California Sea Grant College Program

The history of American law reflects in large measure how social and economic privileges have been promoted and regulated by law. This study examines how farmers won and used the privilege of extensive immunity from the anti-trust laws at both the state and federal levels. Agricultural cooperatives, on the grounds that they were "benevolent" monopolies, were exempted from anti-trust liability. The changed legal status of cooperatives paved the way for significant changes in the relationship between government and agriculture during the twentieth century.

In the Progressive Era, legislatures generally viewed cooperatives as deserving of special treatment. The courts, however, regarded cooperatives with suspicion, particularly because cooperatives resembled corporations in form and function. The California Associated Raisin Company (CARC) tested prevailing assumptions about the legitimacy of monopoly in agriculture. It combined the traditional cooperative ideal of economic democracy with the legal powers of commercial corporations.The control the CARC exerted over supply and price was ultimately challenged in federal court. But Congress passed the Capper-Volstead Act of 1922 in time to moot the litigation. The Capper-Volstead Act extended anti-trust immunity to all cooperatives, specifically those organized according to the California model. State cooperative marketing laws subsequently enacted and ratified by the courts completed the revision of their old anti-monopoly prejudice.

The transformation in the legal status of cooperation helped to direct agriculture's fortunes under the New Deal. Federal and state marketing laws regulating agricultural production and prices extended cooperation's market control to the public sphere. The Supreme Court upheld the state's authority to enact such laws in the case of Parker v. Brown (1943), validating the federal/state division of regulatory authority that they represented. The modern legal status of agricultural cooperatives stems from the example of the CARC. Its significance lies not so much in how it benefitted the raisin growers but in the availability of this new legal form for cooperating farmers in the rest of the nation. The history of cooperation reveals as well an important legal dimension in the process by which the shift to a highly commercialized agriculture took place.