receive truck shipments of fruits and vegetables originating outside of the State.

An extreme example of discrimination against out-of-State produce is afforded by a Georgia law enacted in 1935. After giving the Commissioner of Agriculture certain powers with respect to establishing and maintaining eight farmers' markets and authorizing him to promulgate and enforce official grades for farm products sold in these eight markets, the law empowers the commissioner to embargo fruits and vegetables coming into the State whenever such action is necessary to protect Georgia growers. 10

It seems to be intended frankly to benefit the Georgia grower at the expense of outsiders and at the expense of the Georgia consumer.

LEGAL ASPECTS

The constitutional status of many of the laws described in this part of the report has not as yet been clearly determined through court action. However, a number of tendencies may be briefly noted. As shown in pages 51-52, taxes may be found, in view of the stated purpose of the act, to be unreasonable and burdensome. The case may be cited of the city of Duluth, Minn., which imposed a license fee of $25 per day on transient merchants. In holding this fee unreasonable and, therefore, invalid the Minnesota Supreme Court said: "The ordinance is not concerned with the business done, nor does it seem to have any reference to the cost of issuing the license and the possible amount of police supervision required."11

The constitutionality of the various laws that give preference to certain merchant-truckers

The New York Packer, October 22 and October 29, 1938, and The Produce News (New York), November 19, 1938.

10 Laws of 1935, no. 44, pp. 369-72. Sec. 8 reads as follows: "Sec. 8. The Commissioner of Agriculture in carrying out the terms of this bill shall, in addition to the power heretofore given him, have authority to inspect all fruits, vegetables and truck crops coming into Georgia markets or offered for sale within the State. He shall have power, and is hereby directed, insofar as is possible, to protect the Georgia growers and consumers of fruits, vegetables and truck crops by declaring an embargo on any fruit, vegetable or truck crop coming into this State when the supply of the same fruit, vegetable or truck crop grown in this State is ample for the markets of this State at that time."

11 City of Duluth v. Rosenblum (Supreme Court, Minnesota), 230 Northwestern 830 (1930).

seems to depend largely on the kind of preference granted. Thus laws that exempt the growertrucker from certain taxes or give him other advantages may be valid. One of the leading cases in this field has to do with a license tax imposed on the business of refining sugar in Louisiana. Farmers grinding and refining their own sugar were exempted from the tax. The United States Supreme Court upheld the law saying it had always been the policy of Government to exempt producers from the taxation of the methods employed by them in getting their produce to market. 12

On the other hand, laws that give preference to local produce and those that place a tax or other burden on products from other States have been repeatedly thrown out by the courts. 13 In general, laws prohibiting or placing direct burdens on house-to-house peddling have, where interstate commerce is involved, been found invalid.1 In general, these laws and ordinances appear to be constitutional insofar as they give exemptions to farmers disposing of their own product but are invalid when they discriminate against the products of another State.

STATEMENT OF THE PROBLEM

The questions raised by these attempts to restrict or regulate the merchant-trucker and to limit the use of farmers' markets are but a part of larger problems arising from the tremendous changes that have resulted, and are still resulting, from the growing use of the motor-vehicle. A thorough discussion of this whole matter is clearly beyond the scope of this study. We must content ourselves here with a brief analysis of the more important aspects of the restrictive legislation that has been described in this chapter.

One of the chief incentives leading to this

19 American Sugar Refining Co. v. Louisiana, 179 U. S. 89 (1900). 13 See for example: Webber v. Virginia, 103 U. S. 344; Welton v. The State of Missouri, 91 U. S. 275; Guy v. Baltimore, 100 U. 8. 434; and Brown v. Maryland, 25 U. S. 419.

