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Wiley and the Whiskey Industry: Strategic Behavior in the Passage of the Pure Food Act

Published online by Cambridge University Press:  11 June 2012

Jack High  and
Clayton A. Coppin
Jack High
Affiliation:
Jack High is associate professor of economics atGeorge Mason University.
Clayton A. Coppin
Affiliation:
Clayton A. Coppin is research consultant at the Center for the Study of Market Processes, George Mason University.
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Abstract

In discussions of the fight for the Pure Food and Drugs Act of 1906, Harvey Washington Wiley is usually portrayed as the consumers' champion, the Whiskey Trust as their adversary. Messrs. High and Coppin argue otherwise. Wiley's correspondence from 1904 to 1906 reveals a deep split between whiskey producers, with the makers of straight whiskey lining up behind Wiley's pure food bill and the rectified whiskey producers fighting against it. The authors argue that both sides used the consumer only as a convenient focus for their rhetoric; their activities thus provide another example of regulatory legislation passed to further the goals of private interests rather than to protect the public interest.

Type
Articles
Information
Business History Review , Volume 62 , Issue 2 , Summer 1988 , pp. 286 - 309
Copyright
Copyright © The President and Fellows of Harvard College 1988

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References

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2 Public interest interpretations of the Pure Food Act can be found in Sullivan, Mark, Our Times (New York, 1927), vol. 2Google Scholar; Bailey, Thomas A., “Congressional Opposition to Pure Food Legislation,” American Journal of Sociology 36 (July 1930CrossRefGoogle Scholar); Wilson, Steven, Food and Drug Regulation (Washington, D.C., 1942Google Scholar); Carson, Gerald, “Who Put the Borax in Dr. Wiley's Butter,” American Heritage 7 (1956): 58–63Google Scholar; Natenberg, Maurice, The Legacy of Dr. Wiley (Chicago, Ill., 1957Google Scholar); Anderson, Oscar, Health of a Nation (Chicago, Ill., 1958Google ScholarPubMed); Young, James Harvey, The Toadstool Millionaires (Princeton, N.J., 1961Google Scholar); Young, , “The Long Struggle for the 1906 Law,” FDA Consumer, 12 June 1981, 12–16Google Scholar; Young, James Harvey, ed., The Early Years of Federal Food and Drug Control (Madison, Wis., 1982Google Scholar); Crunden, Robert M., Ministers of Reform: The Progressive Achievement in American Civilization, 1889–1920 (New York, 1982Google Scholar). A theoretical justification for public benefits of pure food laws is given by Hinick, Melvin and Staelin, Richard, Consumer Protection Legislation and the U.S. Food Industry (New York, 1980Google Scholar).

3 The quoted phrase is James Harvey Young's. See Toadstool Millionaires, chap. 14.

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8 Donna Wood, Strategic Uses, 201. Morton Keller mentions that the meat inspection and pure food acts passed “only after an aroused public opinion conjoined with commercial self–interest.” Affairs of State (Cambridge, Mass., 1977), 414Google ScholarPubMed.

9 We are following the advice of Samuel P. Hays, “to observe the actors in that regulatory process more directly and to focus on the people involved in it, their perspectives and choices.…” See “Political Choice in Regulatory Administration,” in Regulation in Perspective, 126.

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11 Fusel oil is defined in Webster's New World Dictionary, College Edition, 1962, as “an oily, acrid, poisonous liquid occurring in alcoholic products that have not been distilled sufficiently to separate the ethyl alcohol from other substances with a low boiling point: it consists generally of a mixture of amyl, butyl, propyl, and isoamyl alcohols.”

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14 Carson, History of Bourbon, 153–57, 166.

15 Ibid., 155.

16 Anderson, Health of a Nation; Wiley to Mary M. Schuger, 26 Jan. 1903, Wiley Papers. Library of Congress. All citations of Wiley's correspondence are to this collection unless otherwise identified. For his early years, see Wiley, , An Autobiography (Indianapolis, Ind., 1930Google Scholar).

17 Wiley to Professor N. S. Shaler 7 Jan. 1902; Wiley to Dr. Wm. A. Noyes, 23 Oct. 1903; Temin, Taking Your Medicine, 27; Dupree, A. Hunter, Science in the Federal Government (Cambridge, Mass., 1957), 176–83Google Scholar; True, A. C., A History of Agricultural Experimentation and Research in the U.S. 1607–1925, USDA Misc. Pub. 251 (Washington, D.C., 1937Google Scholar). Expanding bureaus were frequently attributable to entrepreneurial bureau leaders. The most successful were those who found something to regulate. See Rosenberg, Charles E., “Rationalization and Reality in Shaping American Agriculture Research, 1875–1914,” in The Sciences in The American Context: New Perspectives, ed. Reingold, Nathan (Washington, D.C., 1979), 143–63Google Scholar; Daniels, George H., Science in American Society: A Social History (New York, 1971Google Scholar); Rossiter, Margaret W., “The Organization of the Agricultural Sciences,” in The Organization of Knowledge in Modern America, 1860–1920, ed. Oleson, Alexandra and Voss, Jon (Baltimore, Md., 1979Google Scholar).

