Packers and Stockyards Act
Encyclopedia
The Packers and Stockyards Act of 1921 (7 U.S.C.
§§ 181-229b; P&S Act) was enacted following the release in 1919 of the Report of the Federal Trade Commission
on the meatpacking industry.
occurred and the cost of living rose, President
Woodrow Wilson
ordered the FTC to investigate the industry from the "hoof to the table" to determine whether or not there were any "manipulations, controls, trusts
, combinations
, or restraints
out of harmony with the law or the public interest."
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. The FTC, in fact, recommended governmental ownership of the stockyards and their related facilities.
The meat packing industry had also became a prime concern of Wilson's Attorney General
Alexander Mitchell Palmer
. After threatening an antitrust suit, in February 1920 Palmer managed to force the "Big Five" packers (Armour
, Cudahy, Morris, Swift and Wilson) to agree to a consent decree
under the Sherman Antitrust Act
which drove the packers out of all non-meat production, including stockyards, warehouses, wholesale and retail meat.
Agitation for legislation to regulate the packers persisted into the Warren Harding administration despite the decree, and Congress
passed the Packers and Stockyards Act on August 15, 1921 as H.R. 6320 and the law went into effect in September 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 eggs
, 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 required them 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 twenty thousand square feet were regulated.
Today, the Act's scope has expanded to regulate the activity of livestock dealers, market agencies, live poultry dealers and swine contractors as well as meatpackers.
In Stafford v. Wallace (1922), it was argued that the act was unconstitutional, since it exceeded the powers granted to the federal government. The Supreme Court
, however, ruled that the regulation was licensed by the Commerce Clause, and was therefore constitutional.
The first major amendment to the Act was in 1958, when Congress expanded the jurisdiction
of the United States Department of Agriculture
(USDA) to include all auction
markets operating in commerce. Before 1958, only auction markets with an area of 20,000 square feet (1,858 m2) or more were covered. In addition, jurisdiction over market agencies and dealers was expanded to include all of their livestock activities in commerce, including those away from stockyards.
In 1976, the Act was amended to increase financial protection to livestock producers and to expand USDA jurisdiction. This amendment:
In subsequent legislation that amount was increased to $11,000 for packers, swine contractors, stockyard owners, market agencies, or dealers, and $27,000 for live poultry dealers.
In 1987, the Act was amended to provide trust protection to live poultry sellers and contract growers in the event of nonpayment for poultry by live poultry dealers and in 2000 it was amended to require P&SP to perform an annual assessment of the cattle and hog industries.
The Farm Security and Rural Investment Act of 2002
(2002 Farm Bill) amended the Act to regulate certain activities of swine contractors who enter into swine production contracts with contract growers.
In general, the amendment made swine contractors subject to certain provisions of the Packers and Stockyards Act. The amendment prohibited certain activities of swine contractors, required swine contractors to maintain certain records, and held them responsible for the acts of their employees, officers, and agents. The amendment also gave swine production contract growers the right to sue swine contractors in federal district court
. The amendment did not impose any new bonding or registration requirements, establish a trust for swine production contract growers, or establish any prompt payment requirements for swine contractors.
The P&S Act is administered by the Grain Inspection, Packers and Stockyards Administration
(GIPSA) of the U.S. Department of Agriculture.
Title 7 of the United States Code
Title 7 of the United States Code outlines the role of agriculture in the United States Code.: Commodity Exchanges: Cotton Standards: Grain Standards: Naval Stores: Importation of Adulterated Seeds: Insecticides and Environmental Pesticide Control: National Laboratory Accreditation: Insect Pests...
§§ 181-229b; P&S Act) was enacted following the release in 1919 of the Report of the Federal Trade Commission
Federal Trade Commission
The Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...
on the meatpacking industry.
History and passage
As the outbreak of World War IWorld War I
World War I , which was predominantly called the World War or the Great War from its occurrence until 1939, and the First World War or World War I thereafter, was a major war centred in Europe that began on 28 July 1914 and lasted until 11 November 1918...
occurred and the cost of living rose, President
President of the United States
The President of the United States of America is the head of state and head of government of the United States. The president leads the executive branch of the federal government and is the commander-in-chief of the United States Armed Forces....
Woodrow Wilson
Woodrow Wilson
Thomas Woodrow Wilson was the 28th President of the United States, from 1913 to 1921. A leader of the Progressive Movement, he served as President of Princeton University from 1902 to 1910, and then as the Governor of New Jersey from 1911 to 1913...
ordered the FTC to investigate the industry from the "hoof to the table" to determine whether or not there were any "manipulations, controls, trusts
Trust (19th century)
A special trust or business trust is a business entity formed with intent to monopolize business, to restrain trade, or to fix prices. Trusts gained economic power in the U.S. in the late 19th and early 20th centuries. Some, but not all, were organized as trusts in the legal sense...
, combinations
Price fixing
Price fixing is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand...
, or restraints
Restraint of trade
Restraint of trade is a common law doctrine relating to the enforceability of contractual restrictions on freedom to conduct business. In an old leading case of Mitchell v Reynolds Lord Smith LC said,...
out of harmony with the law or the public interest."
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. The FTC, in fact, recommended governmental ownership of the stockyards and their related facilities.
The meat packing industry had also became a prime concern of Wilson's Attorney General
United States Attorney General
The United States Attorney General is the head of the United States Department of Justice concerned with legal affairs and is the chief law enforcement officer of the United States government. The attorney general is considered to be the chief lawyer of the U.S. government...
Alexander Mitchell Palmer
Alexander Mitchell Palmer
Alexander Mitchell Palmer was Attorney General of the United States from 1919 to 1921. He was nicknamed The Fighting Quaker and he directed the controversial Palmer Raids.-Congressional career:...
