Cronyism

CHAPTER 10

PURIFYING THE COMPETITION

Early twentieth-century banking, industry, and railroad regulations: all were restrictionist measures designed by corporatist interests to enrich said interests. The same can be said for the meat, food, and medical regulations of the time. Many economic historians hold these government interventions as exemplary progressive reforms that corrected severe informational problems, the result of public-interested activists triumphing over entrenched firms.The reality is practically the reverse: businesses lobbied for cartelizing compliance costs and other barriers, bureaucrats desired bigger budgets to increase their power and influence, and professional agitators coveted a chance in the spotlight and the ability to micromanage the economy. Typical of the Corporatist Era, contending interests entered acrimonious fights to establish their preferred regulatory systems.

Big Meat

This was evident in meatpacking, where the Beef Trust defensively lobbied against health regulations that threatened their profits and turned the rules into favorable industry cartelization. The Beef Trust’s regulatory drive began during the Spanish-American War, when Philip Armour lobbied the McKinley administration to acquire contracts for military meat provisions. The increased revenue from this subsidy was outweighed by an unexpected cost courtesy of General Nelson Miles. This army official had had an axe to grind ever since the Pullman strike of 1894, when his troops encountered serious difficulties in suppressing Beef Trust workers on strike near the railroads. After the war Miles accused the Chicago packers of selling unsanitary meat products that killed soldiers in Cuba. Although testimony uncovered that monotonous diets, poor storage, filthy water, and disease from the tropical climate caused the illness-related casualties, the bad publicity damaged the Beef Trust.

Antitrust setbacks added insult to the public relations injury. Like other industry cartels, the Beef Trust embraced mergers as a way of controlling market competition. In 1902, Armour & Co. heir J. Ogden Armour and officials of Beef Trust members Swift & Co. and Morris & Co. arranged with Kuhn, Loeb & Co. and National City Bank’s James Stillman to create a massive merger with a $550 million market capitalization. Unfortunately for the meatpackers, the Northern Securities antitrust imbroglio caused the bankers to back out. Wall Street perceptively predicted that Theodore Roosevelt would oppose the large meatpacking combination: the former cattle rancher had served as a colonel during the Spanish-American War and testified with Miles against the packers. Moreover, retail meat prices were rising during Roosevelt’s first term. Not the result of rapacity on the part of meatpackers, these price increases were due to simple supply and demand: growing population increased demand, and tight livestock supplies—partially caused by the Bureau of Animal Industry’s (BAI’s) strict condemnations of animal carcasses—limited supply. The resultant high meat prices angered the public and jeopardized Roosevelt’s reelection bid in 1904.

Not one to hide his biases, Roosevelt called the Beef Trust “evil.”Ranchers continued to insist that the Beef Trust held down cattle prices and therefore lobbied for new antitrust investigations to cripple the largest purchaser of their products. The Bureau of Corporations, Roosevelt’s investigatory agency, initiated antitrust probes before the election. To the dismay of the ranchers and of Roosevelt, the bureau’s report, which came out after the election, revealed that the Beef Trust slaughtered only 45 to 50 percent of the nation’s cattle—a clear refutation of their accusation that the packers controlled the entire industry. Despite the exoneration, the costly investigation damaged the Beef Trust.

To make matters worse, a new powerful interest group was emerging. Progressive activists, settlement-house workers, and muckraking journalists who championed socialism and nationalized industry, attacked the Beef Trust. Professing to enhance the general welfare, these men and women desired fame, fortune, and taxpayer-funded employment that would provide job security and the power to plan the economy. Or, as one critical congressman put it, they “search[ed] out things to criticize in order that they may employ themselves in the endeavor to reform them.”One example was Florence Kelley of Chicago’s Hull House. A translator of Marxist literature into English, Kelley lobbied in 1893 for an Illinois law that regulated working conditions of women and children. After drafting the legislation she became the state’s first chief inspector of labor standards in factories, triumphantly writing to Karl Marx’s coauthor Friedrich Engels that her subordinates are “outspoken Socialists and active in agitation.”

The self-interested reformer who inflicted the most damage on the Beef Trust was the failed novelist Upton Sinclair. After briefly visiting Chicago’s facilities, he wrote The Jungle, a novel about wage slavery that included stories of workers falling into cooking vats and poisoned rats getting ground into meat products. Taken as fact among the public and politicians, the picture he painted was far from the truth: the Beef Trust had improved meat quality through refrigeration and canning that reduced spoilage; pioneered in sanitary innovations including brick cattle pens, sewage systems, and electrical motor power that minimized dust; and opened their slaughterhouses to the public through guided tours. But Isaac Marcosson, editor at Doubleday, Page & Co., knew a sensationalist hit when he saw one. In 1905 he had aggressively promoted Thomas Dixon Jr.’s The Clansman, a race-baiting polemic that inspired the 1915 film The Birth of a Nation. Events proved Marcosson right: The Jungle hit the shelves in February 1906, and by the end of the year it was estimated that more than one million people had read it. Worried about Sinclair’s accusations, consumers decreased their purchases of meat and sales sank. Internationally, hysteria over The Jungle caused American meat exports to drop 11 percent, from $115 million in 1906 to $102 million by 1908.

Seizing his moment, Roosevelt directed the US Department of Agriculture (USDA) to investigate the Beef Trust. BAI officials, perennial advocates of bigger appropriations, could have used the opportunity to paint a dark picture to justify a larger budget and build up their bureaucratic power. Yet even they admitted that Sinclair “willfully closed his eyes to establishments where excellent conditions prevail[ed]” and engaged in “willful and deliberate misrepresentations of fact.”Fortunately for Roosevelt, he sent another inspection team consisting of Charles Neill, a former economics professor at the Catholic University of America in Washington, DC, turned commissioner of labor, and Assistant Secretary of the Treasury James Reynolds. Both men had previously toured the Chicago facilities without complaint. Now, eager to please their boss, they reported disgusting working conditions.

The publicity nightmare for the Beef Trust turned into a legislative nightmare as Republican senator Albert Beveridge of Indiana worked on an inspection bill. Historian John Braeman describes Beveridge as “always eager to bask in the spotlight” and garner “personal glory”; writing legislation against the unpopular Beef Trust suited his purposes.Beveridge’s bill required inspection of meat intended for interstate markets, stipulated that the packers must pay for inspection, and empowered the USDA to mandate strict sanitary regulations. The provisions would significantly raise costs of operation for both large and small meatpackers, resulting in further reduced supplies and higher consumer prices. The Senate passed Beveridge’s inspection bill in May 1906.

The Beef Trust did not oppose new regulations if inspections were taxpayer-funded and health regulations raised smaller competitors’ costs but were not too onerous for the large firms. In other words, if they promoted their desired cronyism. As with countless other privilege-seeking firms, the Beef Trust fixated on raising their rivals’ costs. J. Ogden Armour announced that the Chicago packers supported federal inspection because it “puts the stamp of legitimacy” on their products, in contrast to those of smaller rivals who sold their meat “without having been inspected by government” and purportedly “with little or no concern.”Louis Swift of Swift & Co. said he “would be glad to make any changes . . . that experts might consider necessary,” even though his business “was [already] conducted in a proper and sanitary manner.”The Chicago meatpackers in general proclaimed their support for sanitary “regulations which are reasonable, rational, and just”—according to the Beef Trust, of course.

In June, after J. Ogden Armour left for Paris to escape the bad publicity, Louis Swift strategized with Thomas Wilson, Morris & Co.’s general manager. They decided to turn to the Republicans who controlled the House’s Committee on Agriculture: Chicago’s “blond boss” William Lorimer and New York’s James Wadsworth, a wealthy rancher who found The Jungle “most costly to my foreign trade.”They were politicians the Beef Trust could count on—ones with a vested interest in the matter. Lorimer and Wadsworth worked with Swift and Wilson to draft a pro–Beef Trust bill that restored taxpayer-funded inspection. Shortly thereafter, they held hearings on their bill where the Chicago packers could defend themselves publicly.

Wilson represented the Beef Trust before the House committee, defending taxpayer-funded inspection and advocating bringing smaller firms into regulatory compliance. The Beef Trust had “no objection” to the government “putting on as many inspectors as they want, provided we do not have to pay for them.” “It is to our advantage,” Wilson reassured Congress, “to have good inspection . . . from the hoof to the can.” Smaller firms “have no losses for condemnation; they have no expense for this inspection.” For this reason, they possessed “a tremendous advantage . . . in disposing of their meat products,” an advantage Wilson wanted Congress to eliminate.

Thanks to the Beef Trust’s defensive lobbying, the Senate yielded to the House bill in late June. To the frustration of Sinclair and others, the Meat Inspection Act of 1906 provided more, not fewer, special privileges to the Beef Trust: taxpayer subsidies for the mandatory inspection of meat products intended for export and interstate markets, along with favorable sanitation standards. Unsurprisingly, Armour & Co. boasted that “nobody in this country will give the law heartier support than we will.” Morgan partner George Perkins wrote to J. P. Morgan that for the Chicago meatpackers the law “will certainly be a very great advantage when the thing once gets into operation and they are able to use it all over the world, as it will practically give them a government certificate for their goods.”