18 Yearbook of the Department of Agriculture, 1897, 81–82; Anderson, Health of a Nation, 119.

19 Editorial, “Pure Food Laws for Private Purposes,” Independent 55 (21 May 1903): 1224–25Google Scholar.

20 Wiley to R. M. Allen, 2 April 1903; Wiley to file, 15 July 1903; and Wiley to Badger, 10 June 1902; Wiley to William Smedley, 18 June 1903; Wiley to George F. Warren, 2 Nov. 1903.

21 Wiley to M. A. Scovell, Wiley to L. M. Frailey, Wiley to Allen, Wiley to Fear, all 30 June 1903; Wiley to Allen, 2 April 1903, Wiley to Scovell, 23 Jan. 1903.

22 Wiley to Scovell, 23 Jan. 1903. See also Allen to Wiley, 21 May 1903, National Archives, Bureau of Agricultural Chemistry and Industrial Chemistry (BACIC). Wiley to Allen, 2 April 1903. Scovell was more than Allen's boss. Orphaned at an early age, Allen had been taken in by the childless Scovells. See Wolfe, Margaret Ripley, “The Agriculture Experiment Station and Food And Drug Control: Another Look at Kentucky Progressivism, 1898–1916,” The Filson Club History Quarterly 49 (1975): 323–38Google Scholar.

23 Wiley, Autobiography, 176.

24 Wiley to Scovell, 23 Jan., Wiley to Taylor, 7 July; Wiley to Overholt & Co., 10 Oct., all 1903. Wiley accepted gifts of whiskey as well as other food items throughout the struggle for a pure food law.

25 Carson, “Who Put the Borax in Dr. Wiley's Butter,” 59–60; Anderson, Health of a Nation, 149–52.

26 Anderson, Health of a Nation, 157–58; Wiley to Frailey, 25 May 1903. William P. Hepburn was a representative from Iowa; Porter J. McCumber was a senator from North Dakota.

27 Wiley to Hon. P. J. McCumber, 6 Feb.; Wiley to Allen, 4 Feb.; Wiley to E. E. Slosson, 12 Jan., all 1904, Food and Drug Administration (FDA), National Archives.

28 Wiley to Hough, 2 Jan. 1904; BACIC. Wiley to Edmund Taylor, 11 Jan. 1904, FDA. Wiley to Hon. P. J. McCumber, 21 Jan. 1904, FDA. Wiley to L. M. Frailey, 5 Jan. 1904.

29 Wiley to Hough, 2 Jan. 1904, BACIC; Wiley to Hon. P. J. McCumber, Jan. 1904; Wiley to Fear, 10 March 1904; Wiley to Percy T. Morgan, 4 March 1904, FDA.

30 Wiley to Hon. P. J. McCumber, 27 Jan. 1904; Wiley to Hon. P. J. McCumber, 8 March 1904; Wiley to M. N. Fline, 8 March 1904. This could explain why there was so little enforcement of the drug provisions of the Pure Food and Drugs Act during the early years. Temin, in Taking Your Medicine, 32, states that “Wiley himself neglected drugs. Only 135 of the first 1000 judgments obtained under the 1906 law concerned drugs.”

31 Allen to Wiley, 2, 18, 23 Feb. 1904, BACIC.

32 Edmund Taylor, the maker of Old Taylor Kentucky Straight Bourbon, was not new to the battle against rectified whiskey. In 1881 at a meeting of the Kentucky Distillers' Association, Taylor had offered to the Association a resolution, which they adopted, recommending that, “a committee of three be appointed by the chairman to see the Commissioner of Internal Revenue, with a view to calling his attention to and seek protection from vicarious manufacture at registered distilleries, and the manufacture of what are known as ‘new process’ whiskies in this state.” See Stevens, William S., ed., Industrial Combinations and Trusts (New York, 1913), 7Google Scholar. Allen to Wiley, 29 Jan. 1904, BACIC.

33 The American Grocer was owned by the Thurber family, large New York wholesale grocers and longtime supporters of pure food. L. O. Howard, chief of the Bureau of Entomology and Wiley's associate, was Thurbers nephew; see Okun, Mitchell, Fair Play in the Market Place (DeKalb Ill., 1986Google Scholar); Howard, L. O., Fighting the Insects ([1933]; New York, 1980Google Scholar); Wiley to Barrett, 1 Feb.; Wiley to Frailey, 5 Jan.; Wiley to Taylor, 11 Jan.; Wiley to E. E. Slosson, 12 Jan.; Wiley to Percy T. Morgan, 4 March; Wiley to Allen, 20 Feb., all 1904, FDA.

