Prohibition’s Sponsor Authored Legislation Vital to Farm Co-ops
(Editor’s note: This two-part report explores the life of a lawmaker and an act he authored that remains the most important single-piece of legislation affecting U.S. farmer cooperatives.)
Save for two legislative battles in his life, a 10-term Minnesota congressman probably would be forgotten by almost everyone.
The cruel irony is the man is remembered by most people as the butt of comments ridiculing and scorning him for his role in one of those events and scarcely remembered at all for his involvement in the second, which he personally considered much more significant.
The man was Andrew J. Volstead whose name is attached both to Prohibition – the so-called "noble experiment that failed" – and to this nation’s agricultural cooperative movement.
A search of Internet references and libraries reveals little about this public servant from Western Minnesota. Details that can be found list only a few basic biographical facts and mention his authorship of the Prohibition Act, a measure written to implement and enforce the 18th Amendment to the U.S. Constitution. One reference noted Volstead "also wrote" the Capper-Volstead Act of 1922.
Volstead undoubtedly would take exception to his involvement in writing the cooperative legislation being described as an "also" or not being listed at all. For as he once wrote, "While the Prohibition Act has made my name known pretty much everywhere, I believe that this law (the Capper-Volstead Act) is no less deserving of notice."
Indeed, the Capper-Volstead Act often is referred to as the Magna Charta of farmer cooperatives.
A native of Minnesota, one of several Midwestern states where the cooperative movement first flourished, Volstead fully realized the impact of the co-op legislation and considered it the most important achievement of his 20 years in Congress.
"The cooperative marketing law will do more good than any other law you can name because it will make it possible for the farmers to sell their products on an equal footing with the businessman," Volstead wrote. "If the farmers are going to be successful, it is my judgment that they must become successful in that way."
The fact there is little recorded about Volstead is perhaps due in large part to the furor and controversy raised by Prohibition. Faced with threats, criticism and general disdain from the news media and other segments of the population due to his authorship of that act, he sought to retreat from the limelight. He rarely was available for interviews and he rejected opportunities to write and lecture. He also refused to write an autobiography.
Born to Norwegian immigrant parents near Kenyon in Southern Minnesota, Volstead attended St. Olaf’s College in Northfield, Minnesota, and graduated from Decorah Institute in Iowa in 1881. He then began studying law and was admitted to the bar in 1883.
In 1886, he moved to Granite Falls, Minnesota, where he made his home for the rest of his life. It was in this Western Minnesota community his career as a public servant began.
He ran for the office of attorney of Yellow Medicine County, defeating a long-time incumbent by waging a vigorous campaign for an office that heretofore had not been hotly contested. He also served as Granite Falls’ city attorney and mayor.
Elected to Congress as a Republican in 1902, he served in the House until defeated for re-election in 1922 in a district hard hit by the agricultural depression that began soon after World War I.
During his congressional career, he gained the respect of his colleagues as a hardworking public servant with a fine legal mind. As a member of the House Judiciary Committee, he demonstrated an ability to write sound legislation and move bills successfully through the legislative process. He ultimately became chairman of that body and in that capacity wrote both the Prohibition enforcement bill and the agricultural cooperatives act.
After his defeat in 1922, he returned to Minnesota where he served as legal adviser to the Northwest Prohibition Enforcement Agency. When Prohibition was repealed in 1933, he returned to Granite Falls where he spent the rest of his life.
Although Volstead owned three farms during his lifetime and was a member of a co-op elevator, he did not farm actively. But there can be no doubt he sympathized with the farmer’s cause and firmly believed in the cooperative philosophy.
Volstead was married to Helen (Nellie) Mary Osler Gilruth in 1894 and they had one child, Laura Ellen. He died early in 1947 at the age of 86, probably saddened by the fact he was remembered more for his involvement in the Prohibition Act than for his efforts on behalf of co-ops.
Volstead: The Act
More than 86 years after it became law, the Capper-Volstead Act of 1922 remains a cornerstone of the foundation on which most of today’s agricultural cooperatives are based.
However, what the historic legislation does and does not do may not be generally understood. The passage of time also has clouded the conditions that led to the bill’s approval.
For example, Capper-Volstead was not a measure that legalized cooperatives. Co-ops existed long before that legislation became law. Neither was the act designed to exempt cooperatives from all provisions of federal anti-trust laws. Legal decisions since Capper-Volstead became law emphasize that point.
A review of developments involving co-ops prior to 1922 provides the best starting point for an understanding of what Capper-Volstead is and what it does and doesn’t do.
Known in Europe for many years, co-ops sprang up in this nation as early as 1810. Agricultural cooperation grew over the years as economic conditions brought more and more farmers together in efforts to improve their economic position.
At the same time, American business corporations were growing rapidly and wielding greater economic power. To prevent big business from abusing its power through monopolies and other restraints of trade, Congress in 1890 passed the Sherman Antitrust Act, a measure most farmers firmly supported.
But one of the Sherman Act’s results was to put farmer cooperatives on shaky legal ground. A number of court rulings were handed down against co-ops in cases brought under both the Sherman Act and similar states statutes. The basis of those decisions was farmers, as independent businessmen, were not entitled to join together to bargain for price and other terms of sale, just as railroads were not able to conspire to set freight rates jointly.
The Clayton Act of 1914 attempted to address the Sherman Act’s problem areas but technical legal issues remained, leaving co-ops in limbo.
The end of World War I plunged U.S. agriculture into a depression 10 years before the stock market crash of 1929. However, not everyone agreed on how to address the farmer’s plight.
Sen. Arthur Capper, a Kansas Republican, stepped forward to offer a bill designed to clarify issues still remaining after the Clayton Act’s approval. But Volstead and others faulted this legislation, known as the Capper-Hersman Bill, from a number of standpoints.
Volstead then devoted months to studying and redrafting the proposal and, with Sen. Capper again signing on as a chief sponsor, introduced a revised bill in 1920.
The battle for passage would take almost two years. Among other things, Volstead was fighting not only urban legislators but many of the top leaders of his own party. In the Senate, Capper, who was not an attorney, turned over the handling of the legislation to Sen. Frank Kellogg, another Minnesota Republican and an eminent lawyer.
Finally approved in both the House and Senate, the bill was signed into law by President Warren Harding early in 1922.
The key section of the Act declares:
"Persons engaged in the production of agricultural products…may act together in associations, corporate or otherwise, with or without capital stock, in collectively processing, preparing for market, handling and marketing in interstate and foreign commerce, such products of persons so engaged. Such associations may have marketing agencies in common; and such associations may make necessary contracts and agreements to effect such purposes."
To guard against inappropriate use of the legislation’s provisions, the Act also directs the Secretary of Agriculture to begin proceedings leading to a cease-and-desist order against any association found to be improperly monopolizing or acting in restraint of trade. So while cooperatives do have a limited antitrust exemption, the Act’s wording states that the freedom is not absolute. Rulings in various court cases over the years have confirmed that fact.
Even now, more than 66 years after Capper-Volstead’s approval, questions remain on what cooperatives legally can and cannot do.
In addition, lawmakers in a number of states have approved or are considering legislation redefining what a cooperative is. Although one of the main purposes of this new legal trend is to provide greater flexibility in the type of business structure co-ops may use, another likely result will be additional questions courts ultimately will be asked to address.