Smaller meatpackers complained loudly about the new compliance costs thrust upon them. According to meatpacker George McCarthy, requiring “plants in absolutely sanitary condition from top to bottom” forced upon “the smaller class of packer” great “expense in reconstructing and fixing up his plant.” This included “hav[ing] separate machinery . . . instead of using one machine for several things,” such as separate facilities for making pure and compound lards.The Beef Trust, with its already advanced factories, did not have to make as many adjustments. In addition, the smaller meatpackers now suffered the condemnations that the Beef Trust had faced since the 1890s. The Journal of Commerce reported how “small slaughterers and meatpackers” complained that inspectors’ incentives to meet quotas caused an “immense amount of meats [to be] wasted by wholesale condemnation” and restricted the meat variety they could offer to consumers.Even the commission of doctors and veterinarians reviewing BAI condemnation regulations admitted that “several sections (for instance, the sections on hog cholera, swine plague, actinomycosis, tuberculosis, and tapeworm cysts) could be made less stringent without any danger to the health of the consumer.”These fastidious health regulations severely hampered the ability of small firms to operate.

As a result of the restrictions, interstate meatpackers declined from 923 in 1906 to 300 in 1910. The meatpacking industry estimated that the regulations added 3 to 5 cents to the price of a pound of beef and pork, or roughly 25 percent of the total price. At a time when consumers were already complaining about price increases from a growing population, the new regulations added to their woes. While small packers and the general public suffered, the Beef Trust reaped the rewards. As a percentage of its net worth, Armour & Co.’s profits grew from 6 percent in 1906 to over 9 percent in 1910. These earnings allowed J. Ogden Armour to secure loans from Kuhn, Loeb & Co. and National City Bank to expand facilities in the United States and Argentina.

The outbreak of World War I turned into a bonanza for the Chicago packers. Fallout from The Jungle had caused meat exports to fall from $115 million in 1906 to $68 million in 1914; by 1916 they had shot up to $198 million. US entry into the Great War in 1917 exploded meat exports further to an astounding $698 million by 1919. The wartime Food Administration, led by Herbert Hoover, coordinated Allied purchases through a packers’ committee that Thomas Wilson chaired. The Food Administration ostensibly restricted large meatpackers’ profits to around 10 percent. However, the Beef Trust secretly understated its profits by manipulating the value of its inventories, buying from subsidiaries at artificially high prices, selling to subsidiaries at artificially low prices, shifting profits to less regulated avenues, breaking off part of their business into international entities, and treating interest-bearing obligations as capital according to Food Administration guidelines.

The Chicago packers rode high as government subsidization of demand and restriction of competition continued to increase their market share and profits. The Beef Trust’s share of federally inspected slaughtered animals rose from 60 percent in 1908 to 69 percent in 1919. Armour & Co.’s actual (rather than reported) profits climbed to 20 percent of net worth in 1917. In terms of assets the company moved from the ninth largest industrial concern in the nation in 1909 to the third largest by 1919. To further expand operations, it aggressively borrowed $120 million by 1919 to expand on the West Coast, open new plants in Brazil, diversify into fruits and vegetables, and build state-of-the-art meat coolers and freezers in Chicago. J. Ogden Armour reaped the rewards. In 1918 contemporaries estimated his rapidly increasing wealth at $125 million—making him tied for sixth wealthiest man in the country. He lived lavishly outside of Chicago at his one-thousand-acre property, Mellody Farm, complete with three reflecting pools, five man-made ponds, and a private railroad spur—a palace one historian called “the most pretentious of all” in the area.

The Beef Trust’s good times did not last as livestock and grocer interests counterattacked with their own corporatism. After the Chicago meatpackers defeated antitrust lawsuits in the early 1910s, the American National Live Stock Association lobbied for new antitrust proceedings in an attempt to boost cattle prices. Then the soaring cost of food during World War I enraged consumers, and President Wilson looked to blame anyone besides the government. Populists in Congress demanded an investigation by the Federal Trade Commission (FTC), but big-business commissioner Edward Hurley blocked their attempts. After Hurley left in early 1917 Wilson directed the agency to investigate.

The FTC pulled out all the stops, including paying famous prosecutor Francis Heney $2,500 a month—a hefty sum relative to the $10,000 annual salary commissioners received. The FTC’s 1919 report did uncover the Beef Trust’s hidden profits and enlarged market share but neglected the government’s role in creating the barriers to entry and wartime contracts that led to such steep rewards. Instead, in 1920 Wilson’s attorney general forced on the Chicago packers a consent decree that divested their ownership in stockyards, stopped them from producing various nonmeat foods, and prohibited the companies from entering the retail business. The edict cartelized the stockyards, the production of nonmeat food, and retail meat businesses by blocking out the largest competitor—the Beef Trust. Congress codified the consent decree a year later in the Packers and Stockyards Act of 1921.

It should come as no surprise that the rancher and grocer interests lobbied for these restrictions on their competitors. Ranchers wanted the Chicago packers out of the stockyards: Senator John Kendrick of Wyoming, one of the major politicians involved, served concurrently as the president of the American National Live Stock Association. Grocers wanted to prohibit the Beef Trust’s entry into retail. The Southern Wholesale Grocers’ Association hired Lewis Haney, a former economist at the FTC, to write research that criticized the Beef Trust and promoted the Packers and Stockyards legislation.

While the Beef Trust successfully postponed enforcement of the law for over a decade through court battles, the Depression of 1920–1921 proved far more disastrous. As with agriculture in general during the war, overproduction rapidly turned into massive excess inventory. Meat exports collapsed from $698 million in 1919 to $157 million in 1921, Armour & Co. suffered a 15 percent loss, and Armour himself reportedly hemorrhaged $1 million a day for 150 days until Albert Wiggin of Chase National Bank and other bankers took over his company.

Technological change then dealt the killing blow. The rise of refrigerated trucking inaugurated a decades-long process that moved slaughtering away from Chicago and closer to the farmer and rancher. The rise of grocery stores that bought directly from small packers and not from the Beef Trust’s wholesale warehouses further cut into profits. As a result of these changes, during the 1920s the Beef Trust’s share of federally inspected slaughtered animals declined to 58 percent, and Armour & Co. fell from the third to the fourteenth largest industrial firm.

Wealthy cattlemen, flexing their newfound power, now lobbied the government to grade standards of high-quality beef so they could earn more for their Angus and purebred cattle. Not only that: they also wanted to restrict the supply of purebred cattle. Former Wall Street banker and Angus breeder Oakleigh Thorne, a main organizer behind the new National Better Beef Association, wanted to “lessen as much as possible the production of the quality of beef,” a clear attack on competition.In May 1927, the USDA inaugurated the taxpayer-subsidized grading of prime and choice meats by the Bureau of Agricultural Economics. The average price of cattle increased sharply, and by December high-end hotels and other establishments threatened a boycott. The USDA defused the situation by defending the cattlemen.

Meatpackers also tried to raise the price of meat products through an FTC-style trade practice conference. This was becoming common practice in food distribution. The grocery stores, for example, still wanted more barriers into the retail food industry. In 1928, the American Wholesale Grocers’ Association and others organized the Grocery Trade Conference with the FTC to propose that the “terms of sale shall be open and strictly adhered to” and prohibit “secret rebates or secret concessions or secret allowances of any kind[,] . . . free deals, . . . offering premiums, gifts or prizes[,] . . . price discrimination” and other competitive price-cutting behaviors.The meatpackers followed suit. In 1929 the Institute of American Meat Packers, the industry’s trade association, lobbied the USDA to call its own trade practice conference. The USDA dutifully agreed to enforce cartel provisions that prohibited “secret rebates, concessions or allowances of any kind,” and “obscuring the sales price by granting secretly unusual discounts or terms.” The National Provisioner boasted that this “code of fair trade practices provid[es] for self-regulation of the industry” and heralded a new era of cartelization.

The Beef Trust’s government-promoted cartel experienced a sharp rise and fall. Since the late nineteenth century the Chicago packers had improved consumers’ ability to purchase affordable and better quality meat. They of course aimed to monopolize markets, but competition prevented them from doing so. Making matters worse, rival interests that included ranchers and progressive crusaders schemed to hurt the Beef Trust through antitrust and other regulations. When a groundless public health scare arose in 1906, the Beef Trust defensively lobbied to ensure that the Meat Inspection Act disproportionately hurt the smaller packers. Under the guise of health regulations they consolidated the industry and raised prices, a cartelization that continued during World War I. The rewards did not last long. Rival ranchers and grocers weakened the companies, and the postwar downturn devastated them. By the end of the 1920s a corporatist apparatus existed to benefit the cartels of smaller and medium-sized meatpackers, ranchers, and grocers. Though the special privileges had changed hands, the public still lost, suffering from coerced reductions in product variety and from price hikes. Cronyism in meatpacking was alive and well.

