When I set out to write a post on margarine versus butter, I had no idea it would lead to such a fun discovery. Turns out there has been a fascinating and comical fight between the two industries since margarine arrived in the country back in the late 1800s.
The original formula for margarine was invented during Napoleon III’s time to provide a cheaper alternative for French soldiers to get a butter-like substance. (Napoleon III was the first French president and then the last French monarch. Confused? I am. Here’s his Wikipedia). For a more detailed account on the invention, check out this great National Geographic article. I want to get to the fun stuff, so I’m skipping ahead.
Soon after margarine was invented, it came over to the U.S. Needless to say, dairy farmers in the U.S. were NOT happy with the arrival of margarine. Margarine provided a close substitute to butter. What happens when there are new substitutes to a product? Fewer people will want to buy butter and people will be more responsive to changes in price.
So, what did the butter industry do? They successfully (and maybe surprisingly) lobbied the government for various interventions to keep their competitor away.
Here are some things that the federal and local governments imposed (not necessarily in chronological order):
1. Federal Margarine Act of 1886 (Technically called the Oleomargarine Act): added a two-cent per pound tax on margarine and required annual licensing fees (2 cents is 55 cents in today’s dollars). It was signed into law by President Grover Cleveland and remained in effect until 1950. (House of Representatives)
2. Maine, Michigan, Minnesota, Pennsylvania, Wisconsin, and Ohio BANNED margarine. The ban in Wisconsin lasted until 1967!!
3. Over 30 states issued anti-color laws to keep margarine companies from dying margarine yellow, arguing that it could confuse and defraud customers who thought they were eating butter. (Meanwhile, butter companies also were dying their butter yellow to increase the appeal).
4. Five states required that margarine was dyed pink – PINK! (Although this was declared unconstitutional in 1898).
Why did governments impose these restrictions? Well, Dupre (1999) shows that there was a strong correlation between votes to tax margarine and the butter-industry in those states. In other words, in states where the butter industry was strong and there was more to lose from margarine, congressional votes were higher (good lobbying). There was also a smear campaign against margarine: “Pro-butter political cartoonists pictured factories dropping everything from stray cats to soap, paint, arsenic, and rubber boots into the margarine mix” (National Geographic)
The above were just the initial actions by the butter industry / government interventions. Then came the really funny stuff (well, requiring margarine to be pink and claiming that rubber boots went into it is pretty funny).
Let’s go back to the color of margarine. On its own, and especially when it was originally created, margarine was apparently a pasty white substance. Not surprisingly, it’s less appealing to eat white paste than the more buttery color of yellow. As a result, the fight between the butter and margarine industries became bizarrely focused on the color of margarine. Here is the back and forth that followed:
Dairy Industry: The 1886 Margarine Act was amended in 1902 to require a 10-cent tax on artificially butter-colored margarine. The average wholesale price of margarine was only 13.2 cents per pound in 1900, so the tax would be a substantial increase. (Dupre, 1999). (By the way, 10 cents in 1902 is equivalent to around $3 today!).
Margarine Industry: That tax was really prohibitive (it would ruin the market). Margarine companies reacted by developing a way to naturally color margarine yellow by using different types of vegetable oils.
Dairy Industry: The dairy industry fought back and lobbied for a new amendment to the 1886 Margarine Act such that that ALL yellow margarine had to be taxed in 1930 (regardless of the reason for the color).
Margarine Industry (my favorite part): Margarine companies began selling margarine ALONG WITH yellow dye. Just imagine, you buy a product and have to add color to it, so that there is no tax on it. Genius! For some awesome images of the packaging, click here.
Finally, in 1950, the Margarine Act was repealed. Wisconsin was the lone state holding out for a while on the ban of margarine. People in Wisconsin would cross borders just to get margarine – just like alcohol when liquor stores closed in Pennsylvania at the beginning of the lock-down!
What should you take away from this from an economic perspective:
- Firms would prefer few competitors and they will do their best to decrease competition. In this case they successfully lobbied the government to intervene.
- Firms respond to incentives. What did the margarine industry do so they didn’t have to pay a tax on yellow margarine – they developed a way to skirt the tax by giving customers the dye to turn margarine the color they wanted.
Now there is a whole other story that I could tell about the changes in tastes and preferences for margarine versus butter, but I’ll leave that for another time.
**And just in case you think the U.S. was harsh on margarine, Canada prohibited margarine entirely from 1886 to 1949. ***
Dupre, Ruth. 1999. "If It's Yellow, It Must be Butter": Margarine Regulation in North America Since 1886." The Journal of Economic History. Vol. 59, No. 2, pp. 353-371
Rupp, Rebecca. 2014. "The Butter Wars: When Margarine Was Pink." National Geographic https://www.nationalgeographic.com/culture/food/the-plate/2014/08/13/the-butter-wars-when-margarine-was-pink/#close
Mickle, W. T.1941. "Margarine Legislation." Journal of Farm Economics. Vol. 23, No. 3, pp. 567-583.
White, April. 2017. "When Margarine was Contraband." JSTOR Daily.
Young, Adam. 2002. "The War on Margarine." Foundation for Economic Education. https://fee.org/articles/the-war-on-margarine/
Chili Breakfast Rolls
I’ve been eating these chili breakfast rolls my whole life, but they were ‘invented’ a long time before that. A recipe from my dad’s mom, they provide a perfect recipe for this post. Not only does it call for margarine (as all of my grandparents’ recipes did), it uses Bisquick. Bisquick was invented in the 1930s, around the time that people were mixing yellow dye into their margarine. These are similar to the Betty Crocker Sausage Cheese Balls, but I think they are better with a higher ratio of sausage and no cheese.
Chili Breakfast Whirls
2 cups biscuit baking mix
¼ cup margarine, melted
½ cup milk
1 lb. hot pork sausage (if you can find it)
1 can green chili, chopped
Mix well: biscuit mix, milk, and margarine. Refrigerate it for around ½ an hour.
Meanwhile mix sausages and green chili – let stand to room temperature or at least until it is easy to work with.
Get dough out of refrigerator and divide it in half. Roll out dough into a large rectangle about ¼ inch thick. Spread sausage mix completely over each piece of dough.
Roll up like you would for cinnamon rolls or a jelly roll.
Wrap in plastic wrap or foil and freeze for 1 hour. This will allow you to cleanly slice the rolls.
Remove the log from the freezer and slice.
Bake immediately or freeze until ready to use.