14 See for example: Real Silk Hosiery v. Portland, 268 U. S. 325 (1925) and Robbins v. Shelby County Taxing District, 120 U. S. 489 (1887). A recent case which appears to uphold such local restrictions is Town of Green River v. Fuller Brush Co., 65 Fed. Rep. (2nd) 112 (1933).

legislation has been the desire of existing groups to protect themselves from new forms of competition. The merchant-trucker is an innovator and his appearance frequently forces a drastic reorganization of the distributive machinery. He competes with and sometimes short cuts the old, established middlemen by carrying produce directly from the farmer to the processor, the city wholesale market, or in come cases directly to the retailer, or the consumer. The middleman's function and organization may be greatly modified, or he may not even survive.

One need not look far into the marketing of most agricultural products to discover abundant evidence of these changes. A few random examples may be given. In the marketing of fresh fruits and vegetables in many parts of the country the truck has superseded the railroad as the chief transportation agency. Large percentages of the onion crop of Massachusetts, the peach crops of Michigan and Illinois, and the citrus fruits of Texas are moved by merchant-truckers.

Merchant-truckers sometimes sell through established wholesalers or commission merchants, but sometimes themselves act as wholesalers or jobbers.15 Occasionally the process is carried a step farther and the produce is distributed directly to the consumer from markets or from roadside stands, or by peddlers from house to house, thus eliminating the established retailer.

Similar changes have taken place in the marketing of livestock and are, at present, rapidly appearing in the marketing of grain. A few years ago, hogs and cattle were ordinarily bought, assembled, and shipped by livestock buyers, dealers, or cooperative associations located in hundreds of small railroad towns. Some of this business has passed to merchanttruckers who buy the animals at the farm and haul them, sometimes over long distances, to the stockyards in large cities.

Similarly the small-town grain buyer or cooperative elevator formerly received the grain brought in directly by the farmers, often stored

15 On the marketing of fruits and vegetables, see especially CROW, W. C., WHOLESALE MARKETS FOR FRUITS AND VEGETABLES IN 40 CITIES, U. S. Dept. Agr., Cir. No. 463 (Washington, 1938).

it for a time, and then shipped it on by rail to the great markets. In some areas of the Middle West the merchant-trucker is now rapidly changing this procedure. He obtains the grain from the farm and transports it directly by truck to the large storage, processing, and shipping

centers.

The legislation described in this section is largely restrictive to the new methods of marketing and is protective to the established institutions. If we were to take a completely laissezfaire position, we would condemn the bulk of this legislation as meddlesome interference with business by Government. We would point out that, unless hindered by repressive legislation, technological changes constantly alter the forms and functioning of our economic machinery. The stage-coach drivers, the teamsters, the innkeepers, and the canal companies-the "legitimate" institutions-fought the introduction of the railroad. Yet the railroad won because shippers and the public gave it their patronage. So, with the system of marketing through merchant-truckers and farmers' markets, it might be said from the laissez-faire viewpoint, let this system displace the older one to the extent that producers find it profitable to sell their products in this way and retailers and consumers find that they get lower prices or better service. Much has been made of the wide spread in prices between the farmer and the consumer. Here is a new method of marketing which presumably reduces this spread. Then let us continue to put our faith in competition, assume that producers and consumers know their own best interests, and let nature take its course.

Such is the laissez-faire position, but it is a line of reasoning that is unacceptable to the established dealers and which, in fact, the public is no longer inclined to follow without critical examination. Many people feel that the new method should be carefully examined to make sure that its displacement of the old will result in a net social advantage. After such examination they believe the State should, where necessary, regulate or even prohibit. From this point of view let us examine the chief arguments advanced for the restrictions on local and inter

state trade that result from regulating itinerant merchants and farmers' markets.

THE ARGUMENTS FOR RESTRICTIVE LEGISLATION

The licensing and regulation of the itinerantmerchant is generally deemed necessary to protect farmers, dealers, and consumers from fraud. It is charged that merchant-truckers give short weight, pay with worthless checks, and are generally given to fraudulent practices. Instances of dishonesty can be cited, but no study has been made to show exactly how common these practices are. Those who defend the merchanttruckers claim that most of them are honest and reliable and cite as proof that growers, retailers, and consumers must on the whole be honestly dealt with or they would not continue to do business with the merchant-truckers.

