milk for the nation was endangered. As a result of these prevailing conditions, affirmative action by the Federal Government was proposed. The culmination of these activities was the inclusion of the dairy sections in the Agricultural Adjustment Act of 1933,5 in an effort to stabilize prices by adjusting the situation between producers and distributors.

In the beginning, considerable judicial opposition handicapped the control of the milk business under the Agricultural Adjustment Act of 1933. In instances where milk had been brought across a State line and sold in a State other than the State of origin, the lower Federal courts almost uniformly held that, under the commerce clause of the Federal Constitution, Congress did not have the power to regulate the purchase price of milk at the point of production.

6

In cases where the production and sale of milk had been wholly intrastate, a license issued under the authority of the Agricultural Adjustment Act by the Secretary of Agriculture was held to be unconstitutional and void, even though such intrastate transaction affected the interstate marketing of milk.'

'Hearings before the Temporary National Economic Committee, pt. 7, May 1939, pp. 2755, 2757. See REPORT of Federal Trade Commission on the Sale and Distribution of MILK, vol. 10, 1935, vol. 7, 1936; vol. 19, 1937.

548 Stat. 34, sec. 8, (3). The Agricultural Adjustment Act empowered the Secretary of Agriculture to enter into marketing agreements and to issue licenses "to processors, associations of producers, and others engaged in the handling, in the current of interstate and foreign commerce, of any agricultural commodity or product thereof," as may be necessary to eliminate unfair trade practices and to effect the restoration of previous price levels by the control of production.

(a) U. S. v. Seven Oaks Dairy Co., 10 Fed. Supp. 995 (D. C. Mass. 1935); Columbus Milk Producers Association v. Wallace, 8 Fed. Supp. 1014 (N. D. Ill. 1934), appeal dismissed in Wallace v. Columbus Milk Producers Co-op Association, 79 Fed. (2d) 1020 (C. C. A. 7th, 1935); Edgewater Dairy Co. v. Wallace, 7 Fed. Supp. 121 (N. D. Ill. 1934), appeal dismissed in Wallace v. Edgewater Dairy Co., 75 Fed. (2d) 1022 (C. C. A. 7th, 1935). In U. S. v. Seven Oaks Dairy Co. the court held that licenses imposed upon milk distributors buying all their milk in Vermont for resale in Massachusetts were invalid as an attempt to regulate production. The court held that production of milk is a business that bears no substantial relation to interstate commerce and that power to regulate it resides in the State and not within the powers of Congress.

(b) Contra: U. S. v. Shissler, 7 Fed. Supp. 123 (N. D. Ill. 1935), aff'd in 76 Fed. (2d) 1017 (1935). The court in this case sustained the requirements for licenses issued under the Agricultural Adjustment Act by granting a temporary injunction restraining milk dealers, buying 40 percent of their milk in Wisconsin for resale in Illinois, from continuing their business after failure to comply with regulations as to price imposed by Secretary of Agriculture. The court stated that intrastate and interstate transactions in fluid milk in the Chicago area were so inextricably intermingled that interstate commerce could not be effectively regulated without regulating that portion which was intrastate.

United States v. Neuendorf, 8 Fed. Supp. 403 (S. D. Iowa 1934); Douglas v. Wallace, 8 Fed. Supp. 379 (W. D. Okla. 1934); Hill v. Darger, 8 Fed. Supp. 189 (S. D. Cal. 1934); aff'd in 76 Fed. (2d) 198 (C. C. A. 9th, 1935); Royal Farms Dairy, Inc. v. Wallace, 8 Fed. Supp. 975 (D. C. Md. 1934); Berdie v. Kurtz, 75 Fed. (2d) 898 (C. C. A. 9th, 1935); Edgewater Dairy Co. v. Wallace, 7 Fed. Supp. 121 (N. D. III. 1934), appeal dismissed in Wallace v. Edgewater Dairy Co., 75 Fed. (2d) 1022 (C. C. A. 7th, 1935).

The 1935 amendments to the Agricultural Adjustment Act substituted "orders" by the Secretary of Agriculture for the original licensing provisions and also provided that the orders promulgated under the act should regulate the handling of such agricultural commodities. or products as were in the current of interstate or foreign commerce where the handling "directly burdened, obstructed, or affected interstate or foreign commerce in such commodity or product." By its terms, the section contained in the previous act applied only to those persons "engaged in the handling in interstate or foreign commerce.' The Circuit Court of Appeals in U. S. v. David Buttrick Co. sustained the constitutionality of the issuance of these "orders" by the Secretary of Agriculture, regulating the marketing of milk. The court held that notwithstanding the decision in U. S. v. Butler 10 holding the Agricultural Adjustment Act, as amended in 1935, unconstitutional, the marketing agreements and "orders" provisions were not intended to, and did not, affect a regulation and control of agricultural production, and as long as the "orders" promulgated merely sought to regulate the purchase, distribution, and sale of milk in the current of interstate commerce, they were valid and a constitutional exercise of congressional power." Successful regulation of the prices and marketing of milk by the Federal Government could only have been accomplished had it been possible for the Secretary of Agriculture to issue orders that would affect marketing of intrastate as well as interstate milk. In the field of transportation it was held 12 that the Federal Government may regulate transactions, otherwise within the sphere of State control, when such regulation is necessary to render effective the exercise of the interstate commerce power and prevent discrimination against interstate commerce.

