Eventually aid from the federal government improved conditions and bought modernization such as rural electrification and highway construction. In the 1940s World War II created a demand for beef, and brought new technologies that would allow the cattle industry to grow. It also brought price controls and black markets.

World War II Price Controls and Black Market Beef
Even before the United States entered World War II on December 7, 1941, food was a strategic commodity. Through the Lend-Lease program established in March 1941 the United States was providing critical foodstuffs to Allied Nations including England, France, China, and the Soviet Union. 

With its entry into the War, the United States faced a huge problem in assuring an adequate supply of food for its troops and its citizens. Beef was a critical element in the food supply chain.

One strategy used by the Roosevelt administration was to create the Office of Price Administration (OPA) to control wartime inflation and ration scarce essential commodities. The OPA set ceiling prices for beef, hogs, and corn designed to keep profit margins at about the same levels they had been in the pre-war years.

The OPA controlled prices from cattle sales, through packing house production, to retail prices for meat at the butcher counter. They also established a rationing system of assure that everyone had an adequate supply of meat and other essentials. Ration stamps were issued to every man, woman and child, and households struggled to budget stamps and put meat on the table.

So, if a consumer wanted a pound of steak he or she went to the meat market and—if there was meat in the butcher’s case—paid the ceiling price of sixty cents plus one red ration stamp.     

The ceiling price for beef was low, but the OPA set corn prices artificially high.  They also placed a floor (the lowest price paid) on hogs. These price differentials encouraged hog production a desired goal for several reasons: First, hogs mature faster than cattle, shortening the time from birth to slaughter and increasing available supplies. Second, lard was used in the manufacture of munitions.

For ranchers and feeders the high price of corn and the low ceiling price on cattle made it economically unfeasible to fatten cattle on corn. Instead, ranchers kept their cattle in pastures and brought them up to sale weight on grass, which took more time than fattening them on corn. Moreover, because of the ceiling prices that meat packers could charge meat markets and grocery stores they preferred to buy the lighter, cheaper grass-fed cattle rather than the more expensive, fatter corn-fed animals.

The result, however, was a beef shortage that, in turn, created a lucrative black market.