Stafford v. Wallace, 258 U.S. 495; 42 S. Ct. 397; 66 L. Ed. 735 (1922)

Facts—Stafford and Company, engaged in the buying and selling of livestock, brought suit against Secretary of Agriculture H. C. Wallace to prohibit him from enforcing the Packers and Stockyards Act of 1921, which they contended was unconstitutional. The act provided for federal authority to supervise the business of the commission men and of the livestock dealers in the great stockyards of the country. Congress passed the act because, after extensive investigation, it found that the nation’s “Big Five” meatpackers were engaged in a conspiracy in violation of antitrust laws to control the business of the purchase of livestock, their preparation for use in meat products, and the distribution and sale thereof in this country and abroad.

Question—Did Congress have the authority under the commerce clause to supervise the activities of the meatpackers?

Decision—Yes.

Reasons—C.J. Taft (7–1). Congress was exercising its established authority over interstate commerce. The stockyards are not a place of rest or final destination. Thousands of head of livestock arrive daily by carload and must be promptly sold and disposed of and moved out to give place to the constantly flowing traffic that presses behind. The stockyards are but a throat through which the current flows, and the transactions that occur therein are only incident to this current from the West to the East, and from one state to another. Such transactions cannot be separated from the movement to which they contribute, and necessarily take on its character. The commission men are essential in making the sales without which the flow of the current would be obstructed, and this, whether they are made to packers or dealers. The dealers are essential to the sales to the stock farmers and feeders. The sales are not in this aspect merely local transactions. They create a local change of title, but they do not stop the flow; they merely change the private interests in the subject of the current, not interfering with, but on the contrary, being indispensable to its continuity. The origin of the livestock is in the West, its ultimate destination known to, and intended by all engaged in the business is in the Middle West and East, either as meat products or stock for feeding and fattening. The stockyards and the sales are necessary factors in the middle of this current of commerce.

 J. McReynolds did not explain the reason for his dissent. J. Day took no part in the decision.

Note—This case demonstrates that activities that closely affect the “stream of commerce” may be made subject to federal regulation even though the activities take place wholly within a state. Stafford follows logically from Shreveport, which allowed Congress to regulate intrastate railroad rates when necessary for effective regulation of interstate rates.