COOPERATIVES: EARLY PHASES 63 



Unfortunately, the legal status of cooperatives in the United States was 

 long the subject of heated controversy. Before the enactment of legisla- 

 tion specifically legalizing cooperatives, the practice of the farmers had 

 been to organize as best they could under the corporation laws of their 

 respective states. These laws, however, were designed for a different pur- 

 pose and did not fit the cooperative need ; moreover, they left the coopera- 

 tives open to the danger of prosecution under the antitrust laws, which 

 forbade conspiracy in restraint of trade. 13 Farm organizations such as the 

 Grange had long emphasized the need for constructive legislation on this 

 subject, but their efforts to achieve a special status for horticultural and 

 agricultural organizations did not at first achieve satisfactory results. In 

 the case of Loewe v. Lawler (1908), when the United States Supreme 

 Court was asked to invoke the Sherman Anti-Trust Act against labor 

 organizations seeking higher wages and agricultural organizations striving 

 for higher prices, the Court held unequivocally against the labor unions 

 and the cooperatives. The act, it maintained, 



. . . had made no distinctions between classes. It provided that "every" contract, 

 combination, or conspiracy in restraint of trade was illegal. The records of Con- 

 gress show that several efforts were made to exempt organizations of farmers 

 and laborers from the operations of the Act, and that all these efforts failed, so 

 that the Act remained as we have it before us. 14 



This point of view caused the advocates of cooperatives much distress. 

 Between 1890 to 1910 many attempts were made to prosecute the direc- 

 tors and officers of selling cooperatives. Indictments against such individ- 

 uals were brought in five states under state antitrust laws, and in Louisiana 

 an indictment was brought under the Sherman Act. While none of the 

 defendants were convicted, as charged, of fixing prices, the farmers were 

 left in grave doubt regarding the legality of their efforts to create and 

 operate effective marketing cooperatives. 15 



13. H. W. Ballentine, "Cooperative Marketing Associations," Minnesota Law 

 Review, VIII (December, 1923), p. 2. See also Hamilton, in Yale Law Journal, 

 XXXVIII (May, 1929), pp. 938-39; Steen, Cooperative Marketing, pp. 3-4; Hanna, 

 Law of Cooperative Marketing Associations, p. 4. 



14. 208 U. S., 274, p. 301. See also Franklin J. Jones, "The Status of Farmers' Co- 

 operative Associations Under Federal Law," Journal of Political Economy, XXIX 

 (July, 1921), pp. 595-96; Knapp and Lister, Cooperative Purchasing of Farm 

 Supplies, p. 24. 



15. John D. Miller, "The Philosophical and Legal Background of the Cooperative 