Crusading against Adulteration

On the same day President Roosevelt signed the Meat Inspection Act of 1906, he also signed the Pure Food and Drug Act. Under the guise of increasing quality and eliminating the use of substitute ingredients, known as adulteration, a coalition of food and medical producers eager to handicap their competitors lobbied for the law. The “generalissimo of the pure-food coalition” was Harvey Washington Wiley, who advocated such a law to aggrandize his own influence in the Department of Agriculture and control what other people consumed.

By the early twentieth century the pure food and drug alliance contained many special interests. Sugar producers wanted to hamper the production of artificial glucose, an increasingly popular and cheaper substitute made from potatoes and corn. Old Taylor, a manufacturer of straight whiskey aged in oak barrels, desired labeling restrictions on the whiskeys most consumers preferred—the cheaper rectified and blended whiskeys made differently and mixed with other liquors. The Royal Baking Powder Company, a maker of cream-of-tartar baking powder used in bread, sponsored fake health organizations and lobbied state legislatures to prohibit alum baking powders that sold for a fifth of the price. The H. J. Heinz Company was inventing a ketchup that did not rely on sodium benzoate, in contrast to smaller competitors that made ketchup with marginal tomatoes and cheaper preservatives. The firm, desirous of stopping what it called “bargain counter mania,” wanted the federal government to ban preservatives in ketchup.

The American Medical Association (AMA) and the American Pharmaceutical Association (APA) criticized the patent medicines that small drug companies made on the grounds that they contained addictive drugs and were advertised with misleading labels. What they really had in mind was their own interest: in the words of one druggist at an APA convention, peripheral firms “divert[ed] money which rightfully belongs to the retail drug trade, in the way of prescriptions and regular drugs.”The Woman’s Christian Temperance Union had long fought for a pure food and drug law because “adulterated food predisposed individuals to alcoholism and vice.”As anti-immigrant evangelists, they worried about ethnic, un-American food like Italian cuisine and French margarine.

Food and drug privilege seekers faced two difficulties. First, the average consumer valued their pocketbook over quality. As A. T. Holmes, the editor of the Inland Grocer, complained, “Perhaps with the majority of food buyers, quality is less a consideration than price. . . . The public cares not a particle for” pure food and drug legislation.Second, use of cheaper alternatives did not cause a health crisis. Refrigeration and canning reduced spoilage, borax and other preservatives applied in limited quantities increased shelf life without requiring excessive salt, processed foods increased variety in diets, and adulteration enhanced flavor and texture. Consumers discovered reputable brands through repeat purchases, cookbooks, and food fairs. Patent medicines did in fact improve consumers’ well-being by numbing pain. Doctors and pharmacists also prescribed the addictive cocaine, opium, whiskey, other alcohols, and morphine contained in patent medicines because they were the only effective pain relievers aside from the newly discovered aspirin (1897). Individuals chose between physicians’ services and cheaper patent medicines.

Beset with these problems, champions of government food and drug standards had one ace up their sleeve: the indefatigable efforts of Harvey Washington Wiley. He remains the canonical example of a bureaucrat interested in crony regulations to increase his agency’s control, enrich business allies, and line his own pockets. A model bureaucrat in the emerging corporatist state!

Wiley, like many of his fellow intellectuals who sought comfortable and prestigious jobs in government, studied in Germany, where he learned how to detect purported impurities in food and drink. He then organized the Association of Official Agricultural Chemists and later became the head of the USDA’s Division of Chemistry, which officially turned into the Bureau of Chemistry in 1901. Wiley ardently advocated “natural” food-making processes and opposed lab-made food and the use of preservatives. This fit his penchant for dining at expensive restaurants and social clubs whose customers could afford his preferred food. Wiley justified his antipreservative stance with “Poison Squad” experiments where he fed test subjects food with preservatives to show how they got sick. The studies lacked scientific validity because there was no control group and the participants had an incentive to complain so they could be temporarily released and eat food not prepared in the USDA. “Political concerns, rather than efforts to methodically collect scientific data,” writes Jonathan Rees, explained Wiley’s procedure.Making a little something on the side also appears to have played a role: in 1902, before Wiley began his experiments, he purchased an interest in a salicylic acid plant. Salicylic acid became the only preservative his Poison Squad studies approved of. Thus, Wiley’s vituperative stance against all other preservatives would increase both the demand for salicylic acid and his own profits.

Wiley maintained close connections with interests that would benefit from antipreservative and purity regulations. After urging the USDA to subsidize the production of cane, beet, and sorghum sugar, Wiley worked with the Louisiana Sugar Producers Association and the American Beet Sugar Association. He also befriended sugar and coffee entrepreneur John Arbuckle and worked as a consultant for his sugar laboratory. As a connoisseur of straight whiskey who bought it for the elite Cosmos Club in Washington, Wiley discussed his alcohol standards with Old Taylor and frequently accepted gifts of straight whiskey. Wiley could call upon several good friends at Royal Baking Powder Company and had even asked one “to get up some scheme to get me into an office where I can make some money.”He corresponded with H. J. Heinz Company officials and stepped up attacks on sodium benzoate once he knew about their new ketchup. Wiley served on the AMA’s Council on Pharmacy and Chemistry, and APA member Dr. Lyman Kebler ran the Bureau of Chemistry’s drug laboratory. Lastly, Wiley could count upon a trusted female acolyte, Alice Lakey of the General Federation of Women’s Clubs, who heralded him as “a Moses given to the people by God.”

Between 1897 and 1906 Congress debated roughly forty pure food and drug bills that restricted various ingredients and instituted new labeling costs. Wiley made sure Congress defeated bills that vested regulatory authority outside his Bureau of Chemistry. For example, Wiley deep-sixed Wisconsin congressman Joseph Babcock’s bill because it called for the creation of a new enforcement bureau in the USDA (this bill was at the urging of former Wisconsin governor William Hoard, a champion of his state’s dairy interests who wanted to oversee the new bureau).

On the other hand, Wiley pulled out all the stops for bills that enhanced the Bureau of Chemistry. Using sensationalism without evidence, he claimed soothing syrups and impure milk killed more infants in the previous fifty years than soldiers were killed in the Civil War. He called upon former AMA president Charles Reed to testify about how doctors should prescribe only straight whiskey, not other whiskeys. He dispatched the shock troops in the General Federation of Women’s Clubs to the front lines and asked them to bombard congressmen with letters.

It was not to be for Wiley. Each time, enough opposing interests feared the competitive disadvantage rivals hoped to foist upon them and defensively lobbied against the bills. By early June 1906 a pure food and drug law still appeared distant. Congress only passed such legislation because of hysteria from The Jungle, which blew “the smoldering fire into flame,” according to Outlook magazine.Wiley, for his part, rejoiced that the purported meat crisis resulted in legislative victory, but he did not care about meat inspection since enforcement would reside in the rival Bureau of Animal Industry. His chief concern was selfpromotion.

The Pure Food and Drug Act prohibited adulterated and misbranded food and drugs in interstate commerce. Patent medicines had to add labels noting the amount of alcohol, opium, cocaine, and other drugs in their formulas, though no limit existed on how much they could contain. The law, as with so many other regulations, was extremely vague and subject to wide interpretations. Wiley’s Bureau of Chemistry could determine what classified as adulteration or mislabeling and seize samples. It could also warn companies that their sanitary standards increased the chance of adulteration, a dubious stretch because adulteration referred to what was put in food and not to the conditions food was made in. The major downside for Wiley’s bureau was that final authority regarding what constituted adulteration rested with the secretaries of agriculture, the treasury, and commerce and labor. If a company was prosecuted, the court system would determine its guilt and punishment. Nevertheless, the law tremendously increased Wiley’s authority and gave him the ability to institute massive compliance costs in the form of relabeling, adjusting recipes, and restructuring factories.

No surprise, then, that he considered the so-called Wiley Law “a splendid foundation on which to erect a more perfect structure in the future.”Its vagueness and interpretative malleability were an opportunity to augment his own power, and he eagerly told his subordinates that whatever they were trying to do, “we must read it into the law!”And with this great power came a bureaucracy far larger than what legislators were promised. During the law’s passage Wiley assured Congress there would be “very little, if any, increase in expenditure” for chemical analysis, not even “one additional inspector,” and a budget of only $150,000 to $200,000, which was “a very large estimate.”After the law’s passage, Wiley unloaded the true cost onto the taxpayer and demanded new chemists and clerks, fifty new federal inspectors, and $750,000 in appropriations. With each passing year Wiley’s requests grew. From 1906 to 1912 the Bureau of Chemistry’s budget mushroomed from $155,000 to $964,000, and its staff increased from 110 to 546. The agency soon boasted a new six-story building in the nation’s capital that issued directives to sixteen branch laboratories.

