cheese made from whole milk, and often turned during the voyage to European
markets. See E. LAMPARD, supra note 2, at 245-48.
n55. Akerlof, The Market for "Lemons": Quality Uncertainty and the Market
Mechanism, 84 Q.J. ECON. 488 (1970).
n56. E. WIEST, supra note 2, at 25.
n57. See id. at 128-29. Price differentials based on geographic origin were
often pronounced. In 1877, for example, butter from Elgin, Illinois sold for 38
to 40 per pound, while the best New York butter sold for only 30 to 33 per
pound. Id. at 129. Butter from other areas sold for even less.
n58. Akerlof, supra note 55, at 488.
n59. E. LAMPARD, supra note 2, at 99; M. OKUN, supra note 2, at 192-93; E.
WIEST, supra note 2, at 25.
n60. See Act of June 6, 1896, ch. 337, 29 Stat. 253 (regulation and taxation of
n61. E. GUTHRIE, supra note 19, at 217; E. WIEST, supra note 2, at 33-34
(defining "overrun" as the increase of finished butter attributable to water
and substances other than fat).
n62. See Oleomargarine: Hearings Before the House Comm. on Agriculture, 56th
Cong., 1st Sess. 196 (1900) [hereinafter 1900 House Hearings], reprinted in The
Oleomargarine Bill: Hearings on H.R. 3717 Before the Senate Comm. on
Agriculture and Forestry, 56th Cong., 2d Sess. 703 (1901).
n63. See id.
n64. See E. GUTHRIE, supra note 19, at 202.
n65. On renovated butter, see E. GUTHRIE, supra note 19, at 216-18; E. WIEST,
supra note 2, at 229-34.
n66. For example, farmers who delivered whole milk to creameries received a pro
rata share of a common pool of skim milk which they typically fed to livestock.
This skim milk was often of degraded or inferior quality and was sometimes
infected with tuberculosis or other diseases. See E. WIEST, supra note 2, at
28, 35-36. The introduction of a separator suitable for farm use in the 1890s
mitigated this particular problem. See id. at 35-36; T. PIRTLE, HISTORY OF THE
DAIRY INDUSTRY 82-83 (1926).
n67. See JUSTICE REPORT, supra note 16, at 19; E. WIEST, supra note 2, at 159.
n68. See E. WIEST, supra note 2, at 159.
n69. See Akerlof, supra note 55, at 488-89.
n70. Gresham's Law states that bad money tends to drive out good money in an
economy where both are in use. See id. at 489. As Akerlof observes, the analogy
to Gresham's Law is not precise because money users know which is bad money and
which is good, whereas purchasers of goods subject to severe quality
uncertainty are not able to distinguish between good and poor quality
commodities. Id. at 490.
n71. Id. at 488.
n72. See E. LAMPARD, supra note 2, at 124-25 (describing the growth of small
local groups into Wisconsin dairy associations).
n73. See, e.g., E. GUTHRIE, supra note 19, at 189 (describing the influence of
dairy associations in developing grading systems for butter).
n74. E. LAMPARD, supra note 2, at 122.
n75. E. WIEST, supra note 2, at 79.
n76. Id. at 101.
n77. E. LAMPARD, supra note 2, at 104.
n78. See, e.g., 1886 Hearings, supra note 15, at 1 (mentioning the Holstein
n79. See E. LAMPARD, supra note 2, at 122-25; 128-29.
n80. See E. WIEST, supra note 2, at 128.
n81. See T. PIRTLE, supra note 66, at 140-41.
n82. Hoard is beatified in G. RANKIN, supra note 1. The Jefferson County Union
started publication in 1870. Hoard later established the most influential
national journal for the dairy industry, Hoard's Dairyman, which first appeared
in 1885. The success of Hoard's Dairyman provides some measure of the growing
power of the dairy lobby: its circulation was a mere 700 in 1885, over 11,000
in 1892, and nearly 70,000 by 1918. E. LAMPARD, supra note 2, at 341.
n83. See G. RANKIN, supra note 1, at 204.
n84. For example, in 1864 the New York State Cheese Manufacturers' Association
obtained a law prohibiting dilution of milk by farmers supplying cheese
factories. E. WIEST, supra note 2, at 25 n.2.
n85. See E. GUTHRIE, supra note 19, at 194-95; 1886 Hearings, supra note 15, at
n86. E. GUTHRIE, supra note 19, at 195.
n87. Id. at 198-200.
n88. Id. at 200.
