The Big Meat: The Beef Trust, Regulatory Capture, and Government Intervention

Abstract

“Laws, like sausages, cease to inspire respect in proportion as we know how they are made.” -John Godfrey Saxe, 1869 (Shapiro 2008) Abstract: This paper analyzes the relationship between government intervention and the Chicago Beef Trust in the late 19th and early 20th century up to the historically significant 1906 Meat Inspection Act. It argues that in order to understand the process behind the 1906 act one must also understand the motivations behind prior meatpacking regulations. The large Chicago meatpacking firms, innovators in meat safety and quality, were one of many special interest groups involved in the legislative arena and consequently lobbied against damaging legislation and supported the passage of laws they could benefit from. With regards to the 1906 inspection act the packers successfully blocked hostile legislation and instead secured an increase in government subsidized inspection and an extension of regulatory compliance to smaller competitors. This regulatory capture resulted in industry consolidation and higher prices at the expense of smaller competitors and consumers. Government meat regulation was not the result of one monolithic special interest but instead due to the complex interaction between rival and antagonistic groups.