In a speech, Wiley stated that he wanted to help businessmen by first letting violators off with a warning: “Like the bad boy he is spanked by his fond father and given another chance to be good.”Wiley neglected to mention that he would spank hardest the competitors of the firms he leagued with. Indeed, Wiley spent the rest of his career falsely accusing certain companies of producing unsafe food or drugs. Due to his combative personality, other government officials grew irritated and worked to restrain his influence.

Wiley brought the most special privileges to sugar interests. The Corn Products Refining Company had recently innovated in the glucose market by selling it straight to the consumer under the name of corn syrup (they did not use the term “glucose” because the average consumer associated it with glue). Wiley insisted that the term “corn syrup” could only describe juice that came from corn, an extremely literal and restrictive definition, and that companies had to label it as glucose. Wiley clearly had other sugar producers in mind: “The glucose industry has been a positive injury to agriculture,” and “the maple grove, the sorghum field and the cane field are ready to furnish all the table syrups that we need.”Eventually, the relevant cabinet secretaries sided against Wiley, ruling that the product could be called corn syrup. This was still a competitive burden because sugar did not have to be on a product label at all, and corn syrup could not be labeled as sugar. Thus, “natural” sugar secured a twofold advantage in the eyes of consumers—it held a monopoly on the term, and products did not have to inform consumers about its presence.

Wiley tried to ban another competitor of sugar, saccharin. Many scientists declared it harmless, but Wiley insisted something was wrong with it because it was artificially made in a lab. Due to the opposition of President Roosevelt, whose doctor gave saccharin to him, and his successor, Taft, Wiley failed to get it banned. Still, costly litigation from 1907 to 1912 was a competitive disadvantage for the producers of the sugar substitute.

Wiley had gone on the record stating that “childhood without candy would be Heaven without harps.”He did not concern himself with added sugar in foods or the tooth decay that sugar consumption caused. He did, however, obsess over added caffeine and found a target in the Coca-Cola Company, which, coincidentally, had recently switched sugar suppliers from Wiley’s friend John Arbuckle to the American Sugar Refining Company. As a regular drinker of coffee, which contained more caffeine than Coca-Cola, Wiley showed his bias here especially. After seizing some of Coca-Cola’s wares he trapped the business in costly litigation until December 1917. Coca-Cola agreed to reduce caffeine in its beverages, forfeit claims to seized goods, and pay for the costs of trial. The case misled people into believing that caffeine in tea and coffee was healthier than in soda beverages.

Wiley secured some victories for the AMA and APA by hurting patent medicine makers, particularly the producer of the popular Cuforhedake Brane-Fude (Cure-for-Headache Brain-Food). The patent medicine contained acetanilid, caffeine, alcohol, and other ingredients. After the Pure Food and Drug Act passed, the company changed its label to conform and indicate that the patent medicine contained 30 percent alcohol, sixteen grains of acetanilid, and no poison. Wiley found these changes insufficient and charged that the formula contained only 24 percent alcohol, that acetanilid was a poison, and that the medicine did not cure headaches. In court, the company had witnesses testify on its therapeutic value, including a pharmacy professor who defended the moderate use of acetanilid. Another expert emphasized that Cuforhedake Brane-Fude advertised 30 percent alcohol because it was referring not to absolute alcohol but to commercial alcohol, the standard for patent medicines. The jury still found the company guilty.

During Wiley’s tenure the Bureau of Chemistry directed its lawsuits primarily against smaller makers of patent medicines instead of the larger firms, smaller firms having less money and being able to put up less resistance in court. The Proprietary Association, a trade association of larger patent medicine producers that previously opposed the 1906 law, grew very comfortable with Wiley’s discriminatory enforcement. Between 1902 and 1912, these patent medicine companies increased their production by 60 percent to take advantage of the reduction in output of the smaller firms.

In other controversies Wiley faced setbacks, though not without raising the costs of businesses that opposed him. To the dismay of the H. J. Heinz Company, Wiley failed to obtain a lasting prohibition on sodium benzoate. The Royal Baking Powder Company experienced a similar defeat in restricting alum baking powders. Not every pet interest of Wiley’s could get what it demanded.

His whiskey crusades didn’t fare much better. In a multiyear campaign Wiley and Old Taylor sought to prohibit rectified and blended whiskey firms from calling their products whiskey. Costly debates continued until 1910, when the Taft administration ruled against straight whiskey manufacturers. Irate, Wiley in later years decided that the prevalence of alternate whiskeys meant that no one should be able to drink, and he became an ardent prohibitionist. Ironically, the Eighteenth Amendment, ratified in 1919, which prohibited the production, sale, and transfer of alcoholic beverages, led to the proliferation of whiskey mixed with dangerous industrial alcohol on the black market. Between 1914 and 1929, alcohol consumption rose from 4 percent to 5 percent of gross domestic product. As the nation consumed more black-market alcohol, annual deaths due to alcohol poisoning increased, from a little over one thousand in 1920 to more than four thousand by 1925.

Wiley left the Bureau of Chemistry in 1912 to become head of the laboratories of Good Housekeeping magazine. By this time his net worth reportedly reached $300,000, which was impressive considering that he earned a government salary of $5,000 and professed in a magazine article that “I have never tried to make money. . . . No man of my age has spent as little money on himself.”In reality, Wiley had amassed a fortune by consulting for food and drug companies he regulated and owning lucrative investments in Washington, DC, and Maryland real estate. During his tenure Wiley also basked in the glory of being a prominent bureaucrat, receiving the prestigious Elliott Cresson Medal and delivering speeches at Harvard and Columbia Universities. He anonymously wrote a statement advocating that he receive the Nobel Prize in Chemistry, but alas, his bid was for naught. Good Housekeeping doubled his salary to $10,000 and allowed him to write paid articles for other magazines. Wiley earned additional income by speaking on the lecture circuit of Chautauqua, a prominent adult-education movement. In one nine-day tour of the Midwest, he collected $1,575. Wiley’s tenure at the bureau not only increased his power over what other people ate but enabled him to make significant amounts of money during and after his time in public office.

The revolving door between the Bureau of Chemistry and the businesses it regulated continued after Wiley’s departure. By the 1920s bureau scientists and inspectors routinely left government service for higher-paying jobs in trade associations and industries, where they advised businesses on how to conform to the law. Or more accurately, they continued to advise businesses: the bureau openly endorsed “cooperation rather than conflict with industry,” an “attitude of appreciation, cordial cooperation and enthusiastic assistance,” and “assist[ing] a manufacturer [with] timely suggestions to produce a legal and therefore a more profitable product.”Now, in addition to its cartelizing work, the bureau subsidized certain companies and trade associations with valuable information. For example, food companies close to the bureau offloaded research costs involved with developing new technologies for storing and transporting certain foods. Drug companies also secured research assistance from the bureau regarding the composition of their formulas and how to label products.

In 1927, Congress created the Food, Drug, and Insecticide Administration, a new agency that assumed the regulatory functions of the bureau’s work. In 1930 it shortened the name to the Food and Drug Administration (FDA). The next year, the FDA could boast a budget of $1.6 million and staff of over five hundred employees. This was twice the budget of and slightly more employees than the entire Bureau of Chemistry in 1908.

The 1920s merger movement extended to the combination of food and drug companies into larger firms. One of the most notable instances was Standard Brands, a J. P. Morgan & Co. creation consisting of the Royal Baking Powder Company and other concerns. A major reason for the trend toward larger food and drug firms was that only these companies could handle the compliance costs associated with adhering to government-dictated adulteration and sanitation standards. According to Elaine McIntosh, “Giant corporations replaced the many smaller companies who could not afford the investments necessary for the equipment and monitoring required to comply with the new ‘pure food laws.’”The laws, therefore, forced local businesses to either accept a buyout or merge with other companies.

The Pure Food and Drug Act and the establishment of the FDA reflected the general trend of corporatism developing throughout the economy. The Bureau of Chemistry did not restrict the consumption of food and drugs considered unhealthy by the standards of the day; it merely played favorites. The bureau’s actions reflected the whims of favor-seeking businesses and budget-maximizing bureaucrats who sought anticompetitive barriers and outsized influence. There were, of course, differences between the groups, and interests sometimes lobbied to defeat other groups’ proposals, but they all agreed on government regulation and enforcement. The cartelist mindset had become fully interwoven into the production and sale of the nation’s food and drugs.

Monopolizing Medical Care

In the early 1900s the American Medical Association entered the drive for pure food and drugs to reduce competition from patent medicines. It was no coincidence that the trade organization launched concurrent campaigns to hamper rival doctors and to capture research subsidies from the government. Of course, the AMA professed that its corporatist proposals, which reduced access to medical care and boosted doctor salaries, promoted the public weal. As St. Louis doctor W. G. Moore boasted, “If the American Medical Association be a trust, it . . . [is] a good trust.” A more caustic appraisal came from Chicago physician G. Frank Lydston: AMA officials were “impertinent porcine trust-monopolists who have besmirched the alma maters and discredited the diplomas of thousands of decent and capable physicians.”