n89. See 1886 Hearings, supra note 15, at 25 (statement of W. P. Richardson,
President, Orange County Milk Producers' Association).
n90. See M. OKUN, supra note 2, at 199.
n91. 1886 Hearings, supra note 15, at 25 (statement of W. P. Richardson).
n92. See M. OKUN, supra note 2, at 200.
n93. S. RIEPMA, supra note 2, at 7-8; M. SCHWITZER, MARGARINE AND OTHER FOOD
FATS: THEIR HISTORY, PRODUCTION AND USE 60 (1956); K. SNODGRASS, supra note 2,
at 125-26; Van Alphen, Hippolyte Mege Mouries, in MARGARINE: AN ECONOMIC,
SOCIAL AND SCIENTIFIC HISTORY 1869-1969 5, 6-7 (J. Van Stuyvenberg ed. 1969).
Mege-Mouries began his research with the bizarre hypothesis that melting the
fatty tissue of cow udders would produce the basic fat material of butter. E.
LAMPARD, supra note 2, at 257-58. He was awarded a prize by Napoleon III for
developing the best butter substitute. M. SCHWITZER, supra, at 59; K.
SNODGRASS, supra note 2, at 125.
n94. S. RIEPMA, supra note 2, at 6-7; K. SNODGRASS, supra note 2, at 129.
n95. See M. OKUN, supra note 2, at 252-53.
n96. For a comparison of margarine and butter prices between 1877 and 1886, see
infra notes 117-119 and accompanying text.
n97. M. OKUN, supra note 2, at 252; W. PABST, supra note 2, at 19; Note, The
Oleomargarine Controversy, supra note 2, at 632.
n98. See W. PABST, supra note 2, at 19.
n99. E. LAMPARD, supra note 2, at 258.
n100. See K. SNODGRASS, supra note 2, at 132-33.
n101. See id.; W. PABST, supra note 2, at 20.
n102. See W. PABST, supra note 2, at 21.
n103. See K. SNODGRASS, supra note 2, at 134-36; E. WIEST, supra note 2, at
n104. For example, Armour & Co., the great Chicago packing house, was among the
biggest margarine manufacturers at the time. See 1886 Hearings, supra note 15,
at 102 (statement of George H. Webster); id. at 224-27. The United States Dairy
Company was affiliated with the Commercial Manufacturing Company, which was the
largest company in the United States, according to one witness at the Senate
hearings. See M. OKUN, supra note 2, at 252; 1886 Hearings, supra note 15, at
146 (statement of James H. Seymour). United States Dairy Company was also
linked with H.K. and F.B. Thurber & Co., the nation's largest wholesale grocer.
See M. OKUN, supra note 2, at 100, 252.
n105. In 1904, the average value of product per creamery was $ 24,000, compared
with $ 400,000 for margarine factories. W. PABST, supra note 2, at 22. Although
data are not available for earlier years, the discrepancy was probably larger
before 1886. Dairy farms, of course, were even smaller operations than
creameries. See supra notes 16-17 and accompanying text.
n106. See 1886 Hearings, supra note 15, at 105 (statement of George H. Webster)
(noting that there were about thirty margarine producers nationwide); supra
notes 99-102 and accompanying text.
n107. The advantage was pronounced by 1878 and almost certainly existed five
years earlier. See E. LAMPARD, supra note 2, at 110-11.
n108. See E. WIEST, supra note 2, at 235 (describing competition between
oleomargarine and cheaper grades of butter).
n109. See E. LAMPARD, supra note 2, at 258. A Wisconsin factory owner declared
with apparent pleasure that margarine was "giving better satisfaction than most
dairy butter as now made," and predicted that unless dairy (farm) butter
improved, margarine would drive it off the market. Id.
n110. Guthrie reports wholesale butter prices of 14.75 per pound in 1861 and
44.5 per pound in 1866. E. GUTHRIE, supra note 19, at 199.
n112. E. LAMPARD, supra note 2, at 455.
n114. [SEE ILLUSTRATION IN ORIGINAL]
n115. For analysis of demand cross-elasticities between margarine and butter,
see E. WIEST, supra note 2, at 206-08.
n116. M. TWAIN, LIFE ON THE MISSISSIPPI 328-29 (1923).
n117. E. LAMPARD, supra note 2, at 455.
n119. Source: 1886 Hearings, supra note 15, at 184-85.
n120. See supra note 114.
n121. See W. PABST, supra note 2, at 30; see also M. OKUN, supra note 2, at
n122. See M. Okun, supra note 2, at 252.