Insofar as there is a tendency to fraud and dishonesty, licensing, the posting of bonds, and other regulations may be necessary for the protection of the public. As the merchant-trucker has no established place of business, and may be here today and gone tomorrow, there is probably more need to regulate him than the man with an established place of business. But this is an administrative problem, which, it appears, could be successfully handled without placing unreasonable burdens on honest itin

erants.

Where truckers are permitted to use market facilities and to sell directly to jobbers, retailers, or consumers, thus competing with the established local merchants, the latter often complain that it is unfair to let the truckers use a market that is made possible and is financially supported by the local people. The answer would appear to be that the marketing system is so much more efficient when all the produce brought into a city is concentrated in one market, and the consumers, the farmers, the retailers, and the trade itself are so much benefited, that the public interest demands that truckers be given a place in the market. They should pay their fair share of costs and fees, of course, so they will not have an artificial advantage over the established merchants.

What this fair share may be is a subject prop

erly open to earnest discussion by those who are concerned and interested in the problem. The following suggestions are submitted for consideration.

(1) Merchant-truckers should be charged a rental for the facilities provided for them, sufficient to pay the cost of those facilities. In computing this, allowance should be made for the administrative overhead of the market and for the fact that the facilities will be partially empty during a part of the year, if ample space is to be provided for the peak season.

(2) Fees for the privilege of doing business and occupational taxes should be set at such levels that the per diem amount will be the same or virtually the same for the merchant-trucker as for the established merchant who does about the same daily volume of business.

(3) Merchant-truckers should be given their choice of paying rentals, fees, and taxes on a daily, weekly, monthly, quarterly, or annual basis, in order that they may take full advantage of the flexibility of action and the flexibility of schedule that the motortruck makes possible At the same time, payments on a daily basis should include a sum sufficient to pay for any additional costs of collection made necessary by daily collection; and the same rule should be applied to weekly, monthly, or quarterly pay

ments.

A complaint frequently made, especially by the wholesalers and jobbers, is that merchanttruckers typically bring in low-grade produce and reduce prices on the local markets. Although he sometimes handles high-quality products, there has been a tendency, at least in certain markets, for the merchant-trucker to bring in much ungraded or lower grade commodities whereas the railroads have retained a considerable share in the transportation of the higher grades. However, the Bureau of Agricultural Economics is not ready to accept the proposition that movement to market of the lower grade produce is always undesirable. If lower prices for the produce of the better grades result from the presence of poorer grades on the market, some producers and possibly some dealers may make less profit from the sale of the

better grades. But it by no means follows that it is socially desirable to prevent the merchanttrucker from carrying the lower grade produce to market. By purchasing this produce the itinerant merchant may help the producer of these products to dispose of them, and the merchanttrucker may help the low-income consumer by making available to him fruits and vegetables that are cheap and wholesome.

Closely related to the above is the contention that movements by trucks, especially of fresh fruits and vegetables, are so fluctuating and unpredictable as to demoralize the wholesale markets.16 When transportation is by rail the trade is kept well informed of shipments, knows when arrival may be expected, and is in a position to take the risk of future commitments. With the rise of truck transportation the stability of the market has been rudely shattered. The merchant-truckers are often uninformed as to market conditions. Like the sailing vessels of a century ago, before the days of the cable and radio, they may glut the market one week only to leave it understocked the next. Moreover, the trucks may arrive any time during the day or night, thus causing sharp price fluctuations within a given day. In general, this instability appears to be disadvantageous to the established trade and probably also is not in the best interests of producers and consumers, although individuals may occasionally gain from it.