A denial of Federal control over the marketing of milk within the producing State permits the intrastate producer to undersell competing products which come in from other States and sell at a price previously determined by a Federal marketing order. Since such discrimination seriously impedes any national program for the stabilization of prices in the milk industry, the court in U. S. v. Andrews 13 sustained an "order" as applied to distributors engaged in an intrastate business, although in emergencies the distributors augmented

8 48 Stat. 34, sec. 8, as amended, 49 Stat. 753, sec. 8c (1) (2), 7 U. S. C. 608c. 991 Fed. (2d) 66 (C. C. A. 1st, 1937), rev'g 15 Fed. Supp. 655 (D. C. Mass. 1936).

10 297 U. S. 1, 56 Sup. Ct. 312, 80 L. Ed. 477 (1936).

11

12

See also U. S. v. Andrews, 26 Fed. Supp. 123 (D. C. Mass, 1939).

Houston East and West Texas Ry. Co. v. U. S., 234 U. S. 342, 34 Sup. Ct. 833, 58 L. Ed. 1341 (1914).

18 See note 11, supra.

14

their supplies by purchasing from others engaged in an interstate business. The court distinguished U. S. v. Seven Oaks Dairy Co.,14 by pointing out that the act before the court in the Seven Oaks case applied by its terms only to persons handling agricultural commodities or products in the current of interstate or foreign commerce, while the act before the court in the Andrews case applied not only to products handled in foreign or interstate commerce, but also broadened the scope of the act to include the handling of such commodities which directly burdened or obstructed interstate or foreign commerce. The first case to reach the Supreme Court involving the question whether the power of the Federal Government extended to the regulation of intrastate handling of milk was U. S. v. Rock Royal Cooperative.15 In this case, the Secretary of Agriculture found that two-thirds of the milk consumed in New York City and its environs is brought in from other States, and that the other third produced in New York State becomes commingled with the "interstate" milk so that all is handled either in the current of interstate commerce or so as to affect interstate commerce. A mandatory injunction was sought to secure obedience to an order fixing minimum prices and establishing an equalization pool. The court sustained the order affecting the persons engaged in intrastate as well as interstate business by saying that "where local milk and foreign milk alike are drawn into a general plan for protecting the interstate commerce in the commodity from the interferences, burdens and obstructions arising from excessive surplus and the social and sanitary evils of low values, the power of Congress also extends to the local sales." 16

The result of these decisions was to uphold the Agricultural Adjustment Act's extension of Federal authority to cover the sale and marketing of intrastate milk where it is evident that adequate regulation of interstate commerce cannot be maintained without regulating intrastate transactions of like character. By opening the way to effective Federal control in the stabilization of prices in the milk industry, the Supreme Court removed the restrictive effect of the early lower Federal court decisions.18

14 See note 6 (a) supra.

15 307 U. S. 533, 59 Sup. Ct. 993, 83 L. Ed. 1446 (1939).

10 Id. at 569. Accord: H. P. Hood v. U. S. and Whiting Milk Co. v. U. S., 307 U. S. 588, 59 Sup. Ct. 1019, 83 L. Ed. 1478 (1939), where the court in dismissing the constitutional attack on the power of Congress to regulate the intrastate marketing and sale of milk when such regulation is necessary for the effective control of interstate prices, said that there is nothing to be added to the statement of the constitutionality of the act in U. S. v. Rock Royal Co-operative.

17 748 Stat. 753 (8c) (1935), as amended, 50 Stat. 746 (1937) (7 U. S. C. 608c). 18 See notes 6 and 7, supra.

E

GENERAL CHARACTER OF STATE LEGISLATION

ARLY State statutes relating to the milk industry were enacted primarily for the purpose of insuring a pure and wholesome supply of milk.19 This legislation was the "consumer" type as distinguished from the "industrial" type of control statutes enacted in recent years. It was not until the depression had had its effect on the milk industry that the need for regulation of the distributive processes became apparent. The first legislative attempt 20 to control the economic forces bearing upon the industry was the New York Milk Control Law passed in 1933, effective April 10, 1933.21 Many State legislatures followed New York and Wisconsin, and at the present time 21 States have some form of milk control legislation.22 Nineteen States have adopted laws generally similar in type and character to the New York act. The California and Louisiana acts are different.

