The Packers and Stockyards Act of 1921. a History of Administration

The Packers and Stockyards Act of 1921 A History of Administration and Enforcement Third Edition Prepared for Grain Inspection, Packers and Stockyards Administration Packers and Stockyards Program New Employee Training Kansas City, Missouri August/September 2009 S. Brett Offutt, Director Policy and Litigation Division Packers and Stockyards Program 2 American agriculture, as we all know, built on the free enterprise and open market system, has long been the envy of people all over the world. No other nation has an agricultural industry to match American farmers and ranchers when it comes to providing food at reasonable cost. - President Gerald Ford 3 4 Packers and Stockyards Act of 1921 A History of Administration and Enforcement Foreword Welcome new employees of the Packers and Stockyards Program. This publication marks the third installment of my ―History of P&S.‖ This Third Edition includes new and updated information not found in the first two editions, which were presented in Shepherdstown, West Virginia in June 2007 for the GIPSA Leadership Program and in Indianapolis, Indiana in September 2008 for the Packers and Stockyards Program National Employee Conference. This also marks the first time I have incorporated discussion of landmark cases under the Packers and Stockyards Act, including cases from the first decade of the 21st Century. A separate publication and presentation on landmark cases was prepared for training of nearly all P&SP employees in 2007 at the Federal Law Enforcement Training Center in Glynco, Georgia. Throughout the course of our 88 year history, the Act has been amended and supplemented numerous times. Likewise, our agency has undergone many changes including in name and organizational structure. In the pages that follow, I have attempted to give an overview of the history of the Act and its amendments, with additional focus on the agency charged with its administration and significant ―landmark‖ cases that have shaped our jobs as P&S employees. The detail and accuracy within this publication are only as good as the information available to me. In that respect, I am thankful to have found a number of valuable resources including an oral history given by Chester Morrill, the first person to head the Packers and Stockyards Administration. Morrill‘s oral history was written from a series of interviews in 1952, in which he spoke in detail about the early days of P&S. Mr. Morrill gave me considerable insight into the early days of P&S in the 1920‘s and led me to additional sources including 1924 Hearings before the Committee on Expenditures in the Department of Agriculture, House of Representatives. The National Agricultural Library at USDA has proven to be an excellent resource as well. In conducting my initial research, I learned interesting, and perhaps trivial, things I hadn‘t previously known. For example, Odin Langen served as Administrator of the Packers and Stockyards Administration in 1971 and 1972, following his six terms as a U.S. Representative from Minnesota. Langen lost his re-election bid in 1970 to Bob Berglund, who would later serve as Secretary of Agriculture under President Carter. These P&S Chronicles are arranged by decade, providing information on significant Congressional actions, major cases, agency leadership and other happenings. Some overlap of events is bound to occur where the activities of one decade impact the events and actions of other decades. In those instances I‘ve tried to eliminate unnecessary duplication of information. Finally, I‘ve provided photos and exhibits throughout the text and at the back of this publication, including the federal register notice that establishes GIPSA as an agency, and profiles of each Secretary of Agriculture responsible for administering the Act since its enactment in 1921. Enjoy. 5 6 Chapter 1 Introduction The Packers and Stockyards Act (P&S Act) was enacted in 1921 following the release in 1918 of the Report of the Federal Trade Commission on the Meat Packing Industry. For years prior to enactment of the P&S Act, the largest meatpacking companies had been suspected of conspiring to control the purchases of livestock, the preparation of meat and meat products and their distribution in this country and abroad. In 1917, President Wilson directed the Federal Trade Commission (FTC) to investigate the facts relating to the meatpacking industry. The FTC concluded that the ―Big Five‖ (Swift, Armour, Cudahy, Wilson and Morris) controlled the market in which they bought their supplies and the market in which they sold their products. The report pointed out that the monopolistic position of the ―Big Five‖ was based primarily upon their ownership or control of stockyards and essential facilities for the distribution of perishable foods and that control of the stockyards carried with it dominance over commission firms, dealers, cattle-loan banks, trade publications, etc. The FTC reported packers were manipulating markets, restricting flow of foods, controlling the price of dressed meat, defrauding producers and consumers of food and crushing competition.1 The FTC, in fact, recommended governmental ownership of the stockyards and their related facilities. Congress chose a less drastic alternative and after some controversy2 enacted the P&S Act a year after the Big Five packers and others entered into a consent decree under the Sherman Act. The Act was originally designed to regulate the ―Big Five.