U.S. Markets closed

If You Drink Milk, Thank Big Government

Stephen Mihm

(Bloomberg Opinion) -- Elsie the Cow may be reaching the end of her days. The venerable Borden Dairy Co. filed this month for bankruptcy protection, citing declining sales. It’s not the first big milk producer to take this step in the past year: Dean Foods Co. filed for bankruptcy in November. But there’s something symbolic about Borden going bust: The company, founded in 1857, is one of those iconic brands that is inseparable from America itself.

This is sad news, but an opportune time to consider the little-appreciated ways that capitalist enterprise and government regulation went hand-in-hand to create the modern milk business that Borden once represented.

When asked the now-famous question “Got Milk?” most people in the colonial era would have answered in the negative. Family cows didn’t always produce a steady supply, and most people drank far more in the way of hard cider. In the absence of refrigeration, families turned what little milk they did collect into cheese or a fermented goop known as clabber.

The idea of starting the day with a tall glass of milk didn’t really take off until the rise of cities in the 19th century. This was a bit paradoxical: A consumable associated with bucolic rural life was actually a product of modern, urban living — specifically, the way that city life transformed how women nursed babies.

In the new cities, a combination of poverty and poor nutrition — along with a breakdown in cooperative nursing circles — meant that new mothers couldn’t sustain their infants on breast milk alone. They turned to cow’s milk, and the demand sparked a growth in the supply. But therein lay a problem.

Milk brought into cities from the surrounding countryside could easily spoil. Production was unregulated, and milk from hundreds of farms was combined into single shipments. One diseased cow could poison an entire batch.

This arrangement was preferable to urban dairies. As the historian Timothy Lytton has documented, brewery and distillery owners in the 1820s discovered that cows would eat the slop left behind after fermenting grains. Soon, cities had numerous “swill milk” dairies next to distilleries.

Cows that would never see the light of day would be penned up in horrific conditions and fed hot, steaming piles of mash. Manure was rarely removed, and cows developed a host of diseases, most notably bovine tuberculosis. Most lived only a year or two in these conditions.

The milk they produced often had a strange blue color to it, and lacked the usual butterfat. But it was the contaminants in the milk that made it so dangerous. Swill dairies milked diseased cows until they keeled over, with predictable consequences. Dairies also watered down their milk with municipal water teeming with germs. Little wonder that infant mortality rates hit 50% in some cities.

Enter a man whose name would become synonymous with milk: Gail Borden. An inventor and entrepreneur, Borden patented a method for condensing milk using a vacuum process. After struggling in the late 1850s, he built a factory near hundreds of small-time rural dairies, buying only raw milk that met certain basic standards of cleanliness. He then condensed the milk and canned it, making a product that would not spoil.

The newfangled milk didn’t immediately attract buyers. It was a strange idea, really, and Borden’s company struggled. Then came the Civil War. A government official desperate to get milk and sugar for soldiers’ coffee made the fateful decision to hire Borden’s company to deliver 500 pounds of condensed milk.

This single order led to many more, and by 1863, Borden’s growing network of factories was producing 14,000 quarts of condensed milk a day. As Deborah Valenze, a historian of milk, wrote: “This was not to be the last time that a contract from government propelled a struggling company into the front ranks of American business.”

In the late 19th century, most city-dwellers continued to buy conventional milk, not the safer condensed stuff, and infant mortality rates remained at eye-popping levels. A growing number of private, philanthropic efforts tried to reform the milk supply by creating certification programs or promoting pasteurization. But it was only when the state and city governments began cracking down on distillery dairies and other abuses that things began to change.

New York City’s efforts were typical of the movement. In 1905, the city’s health commissioner, Thomas Darlington, began inspecting milk shipped into the city as well as milk produced within its borders. This was a major expansion in government’s role, with thousands of unannounced inspections of dairies and distributors. In 1906, Darlington bragged that “not a drop of impure milk can now break through the cordon of inspection guarding every entrance to the city, not a drop can reach the consumer which has not been tested, nor can a drop get to the table for which we have not a complete history.”

In 1905, Chicago also passed a set of regulations, and local producers cried foul. The Chicago Tribune reported that dairies continued to promote swill milk, and that the “Borden Milk company, which the dairymen brand a ‘trust’ … is at the bottom of their troubles.” Why? Because Borden lobbied for the regulations.

Hard to understand now, perhaps, but certain big businesses in the Progressive Era saw an opportunity in increased regulation. Large vertically integrated companies like Borden, which had already instituted rigorous quality-control programs, could readily meet the new regulations in a way that smaller, independent dairies and distributors could not.

The movement would eventually go national. President Theodore Roosevelt appointed public-health crusader Milton Rosenau as a sort of milk czar, charged with conquering contamination in the nation’s dairy supply. In his manifesto, “The Milk Question,” Rosenau declared that real problem with milk production lay in the small-time producers, which were too numerous and scattered to regulate.

“The day of the small dairy man is doomed,” Rosenau wrote. “The production of milk will gradually and inevitably drift into the hands of larger dairies where economic conditions justify competent assistants, skilled supervision, and efficient equipment.” In Rosenau’s vision, big corporate combines were “a power for great good in the milk industry.” He wrote, “It is evidently much easier to control, educate, and regulate a few large contractors than hundreds of small independent dealers.”

Borden was perfectly positioned to take advantage of this push toward consolidation, particularly after Rosenau and a diverse coalition of reformers and regulators promoted the idea of mandatory pasteurization laws. In fact, Borden had already embraced pasteurization, billing its milk as safer than the competition.

The company therefore threw its weight behind mandatory pasteurization laws in states and cities across the country. The upshot was a further consolidation. In places that passed mandatory pasteurization laws, Borden and its main competitor, National Dairy, began buying up competitors unable to upgrade. When Milwaukee passed a mandatory pasteurization law in 1914, it had 232 distributors. Six years later, only 32 remained. And Borden was now a much bigger company.

This dialectic — more regulation begetting more consolidation — would continue unabated through the 20th century. Borden was hardly alone in benefiting from this transformation of the industry, but it was very much at the forefront.

As milk became safer and cheaper, it became the drink of choice. When combined with a host of other government initiatives — New Deal subsidies and price supports, school-lunch programs, and others — big milk became further entrenched in the nation’s diet.

But then, beginning in the 1970s, milk consumption began its slow, steady decline that has helped fuel the Borden bankruptcy. The conventional explanation is that Americans started consuming other drinks: fruit juices, for example, and eventually, milk substitutes.

But why, exactly? Regulation may have played a role here, too. The federal government introduced food labels in 1973, with a growing number of products eventually forced to confess the amount of healthy and unhealthy contents. Guidelines established in 1977 targeted a few villains. Foremost among these was fat.

Milk was full of fat — never mind cheese and butter. Skim milk wasn’t nearly as tasty. And so, as the government’s war on fat revved up, milk consumption began to drift downward. It was replaced by beverages that, though loaded with sugar, didn’t contained the dreaded fat and cholesterol associated with conventional dairy.

The story of milk is a strange one indeed. Its pride of place in the nation’s diet is a function of regulation. But so, too, may be its long, inexorable decline.

To contact the author of this story: Stephen Mihm at smihm1@bloomberg.net

To contact the editor responsible for this story: Stacey Shick at sshick@bloomberg.net

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Stephen Mihm, an associate professor of history at the University of Georgia, is a contributor to Bloomberg Opinion.

For more articles like this, please visit us at bloomberg.com/opinion

Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.