THE UNITED STATES of America was formed as a federation of 13 States. Many benefits were expected from the Union. Not the least of these was the abolition of interstate tariffs and the establishment of free trade among the States. Farmers and manufacturers were to be free to produce wherever conditions were favorable, and they were to have the right to sell their products in any part of the country without unnecessary hindrances.

A Constitution was drawn up which gave to the Federal Government the duty of regulating interstate and foreign commerce and which forbade the States to lay duties on goods imported from other States and from foreign countries. 2 Although some people felt that these provisions in the Constitution left the States insufficient sources of revenue, nobody seems to have doubted the need for encouraging unimpeded commerce among the several States. At the Massachusetts Convention held in 1788 to ratify the Constitution, Mr. Dawes stated the situation in these words:

3

"As to commerce, it is well known that the different States now pursue different systems of duties with regard to each other. By this and for want of general laws of prohibition through the Union we have not secured even our own

1 Art. 1, sec. 8, of the Constitution provides that "the Congress shall have the power . . . to regulate commerce with foreign nations and among the several States and with the Indian tribes."

Art. 1, sec. 10, of the Constitution provides that "No State shall, without the consent of Congress, lay any duties on exports or imports except what may be absolutely necessary for its inspection laws."

The Independent Chronicle and The Universal Advertiser, Boston, Mass., January 31, 1788.

domestic traffic that passes from State to State." This probably expressed the view of wellinformed people in all the States. Everyone saw the danger of State protectionism and the need for assuring the farmer and the manufacturer a free market.

Since the adoption of the Constitution the policies of the National and State Governments have been mainly such as to allow and even to promote the free exchange of goods throughout the country. Without such policies we could not have developed our specialized agriculture nor could we have built large-scale manufacturing industries. In fact, it is not too much to say that the prosperity of American agriculture and industry is built largely on the foundation of free trade throughout a large country.

Yet, as the country grew, as transportation became cheaper, as consuming cities reached out farther for their supplies of food, as foods became more highly processed, and as the marketing system became more complex, it became necessary to have an increasing number of laws, regulations, and ordinances to protect the farmer, the dealer, and the consumer. Food had to be inspected to prevent adulteration and fraud. It had to be graded and identified as to quality. Dishonest business practices had to be prevented. Services such as that of supplying market news were required. Quarantines were needed to prevent the spread of pests and diseases. To meet these and similar legitimate needs the States and the Federal Government have adopted and en

forced an increasing number of marketing laws, and are constantly urged to pass more.

With the great increase in these regulations, two closely related and often indistinguishable dangers arose. One was that by their very complexity and multiplicity these regulations might, quite without intention, hamper trade more than help it; the other that the tendency might arise to use such measures to raise barriers against distant competitors and thus, while possibly helping local producers or dealers, hurt other producers and dealers and all consumers. Recognizing the growing importance of this problem, the Bureau of Agricultural Economics has cooperated with the various State departments of agriculture to study the situation. The following report summarizes the results of this study.

The reader should be warned at the outset not to confuse the terms "free trade" and "unregulated trade." If we should abolish all Federal and State laws on the subject of marketing we would not promote free trade. In fact, we might destroy a large part of the interstate trade which now exists. The freest possible trade can occur only when the farmer, the dealer, and the consumer are all protected by sound laws which are enforced honestly and impartially. By the term, "free trade," as we use it here, we mean a situation in which (1) each State and each market in each State admits any healthful and honestly described products from any part of the country without any kind of discrimination on account of the location of the producer or dealer, and (2) the various State governments and the Federal Government cooperate in the development of laws and regulations that are as simple as possible and as uniform as possible in order that a shipment that is acceptable in one market will also be acceptable in any other market in the country.

