Chapter 6
Granger Laws Their Significance

"The created is never greater than the creator." -Grange slogan

So profound an impact have the "Granger Laws" had on modifying and improving-the American service capitalistic system that every law student since 1873 has been required to learn. how they came about, and their significance in building protection, and in requiring fair treatment, for every citizen from public utilities; thus helping to make the United States the world power it is today.

As an important feature of the Grange Centennial observance, students in U.S. accredited law schools were invited in 1965 to compete in a national contest by analyzing and writing about "The Impact of the Grange on Social Legislation," with particular reference to the Granger Laws.

In the announcement of this timely contest to spotlight, nearly 100 years later, this far-reaching accomplishment of the Grange, it was explained that:

The fundamental concept in government-business relations in our nation flows from Granger Laws. Under them, monopolistic tendencies of capitalistic business have been controlled by regulatory laws so as to preserve the benefits of competitive enterprise, the ingenuity of man and human dignity, and still have the benefits of large-scale production from the incentive of free men.
During the same approximate period of time that America has become the production marvel of the world, much of the world, because of the frustrations engendered by monopolistic -practices of cartels and predatory trusts, has been encouraged to take the road to state capitalism as part of dictatorial, materialistic communism.

The National Grange, as part of its 100th anniversary in 1967, feels obligated to encourage the present-day law student to become familiar with the origin and history of these Granger Laws, the first of which were declared constitutional in 1876 (in Munn vs. Illinois). Subsequent decisions have permitted a greatly expanded scope of regulation to preserve private ownership and protect it against monopoly or state socialism. The impact and significance of this social legislation is the theme of the contest.

How the Granger Movement Started

In 1873, when the first regular delegate session of the National Grange held in Georgetown, Washington, D. C., brought together representatives of 11 states, the most important question demanding attention was that of monopolies, chiefly in transportation.

Today's citizens, conscious of the established powers of the Interstate Commerce Commission to regulate rates, determine rules and procedures for interstate shipments by rail or truck, and require adherence to performance and safety standards, can hardly realize the situation in the 1860's.

In his classic book, The Granger Movement, Solon Justice Buck traced the fundamental conditions that brought about the early growth of the Grange, and the Granger Movement which has been such an important factor in America's progress.

In carefully researched terms with many citations of origin, Prof. Buck sets the stage:

Previous to about 1870 there was little thought of public control of railways: they were looked upon as blessings to the country, the extension of which should be encouraged, rather than checked by subjecting them to interference. It was generally supposed that competition would prove an efficient regulator, and so the demand was for more railroads and hence more competition rather than for governmental regulation.

During the period of railway expansion that followed the war, however, it began to be evident that competition was not going to curb the power of the railroad corporations because of the ease with which consolidations were effected.

Agreements between the various trunk lines for the maintenance of rates, made necessary by the ruinous rate wars, were also frequent during this period, and nothing could serve better to arouse the anger of the, farmers and rural politicians than the thought of two or three railroad magnates meeting together and agreeing to maintain a certain rate or, as they put it, to impose an additional tax on the products of. agricultural labor ....

There were many things in the management of railroads in the early seventies which tended to arouse antagonism on the part not only of the farmers but of the public in general .

. . . they denied the right of the public, the states, or the nation to regulate or in any way interfere with their operations. There seems to have been, also, a general disregard of the convenience of customers on the part of railway officials and employees. Travelers and shippers are said to have been subjected to all sorts of discourtesies and even injuries and any attempt to secure justice was apt to result in persecutions by the powerful corporation .

. . . Complaint was also made of the influence which was exercised by the railroad corporations over legislators and public officials. The most prevalent form of this influence was the free pass system . . .
It was in the shape of rates or tariffs, however, that the railroad problem was most closely brought home to the farmer. The charges preferred were that railroad rates in general were too high and that gross discrimination was practiced in fixing them. When the Iowa farmer was burning corn for fuel, because at fifteen cents a bushel it was cheaper than coal, while at the same time it was selling for a dollar in the East, he felt that there was something wrong and quite naturally accused the railroads of extortion . . . .

It is quite evident then that the farmers had a number of real grievances against the railroads, although they did not always clearly understand the situation or realize just where the trouble lay.
It was in the four northwestern states of Illinois, Minnesota, Iowa, and Wisconsin that the most important railroad restrictive laws were enacted; and in these states arose the principal cases leading to important judicial decisions. Here, too, were the states with the strongest Grange influence, which was the principal force back of the movement for railroad regulation.

However, Grange influence and demand for restrictive legislation was not confined to these states. In almost every state there arose demand for regulation, with the Patrons of Husbandry in the forefront of the agitation.
Buck credits the Grange in his summary in these words: ". . . It is not too much to say that the fundamental principles upon which American regulation of railroads by legislation has developed were first worked out in the Granger states of the Northwest during the decade of the seventies."

The Granger Laws and the Supreme Court

Perhaps the most important results of the state-by-state Grange fight for railroad legislation was the action of the United States Supreme Court in handing down decisions in seven Granger cases in November, 1876. These decisions established the fundamental principle that the state has the right to regulate monopolies.

Vital Principle Established by Grange Fight

The distinctive slogan of Grange origin in the great fight was "the created is never greater than the creator."

Using this slogan as the basic argument for the regulatory legislation, the favorable court decisions established the fundamental principle that the state which permitted the monopoly retained unto itself the right to regulate and control that monopoly.

Federal Legislation Follows Same Principle

When it became apparent that individual state legislation could not solve the problems created by the situation in transportation, the principle previously upheld in the state courts was applied on the national level in the passage in 1887 of the Interstate Commerce Act. Later legislation applied this principle of monopoly control to all public utilities, as well as franchised operations permitted under federal law.

The problem of the development of monopolies and cartels in the rest of the economy was confronted by passage of the Sherman Antitrust Act in 1890. Instead of regulating their action and rates as had been done with the railroads and public utilities, it provided that the self-regulating features of the competitive market should be preserved by the prevention of monopolies and other practices which operated to restrain trade or destroy competition.

The adoption of these two laws which were the heart of the Granger legislation became one of the landmarks of economic history. The modified capitalistic system which developed in the United States under the guidelines of these progressive laws avoided the errors which had developed in Eastern European capitalism, which made their system vulnerable to socialism.

Thus, the regulation of monopolies and the preservation of the competitive system in the U.S. has resulted in the greatest economic development, the widest ownership of production, the most liberal distribution of profits, and the highest standard of living of any major country of the world. Without the Granger Laws this would not have been possible, and indeed, the U.S. might well be a socialistic nation today.

Since these historic beginnings, the same principles have been applied to communications, air transportation, and the regulation of commodity and stock exchanges.

The Grange still considers the Government a partner in the preservation of a competitive market where possible, and in the operation of a regulated market where necessary. This concept of the relationship of Government to the economic life of our country was restated by the National Grange in 1942 when it established as a part of its policies three guideposts for the solution of present-day economic problems. One was:

"The prime purpose of government is to protect its citizens from aggression both physical and economic."

The Granger Movement is not dead. It is still at the center of our economic life. Its contribution is immeasurable; its future is as certain as the democracy of which it is so much a part.