In my opinion, Iodine was only added to flour as a prophylaxis against potential thyroid cancer as a result of atmospheric testing in Nevada in the '50s(60s... I'm not sure when that ended). It was NOT added to bread as a source of Iodine because we need it, salt was already iodized for that purpose.
The oft-repeated "and then they took the Iodine out, and added potassium bromate to the bread" is incomplete info, although it certainly makes for a good story.
The adulteration of food goes back a long way in history, as long as there have been people desiring to profit from selling food to other people, there have been those that will try to figure out how to make the most product for the least amount of money regardless of these cost cutting measures effects on the wholesomeness or healthfulness of the food. Caveat Emptor.
The use of potassium bromate as a dough conditioner goes back to at least the 20s. There were studies that showed that the use of potassium bromate(along with other chemical goodies) made for a more uniform loaf in a wide geographical area(different baking conditions, humidity, etc). Yeast raised breads also showed a loss of "dry matter"(as in, the actual stuff that it takes to make a loaf of bread) from the action of the yeast. The use of these chemical cocktail "yeast foods" reduced that loss of dry matter. in other words, saved money!
So, the legislation? If that were public then we would know that the U.S. government knowingly put it's citizens in harms way, we'll never see it.
I'd like to know where the person that initially wrote that "they put iodine in, and then took it out" got his or her info. That's been repeated so often that we'll never know the source.
This is the most complete discussion on iodine in bread that I've been able to find, "Iodine nutriture in the United States: summary of a conference, October 31, 1970 By National Research Council (U.S.). Food Protection Committee"
My conclusions from reading this is that bread was not thought of as a reliable source of iodine for some population groups(women on diets, etc), excessive iodine caused problems in other population groups(over 50, the usual), and iodine sufficiency interferes with medical imaging:)