This report reviews several types of marketing laws and regulations. In many cases these laws seem to interfere with free trade as defined above. Probably most of these laws are intended for purposes, the desirability of which no one would question, such as the protection of health, the prevention of fraud, and the conservation of future food supplies. In such cases the interferences with free trade are unintentional, or at least incidental. But some laws and some city

ordinances seem to have been designed to protect nearby farmers by making it unnecessarily difficult or expensive for distant farmers or dealers to get their products on the local market. The number and variety of such laws and ordinances seem to be growing, and this publication will show that in recent years laws have sometimes been passed in retaliation against real or fancied discrimination in other States.

Probably few agricultural economists and marketing specialists fully realize the seriousness of the problem discussed in this report. Although most students and officials who are familiar with the marketing of agricultural products are aware that there are some laws and regulations which are discriminatory and which hamper the free movement and sale of agricultural products, each single law or regulation taken by itself is likely to seem rather unimportant. But a general review of the situation reveals how far we have departed from the principle of unimpeded commerce among the States and how seriously these departures may affect the prosperity of agriculture.

The fact that some of the most discriminatory laws and regulations are either not enforced at all or are only occasionally employed is sometimes used to minimize the seriousness of the present situation. In many cases, however, irregularity and capriciousness of enforcement constitute in themselves a grave problem. Intermittently enforced laws may have as detrimental an effect upon the flow of farm products as discriminatory regulations that are rigorously applied.

This report does not include a quantitative estimate of the economic losses suffered by farmers, dealers, and consumers on account of laws and regulations that interfere with the free movement of agricultural products. Statistics are presented in a few cases to indicate roughly the extent to which trade has been reduced by particular measures. But in general pertinent statistics are not available, and it would be a Gargantuan task to develop them. It has been deemed more important at this point to survey the entire field than to ascertain the precise economic effects of the various restrictive

measures.

On the basis of the survey that has been made of these measures and which is presented in the following pages of this publication, the authors believe that the economic losses caused by laws and regulations that unduly restrict commerce in agricultural products have been substantial. This opinion is shared by a large number of State officials who have worked with the authors in the preparation of this report.

This publication does not presume to be a legal document. It has been written by economists and is primarily concerned with the economic implications of these laws. Their constitutional aspects have received but slight attention and such interpretation as appears in the report is that of the economist, not the legal expert.

As we see it, there is a real need for many kinds of marketing laws and this need probably will continue to increase as our civilization becomes more complex. This situation calls for active cooperation between Federal, State, and municipal officials to give the public all necessary protection and, at the same time, to allow and to promote the free exchange of goods from one part of the country to another.

The problem is not one that can be solved simply by repealing a few laws or by writing a few new ones. It will be solved only if farmers and public officials alike see the dangers inherent in some of the recent legislative trends and are willing to work continuously and intelligently to develop a cooperative program. A large number of Federal, State, and city officials were consulted in connection with the study on which this publication is based. Without exception they all showed a real interest in the problem and a desire to improve the present interstate trade situation. For example, one of the eight State commissioners of agriculture who reviewed the manuscript of this report wrote:

"I have read all of the chapters on this great subject of interstate movement of farm commodities and noted the barriers and handicaps that are shown in your research work. I am amazed at the contents of these several chapters and the picture that you have been able to present . . One of two things, I am sure, will happen in consequence. Either the people of the several States

will come to their senses and recognize that we have a Union of 48 States instead of a disunion, or there will be drastic demands for Federal control over these matters. Sooner or later it should mean cooperation by all of the States and the Federal Government in place of individual State action or absolute Federal control."

Similar comments were made by several other State commissioners of agriculture and by State marketing officials. The thought in the last quoted sentence has been expressed by almost all Federal and State officials who have discussed this subject with the authors. None of them wants to see the Federal Government take over all regulation in the field of marketing, and all believe there is a growing need for a cooperative program on which the Federal, State, and municipal governments can unite.