n123. Act of June 5, 1877, ch. 415, 1877 N.Y. Laws 441. The title of the New
York statute was "An act for the protection of dairymen, and to prevent
deception in sales of butter." Id. See also M. OKUN, supra note 2, at 254-55.
n124. Act of Apr. 28, 1877, 1877 Mo. Laws 319. Although the Missouri statute
passed the legislature before the New York law, New York's law was approved and
became effective a few weeks earlier than the one passed by Missouri. See id.;
supra note 123.
n125. Act of Mar. 26, 1878, ch. 352, 1877-78 Cal. Stat. 535.
n126. Act of Mar. 27, 1878, ch. 121, 1878 Conn. Pub. Acts 337.
n127. Act of Apr. 5, 1878, ch. 493, 1878 Md. Laws 826.
n128. Act of Apr. 3, 1878, ch. 106, 1878 Mass. Acts 70.
n129. Act of May 15, 1878, 1878 Ohio Laws 558.
n130. Act of May 22, 1878, No. 112, 1878 Pa. Laws 87. The Pennsylvania law was
submitted for advance approval to organizations such as the Solebury Farmers'
Club, the Bucks County Agricultural Society, and the Doylestown Agricultural
and Mechanics Institute. E. WIEST, supra note 2, at 237.
n131. Act of Feb. 10, 1879, ch. 154, 16 Del. Laws 223.
n132. Act of May 31, 1879, 1879 Ill. Laws 95.
n133. Act of Mar. 24, 1879, ch. 169, 1879 Tenn. Acts 212.
n134. See Act of Apr. 2, 1885, No. 127, 1885 Ark. Acts 204; Act of Apr. 6,
1885, 1885 Colo. Sess. Laws 282; Act of Mar. 10, 1885, ch. 64, §§ 3-7, 1885
Dakota Laws 110; Act of Feb. 17, 1881, ch. 3280, No. 62, 1881 Fla. Laws 84; Act
of Sept. 21, 1883, No. 261, 1882-83 Ga. Laws 124; Act of Jan. 27, 1885, 1884-85
Idaho Sess. Laws 61; Act of Mar. 3, 1883, ch. 62, 1883 Ind. Acts 78; Act of
Mar. 12, 1880, ch. 39, 1880 Iowa Acts 34; Act of Feb. 28, 1883, ch. 154, 1883
Me. Acts 125; Act of June 10, 1881, No. 254, 1881 Mich. Pub. Acts 346; Act of
Mar. 2, 1881, ch. 133, 1881 Minn. Laws 175; Act of Mar. 9, 1882, ch. 50, 1882
Miss. Laws 85; Act of Mar. 10, 1885, 1885 Mont. Laws 51; Act of Feb. 20, 1883,
ch. 53, 1883 Neb. Laws 239; Act of Feb. 4, 1881, ch. 14, 1881 Nev. Stat. 24;
Act of Aug. 11, 1881, ch. 57, 1881 N.H. Laws 476; Act of Feb. 21, 1884, ch. 15,
1884 N.J. Laws 24; Act of Feb. 25, 1885, 1885 Or. Laws 127; Act of June 8,
1880, ch. 829, 1880 R.I. Acts & Resolves 8; Act of Feb. 10, 1880, ch. 64,
1879-80 Va. Acts 49; Act of Nov. 25, 1884, No. 88, 1884 Vt. Laws 82; Act of
Feb. 4, 1886, 1885-86 Wash. Laws 118; Act of Mar. 3, 1881, ch. 40, 1881 Wis.
n135. See K. SNODGRASS, supra note 2, at 89-90.
n136. Act of Mar. 3, 1881, ch. 40, 1881 Wis. Laws 39.
n137. See, e.g., Act of Sept. 21, 1883, No. 261, 1882-83 Ga. Laws 124.
n138. The economic justification for these statutes can be rephrased in modern
terminology using Akerlof's "lemons" model, discussed at supra notes 55-71 and
accompanying text. According to Akerlof's scenario, some merchants who knew
that consumers could not easily tell the difference between butter and
margarine would palm off margarine as butter. Consumers, however, would come to
realize that they were likely to receive margarine rather than butter and,
accordingly, would lower the amount they were willing to pay for any table
spread or shortening agent. As the market price went down, butter would be
driven off the market, to be replaced by margarine. Eventually consumers who
desired to purchase butter would be unable to do so. This scenario of market
breakdown provides a solid contemporary economic justification of the
first-generation statutes (assuming the accuracy of the factual premises that
consumers could not easily distinguish butter and margarine and that some of
them would be willing to pay premium prices for genuine butter).