But here again one may seriously doubt that the best solution is suppression of this new marketing method. At least before such action is taken, certain other remedies for the present situation merit consideration. Without going into the details of such plans here, it should be noted that, in part, the present chaos is due to the fact that we are in a period of rapidly changing market structure. Periods of transition are almost inevitably unstable and disruptive. Many students believe that, as readjustments are made following the impact of these new forces, greater stability will appear. This will be greatly facilitated as new methods

10 It may be noted that this is a charge against all movement by truck not just by the merchant-trucker. However, the merchanttrucker as the least organized and probably the least well-informed element must bear the chief responsibility.

and devices for collecting and disseminating market information are developed. More careful regulation of markets, especially the regulation of hours during which a market shall be open each day, with the stipulation that produce to be sold that day must arrive by a certain time, may be effective in greatly reducing market fluctuations within a single day. Finally the merchant-trucker may be, when wellinformed of market conditions, a stabilizing rather than an unsettling influence. His great advantage is flexibility of movement. Were his activity weil directed, gluts might be broken and shortages relieved more rapidly than is now possible under the usual conditions of rail shipment.

The problem of the peddler who hawks his wares in the street or goes from door to door is a rather special one. In many cases his activity apparently results in the disposal of a larger quantity of certain commodities than would be sold without his efforts. Thus the recent barring of pushcart operators in New York was protested by wholesalers and jobbers who claimed that consumption was reduced by eliminating a market outlet which was well adapted to handle highly perishable produce at low cost.

There is also the question of whether consumers want this type of marketing. Sometimes the hucksters' prices are lower than those of the established dealers. Some people value the convenience of being able to buy at the door or in the street. Others consider these possible advantages as more than offset by the trouble and annoyance often caused by hucksters and door-to-door peddlers. Where a clear majority of consumers do not wish this service probably they ought to be able to restrict or even to forbid it. For example, in the model community of Greenbelt, recently established just outside the District of Columbia, the residents have voted to keep out hucksters and most door-to-door venders of commodities.

Finally there is the question of those regulations which restrict trade either by giving preference to local merchant-truckers or by placing special impediments on those from a distance.

Laws that give preference to local merchanttruckers and grower-truckers appear to have no more justification than other laws that limit the market in order to give local advantage. The gain to local interests is offset by the disadvantage to those in other parts of the country and the consumer stands to lose because he must buy in a more limited market.

A similar conclusion must be reached in regard to local-preference rules in connection with farmers' markets. The only group that is likely to gain from limiting the farmers' market to growers or to home produce is the established middleman, but in many cases he also is harmed for such regulations commonly limit the size of the market and drive away business.

But does not the local farmer benefit from being given a privileged position on the nearby market? Apparently some farmers believe they gain by keeping out products from competing areas. In many cases, however, the regulations barring distant produce from particular markets simply force truckers to sell it on the streets or to peddle it from store to store. This may lead to more unstable conditions than would exist if the distant products were allowed to come into the regular market places. Moreover, in the height of the local growing seasons, when the local farmer has the most to sell, such regulations usually have no value because distant producers cannot compete with the local ones. In the height of the local season, the local grower has a surplus to sell in other markets and wants to be restricted as little as possible. Also restricting the use of particular market places usually makes

it necessary to provide several markets in each city, although in most cases probably one would be more efficient. It is doubtful whether the local farmer gains much by most attempts at excluding distant products. Where such attempts lead to retaliation in other cities or States, he may suffer further disadvantage.

Furthermore, it may be noted that the market will probably be a relatively small one if out-ofState produce and merchant-truckers are excluded. This may be disadvantageous to local farmers for it may mean fewer buyers. In general, the larger and freer the market the more buyers are attracted to it. Out-of-State merchant-truckers bringing in loads of produce are eager for a back haul. If permitted to come, they may relieve the market of a surplus by taking back with them those products which they find lowest in price.

The consumers have apparently been little considered in connection with these preferences and exemptions. Insofar as these laws limit the efficiency of the market, or from time to time help to hold up prices or prevent good food from being sold, they result in a loss to the consumers.

We may conclude that regulation and licensing of the merchant-trucker is often necessary and justifiable. On the other hand, excessive license fees and restrictive regulations as well as preferential treatment to local interests appear to set up unnecessary and burdensome restrictions on local and interstate trade. Finally preferential treatment of local interests on farmers' markets appears contrary to the best interests of producers and consumers generally.