The AMA had long advocated restricting the supply of doctors, including doctors practicing similar kinds of medicine at lower prices and heterodox homeopaths and eclectics. AMA doctors practiced what these competitors called allopathic medicine, which used pain-killing alcohol, morphine, cocaine, and other drugs to reduce suffering. In contrast, homeopathic doctors matched symptoms with remedies made from diluted natural substances to stimulate healing, while eclectic doctors gave patients botanical herbs to alleviate pain and improve health. Consumers judged these alternatives therapeutic, and the AMA considered this a problem. In the late nineteenth century, the trade association lobbied for medical licensing boards at the state level to curtail what the Journal of the American Medical Association called “unrestricted competition.”The AMA managed to restrict the supply of allopathic doctors but, lacking the necessary political clout, had to settle for either a single board system that included homeopaths and eclectics or a system of separate boards for those groups. Both cases allowed more competition than the AMA desired. By 1901, all states and territories except Alaska and Oklahoma had instituted licensing boards that required potential doctors to pass an examination, earn a diploma in medicine, or both.

This was not enough. The supply of physicians per one hundred thousand in population barely dropped from 171 in 1880 to 166 in 1890 before climbing to 173 in 1900. Most physicians earned a middling salary of around $1,000 a year. Continued competitive pressure occurred for two reasons. First, degreegranting medical schools, which were largely allowed to form unimpeded by regulation, multiplied from 100 in 1880 to 160 in 1901. Approximately 20 percent matriculated homeopaths and eclectics. Some of the graduates included aspiring blacks, females, and Catholic and Jewish immigrants, whom the AMA found especially undesirable. Second, competing schools of medicine continued to enter the market. Osteopaths and chiropractors began treating patient pain with adjustment of the spine and joints, a remedy Dr. Morris Fishbein, longtime editor of the Journal of the American Medical Association, castigated as a “malignant tumor” and a “cult,” one “so simple that even farm-hands can grasp it.”Optometrists, one of the “pretensions of quackery [that] deceive the very elect,” according to the president of the Ohio State Medical Association, increasingly cut into regular physicians’ eye-care revenue.

Instead of pulling up their bootstraps through greater efficiencies, doctors in the AMA decided in the beginning of the twentieth century to regroup and mount another lobbying assault for more crony impediments on their competitors. This cartelization paralleled other professions’ efforts to forcibly cut down on rivals and restrict consumer choice: the American Pharmaceutical Association lobbied for restrictive licenses to control the pharmacy profession; the American Psychological Association advocated state subsidies for mental asylums to increase the demand for mental-health professionals and restrict alternative competition; accounting organizations sought to require increased standards for certified public accountants and degree-granting universities; the American Bar Association devised state laws restricting the legal profession and injecting lawyers’ services into arbitration proceedings; the National Education Association insisted on professional training requirements for schoolteachers; and local bureaucrats overhauled school boards to kick out elected officials in favor of appointed and allegedly nonpartisan experts. “Increasingly formal entry requirements” into medicine and other professions, writes Robert Wiebe, “protected their prestige through exclusiveness.”That was exactly the point.

The AMA commenced a thorough overhaul of its operations. In 1904 the association created the Council on Medical Education, which consisted of five medical professors from major universities, to agitate for reform. This group focused on lobbying for a doctor-controlled corporatism: strengthening licensing requirements for doctors by instituting single board systems staffed entirely by allopathic physicians; requiring harder examinations for would-be doctors; and ensuring applicants came only from AMA-approved schools that stipulated tougher entrance exams, longer academic years, more training, and higher tuition fees.

The attitude was extremely elitist. The AMA considered its preferred medical practices the only legitimate ones and wanted to force consumers to purchase the costlier services of doctors who graduated from top-tier universities. In 1903 the president of the AMA sneered at those colleges where “medical education was prostituted . . . [and] enabled the clerk, the street-car conductor, the janitor and others employed during the day to obtain a medical degree.”Translation: these schools produced a lower-quality but more affordable output that a sizable portion of the public preferred. One doctor teaching at such a medical school in Tennessee eloquently protested against the epithets the AMA hurled:

True, our entrance requirements are not the same as those of the University of Pennsylvania or Harvard; nor do we pretend to turn out the same sort of finished product. Yet we prepare worthy, ambitious men who have striven hard with small opportunities and risen above their surroundings to become family doctors to the farmers of the south, and to the smaller towns of the mining districts. . . . Can the wealthy who are in a minority say to the poor majority, you shall not have a doctor?

This was in fact exactly what the AMA wanted to say to the poor majority: only the best doctors could practice, and only those who could afford their fees could have access to medical care.

The Council on Medical Education achieved remarkable success, much to the enmity of homeopaths, eclectics, osteopaths, chiropractors, and less prestigious allopaths. From 1900 to 1907, under the purported justification of improving the public’s wellbeing and the quality of health care, thirty states and territories instituted AMA-style corporatism by replacing multiple boards systems with single boards that had less representation of heterodox doctors. These cartel boards now required difficult tests in an average of nine fields and mandated that license applicants could graduate only from AMA-approved schools. Many smaller schools, facing a profit squeeze if they increased their standards for applicants, revamped curriculums, and built AMA-style laboratories, decided to close or merge with other institutions. The creation of more restrictive medical boards thus caused the number of medical colleges to decline by almost one-fifth and the number of physicians per one hundred thousand in population to fall 5 percent between 1900 and 1910.

The council was not satisfied. By 1907 it had visited every medical school in the country and concluded that only half maintained tolerable standards. The rest needed to change to meet AMA guidelines or fall by the wayside. The AMA, however, withheld the publication of the council’s restrictionist report because it feared that state legislatures, medical schools, and the public would view its proscription as blatantly self-serving. The AMA needed an equivalent report written by someone who lacked any connection with the association. For this reason, according to the chairman of the council, Dr. Arthur Bevan, the council moved to “obtain the publication and approval of our work by the Carnegie Foundation for the Advancement of Teaching [because it] would assist materially in securing the results we were attempting to bring about.”The Carnegie Foundation and similar institutions were funded with large endowments. They enabled Andrew Carnegie, John D. Rockefeller, and other elites to insulate their wealth from state and local taxes and use it to finance various causes their kin considered important. In the case of medicine, Rockefeller’s son, John D. Rockefeller Jr., used the family’s wealth to crush all forms of medical dissent. This was ironic considering that Rockefeller Sr. utilized homeopathic services.

President Henry Pritchett of the Carnegie Foundation, a former president of the Massachusetts Institute of Technology, chose Abraham Flexner to spearhead the AMA’s covert study. Flexner was a secondary school teacher who had little knowledge of medical matters. He was, however, the brother of Dr. Simon Flexner, a professor at the University of Pennsylvania turned director of the Rockefeller Institute for Medical Research. Simon supported the AMA model for education and was a protégé of Dr. William Welch. A close advisor to Rockefeller Jr., Welch served as the first dean of the Johns Hopkins University Medical School and would become president of the AMA in 1910. Welch firmly believed that science must begin and remain concentrated in the laboratory, in contrast to others, such as Johns Hopkins’s Dr. William Osler, who argued that science should proceed from the bedside of the sick patient.

Abraham Flexner agreed with his brother, Welch, Rockefeller Jr., and the AMA. He praised the heavily subsidized educational system of Germany, where many American doctors had obtained graduate degrees, because it was “on an aristocratic plane,” unlike the numerous smaller, for-profit colleges in the United States.He thought every American medical university needed to be patterned on Johns Hopkins and require full-time students to engage in extensive research in clinical facilities and laboratories. Moreover, Flexner believed there was no room for heterodox doctors or lower-quality traditional doctors. He opined that the “‘poor boy’ has no right . . . to enter upon the practice of medicine unless it is best for society that he should.” His overtly elitist attitude made no room for disadvantaged communities unable to afford top-tier medical practitioners.

The Carnegie Foundation worked very hard to cover up how the AMA dictated its report. When Flexner and Pritchett attended a Council on Medical Education meeting in late 1908, Pritchett, with astonishing transparency, stated that the report of “the foundation would be guided very largely by the Council’s investigations” but would not mention the council, so it would “have the weight of an independent report of a disinterested body.”In other words, the foundation would conceal the connection to prevent the public from realizing that the AMA was behind a report that would greatly increase its doctors’ incomes.

In 1909, much like the AMA had in previous years, Flexner began to visit the country’s medical institutions of higher learning. Some visits lasted only a couple of hours. In one three-month span Flexner inspected sixty-nine schools in twenty-two states. The pace of Flexner’s inspections did not really matter because he already had the verdict in his pocket and was simply following the council’s recommendations. As Pritchett cheerfully wrote to council chairman Bevan, “We have been hand in glove with you and your committee. . . . When our report comes out, it is going to be ammunition in your hands.” But Pritchett stressed that the relationship had to remain secret, for it was desirable “to maintain in the meantime a position which does not intimate an immediate connection between our two efforts.”

