Market Prorates as Restrictions on Internal Trade

Abstract

My subject involves the view that prorate laws, namely, laws which permit allocation of the available markets to the members of a producer group, are which are likely to have effects other than those more obvious effects for which they are imposed. I am thinking not only of the type of law represented by the California Prorate Act, but of the proration features of the United States Marketing Agreements Act of 1937 as well. I am not aware that other states than California have as yet enacted such legislation, but if one law succeeds, others will come. The term trade barriers probably brings to the minds of most Americans some such older as quarantines or tariffs. Quarantines have long been used for such laudable purposes as that of preventing the spread of insect pests or diseases. They have doubtless been retained in some cases after the danger was past, to afford protection against outside supplies. At any rate, producers have commonly realized that such quarantines were offering such economic protection when in force. Tariffs have become familiar after a century of discussion, first as developers of infant industries, later as alleged protectors of the American standard of living for labor employed by established industries, etc. Almost always such discussion has involved the thought of protecting us against them. In the case of prorate schemes, the aim is to protect us in a particular producer group against ourselves; that is, to promote action by ourselves similar to that which we would take if we were I. Obviously, that would make us a monopolist. The use of any monopoly power by a group of competitors in a given area is quite certain to lead to adjustments between regions. The older protectionist schemes were designed to keep goods out of the protector's market lying within their own borders. The newer forms under the various surplus control schemes seek to apply the same sort of protection to the individuals in the producing group as regards their own markets, either within their own borders, or outside. Thus, the California lemon growers have long been interested in tariff laws designed to protect their domestic market