34 Wirtschafter, Jonathan Dine, “The Genesis and Impact of the Medical Lobby: 1898–1906,” Journal of the History of Medicine and Allied Sciences 13 (1958): 15–49CrossRefGoogle ScholarPubMed; Wiley to Hon. P. J. McCumber, 4 March 1904, FDA; Allen to Wiley, 2 Feb. 1904, BACIC; Wiley to R. M. Allen, 25 Feb. 1904; Wiley to F. N. Barrett, 1 Feb. 1904, FDA.

35 Wiley to Allen, 19 April 1904; Wiley to Hepburn, 30 April 1904; FDA.

36 Sullivan, , Our Times, 2: 522–23Google Scholar.

37 Hough, , Discussion of Subject of Distilled Spirits (St. Louis, 1904Google Scholar).

38 Anderson, Health of a Nation, 196.

39 The Bureau of Chemistry issued Food Inspection Decision #4 on 6 August 1904, which read, “Whiskey is the distilled product of fermented cereal grains, properly aged in wood in order to remove the greater part of the fusel oils, etc., produced during the distillation.”

40 The Oxford English Dictionary defines whiskey as “A spirituous liquor distilled originally in Ireland and Scotland, and in the British Islands still chiefly, from malted barley… in U.S. chiefly from maize or rye.…” The Dictionary gives an example of the term from 1715 (“Whiskie shall put our brains in a rage”), 150 years before producers started aging it in a barrel. The term originated in Scotland and Ireland, and is shortened from whiskeybrae, which in Gaelic meant “water of life.” In America, Webster's Compendious Dictionary of the English language of 1806 says “whisky” is “a spirit distilled from grain.”

41 Wiley to President, Wine and Spirit Trader's Society, 28 Oct. 1904; Wiley to E. T. Fleming, 11 Oct. 1904, FDA; Wholesale Liquor Dealers Association Letter to Members, 14 May 1904, FDA.

42 National Wholesale Liquor Dealers' Association, “The Truth about Whiskey,” 1904. Hough to Wiley, 11, 19, 28 Oct. 1904, BACIC.

41 Hough to Wiley, 11 Oct. 1904, BACIC.

44 Wiley to Hon. Wm. Lorimer, 4 Jan. 1904; emphasis added.

45 Wiley to J. H. Chinn, 21 March 1906; Wiley to Editor, The Wine Trade Review, 6 March 1905.

46 Edwin F. Ladd, chief chemist of the Agriculture Experiment Station in North Dakota and a correspondent of Wiley, had been successful in using such a strategy against eastern interests. Eastern firms attacked Ladd, which increased his popularity and helped the passage of a pure food law in North Dakota. See Kane, R. James, “Populism, Progressivism, and Pure Food,” Agricultural History 38 (July 1964): 161–66Google Scholar.

47 Allen to Wiley, 24 March 1905, BACIC. For similar statements see Wiley to William O. Bates, 6 April; Wiley to Major William H. Thomas, 25 April; Wiley to Allen, 8 May, all 1905, FDA.

48 Wiley to Fleming, 11 Oct. 1904, FDA.

49 New York Post, 2 April 1905; also see numerous newspaper clippings in the Wiley Papers; Hough to Wiley, 3 Jan. 1905, BACIC. Wiley to Hough, 9 Jan.; Wiley to Scovell, 14 March; Wiley to Allen, 8 March, all 1905, FDA.

50 Sullivan, , Our Times, 2: 531–32Google Scholar; Stephenson, , Nelson W. Aldrich (Port Washington, N.Y.), 280, 464Google Scholar.

51 Tinker, “Who Killed the Pure Food Bill?” Public Opinion, 15 April 1903, 572–73, 590. Allen worked temporarily in Washington in 1908 and 1909 as a special assistant to the attorney general on pure food cases. Wolfe, “Agriculture Experiment Station,” 334.

52 Phillips, David Graham, Treason of the Senate (Chicago, Ill., 1964Google Scholar), reissue of articles that appeared in Cosmopolitan from March to November 1906.

53 Allen to Wiley, 24 March 1905, BACIC; Wiley to Editors, Public Opinion, 18 April 1905; Wiley to William O. Bates, 15 April; Wiley to H. N. Gardner, 18 April; Wiley to Dr. Hugo Schwertzer, 13 April, all 1905; Wiley to Editor, Collier's Weekly, 27 May 1905; Lowery, , “The Senate Plot Against Pure Food,” World's Week 10 (May 1905): 6215–17Google Scholar; Wiley to Alice Lakey, 13 June 1908, FDA.