‖ As you know, 1 The Report of the Federal Trade Commission on the Meat Packing Industry (1918) states at 392: ―It appears that five great packing concerns of the country Swift, Armour, Morris, Cudahy, and Wilson have attained such a dominant position that they control at will the market in which they buy their supplies, the market in which they sell their products, and hold the fortunes of their competitors in their hands … The producer of livestock is at the mercy of these five companies because they control the market and the marketing facilities and, to some extent, the rolling stock which transports the product to the market … The power of the Big Five in the United States has been and is being unfairly and illegally used to Manipulate live-stock markets; Restrict interstate and international supplies of foods; Control the prices of dressed meats and other foods; Defraud both the producers of food and consumers; Crush effective competition; Secure special privileges from railroads, stockyard companies, and municipalities; and Profiteer … The rapid rise of the packers to power and immense wealth and their present strangle hold on food supplies were not based necessarily on their ownership of packing houses, but upon their control of the channels of distribution, particularly the stockyards, private car lines, cold storage plants and branch houses. Similarly the great profits which they have secured and are now securing are not primarily due to exceptional efficiency in operating packing houses and manufacturing plants, but are secured through their monopolistic control of the distributive machinery.‖ 2 At different stages in the legislative process, bills on the subject called for administration by a separate commission, for regulation of packers by the FTC and of the stockyards by the Interstate Commerce Commission. 7 the Act‘s scope has expanded well beyond just the largest of packers. Today, the Act regulates the activity of packers, livestock dealers, market agencies, live poultry dealers and swine contractors. H.R. 6320, ―The Packers and Stockyards Act,‖ was passed by Congress on August 15, 1921, and became effective September 15, 1921. The Act‘s purpose at the time it was passed was to ―regulate interstate and foreign commerce in live stock, live-stock produce, dairy products, poultry, poultry products, and eggs3, and for other purposes.‖ It prohibited packers from engaging in unfair and deceptive practices, giving undue preferences to persons or localities, apportioning supply among packers in restraint of commerce, manipulating prices, creating a monopoly or conspiring to aid in unlawful acts. The Act also made stockyards quasi-public utilities and required yard officers, agents and employees to register with the government. Stockyards were forbidden from dealing in the livestock they handled, and were required to maintain accurate weights and measures and pay shippers promptly. However, not all stockyards were under the jurisdiction of the Act. Only those with pen space larger than 20,000 square feet were regulated. In the years since 1921, the P&S Act has been updated several times to keep pace with a changing and dynamic industry. 3 As originally enacted, the definition of ―packer‖ read, in part, ―any person engaged in the business … (d) of marketing meats, meat food products, live-stock products, dairy products, poultry, poultry products, or eggs, in commerce…‖ 8 Administration of the Act During the past 88 years, the Packers and Stockyards Act has been administered in several different organizational structures both within other agencies and as an independent agency reporting directly to the Secretary or Assistant Secretary: From To Agency Name September 16, 1921 July 1, 1927 Packers and Stockyards Administration under the Secretary of Agriculture July 1, 1927 July 1, 1939 Packers and Stockyards Division under the Bureau of Animal Industry July 1, 1939 February 23, 1942 Packers and Stockyards Division under the Agricultural Marketing Service February 23 , 1942 December 5, 1942 Packers and Stockyards Division under the Agricultural Marketing

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