n139. See, e.g., 17 CONG. REC. 4894 (1886) (remarks of Rep. Millard); id. at
4901 (remarks of Rep. Frederick).
n140. See, e.g., 1886 Hearings, supra note 15, at 7 (remarks of L.I. Seaman)
("[T]here appear to be so many milk-and-water judges on the bench, who seem to
regard the violation of the [margarine] law in the light that they do some
other unimportant violations of it, that it is an exception when a man is fined
n141. One of the earliest margarine prosecutions in New York fell apart when
the experts failed to agree on whether the chief exhibit was margarine or
butter. M. OKUN, supra note 2, at 256. See also 1886 Hearings, supra note 15,
at 9 (remarks of Gardiner B. Chapin).
n142. See 1886 Hearings, supra note 15, at 9 (remarks of Gardiner B. Chapin
(state antimargarine laws are "not generally executed at all"); id. at 11
(remarks of James Hughes); id. at 13 (remarks of Victor E. Piollet)
n143. See 1886 Hearings, supra note 15, at 7 (remarks of L.I. Seaman) ("These
people violate the law, and then when they are arrested and convicted they pay
the fine of $ 100 and go back and repeat the offense, and yet make money by
it"); id. at 11 (remarks of James Hughes).
n144. See generally Becker, Crime and Punishment: An Economic Analysis, 76 J.
POL. ECON. 169 (1968) (discussing the relationship between frequency of
enforcement and size of sanction in deterring crime); Stigler, The Optimum
Enforcement of the Laws, 78 J. POL. ECON. 526 (1970) (discussing the conditions
for optimum enforcement in terms of costs of enforcement and costs of
n145. See 1886 Hearings, supra note 15, at 8-9 (remarks of Gardiner B. Chapin).
n146. See id. at 184-85.
n147. See id.
n148. The industry did, however, continue to press for labelling legislation in
additional states, see supra note 134, and did make desultory efforts to obtain
federal protection, see infra notes 204-205.
n149. See 1886 Hearings, supra note 15, at 27 (remarks of S. P. Hibbard)
(dairying a prosperous business in 1880 and part of 1881). At least one
industry representative testified in 1886 that business had been depressed for
a number of years prior to 1883, but the statement refers to special conditions
in the New York fluid milk market where dealers had apparently formed a buyers'
cartel to drive prices down. See 1886 Hearings, supra note 15, at 25 (statement
of W. P. Richardson).
n150. [SEE ILLUSTRATION IN ORIGINAL]
n151. See id. and accompanying text.
n152. See id.
n153. See id.
n154. See supra note 114.
n155. See id.
n156. See 1886 Hearings, supra note 15, at 25-26 (statement of W. P.
Richardson) ("depression in the butter counties"); id. at 28 (statement of S.
P. Hibbard); id. at 31-33 (statement of G. W. Martin).
n157. Margarine fell from 15 per pound in 1883 to 11 per pound in 1886,
probably reflecting reduced demand caused by lower butter prices. See supra
note 119 and accompanying text.
n158. Pennsylvania's prohibitory statute, enacted in 1885, was typical. It
provided in pertinent part that "no person . . . shall manufacture out of any
oleaginous substance . . . any article designed to take the place of butter . .
. produced from pure unadulterated milk, or cream from the same . . . nor shall
sell or offer for sale, or have in his . . . possession with intent to sell the
same as an article of food." Act of May 21, 1885, No. 25, 1885 Pa. Laws 22.
n159. Act of Mar. 3, 1885, ch. 297, 1885 Me. Acts 247.
n160. Act of June 12, 1885, no. 186, 1885 Mich. Pub. Acts 256.
n161. Act of Mar. 5, 1885, ch. 149, 1885 Minn. Laws 189.
n162. Act of Mar. 24, 1881, 1881 Mo. Laws 120.
n163. Act of May 5, 1884, ch. CXCIV, 1884 N.J. Laws 289.
n164. Act of Apr. 24, 1884, ch. 202, 1884 N.Y. Laws 255.
n165. Act of Apr. 27, 1885, no. 705, 1885 Ohio Laws 159.
n166. Act of May 21, 1885, supra note 158.
n167. Act of Apr. 8, 1885, ch. 361, 1885 Wis. Laws 333.
n168. Act of Aug. 26, 1885, ch. 68, 1885 N.H. Laws 269.
n169. Butter Produced States Population (Pounds) Illinois 3,077,871 53,657,943
Indiana 1,978,301 37,377,797 Iowa 1,624,615 55,481,958 Kansas 996,096
21,671,762 Michigan 1,636,937 38,821,890 Minnesota 780,773 19,161,385 Missouri
2,168,380 28,572,124 New York 5,082,871 111,922,423 Ohio 3,198,062 67,634,263
n170. Act of Apr. 29, 1884, ch. 202, § 9, 1884 N.Y. Laws 255, 257.
n171. Id. The state appropriated $ 30,000 a year for the dairy commission. Id.