The Flexner Report of 1910 went beyond the earlier council report, recommending that only 31 of the nation’s 131 medical colleges remain open. Such draconian closures would have deprived twenty states of such institutions entirely. For his good work on behalf of the AMA, the Carnegie Foundation bumped Flexner’s salary from $3,000 to $5,000. He soon left to work at the Rockefellers’ General Education Board, an institution that quickly channeled a $1.5 million grant to the Johns Hopkins Medical School for the establishment of endowed chairs.

The homeopathic Clinical Reporter argued that unless “authority is to flow from an unlimited access to the pocketbook of a multimillionaire,” Flexner was unqualified to review the nation’s medical institutions.The Eclectic Medical Journal charged that the Rockefeller and Carnegie interests were engineering a massive restriction in the supply of doctors to benefit the AMA. Their efforts were for naught. Pritchett was right: the Flexner Report, skillfully camouflaged as a disinterested muckraking piece in the name of the public’s health, provided much “ammunition” for the AMA’s cartelization drive. By World War I single boards existed in forty-three states, with seventeen excluding alternative doctors completely. Homeopaths and eclectics suffered a sharp drop in representation. Chiropractors and osteopaths were also restricted, and where they could receive licenses, the AMA lobbied for restrictions on what services they could provide. Optometrists fared the best: they joined the medical cartel and acquired licensing laws in thirty-nine states and two territories by 1917.

The Flexner Report hastened the decline in medical colleges. The AMA became a de facto accreditation agency and exerted considerable influence over educational standards. The total number of institutions fell to eighty-five in 1920 and then to seventy-six by 1929. Homeopathic and eclectic schools, as well as those catering to black and female students, were hit the hardest. The total decline from 1901 to 1929 reached 52.5 percent, less than what Flexner had hoped but exactly in line with the AMA’s original report.

At the same time the guillotine fell on poorer schools, the nation’s elite institutions received generous endowments. From 1913 to 1919, Rockefeller Sr. transferred $183 million to the Rockefeller Foundation. In 1920, Rockefeller Jr. put Flexner in charge of $50 million of this sum to plow into Johns Hopkins, the University of Chicago, and other top universities. Crucially, Flexner envisioned this money as but a fraction of the $200 million needed to overhaul the nation’s medical education because “taxation will certainly supply the absolute essentials.”Rockefeller Jr. expected that his donations to state universities, such as the University of Iowa, would be matched by taxpayer funds. In this way, the taxpayer would subsidize the Rockefeller Foundation and the AMA’s overhaul of the nation’s medical industry.

To the delight of Welch and other academic doctors, the Rockefeller and taxpayer slush fund enabled them to spend less time teaching and practicing medicine and instead to concentrate on highly specialized and technical research. This was to the detriment of the graduate student, who was deprived of hands-on experience, and the public, which lost access to academics’ part-time medical services. Dissenting doctors such as Osler colorfully lamented the shift as creating “a set of clinical prigs, the boundary of whose horizon would be the laboratory, and whose only human interest was research.”

The tightening licensing standards and accreditation vice grip around colleges created a significant doctor shortage. The number of physicians per one hundred thousand in population decreased 24 percent, from 164 in 1910 to 125 in 1929, making the total decline since the turn of the century 28 percent. Poorer rural communities bore the brunt of the shortage. Flexner’s own study at the General Education Board showed that from 1906 to 1923, the number of people per doctor in large cities increased by 9 percent while in smaller towns it skyrocketed 54 percent. It is no wonder that Bevan found the council’s handiwork good: “We had anticipated this [decline] and felt that this was a desirable thing. We had an over-supply of poor and mediocre practitioners.”The AMA raked in the cash. Physicians’ average salaries soared from roughly $1,000 in 1900 to $6,354 in 1928, a 535 percent increase, well above other price rises.

The burgeoning cost of medical services led many to advocate for compulsory health insurance that the federal government would partially cover. Initially, in the 1910s, the AMA supported such a bill from the American Association for Labor Legislation (AALL) because it believed that the taxpayer-funded program would increase the demand for doctors and hence their salaries. After the AMA failed to persuade the AALL to guarantee doctor representation on the administrative boards overseeing payment to physicians, the organization changed its tune: in the 1920s it adamantly opposed and successfully defeated taxpayer-funded health insurance.

Far more promising for the AMA was the drive at the end of the 1920s for a National Institute of Health, something that had been advocated since the Roosevelt administration. Such a government organization could furnish civil-service jobs for the medical profession, grant subsidies for research interests, and enforce restrictive regulations to crack down on medical competition. The AMA lobbied to make sure that its doctors would control the institute and its research funds—it fought against the American Chemical Society, which preferred to funnel research assistance to drug manufacturers and related chemists. Instead, the AMA and the Rockefeller Foundation lobbied for their preferred entity, which Congress created in May 1930. The National Institute of Health was equipped with $750,000 for a building and research fellowships for the medical profession. A far cry from the $15 million appropriation the AMA envisioned, the new institute was still a step in the desired direction.

Food, drug, and medical regulation in the early twentieth century, typically advocated as promoting the nation’s health, was not above the sordid interests of the day. In each case the relevant groups lobbied for subsidies, restrictions on rivals, and the defeat of regulatory proposals that would harm them. Bureaucrats joined in, working with some of the groups to increase their own budgets, control, and influence. The end point was always the same—a cartel protected by the government, to the benefit of the cartelists and bureaucrats at the expense of the consumer and excluded firms.

Corporatism had arrived in food and medicine, just as it had in manufacturing and railroads. The major instigators of each lobbying drive were Wall Street bankers—with J. P. Morgan & Co. playing the lead. It was Wall Street, after all, that financed the large corporate and transport titans. Though New York City financial elites were not as prevalent in the food and drug industry, even here they managed to exercise influence through the Rockefeller Foundation and other organizations. Wall Street was the commodore of the corporatist ship, and its leadership role extended to the banking industry’s regulatory commission and premier money machine: the nation’s central bank.

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George A. Akerlof and Robert J. Shiller, Phishing for Phools: The Economics of Manipulation and Deception (Princeton, NJ: Princeton University Press, 2015), 84–85; and Alan L. Olmstead and Paul W. Rhode, Arresting Contagion: Science, Policy, and Conflicts over Animal Disease Control (Cambridge, MA: Harvard University Press, 2015), 172–218.

Patrick Newman, “Playing the Defense: The Beef Trust, Cronyism, and the 1891 and 1906 Meat Inspection Acts,” Independent Review 29, no. 1 (Summer 2024): 41–42.

Quoted in Mary Yeager, Competition and Regulation: The Development of Oligopoly in the Meat Packing Industry (Greenwich, CT: JAI Press, 1981), 186.

Newman, “Defense,” 41–42; Yeager, Competition, 138–45, 166.

Frank Mondell, quoted in “Congressmen Denounce the Neill Report,” National Provisioner, June 16, 1906, 16.

Florence Kelley to Friedrich Engels, November 21, 1893, quoted in Kathryn Kish Sklar, “Hull House in the 1890s: A Community of Women Reformers,” Signs 10, no. 4 (Summer 1985): 671–72.

Michael Lesy and Lisa Stoffer, Repast: Dining Out at the Dawn of the New American Century, 1900–1910 (New York: W. W. Norton, 2013), 37–40, 46–47; Newman, “Defense,” 34–36, 42–43; and Richard Sutch and Susan B. Carter, eds., Historical Statistics of the United States, vol. 5, Governance and International Relations (New York: Cambridge University Press, 2006), 551.

“Supplemental Report,” in US House of Representatives, Hearings before the Committee on Agriculture (Washington, DC: Government Printing Office, 1906), 349–50.

Joseph P. Goldberg and William T. Moye, The First Hundred Years of the Bureau of Labor Statistics (Washington, DC: Government Printing Office, 1985), 45–46; and Newman, “Defense,” 43–44.

John Braeman, “The Square Deal in Action: A Case Study in the Growth of the ‘National Police Power,’” in Change and Continuity in Twentieth-Century America, ed. John Braeman, Robert H. Bremner, and Everett Walters (Columbus: Ohio State University Press, 1964), 54.

J. Ogden Armour, The Packers, the Private Car Lines, and the People (Philadelphia: Henry Altemus, 1906), 66, 378.

“Cannon to Back Beveridge Plan,” Minneapolis Journal, May 28, 1906, 2.

Obion Dyson, “Letters,” in Hearings, 97. Lesy and Stoffer, Repast, 53–54; and Newman, “Defense,” 43–44.

Quoted in Braeman, “Square,” 61; and James W. Wadsworth to Matilda Gay, August 5, 1906, quoted in Braeman, “Square,” 61.

