The War on Margarine!

On August 7, 1886, Congress passed the Margarine Act. This imposed steep annual fees for licenses on manufacturers ($600), wholesalers ($480), and retailers ($48), and a tax of two cents per pound on the product. In 1902, Congress passed a tax on margarine five times higher than the 1886 act, and two years later the Supreme Court upheld the law’s constitutionality. Congress finally repealed the margarine tax in 1950 (poor Prof. Elzinga...), and Wisconsin became the last state to repeal its anti-margarine regulations in 1967.

Capture theory, in the context of regulation, suggests that regulatory agencies may be "captured" or heavily influenced by the industries they are meant to regulate. Now, how does this tie in with margarine?  At the time, the dairy industry held significant sway over and a large impact on government decisions. The Margarine Act was essentially pushed through by dairy interests to restrict the production and sale of margarine. Furthermore, the regulations imposed by the Margarine Act, such as coloring and labeling requirements that made margarine less appealing to consumers, were essentially a result of dairy lobbying influence on the regulatory process in order to "protect public interest." This was also a move to protect the butter industry from competition, as margarine was becoming a cheaper alternative (aka a substitute!). The regulatory decisions were influenced by the dairy industry to preserve its own interests. This is a great example of how regulatory agencies can become captive to the industries they are meant to oversee. Hopefully, this more in-depth exploration of the war on margarine got your brain churning!