The Granger Laws were a series of laws passed in several midwestern states of the United States, namely Minnesota, Iowa, Wisconsin, and Illinois, in the late 1860s and early 1870s. The Granger Laws were promoted primarily by a group of farmers known as The National Grange of the Order of Patrons of Husbandry. The main goal of the Granger was to regulate rising fare prices of railroad and grain elevator companies after the American Civil War. The laws, which upset major railroad companies, were a topic of much debate at the time and ended up leading to several important court cases, such as Munn v. Illinois and Wabash v. Illinois.
The railroads targeted by these laws, such as the Rock Island, Chicago & North Western, and the Milwaukee Road, are sometimes called "granger railroads."
The effects of the Granger Laws
Certain aspects of the Granger Laws varied from state to state, but all of the involved states shared the same intent: to make pricing of railroad rates more favorable to farmers, small rural farmers in particular, in the states. This common aspiration was a result of the laws being promoted heavily in state politics by the National Grange of the Patrons of Husbandry (Grange). The Grange was an organization of farmers that stretched throughout the Midwestern United States and filtered into the Southern United States. Despite the highest proportion of its members being in Kansas and Nebraska, the Grange were most effective in Illinois, Wisconsin, Iowa, and Minnesota, where the Granger laws were eventually passed. The farmers of the Illinois Grange wanted this because smaller rural farmers who tended to ship more locally were being charged such high rates that they were having a difficult time staying in business and making a profit. The U.S. Supreme Court ruled in 1886 that Illinois’ granger laws were unconstitutional because they attempted to control interstate commerce, which had been deemed a responsibility of the federal government by Gibbons v. Ogden (1824). Following the Wabash Case, Congress passed the Interstate Commerce Act of 1887, the first federal regulation of business in the United States. This act forced railroad companies to publish their rates with the government and banned railroads from charging different rates for short and long hauls. This 1887 act also created the Interstate Commerce Commission, which regulated the rates of railroads and ensured the rates remained “reasonable and just”. The Potter Law brought about this system of price fixing. The rates at which Wisconsin fixed the prices yielded little to no profits for the railroad companies. The fixing of rates led to many negative economic effects for the state. In the second year under the Potter Law, no Wisconsin railroad paid a dividend and only four railroads paid interest on their bonds. This led to a complete halt in railroad construction in the state, as the companies did not believe they would make a profit if they built more lines. In 1876, despite still being within constitutional bounds, the state of Wisconsin repealed the law in attempts to spur economic growth brought about by railroad construction.