The Rise of Packer Control
From 1885-1890, following a period of massive herd expansion, the industry underwent a severe downturn that saw cattle prices plummet by 35% (from a high in May 1882 of $7.00 to a low in April 1887 of $3.85.) Ranchers blamed the packer for anti-competitive practices, citing that industry control was held captive by Armour (27% market share in 1890), Swift (26% market share in 1890) and Morris (24% market share in 1890). According to the United States Department of Commerce and Labor (1913, 442) slaughtering and meat packing was the most valuable U.S. industry and stated that for that same time period cites that the city of Chicago had 1,950 small butchers, and nationwide more than 80,000 independent butcher shops were open.
In May 1888, a Missouri Senator by the name of George Vest proposed a resolution to investigate “whether there exists or has existed any combination of any kind by reason of which the price of beef and beef cattle have been so controlled or affected as to diminish the prices paid the producer.” Five senators from cattle states made up the Vest Committee that was formed to respond, which for 13 months held hearings in St Louis, D.C., Chicago, Kansas City and New York City. As reported in the published testimony from the U.S. Senate, the committee repeatedly charged that the packers colluded in purchasing cattle, which accounted for the fall of cattle prices, and that dressed and canned beef shipped from Chicago was from disease animals and therefore less healthy than locally produced beef.
The legislation that was proposed stemming from the committee report followed the same two approaches: guarantee inspection to salvage markets and stem packer control. The most significant piece of legislation was the Meat Inspection Act of 1891, which for the first time authorized the government to inspect and certify food quality for consumers. Any slaughterhouse that desired to produce for interstate trade had to apply for government inspection.
But the Vest report was adamant that inspection alone would not be enough. They asked President Harrison to obtain a repeal of the quarantine regulations against American cattle in Great Britain, arguing that British producers wanted to block the importation of American cattle and that the inspection act should be sufficient to ensure American quality.
If the demand for cattle were to increase both within export and domestic markets, they argued, the gains would be captured by the beef trust unless federal antitrust legislation was also enacted. With that the Vest committee included the Sherman Act in their recommendations. But the Sherman Act merely gave the Federal Government oversight and control of interstate commerce, which packer critics complained would not go far enough into restricting Chicago’s power within the market.
Thus the Bland Amendment was born in the Senate, as an addition to the Sherman Act. The Bland Amendment sought to prohibit the intent to restrict competition, a provision that was not explicit in the Sherman Act. This amendment was directly targeted at the Beef Trust, as it gave the government clear oversight into regulating trade contracts meant to stifle competition within the state for products that would be shipped out of state. Bland, campaigning on his new amendment, was quoted as saying, “There is no trust in this country today that is robbing the farmers of the great West and Northwest of more millions of their hard earned money than this so-called Big Four beef trust of Chicago.”
But the amendment met with criticism in the House, who felt it overstepped the authority of the federal government. In a close vote, conveying the depth of the support for the amendment, the House rejected the change. All amendments to the bill were struck down, and the house eventually approved the original Sherman Act with a 242 to 0 vote, with 85 abstentions.