In two years the dairy commission made over 300 arrests and obtained nearly 100
convictions. 1886 Hearings, supra note 15, at 20 (statement of B. F. Van
Valkenburgh, assistant dairy commissioner). Despite these efforts, however,
enforcement problems persisted in New York. Id. at 20-21.
n172. See generally Miller, Independent Agencies, 1986 SUP. CT. REV. 41, 74
("agency independence provides a useful mechanism for compromise and
accommodation among competing political interest groups.")
n173. See, e.g., H.R. REP. NO. 2028, 49th Cong., 1st Sess. 2 (1886).
n174. See, e.g., 1886 Hearings, supra note 15, at 35, 41, 46.
n175. See M. OKUN, supra note 2, at 274-75.
n176. 1886 Hearings, supra note 15, at 68 (remarks of Charles I. Chandler).
n177. See id. Chandler's credibility, however, is not entirely above suspicion,
since he had previously served as an expert witness for the United States Dairy
Company in actions for infringement of the Mege patent. M. OKUN, supra note 2,
n178. M. OKUN, supra note 2, at 275.
n179. E.g., 1886 Hearings, supra note 15, at 72-73.
n180. Id. at 22 (statement of B. F. Van Valkenburgh). Although the commissioner
conceded that chemistry could not prove that margarine was unhealthy, he did
argue that the substance could cause physiological harm. Id.
n181. E.g., id. at 60 (statement of Prof. Henry Morton).
n182. A leading dairy authority stated as late as 1916 that "[t]he unsanitary
conditions under which the greater portion of the supply of milk is produced
and marketed is a rebuke to society. . . . [O]n a great many farms, where
dairying is not specialized, sanitation is very sadly neglected." E. WIEST,
supra note 2, at 15.
n183. See 1900 House Hearings, supra note 62, at 121 (statement of John Dadie,
n184. See, e.g., 1886 Hearings, supra note 15, at 64 (statement of Professor
Henry Morton); 1900 House Hearings, supra note 62, at 121 (statement of John
Dadie, Esq.); E. GUTHRIE, supra note 19, at 96-98.
n185. See 1886 Hearings, supra note 15, at 45 (statement of Dr. Thomas Taylor)
(explaining that no analysis was made of butter because "it is generally
supposed that butter is made from healthy cows"). Any microscopic investigation
of butter would have discovered bacteria galore. See E. GUTHRIE, supra note 19,
at 35-44, 177-80.
n186. H.R. REP. NO. 2028, supra note 173, at 2.
n187. Powell v. Pennsylvania, 127 U.S. 678, 684-86 (1888) (declaring
Pennsylvania's prohibitory statute to be a legitimate exercise of police power
to protect public health).
n188. See supra notes 159-170 and accompanying text.
n189. See 1886 Hearings, supra note 15, at 20 (statement of B. F. Van
Valkenburgh); id. at 152 (statement of James H. Seymour); 17 CONG. REC. 4911
(1886) (remarks of Rep. Henderson).
n190. See 1886 Hearings, supra note 15, at 20-21 (statement of B. F. Van
Valkenburgh); id. at 169 (statement of W. S. Truesdell).
n191. Leisy v. Hardin, 135 U.S. 100, 124-25 (1890) (invalidating state statute
prohibiting sale of out-of-state liquors).
n192. United States v. E.C. Knight Co., 156 U.S. 1, 12-13 (1895) (control of
manufacturing not subject to regulation under commerce clause).
n193. Both these impediments have since been overcome, thus significantly
reducing the degree to which federalism inhibits interest group activity. See
Wickard v. Filburn, 317 U.S. 111 (1942) (effectively overruling E. C. Knight);
Plumley v. Massachusets, 155 U.S. 461, 478-79 (1894) (sustaining state statute
prohibiting sale of margarine colored to look like butter).
n194. 99 N.Y. 377, 2 N.E. 29 (1885).
