The “Tuberculous Cattle Trust”: Disease Contagion in an Era of Regulatory Uncertainty

By 1900 scientific breakthroughs revealed that bovine tuberculosis was a serious and growing threat to animal and human health. Early private and state initiatives in the U.S. to address the problem were often counterproductive because they increased the incentives for the interstate trade of diseased stock. Our investigation shows that just one unscrupulous dealer exposed thousands of dairy herds and families to the disease. The story bears on the broader economics literature because it helps explain the expanding federal role in regulating food safety. In this case regulations arose from genuine health concerns. Moreover, before the development strict regulatory policies, diagnostic innovations that could have helped prevent the spread of the disease actually made the operation of markets worse by increasing asymmetric information problems.