In the various parts of this report the authors have felt an obligation to make suggestions which might well be considered in such a cooperative program of legislation, but these suggestions are necessarily tentative and general in character. A great deal of detailed work would be necessary to put these suggestions into effect and to develop others that offer promise of greater protection to the public and of freer movement of farm products in interstate com

merce.

One general suggestion might well be made here. Regional and national associations of milk inspectors, quarantine officials, graders, and other specialists can perform a very useful and important public service by providing for free and frank discussion of their common problems and by working cooperatively for uniform laws, or at least for laws that do not conflict unnecessarily with one another. The regional plant boards and the National Plant Board have done very effective work in recent years toward the elimination of unnecessary quarantines and in the coordination of quarantines in the several States. The National Association of Marketing Officials has cooperated actively with the Bureau of Agricultural Economics in the development of standardized grades for farm products. Activities of this kind should be encouraged and expanded.

forced an increasing number of marketing laws, and are constantly urged to pass more.

With the great increase in these regulations, two closely related and often indistinguishable dangers arose. One was that by their very complexity and multiplicity these regulations might, quite without intention, hamper trade more than help it; the other that the tendency might arise to use such measures to raise barriers against distant competitors and thus, while possibly helping local producers or dealers, hurt other producers and dealers and all consumers. Recognizing the growing importance of this problem, the Bureau of Agricultural Economics has cooperated with the various State departments of agriculture to study the situation. The following report summarizes the results of this study.

The reader should be warned at the outset not to confuse the terms "free trade" and "unregulated trade." If we should abolish all Federal and State laws on the subject of marketing we would not promote free trade. In fact, we might destroy a large part of the interstate trade which now exists. The freest possible trade can occur only when the farmer, the dealer, and the consumer are all protected by sound laws which are enforced honestly and impartially. By the term, "free trade," as we use it here, we mean a situation in which (1) each State and each market in each State admits any healthful and honestly described products from any part of the country without any kind of discrimination on account of the location of the producer or dealer, and (2) the various State governments and the Federal Government cooperate in the development of laws and regulations that are as simple as possible and as uniform as possible in order that a shipment that is acceptable in one market will also be acceptable in any other market in the country.

This report reviews several types of marketing laws and regulations. In many cases these laws seem to interfere with free trade as defined above. Probably most of these laws are intended for purposes, the desirability of which no one would question, such as the protection of health, the prevention of fraud, and the conservation of future food supplies. In such cases the interferences with free trade are unintentional, or at least incidental. But some laws and some city

ordinances seem to have been designed to protect nearby farmers by making it unnecessarily difficult or expensive for distant farmers or dealers to get their products on the local market. The number and variety of such laws and ordinances seem to be growing, and this publication will show that in recent years laws have sometimes been passed in retaliation against real or fancied discrimination in other States.

Probably few agricultural economists and marketing specialists fully realize the seriousness of the problem discussed in this report. Although most students and officials who are familiar with the marketing of agricultural products are aware that there are some laws and regulations which are discriminatory and which hamper the free movement and sale of agricultural products, each single law or regulation taken by itself is likely to seem rather unimportant. But a general review of the situation reveals how far we have departed from the principle of unimpeded commerce among the States and how seriously these departures may affect the prosperity of agriculture.

The fact that some of the most discriminatory laws and regulations are either not enforced at all or are only occasionally employed is sometimes used to minimize the seriousness of the present situation. In many cases, however, irregularity and capriciousness of enforcement constitute in themselves a grave problem. Intermittently enforced laws may have as detrimental an effect upon the flow of farm products as discriminatory regulations that are rigorously applied.

This report does not include a quantitative estimate of the economic losses suffered by farmers, dealers, and consumers on account of laws and regulations that interfere with the free movement of agricultural products. Statistics are presented in a few cases to indicate roughly the extent to which trade has been reduced by particular measures. But in general pertinent statistics are not available, and it would be a Gargantuan task to develop them. It has been deemed more important at this point to survey the entire field than to ascertain the precise economic effects of the various restrictive

measures.