“Conditions in Chicago Stock Yards,” in Hearings, 30–31, 88.

“Packers Approve Meat Law,” National Provisioner, July 7, 1906, 16.

George Perkins to J. P. Morgan, June 25, 1906, 3, George W. Perkins Papers, Rare Book and Manuscript Library, Columbia University. Newman, “Defense,” 44–46.

“Meat Packers on Witness Stand,” National Provisioner, March 26, 1910, 18–19.

Journal of Commerce, quoted in “Complain of Inspection Effect,” National Provisioner, August 8, 1908, 42.

Twenty-Fourth Annual Report of the Bureau of Animal Industry, for the Year 1907 (Washington, DC: Government Printing Office, 1909), 362.

Harold van B. Cleveland and Thomas F. Huertas, Citibank, 1812–1970 (Cambridge, MA: Harvard University Press, 1985), 56, 354; Newman, “Defense,” 46–47.

Linda J. Bradley and Barbara D. Merino, “Stuart Chase: A Radical CPA and the Meat Packing Investigation, 1917–1918,” Business and Economic History 23, no. 1 (Fall 1994): 193–96; “Meat Packing Grows Up,” National Provisioner, January 26, 1952, 105–8; Thomas Lane Moore III, “The Establishment of a ‘New Freedom’ Policy: The Federal Trade Commission, 1912–1918” (PhD diss., University of Alabama, 1980), 267–68; Newman, “Defense,” 47; and Mira Wilkins, The Maturing of Multinational Enterprise: American Business Abroad from 1914 to 1970 (Cambridge, MA: Harvard University Press, 1974), 26.

Edward Arpee, Lake Forest, Illinois: History and Reminiscences, 1861–1961 (Lake Forest, IL: Rotary Club of Lake Forest, 1964), 188. Arpee, Lake, 188–90; N. S. B. Gras and Henrietta M. Larson, Casebook in American Business History (New York: Appleton Century Crofts, 1939), 635, 637–38; and Newman, “Defense,” 47.

Daniel T. Gresham, “Reshaping the U.S. Cattle Industry: Producers and Packers, 1914–1933” (PhD diss., Kansas State University, 2023), 32, 38–47; 68, 91; “Meat,” 110–12; Moore, “Establishment,” 257–81; Newman, “Defense,” 47–48; and Patrick Newman, “Personnel Is Policy: Regulatory Capture at the Federal Trade Commission, 1914–1929,” Journal of Institutional Economics 15, no. 6 (December 2019): 1047–48.

Gras and Larson, Casebook, 638–41; Thomas Ferguson, “From ‘Normalcy’ to New Deal: Industrial Structure, Party Competition, and American Public Policy in the Great Depression,” in Golden Rule: The Investment Theory of Party Competition and the Logic of Money-Driven Political Systems (Chicago: University of Chicago Press, 1995), 139; Harper Leech and John Charles Carroll, Armour and His Times (New York: D. Appleton-Century, 1938), 355–57; and Newman, “Defense,” 47–49.

Oakleigh Thorne to R. C. Pollock, December 18, 1926, quoted in Gresham, “Reshaping,” 80.

Resolutions of Grocery Trade Conference, October 1928, quoted in Carl F. Taeusch, Policy and Ethics in Business (New York: McGraw-Hill, 1931), 327.

Quoted in “Meat,” 129, 131.

Gresham, “Reshaping,” 75–82, 99–101; “Meat,” 129, 131; Butler Shaffer, In Restraint of Trade: The Business Campaign against Competition, 1918–1938 (Lewisburg, PA: Bucknell University Press, 1997), 85, 184; and Taeusch, Policy, 326–27, 364.

James Harvey Young, Pure Food: Securing the Federal Food and Drugs Act of 1906 (Princeton, NJ: Princeton University Press, 1989), 121.

National Association of State Food and Dairy Officials, Proceedings (Washington, DC, 1904), 185, quoted in Clayton A. Coppin and Jack High, The Politics of Purity: Harvey Washington Wiley and the Origins of Federal Food Policy (Ann Arbor: University of Michigan Press, 2002), 65.

American Pharmaceutical Association, Proceedings, 1893, 41 (Philadelphia, 1893), 287, quoted in James Harvey Young, The Toadstool Millionaires: A Social History of Patent Medicines in America before Federal Regulation (Princeton, NJ: Princeton University Press, 1961), 208–9.

Lorine Swainston Goodwin, The Pure Food, Drink, and Drug Crusaders, 1879–1914 (Jefferson, NC: McFarland, 1999), 89.

Benjamin R. Cohen, Pure Adulteration: Cheating on Nature in the Age of Manufactured Food (Chicago: University of Chicago Press, 2019), 147–71; Coppin and High, Politics, 22–23, 25–26, 52–54, 65–67; Ronald Hamowy, Government and Public Health in America (Cheltenham, UK: Edward Elgar, 2007), 109–11, 115–16, 126, 242; Jonathan Rees, The Chemistry of Fear: Harvey Wiley’s Fight for Pure Food (Baltimore: Johns Hopkins University Press, 2021), 43, 110, 144–46, 165–67; Daniel J. Smith and Macy Scheck, “Examining the Public Interest Rationale for Regulating Whiskey with the Pure Food and Drugs Act,” Public Choice 196, no. 1–2 (July 2023): 85–122; and Peter Temin, Taking Your Medicine: Drug Regulation in the United States (Cambridge, MA: Harvard University Press, 1980), 26, 223.

National Association of State Food and Dairy Officials, Proceedings, 104, quoted in Coppin and High, Politics, 64–65.

Coppin and High, Politics, 19–31, 66, 135; Robert J. Gordon, The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War (Princeton, NJ: Princeton University Press, 2016), 66, 71–76, 83; Hamowy, Government, 8, 105–8, 110–11, 126, 242–43; Rees, Chemistry, 89, 160; Temin, Medicine, 25–26; and Young, Food, 143.

Rees, Chemistry, 89.

Coppin and High, Politics, 55–56; Rees, Chemistry, 6–7, 76, 86–91, 94–95, 191; and Murray N. Rothbard, The Progressive Era, ed. Patrick Newman (Auburn, AL: Mises Institute, 2017), 243–46, 249.

Harvey Wiley to J. LeDow, April 20, 1892, quoted in Rees, Chemistry, 283.

Alice Lakey to Harvey Wiley, February 1909, quoted in Oscar E. Anderson Jr., The Health of a Nation: Harvey W. Wiley and the Fight for Pure Food (Chicago: University of Chicago Press, 1958), 223. Anderson, Health, 58–65, 103, 116, 155–56, 169–70, 179, 317; Coppin and High, Politics, 35–36, 52, 54, 57–58, 61–62, 75, 78–79, 85–86, 124, 162; and Rees, Chemistry, 32, 51–55, 61–62, 73, 76, 111, 144, 150, 190.

“Against Poison and Fraud,” Outlook 83, June 30, 1906, 496.

Anderson, Health, 169, 179; Coppin and High, Politics, 57, 76–78; Hamowy, Government, 124–26, 131–32, 245–46; Rees, Chemistry, 102, 105; Rothbard, Progressive, 249–50; and Young, Food, 184–86, 253–55.

Harvey Wiley, 1906, quoted in Young, Food, 271.

Frederic Linton, “Its Distinguished Administrators,” Historic Meeting 42, quoted in James Harvey Young, “Food and Drug Enforcers in the 1920s: Restraining and Educating Business,” Business and Economic History 21 (1992): 119.

Hearings before the Committee on Interstate and Foreign Commerce of the House of Representatives, 59th Congress (Washington, DC: Government Printing Office, 1906), 341–42, quoted in Coppin and High, Politics, 89–90.

Anderson, Health, 212, 237; Coppin and High, Politics, 90–93; Hamowy, Government, 133; Rees, Chemistry, 97–99; Rothbard, Progressive, 250; and Young, “Enforcers,” 120.

Harvey Wiley, “Speech in Chicago,” December 14, 1906, quoted in Anderson, Health, 200.

“Hearing on the Subject of Labeling of Corn Products,” December 5, 1907, 16, quoted in Coppin and High, Politics, 138; Washington Evening Star, March 13, 1908, 2.

Harvey W. Wiley, “Sorghum; Its Success and Value,” in Thirty-Second Annual Report of the Indiana State Board of Agriculture (Indianapolis, IN, 1883), 170.

Coppin and High, Politics, 135–36, 141–42, 144–46, 168; Hamowy, Government, 134, 140–41, 248–49; and Rees, Chemistry, 140–42, 180–82, 185–89.

Hamowy, Government, 138–39, 142–43; and Temin, Medicine, 32–34.

Anderson, Health, 208–9, 221, 228–30, 262; Coppin and High, Politics, 94, 96, 101–4, 111–19, 122–39, 161–63; Gordon, Growth, 71; Rees, Chemistry, 116–19, 146, 169; and Reid Mitenbuler, Bourbon Empire: The Past and Future of America’s Whiskey (New York: Penguin Books, 2015), 165–66, 168–69, 177.