n195. A prohibitory statute in Missouri had earlier been upheld, the court
observing that "the legislature may do many things in the legitimate exercise
of [the police] and other powers, which, however unwise or injudicious they may
be, are not obnoxious to the objection of being beyond the scope of legislative
authority." State v. Addington, 77 Mo. 110, 117 (1882).
n196. Marx, 99 N.Y. at 386-87, 2 N.E. at 33-34.
n197. Id. at 381-82, 2 N.E. at 30.
n198. See id. at 383-87, 2 N.E. at 31-34.
n199. Id. at 387, 2 N.E. at 33.
n202. Id. at 387, 2 N.E. at 34.
n203. M. OKUN, supra note 2, at 256.
n204. Id. at 261-63.
n205. See Manufacture and Sale of Oleomargarine, H.R. REP. NO. 1529, 47th
Cong., 1st Sess. (1882).
n206. See supra notes 149 & 151 and accompanying text.
n207. E. LAMPARD, supra note 2, at 455.
n208. H.R. REP. NO. 2028, supra note 173, at 2 (reporting that the value of
milk cows had dropped from $ 40 per head to $ 30 per head, representing a total
capital loss of $ 150,000,000).
n209. See id. (300,000 milk cows slaughtered in 1885 in Chicago alone).
n210. Id. This figure may have represented as much as one-fifth of the nation's
annual production of butter. See 17 CONG. REC. 4865 (1886) (remarks of Rep.
n211. 1186 Hearings, supra note 15, at 224 (statement of George H. Webster).
n212. See supra notes 150 & 153 and accompanying text.
n213. See 17 CONG. REC. 4894 (1886) (remarks of Rep. Millard) (observing that
the New York legislature had attempted in vain to regulate the margarine
business in that state).
n214. See infra notes 226-229 and accompanying text.
n215. See id.
n216. See supra note 74 and accompanying text.
n217. See 1886 Hearings, supra note 15, at 238 (statement of F. K. Moreland,
counsel to the American Agricultural and Dairy Association).
n218. See 17 CONG. REC. 4865 (1886) (remarks of Rep. Scott).
n219. See M. OKUN, supra note 2, at 100, 279.
n220. 17 CONG. REC. 5055 (1886).
n221. Id. at 5053, 5173.
n222. Id. at 5166.
n223. See id. at 4977.
n224. See id. at 5037, 5044, 5161. The text of the bill (with one important
amendment discussed below) was substantially similar to the provision
eventually enacted into law. See Act of Aug. 2, 1886, ch. 840, 24 Stat. 209,
n225. See 1886 Hearings, supra note 15, at 11 (statement of James Hughes).
n226. See supra text accompanying notes 194-202.
n227. The Supreme Court ruled that manufacturing was beyond the reach of
federal power under the commerce clause in United States v. E. C. Knight Co.,
156 U.S. 1 (1895).
n228. See D. CURRIE, THE CONSTITUTION IN THE SUPREME COURT 317-20 (1985).
n229. Veazie Bank v. Fenno, 75 U.S. (8 Wall.) 533 (1869).
n230. Four bills initially were referred to the Judiciary Committee for an
assessment of their constitutionality. The Judiciary Committee issued a report
deferring judgment on two bills and concluding that the other two were
unconstitutional. H.R. REP. No. 1880, 49th Cong., 1st Sess. 4 (1886). With some
parliamentary legerdemain, members of Congress who supported the dairy cause
engineered the referral of one bill to the Agriculture Committee, a favorable
forum, instead of the Revenue Subcommittee of the Ways and Means Committee,
which had a stronger claim to jurisdiction. The Agriculture Committee was given
jurisdiction over the measure by a direct vote of the House. H.R. REP. No.
2028, supra note 173, at 1.
n231. See 17 CONG. REC. 4930 (1886) (remarks of Rep. Price). Each of these
states was among the nation's top twelve dairy states in 1886. See supra note
n232. See 17 CONG. REC. 4931 (1886).
n233. See 1886 Hearings, supra note 15, at 144 (statement of A. M. Fuller,
representing the Pennsylvania State Dairymen's Association); id. at 167
(statement of W. S. Truesdell, representing the Mississippi Valley Dairy and
n234. See id. at 10 (statement of James Hughes of the Produce Exchange of
Baltimore City); id. at 17 (statement of W. H. Duckworth, commission merchant
and dairy farmer); id. at 27 (statement of S. P. Hibbard, commission merchant);
id. at 130 (statement of Col. R. M. Littler, secretary of the Chicago Produce
n235. See id. at 20 (statement of B. F. Van Valkenburgh, assistant dairy
commissioner of New York).
n236. See id. at 25 (statement of W. P. Richardson).