19

A spread of typhoid epidemics throughout the country in the early 1900's gave rise to many health studies which revealed that these epidemics were traceable to bad milk or bad water. This resulted in Nation-wide legislation to purify water and milk. Hearing before the Temporary National Economic Committee, pt. 7, pp. 2760 to 2761 (1939).

20

Technically Wisconsin was the first State to have milk control legislation as the Wisconsin statute (L. 1933, c. 64) became effective April 6, 1933, while the New York act did not go into effect until April 10, 1933. However, the New York statute was more detailed, and was used as a model by other States. "L. 1933, c. 158, art. 25. The statute was an emergency measure to terminate March 31, 1934, enacted as a result of a long and exhaustive investigation conducted by a joint legislative committee, and pursuant to the recommendations included in the report of that committee. (See Report by the Joint Legislative Committee to Investigate the Milk Industry, known as the "Pitcher Report"-New York Legislature Documents 1933, Vol. 21, No. 114). The milk control law was designed and enacted as a method of correcting the economic maladjustments which the "Pitcher Report" showed could not be corrected by the interplay of the normal forces of supply and demand. The act was extended and revised by L. 1934, c. 126, secs. 1, 2 in effect April 1, 1934. This law differed from the act of 1933 and similar laws of other States in that it was divided into separate articles, both of which constituted a part of the agriculture and markets law of the State of New York.

Article 21 was enacted as permanent legislation and provided for an administrative agency empowered to supervise and regulate the entire milk industry of New York, including power to investigate all matters relating to the sale and distribution of milk. Other provisions provided for the enforcement of the act by prescribing penalties for violations, licensing and bonding of milk dealers, requiring records and reports of business transacted and authorizing the administrative agency to take judicial action to enforce the rules, regulations and orders promulgated pursuant to the act.

Article 21-A contained the sections relating to price fixing, and was re-enacted on a temporary basis, to terminate April 1, 1935. By subsequent amendments (L. 1935, c. 10; L. 1936, c. 215) this emergency period was extended to April 1, 1937. This article was repealed by L. 1937, c. 876, sec. 5 in effect June 3, 1937. At the present time article 21 as amended by L. 1939, c. 760, sec. 1, and L. 1939, c. 365 constitutes the entire milk control law of New York.

22 See note 1, supra.

The California Milk Control Act divided the milk industry into two categories; one chapter regulating persons engaged in producing, distributing and consuming market or fluid milk and cream (Agric. Code (Deering, 1937) secs. 735 to 737.12, as amended by the laws of 1939); the other chapter regulating persons dealing in milk used for the manufacture of dairy products (Agric. Code (Deering, 1937) secs. 740 to 750.5).

In Jersey Maid Milk Products Co. v. Brock,23 the division of the milk industry into the two classifications was held not to violate the provisions of the California Constitution (art. 1, secs. 11, 21), directed against special legislation and lack of uniformity in application of the law. The distinction was held to be constitutional because of the difference in the nature of products sought to be regulated. The standards of quality and marketing requirements applicable to the production, distribution or consumption of fluid milk and cream, are, the court pointed out, not required, nor from their nature should they be required, of manufacturing dairy products; and, since the statute is uniform in its operation, applying equally to all persons engaged in each particular class of the milk industry, it is a valid exercise of the State's police power.

The Louisiana statute provides for the creation of a milk control commission and has delegated to it very broad and general powers of supervision over the milk industry. Without any further limitations on its authority, the commission is empowered to issue such orders, rules and regulations pertaining to the milk industry as are necessary for the protection of the public health and welfare.

1. Duration

Some of the milk control acts were enacted as emergency measures to be effective for only a designated period of time.24

GEORGIA: Act enacted in 1937 (L. 1937, No. 374, p. 247) to be in effect until August 15, 1941.

INDIANA: The expiration date was extended by 1939 amended (L. 1939, c. 26, sec. 1) to June 30, 1941. Prior to the 1939 amendment, the expiration date was June 30, 1939 (L. 1937, c. 215, sec. 10); prior to the 1937 amendment, the expiration date was July 1, 1937 (L. 1935, c. 281, sec. 26). MASSACHUSETTS: The original act (L. 1934, c. 376) expired by its terms June 30, 1936, but was extended by L. 1936, c. 300 to June 30, 1938, which was subsequently extended to June 30, 1940 by L. 1938, c. 334. The 1939 amendment (L. 1939, c. 413) extended the time to June 30, 1941. MICHIGAN Act first enacted on May 26, 1939 (L. 1939, act 146) to be in effect to May 26, 1941.