ArtI.S8.C3.5.3 Packers and Stockyards Act of 1921 and Grain Futures Act of 1922

Article I, Section 8, Clause 3:

[The Congress shall have Power . . . ] To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes; . . .

In 1921, Congress passed the Packers and Stockyards Act,1 which brought the livestock industry in the country’s chief stockyards under federal supervision. In 1922, Congress passed the Grain Futures Act2 to regulate grain futures exchanges. In sustaining these laws, the Court relied on Swift & Co. v. United States. For example, in Stafford v. Wallace,3 which involved the Packers and Stockyards Act, Chief Justice William Taft stated:

The object to be secured by the act is the free and unburdened flow of livestock from the ranges and farms of the West and Southwest through the great stockyards and slaughtering centers on the borders of that region, and thence in the form of meat products to the consuming cities of the country in the Middle West and East, or, still as livestock, to the feeding places and fattening farms in the Middle West or East for further preparation for the market.4

The Stafford Court reasoned the stockyards were “not a place of rest or final destination.” 5 Instead, they were “but a throat through which the current flows,” and the sales there were not “merely local transactions. [T]hey do not stop the flow . . . but, on the contrary, [are] indispensable to its continuity.” 6

In Chicago Board of Trade v. Olsen,7 involving the Grain Futures Act, the Court followed the reasoning in Stafford. Discussing Swift, Chief Justice Taft remarked:

[Swift] was a milestone in the interpretation of the commerce clause of the Constitution. It recognized the great changes and development in the business of this vast country and drew again the dividing line between interstate and intrastate commerce where the Constitution intended it to be. It refused to permit local incidents of a great interstate movement, which taken alone are intrastate, to characterize the movement as such.8

In Olsen, the Court examined how futures sales relate to cash sales and impact the interstate grain trade. Writing for the Court, Chief Justice Taft stated: “The question of price dominates trade between the States. Sales of an article which affect the country-wide price of the article directly affect the country-wide commerce in it.” 9 Thus, a practice that demonstrably affects prices would affect interstate trade “directly” and, even though local in itself, would be subject to Congress’s regulatory power under the Commerce Clause. In Olsen, Chief Justice Taft also stressed the importance of congressional deference. He stated:

Whatever amounts to more or less constant practice, and threatens to obstruct or unduly to burden the freedom of interstate commerce is within the regulatory power of Congress under the commerce clause, and it is primarily for Congress to consider and decide the fact of the danger to meet it. This court will certainly not substitute its judgment for that of Congress in such a matter unless the relation of the subject to interstate commerce and its effect upon it are clearly nonexistent.10

Footnotes
1
42 Stat. 159, 7 U.S.C. §§ 171–183, 191–195, 201–203. back
2
42 Stat. 998 (1922), 7 U.S.C. §§ 1–9, 10a-17. back
3
258 U.S. 495 (1922). back
4
Id. at 514. back
5
Id. back
6
Id. at 515–16. See also Lemke v. Farmers Grain Co., 258 U.S. 50 (1922); Minnesota v. Blasius, 290 U.S. 1 (1933). back
7
262 U.S. 1 (1923). back
8
Id. at 35. back
9
Id. at 40. back
10
Id. at 37, quoting Stafford v. Wallace, 258 U.S. 495, 521 (1922). back