Arthur Dunn, “Dr. Wiley and Pure Food,” pt. 2, World’s Work 23 (November 1911): 40.

Anderson, Health, 240; Hamowy, Government, 136; and Rees, Chemistry, 190–93, 199, 215–18, 226.

Walter Campbell, “A New Departure in Federal Food-Law Enforcement,” quoted in Young, “Enforcers,” 121; and Food and Drug Review (February 1927): 4–5, quoted in Young, “Enforcers,” 122.

Hamowy, Government, 146–49; Marc T. Law, “How Do Regulators Regulate? Enforcement of the Pure Food and Drugs Act, 1908–38,” Journal of Law, Economics, and Organization 22, no. 2 (October 2006): 484–86; Temin, Medicine, 35, 40; and Young, “Enforcers,” 121–25.

Elaine N. McIntosh, American Food Habits in Historical Perspective (Westport, CT: Praeger, 1995), 101.

Vincent P. Carosso, Investment Banking in America: A History (Cambridge, MA: Harvard University Press, 1970), 340; and Ron Chernow, The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance (New York: Simon and Schuster, 1990), 309.

“Address of Welcome on Behalf of the Medical Profession of St. Louis,” Journal of the American Medical Association 54, no. 24 (June 11, 1910): 1989.

“G. Frank Lydston on ‘Spinelessness,’ Etc.,” Eclectic Medical Journal 74, no. 4 (April 1914): 192. James G. Burrow, Organized Medicine in the Progressive Era: The Move toward Monopoly (Baltimore: Johns Hopkins University Press, 1977), 45; and Ronald Hamowy, “The Early Development of Medical Licensing Laws in the United States, 1875–1900,” Journal of Libertarian Studies 3, no. 1 (Spring 1979): 94.

“Competition, Supply and Demand, and Medical Education,” Journal of the American Medical Association 11, no. 1 (September 15, 1888): 382–83.

Morris Fishbein, The Medical Follies (New York: Boni and Liveright, 1925), 61.

David R. Silver, “President’s Address,” Ohio State Medical Journal 5 (June 15, 1909): 343. David E. Bernstein, Only One Place of Redress: African Americans, Labor Regulations, and the Courts from Reconstruction to the New Deal (Durham, NC: Duke University Press, 2001), 41–44; Burrow, Organized, 53–56, 58, 175, 178; Hamowy, “Development,” 79, 83–84, 102–3, 108; Hamowy, Government, 2–5, 7–9, 21, 108–9, 428–29; Gerald E. Markowitz and David Karl Rosner, “Doctors in Crisis: A Study of the Use of Medical Education Reform to Establish Modern Professional Elitism in Medicine,” American Quarterly 25, no. 1 (March 1973): 87; Richard Sutch and Susan B. Carter, eds., Historical Statistics of the United States, vol. 2, Work and Welfare (New York: Cambridge University Press, 2006), 541; and Howard Wolinsky and Tom Brune, The Serpent on the Staff: The Unhealthy Politics of the American Medical Association (New York: G. P. Putnam’s Sons, 1994), 10, 45, 69, 123–25.

Robert H. Wiebe, The Search for Order, 1877–1920 (New York: Hill and Wang, 1967), 113.

Bruce L. Benson, “How to Secede in Business without Really Leaving: Evidence of the Substitution of Arbitration for Litigation,” in Secession, State and Liberty, ed. David Gordon (New Brunswick, NJ: Transaction, 1998), 265–81; Vincent Geloso and Raymond J. March, “Rent Seeking for Madness: The Political Economy of Mental Asylums in the United States, 1870–1910,” Public Choice 189, no. 3–4 (December 2021); Hamowy, Government, 429; Patrick Newman, “Taking Government Out of Politics: Murray Rothbard on Political and Local Reform during the Progressive Era,” Quarterly Journal of Austrian Economics 22, no. 1 (Spring 2019): 161–62; Gary John Previts and Barbara Dubvis Merino, A History of Accountancy in the United States: The Cultural Significance of Accounting (Columbus: Ohio State University Press, 1998), 188–96, 242, 257–59, 442; Temin, Medicine, 22; and Wiebe, Search, 113–21.

Burrow, Organized, 32–35, 58; Markowitz and Rosner, “Doctors,” 93, 95–97; and Paul Starr, The Social Transformation of American Medicine, 2nd ed. (New York: Basic Books, 2017), 117–19.

Frank Billings, “Medical Education in the United States,” Science 17, no. 457 (May 15, 1903): 763.

Quoted in Starr, Social, 125.

Burrow, Organized, 32–35, 37–42, 58–70, 84; Markowitz and Rosner, “Doctors,” 93, 95–97; Starr, Social, 117–19; and Sutch and Carter, Historical, 2:541.

Arthur Dean Bevan, “Cooperation in Medical Education and Medical Service,” Journal of the American Medical Association 90, no. 15 (April 14, 1928): 1175.

Thomas Neville Bonner, Iconoclast: Abraham Flexner and a Life in Learning (Baltimore: Johns Hopkins University Press, 2002), 73–74; Burrow, Organized, 34–37, 42; Peter Collier and David Horowitz, The Rockefellers: An American Dynasty (New York: New American Library, 1977), 60–61, 97–98; Reuben A. Kessel, “The A.M.A. and the Supply of Physicians,” Law and Contemporary Problems 35 (Spring 1970): 269; Reuben A. Kessel, “Price Discrimination in Medicine,” Journal of Law and Economics 1 (October 1958): 27; and Ferdinand Lundberg, America’s Sixty Families (New York: Halcyon House, 1939), 346–56.

Abraham Flexner, “Aristocratic and Democratic Education,” Atlantic Monthly (December 1911), 388.

Abraham Flexner, Medical Education in the United States and Canada: A Report to the Carnegie Foundation for the Advancement of Teaching (Boston: D. B. Updike, Merrymount Press, 1910), 42–43.

“Council on Medical Education, AMA Minutes of Meeting, December 28, 1908,” quoted in Howard Berliner, “New Light on the Flexner Report: Notes on the AMA-Carnegie Foundation Background,” Bulletin of the History of Medicine 51, no. 4 (Winter 1977): 606.

Henry Pritchett to Arthur Bevan, November 4, 1909, quoted in E. Richard Brown, Rockefeller Medicine Men: Medicine and Capitalism in America (Los Angeles: University of California Press, 1979), 152.

Bonner, Flexner, 78, 113–14, 318; Brown, Rockefeller, 53, 103–8, 152; Burrow, Organized, 42–44, 47–48, 183; Ron Chernow, Titan: The Life of John D. Rockefeller, Sr. (New York: Vintage Books, 1998), 473; Raymond B. Fosdick, John D. Rockefeller, Jr.: A Portrait (New York: Harper and Brothers, 1956), 112–15, 122–24; Hamowy, “Development,” 94; Hamowy, Government, 5–6, 355–56; Starr, Social, 115, 118–19, 121–23; Sutch and Carter, Historical, 2:541; A. I. Tauber, “The Two Faces of Medical Education: Flexner and Osler Revisited,” Journal of the Royal Society of Medicine 85 (October 1992): 599–601; and Martin Wooster, Great Philanthropic Mistakes, 2nd ed. (New York: Hudson Institute, 2010), 3, 6–9, 12–13.

Unidentified issue of the Clinical Reporter, quoted in “Bulletin No. IV!” National Eclectic Medical Association Quarterly 2, no. 1 (September 1910): 62.

Bernstein, Redress, 43–44; Burrow, Organized, 44, 59–61, 78–81, 87, 162; Hamowy, “Development,” 119; Hamowy, Government, 61; Starr, Social, 120–21; and Sutch and Carter, Historical, 2:541–42.

Abraham Flexner to John D. Rockefeller Jr., “Confidential: Memorandum Regarding Mr. Rockefeller’s Gift to Be Devoted to the Improvement of Medical Education in the United States,” December 1919, quoted in Wooster, Philanthropic, 16.

William Osler to Ira Remsen, September 1, 1911, quoted in “Sir William Osler: On Full-time Clinical Teaching in Medical Schools,” Canadian Medical Association Journal 87 (October 6, 1962): 763.

Bevan, “Cooperation,” 1176.

Brown, Rockefeller, 142, 165, 176–87; Chernow, Titan, 566; Starr, Social, 125–26; Sutch and Carter, Historical, 2:541–42; Wolinsky and Brune, Serpent, 45; and Wooster, Philanthropic, 10–17, 20–30.

Hamowy, Government, 445–49, 490; and Wolinsky and Brune, Serpent, 18–19, 47.

Hamowy, Government, 343–46, 355–65; and Victoria A. Harden, Inventing the NIH: Federal Biomedical Research Policy, 1887–1937 (Baltimore: Johns Hopkins University Press, 1986), 81–82, 117, 125, 152.