Stafford v. Wallace

In the early 1900s, the stockyards of Chicago, along with the steel mills of Pittsburgh and the financial markets of New York City, seemed to be a symbol of American economic power. Not surprisingly, perhaps, writer Upton Sinclair had set his controversial novel The Jungle (1906), which exposed corruption and brutality in business, in the stockyards of Chicago. Through the facilities of companies such as the Union Stockyards & Transit Company, which was incorporated under Illinois law in 1865, passed some 15 million cattle, calves, hogs, and sheep in 1920. This made the stockyards of Chicago the largest in the world. And as the Supreme Court was to discover, some five companies held virtual control over the operations of the Union and other stockyards in the great Chicago livestock center.

When Stafford v. Wallace went before the Supreme Court, Chief Justice Taft went to great lengths in order to establish the extent to which the Chicago stockyards constituted a single point, by no means a terminal one, along a vast stream of interstate commerce. From their point of origin in diverse livestock-raising locales, cattle from Wyoming, sheep from Montana, and hogs from Kansas (to use a few likely examples) would be shipped by farmers to a commission merchant at the Chicago stockyards, with whom the farmer had an agreement to sell the livestock on consignment. Thus the commission merchant did not pay for the livestock; he simply arranged their sale and would take a portion of the profits. Upon receiving the live animals, he would have them driven from the cars to assigned pens, where they would be watered and fed.

In the bill submitted by Stafford's lawyer, E. Godman, to the Supreme Court in Stafford v. Wallace, the petitioner would attempt to establish that this constituted the completion of the transportation of the livestock. Through Godman, Stafford would further assert that livestock consigned to commission merchants were sold by them for a commission, and not "on their own account" as owners; that sales took place only at the stockyard and nowhere else; that such commissions were fixed at a certain price per head; and that the commission merchants simply passed the payment along to the original owners and shippers, minus their own commissions and other expenses. Stafford's counsel presented a number of other claims, all of them intending to show that shipment through the stockyards did not constitute a continuous flow of commercial activity, but rather that there was a series of transactions starting and stopping, from farmer to shipper to commission broker to dealer to purchaser. The purpose of all of this was to establish that the traffic in livestock at the yards constituted a sort of closed circuit, and not a mere series of points on a long line.

Naturally, this was not a question of purely academic concern. If Stafford's counsel could show that the activities of the stockyards were not part of interstate commerce, but were purely intrastate in nature, it would place those activities beyond the purview of Congress and its Packers and Stockyards Act of 1921. If, on the other hand, the stockyards fell under the authority of the legislative branch, the latter could enforce antitrust laws. For some two decades prior to the 1922 case, as Justice Taft stated in his opinion for the majority, the meat-packing industry had been dominated by five companies: Swift, Armour, Cudahy, Wilson, and Morris. These "Big Five," it appeared to the federal government, were engaged in a conspiracy to control the costs of livestock, and in 1903, the government had filed a bill in equity to force them to desist from the alleged conspiracy.