n237. See id. at 201 (statement of G. W. Simpson).
n238. See supra notes 39-92 and accompanying text.
n239. See, e.g., 1886 Hearings, supra note 15, at 173 (statement of Irus Coy,
representing the Chicago Live Stock Exchange); id. at 195 (statement of Howard
M. Holden of the Kansas City Live Stock Exchange); id. at 209 (letter from
Wyoming Stock-Growers' Association); 17 CONG. REC. 4898 (1886) (Pittsburgh
Grain and Flour Exchange); id. at 4905 (Cotton-Seed Crushers' Association); id.
at 4914 (Chicago Board of Trade); id. at 4970 (Knights of Labor); id. at 4971
(Union Stock Yard and Transit Company); id. at 5117 (Trades Assembly of Western
Retail grocers split on the bill, with an official representative from New York
favoring the bill, see 1886 Hearings, supra note 15, at 163 (statement of
Lawrence J. Callanan), and other retail grocers speaking against it, see id. at
194 (statement of J. Merrill Currier); id. at 233 (statement of George M.
n240. See 17 CONG. REC. 4903 (1886) (remarks of Rep. Hepburn) ("I am glad to
say that the whole of this opposition emanates from a single house in the city
of Chicago which manufactures 9,000,000 pounds of this bogus butter"); id. at
4919 (remarks of Rep. Morgan) (attributing virtually all of the arguments and
petitions in opposition to the bill to Armour's influence); id. at 4914-15
(remarks of Rep. Dunham) (submitting affidavit of Philip D. Armour); id. at
4925 (remarks of Rep. Farquhar) (identifying Armour as the nation's largest
margarine manufacturer); id. at 5124 (remarks of Rep. Parker) (citing press
report that Armour's representatives had travelled to Cleveland to persuade the
Knights of Labor to oppose the bill).
n241. See, e.g., 17 CONG. REC. 4865 (1886) (remarks of Rep. Scott).
n242. See 17 CONG. REC. 4869 (1886) (remarks of Rep. Hopkins); id. at 4931
(report of House Committee on Agriculture).
n243. See id. at 4931 (1886) (report of House Committee on Agriculture).
n244. See, e.g., id. at 4868 (remarks of Rep. Hopkins); id. at 5129 (remarks of
n245. See 1886 Hearings, supra note 15, at 96-97 (remarks of Professor James F.
n246. See, e.g., 17 CONG. REC. 4865-66 (1886) (remarks of Rep. Scott).
n247. See, e.g., id. at 4927 (remarks of Rep. Price).
n248. See id. at 5076 (remarks of Rep. McCreary); id. at 4936 (remarks of Rep.
n249. See id. at 4904 (remarks of Rep. Henderson) (quoting a report from the
Secretary of the Treasury estimating a deficit of $ 24,600,000 for the fiscal
year ending June 30, 1887).
n250. See, e.g., id. at 4936 (remarks of Rep. Wilson); id. at 4972 (remarks of
Rep. Morrison); id. at 4898 (remarks of Rep. Mills).
n251. See, e.g., id. at 4865, 4867 (remarks of Rep. Scott).
n252. See, e.g., id. at 4871 (remarks of Rep. Reagan) ("[t]he object is clearly
to legislate in favor of one class of people and against another class"); id.
at 5050 (remarks of Rep. Browne) (the bill "destroys competition and robs one
citizen to put the money in the pocket of another").
n253. Bannard, The Oleomargarine Law, 2 POL. SCI. Q. 545, 554 (1887).
n254. 17 CONG. REC. 4866 (1886).
n255. Id. at 4894 (remarks of Rep. Millard).
n256. Id. at 5082 (remarks of Rep. Hudd); see also id. at 4872 (remarks of Rep.
Hiscock) (acknowledging that the bill "may possibly have the effect of stamping
[the margarine] industry out of existence").
n257. See, e.g., id. at 5209 (vote on amendment that would have reduced the tax
to three cents a pound). At least one pro-dairy legislator strongly suggested
that the bill's proponents would agree to reduction in the size of the tax so
long as the principle of taxing oleomargarine were accepted. See id. at 4868
(remarks of Rep. Hopkins) ("I would not imperil [the bill's] passage in the
House by obstinately adhering to the tax of 10 cents per pound . . . where some
other member, actuated by honest motives, as I presume him to be, should feel
that 2 or 5 per pound is as much as should be imposed").
n258. Id. at 5210.
n259. Id. at 7201-02.
n260. Id. at 5213.
