Antitrust Status of Farmer Cooperatives: - USDA Rural Development ...

their own storing and curing sheds for the tobacco they purchased from
farmers.
Some firms grew both horizontally and vertically. For example,
in 1882, Standard Oil represented a horizontal combination of
kerosene refineries. But the trust expanded vertically--backward into
crude oil production and forward into wholesale and retail marketing-to
use its large-scale operations more effectively. On the other hand,
the formation of the American Tobacco Company in 1890 combined
five firms with their own marketing and purchasing activities into a
single unit that could both reduce costs and exercise tight control of the
industry.
COOPERATIVES EMERGE
During the years leading up to enactment of the Sherman Act,
cooperation sputtered but grew.
The retrenchment of the Granger movement 26 coincided roughly
with the emergence of a new agrarian society, the Farmers' Alliance.
As farm prices continued to fall from 1887 to 1890, the Alliance
membership grew. Its leader, Dr. C. W. Macune, promoted cooperatives
as an answer to the farmer' s worsening economic position.
The Alliance took a somewhat different approach to cooperative
structure than the Grange. The Grange emphasized the role of the
local associations, which could band together to work on problems too
big for a small, local cooperative to handle. This could be
characterized as the forerunner of the federated system.
The Alliance developed statewide associations to unite farmers
into larger, stronger cooperatives. County associations were primarily
governance vehicles, serving to elect delegates to policy positions in
the statewide associations. This approach became the model for
today' s large, centralized cooperatives.
But like their Granger forebears, the Alliance cooperatives gave
farmers a quick boost but then passed from the scene. The Alliance
tried to develop financing policies that minimized the amount of money
farmers were required to invest in their cooperatives. Up-front fees
were not sufficient to adequately capitalize the new ventures.
26 Supra, p. 10.
19