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55 Wiley to Miss Elisabeth Foster, 2 March 1905; Wiley to Taylor, 6 May 1905, FDA; Anderson, Health of a Nation, 190–93; Wirtschafter, “The Genesis and Impact of the Medical Lobby,” 15–49; Young, Toadstool Millionaires, 234; Crunden, Ministers of Reform, 163–99.

56 See Young, Toadstool Millionaires, 239–41, for a discussion of the effects of The Jungle on medicines in the Pure Food Act. There is some controversy about the extent to which the book increased overall support for the act. See Wood, Strategic Uses, 6–9.

57 Parmenter, W., “The Jungle and Its Effects,’ Jouralism History 10 (1983): 14–17Google Scholar, 33–34; Sullivan, , Our Times, 2: 535–36Google Scholar.

58 Anderson, Health of a Nation, 185–94. Wiley memorandum, 3 April 1906, FDA.

59 National Wholesale Liquor Dealers' Association, Letter to Members, 14 May 1904; Stephenson, Nelson Aldrich, 464; Anderson, Health of a Nation, 181–85.

60 Anderson, Health of a Nation, 185–94; Wiley Memorandum, 3 April 1906; Wiley to Congressman Mann, 8 March 1906; Wiley to Dr. Charles A. L. Reed, 14 March 1906, FDA.

61 Roosevelt quote from Anderson, Health of a Nation, 190. Wiley, “Why I Support Wilson and Marshall,” Wiley Papers; Anderson, Health of a Nation, 192–97.

62 Memorandum on the “‘What is Whiskey?’ Controversy,” Federal Alcohol Control Administration (Washington, D.C., 1938Google Scholar), Wiley Papers.

63 Taft, William H., “Whiskey,” Decision by President Taft (Washington, D.C., 1909Google Scholar).

64 McCraw, “Regulation in America,” 170. Also see his Prophets of Regulation (Cambridge, Mass., 1984Google Scholar).

65 Among the important works in economic theories of regulation are Stigler, George, “The Theory of Economic Regulation,” Bell Journal of Economics 2 (Spring 1971): 3–21CrossRefGoogle Scholar; Peltzman, Sam, “Toward a More General Theory of Regulation,” Journal of Law and Economics 19 (Aug. 1976): 211–40CrossRefGoogle Scholar; Tullock, Gordon, “The Welfare Costs of Tariffs, Monopolies, and Theft,” Western Economic Journal 5 (June 1967): 224–32Google Scholar; Kreuger, Anne, “The Political Economy of the Rent–Seeking Society,” American Economic Review 64 (June 1974):291–303Google Scholar; McCormick, Robert E. and Tollison, Robert D., Politicians, Legislation and the Economy (Boston, Mass., 1981CrossRefGoogle Scholar). For surveys of these theories, see Posner, Richard A., “Theories of Economic Regulation,” Bell Journal of Economics 5 (Autumn 1974): 335–58CrossRefGoogle Scholar; Mitnick, Barry M., The Political Economy of Regulation (New York, 1980), 111–53Google Scholar; Tollison, Robert D., “Rent–Seeking: A Survey,” Kyklos 35 (1982CrossRefGoogle Scholar).

66 For a discussion of strategic use of public policy, see Barry M. Mitnick, “Myths of Creation and Fables of Administration: Explanation and the Strategic Use of Regulation,” Public Administration Review (May/June 1980): 275–86. Wood has convincingly explained business involvement in the passage of the Pure Food Act as attempts to use regulation to gain an advantage over competitors. See Wood, Donna J., “The Strategic Use of Public Policy: Business Support for the 1906 Pure Food and Drugs Act,” Business History Review 59 (Autumn 1985): 403–42CrossRefGoogle Scholar; Wood, Strategic Uses. Heiner, Ronald A., “Super Exhaustive Rent–Seeking,” unpub. MS, Brigham Young UniversityGoogle Scholar, has recently produced a mathematical theory explaining the economic effects of the strategic use of public policy. Porter, Michael, Competitive Strategy: Techniques for Analyzing Industries and Competitors (New York, 1980Google Scholar), includes the effects of government regulation in his strategic analyses of competitors. McChesney, Fred S., “Rent Extraction and Rent Creation in the Economic Theory of Regulation,” Journal of Legal Studies 16 (Jan. 1987): 101–18CrossRefGoogle Scholar, calls active political involvement in regulation “rent extraction.”

67 Dupree, Science in the Federal Government, 176–83; Daniels, Science in American Society, 308; Wiley to Professor N. S. Shaler, 7 Jan. 1902; Wiley to Dr. Win. A. Noyes, 23 Oct. 1903. Although there is no clearcut maximand, such as profits, for the bureau head, the bureau's budget is usually considered a good proxy. See Niskanen, William A., Bureaucracy and Representative Government (Chicago, Ill., 1971), 38–42Google Scholar.

68 See Mitnick, Political Economy, 80–84, for a theoretical schema of the regulatory process.