n261. Id. at 7202.
n262. See H.R. EXEC. DOC. No. 368, 49th Cong., 1st Sess. 1-2 (1886).
n263. Id. at 1.
n264. See The Oleomargarine Bill: Hearings on H.R. 3717 Before the Senate Comm.
on Agriculture and Forestry, 56th Cong., 2d Sess. 396 (1901) (remarks of Henry
E. Davis) (describing the newspaper editorial).
n265. See Washington Post, July 31, 1886, at 1, col. 8 (describing a stir among
the press corps when the Speaker of the House received a message thought to be
a veto of the margarine bill).
n266. Washington Post, July 31, 1886, at 2, col. 1.
n267. H.R. EXEC. DOC. No. 368, supra note 262, at 1-4.
n268. Id. at 2.
n270. Bannard, supra note 253, at 557.
n271. See B. HAMMOND, BANKS AND POLITICS IN AMERICA: FROM THE REVOLUTION TO THE
CIVIL WAR 405-450 (1957).
n272. See id.
n273. Dairy forces used this analogy in debate on the bill. See, e.g., 17 CONG.
REC. 4894 (1886) (remarks of Rep. Millard).
n274. See id. at 4894 (remarks of Rep. Millard).
n275. See, e.g., id. at 4977 (remarks of Rep. Milliken).
n276. See id. at 4870 (remarks of Rep. Hammond) ("never have we undertaken to
give protection to one individual of our own people as against another
individual of our own people"); id. at 4917 (remarks of Rep. Glass) ("[t]he
Government of the United States has no right to tax an industry out of
existence, or to tax one industry oppressively for the benefit of another");
id. at 5056 (remarks of Rep. Butterworth) (asking whether the "time has come
when you are willing to wipe out one legitimate domestic industry which but for
your antagonistic legislation might survive and flourish, to wipe it out simply
because it is the competitor of another domestic industry").
n277. See, e.g., id. at 4914 (remarks of Rep. Dunham) ("if we, by legislation
or by taxing a product in order to force up the price of butter, can succeed in
this case, in the next Congress another large interest or large class in the
country will apply to us to tax something else, so that they can keep up the
price of their product"); id. at 4936 (remarks of Rep. Wilson) ("[o]nce we
establish the principle that the sovereign power of taxation with which the
people intrust their servants can be perverted from its only honest purpose of
raising taxes, and be used to oppress, to suppress, or to destroy the industry
of any class of our citizens in order to increase the profits of the industry
of any other class of our citizens, and this ceases to be a government of equal
laws and becomes at once a government of privileged classes and occupations");
id. at 5050 (remarks of Rep. Browne) ("[t]his bill seeks a class legislation in
its present shape of the most pronounced type. A great danger lurks under its
thin di[s]guises; it makes a precedent which may be at any time employed to
destroy the weak in the interest of the strong. The theory upon which this bill
proceeds may be used to justify any legislative monopoly however monstrous or
exacting"); id. at 4898 (remarks of Rep. Mills) ("[i]f you can destroy [the
margarine] industry, you can destroy any other by abusing the power of
taxation"); id. at 5091 (remarks of Rep. Daniel) ("in this bill is the doctrine
that Congress may create monopoly, and may help monopoly to crush out and
destroy every wholesome industry" that is opposed by superior political force);
id. at 5156 (remarks of Rep. Wellborn) ("there cannot be found in all the
history of the Republic a more dangerous precedent than that which the
enactment of this bill . . . would establish").
n278. Id. at 5010-11.
n279. Bannard, supra note 253, at 545.
n280. 17 CONG. REC. 4918 (1886) (remarks of Rep. Dunn).
n281. See Washington Post, July 20, 1886, at 2, col. 3.
n282. Washington Post, July 21, 1886, at 2, col. 1.
n283. Bannard, supra note 253, at 546.
n284. See R. CLEMEN, THE AMERICAN LIVESTOCK AND MEAT INDUSTRY 802-03 (1923).
n285. See 1886 Hearings, supra note 15, at 209.
n286. See S. MISC. DOC. NO. 99, 49th Cong., 1st Sess. (1886).
n287. See R. CLEMEN, supra note 284, at 242-43.
n288. See Bannard, supra note 253, at 545.
n289. See M. SKLAR, THE CORPORATE RECONSTRUCTION OF AMERICAN CAPITALISM,
1890-1916: THE MARKET, THE LAW, AND POLITICS (1987); I. TARBELL, THE
NATIONALIZING OF BUSINESS 1878-98 (1936).
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