. After threatening an antitrust suit, in February 1920 Palmer managed to force the "Big Five" packers (Armour
Armour and Company
Armour & Company was an American slaughterhouse and meatpacking company founded in Chicago, Illinois, in 1867 by the Armour brothers, led by Philip Danforth Armour. By 1880, the company was Chicago's most important business and helped make the city and its Union Stock Yards the center of the...
, Cudahy, Morris, Swift and Wilson) to agree to a consent decree
Consent decree
A consent decree is a final, binding judicial decree or judgment memorializing a voluntary agreement between parties to a suit in return for withdrawal of a criminal charge or an end to a civil litigation...
under the Sherman Antitrust Act
Sherman Antitrust Act
The Sherman Antitrust Act requires the United States federal government to investigate and pursue trusts, companies, and organizations suspected of violating the Act. It was the first Federal statute to limit cartels and monopolies, and today still forms the basis for most antitrust litigation by...
which drove the packers out of all non-meat production, including stockyards, warehouses, wholesale and retail meat.
Agitation for legislation to regulate the packers persisted into the Warren Harding administration despite the decree, and Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
passed the Packers and Stockyards Act on August 15, 1921 as H.R. 6320 and the law went into effect in September 1921.
The Act's purpose at the time it was passed was to "regulate interstate and foreign commerce
Commerce Clause
The Commerce Clause is an enumerated power listed in the United States Constitution . The clause states that the United States Congress shall have power "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." Courts and commentators have tended to...
in live stock, live-stock produce, dairy products, poultry, poultry products, and eggs
Egg (food)
Eggs are laid by females of many different species, including birds, reptiles, amphibians, and fish, and have probably been eaten by mankind for millennia. Bird and reptile eggs consist of a protective eggshell, albumen , and vitellus , contained within various thin membranes...
, 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
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
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 required them 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 twenty thousand square feet were regulated.
Today, the Act's scope has expanded to regulate the activity of livestock dealers, market agencies, live poultry dealers and swine contractors as well as meatpackers.
In Stafford v. Wallace (1922), it was argued that the act was unconstitutional, since it exceeded the powers granted to the federal government. The Supreme Court
Supreme Court of the United States
The Supreme Court of the United States is the highest court in the United States. It has ultimate appellate jurisdiction over all state and federal courts, and original jurisdiction over a small range of cases...
, however, ruled that the regulation was licensed by the Commerce Clause, and was therefore constitutional.
Amendment
The Act has been updated several times to keep pace with a changing and dynamic industry.The first major amendment to the Act was in 1958, when Congress expanded the jurisdiction
Jurisdiction
Jurisdiction is the practical authority granted to a formally constituted legal body or to a political leader to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility...
of the United States Department of Agriculture
United States Department of Agriculture
The United States Department of Agriculture is the United States federal executive department responsible for developing and executing U.S. federal government policy on farming, agriculture, and food...
(USDA) to include all auction
Auction
An auction is a process of buying and selling goods or services by offering them up for bid, taking bids, and then selling the item to the highest bidder...
markets operating in commerce. Before 1958, only auction markets with an area of 20,000 square feet (1,858 m2) or more were covered. In addition, jurisdiction over market agencies and dealers was expanded to include all of their livestock activities in commerce, including those away from stockyards.
In 1976, the Act was amended to increase financial protection to livestock producers and to expand USDA jurisdiction. This amendment:
- required meat packers with annual livestock purchases of over $500,000 to be bondBond (finance)In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...
ed; - provided trust protection for producers in the event of nonpayment for livestock by a meat packer;
- expanded USDA's jurisdiction over wholesale brokers, dealers, and distributors marketing meat in commerce and
- authorized the Agency to assess civil penalties of not more than $10,000 per violation.
In subsequent legislation that amount was increased to $11,000 for packers, swine contractors, stockyard owners, market agencies, or dealers, and $27,000 for live poultry dealers.
In 1987, the Act was amended to provide trust protection to live poultry sellers and contract growers in the event of nonpayment for poultry by live poultry dealers and in 2000 it was amended to require P&SP to perform an annual assessment of the cattle and hog industries.
The Farm Security and Rural Investment Act of 2002
Farm Security and Rural Investment Act of 2002
The Farm Security and Rural Investment Act of 2002, also known as the 2002 Farm Bill, includes ten titles, addressing a great variety of issues related to agriculture, ecology, energy, trade, and nutrition....
(2002 Farm Bill) amended the Act to regulate certain activities of swine contractors who enter into swine production contracts with contract growers.
In general, the amendment made swine contractors subject to certain provisions of the Packers and Stockyards Act. The amendment prohibited certain activities of swine contractors, required swine contractors to maintain certain records, and held them responsible for the acts of their employees, officers, and agents. The amendment also gave swine production contract growers the right to sue swine contractors in federal district court
United States district court
The United States district courts are the general trial courts of the United States federal court system. Both civil and criminal cases are filed in the district court, which is a court of law, equity, and admiralty. There is a United States bankruptcy court associated with each United States...
. The amendment did not impose any new bonding or registration requirements, establish a trust for swine production contract growers, or establish any prompt payment requirements for swine contractors.
The P&S Act is administered by the Grain Inspection, Packers and Stockyards Administration
Grain Inspection, Packers and Stockyards Administration
The Grain Inspection, Packers and Stockyards Administration is an agency of the United States Department of Agriculture that facilitates the marketing of livestock, poultry, meat, cereals, oilseeds, and related agricultural products, and promotes fair and competitive trading practices for the...
(GIPSA) of the U.S. Department of Agriculture.