Interstate Commerce Act
The Interstate Commerce Act was a U.S. federal law enacted in 1887 to regulate the railroad industry and ensure fair and reasonable rates for shippers. It established the Interstate Commerce Commission (ICC) to oversee and enforce the regulations, marking the first time the federal government intervened in private business to promote the public interest. The Act laid the foundation for future government regulation of industry.
6 Key excerpts on "Interstate Commerce Act"
- John T. Jones(Author)
- 2014(Publication Date)
- Routledge(Publisher)
...The railroad pool continued to lobby and push for measures that would strengthen the collusive bonds between the railroads. In 1887, the Interstate Commerce Act was signed by President Cleveland, and the Interstate Commerce Commission (ICC) was formed. The first Chairman of the Commission, Thomas M. Cooley, was a conservative railroad man. The other commission members were also connected in some form with the railroad industry (Moore 1972, 11–12). The Interstate Commerce Act of 1887, which authorized the existence of the ICC, was designed to stabilize the seemingly chaotic railroad industry (Teske, Best and Mintrom 1995, 25). The Act forbade price discrimination and discounts, as well as geographical discrimination. All of these were problems inhibiting collusion that the railroad pool wanted to eliminate. The Act required railroads to publish their rates which reduced rogue railroads’ ability to rapidly change their rates and weaken price competition. Eventually, regulations formed barriers to entry into and exit from the railroad industry by reducing a railroad’s ability to abandon unprofitable lines. The apparent goal was to prevent competition between railroads by setting up each railroad as a local monopoly with specific routes that competitors were forbidden to use and to make it prohibitively costly to enter a market. The complete cartelization of the railroad industry was not possible until the enactment of the Transportation Act of 1920. The Transportation Act authorized the ICC to control minimum rates set by railroads (Moore 1972, 22) Controlling minimum rates limited the railroads’ ability to undercut the ICC prescribed rates for the rail industry. In essence, the one element that leads to the destruction of cartels—cheating on collusive pricing agreements—was essentially eliminated by the Transportation Act of 1920. In the early 1900’s railroads were the main mode of transporting freight. In 1929, as much as three-quarters of the U.S...
eBook - ePubCreating U.S. Democracy: Key Civil Rights Acts, Constitutional Amendments, Supreme Court Decisions & Acts of Foreign Policy (Including Declaration of Independence, Constitution & Bill of Rights)
The Most Important Legal Documents, Established Principles & Crucial Court Cases Which Built the America as We Know It
- U.S. Government, U.S. Supreme Court, U.S. Congress(Authors)
- 2017(Publication Date)
- Madison & Adams Press(Publisher)
...Interstate Commerce Act (1887) Table of Contents Be it enacted. . ., That the provisions of this act shall apply to any common carrier or carriers engaged in the transportation of passengers or property wholly by railroad, or partly by railroad and partly by water when both are used, under a common control, management, or arrangement, for a continuous carriage or shipment, from one State or Territory of the United States, or the District of Columbia, to any other State or Territory of the United States, or the District of Columbia, or from any place in the United States to an adjacent foreign country, or from any place in the United States through a foreign country to any other place in the United States, and also to the transportation in like manner of property shipped from any place in the United States to a foreign country and carried from such place to a port of transshipment, or shipped from a foreign country to any place in the United States and carried to such place from a port of entry either in the United States or an adjacent foreign country: Provided, however, That the provisions of this act shall not apply to the transportation of passengers or property, or to the receiving, delivering, storage, or handling of property, wholly within one State, and not shipped to or from a foreign country from or to any State or Territory as aforesaid. The term "railroad" as used in this act shall include all bridges and ferries used or operated in connection with any railroad and also all the road in use by any corporation operating a railroad, whether owned or operated under a contract, agreement, or lease; and the term "transportation" shall include all instrumentalities of shipment or carriage. All charges made for any service rendered or to be rendered in the transportation of passengers or property as aforesaid, or in connection therewith, or for the receiving, delivering, storage, of...
eBook - ePub- Robert E. Gallamore, John R. Meyer(Authors)
- 2014(Publication Date)
- Harvard University Press(Publisher)
...Because they were “the nation’s first big business,” the railroads had been forced into a pioneering role on many public policy issues involving business and government interactions. This might be called the revenge of the Populists—payback for railroad managers’ misbehavior over the previous three or four decades. As we saw in the previous chapter, Progressive Era legislation required publication of railroad tariffs in interstate commerce, nondiscriminatory application of these rates among persons and places, and control of both maximum and minimum fares or rate levels so that they were “just and reasonable,” as determined by the Interstate Commerce Commission (ICC). Only three years after passage of the Act to Regulate Commerce in 1887, Congress tried again with the Sherman Antitrust Act of 1890 to attack many of these same political concerns with a much different approach and from a much broader platform. Now the fires of reform were fed not by Granger activists protecting local movements of grain to market, but by journalists pointing out widespread abuses of the public trust by greedy “monopolists” cornering industry output or financial securities, and taking appalling shortcuts with respect to broad social concerns such as worker safety, child labor, and food purity. The politicians’ desires to accomplish two goals came together precisely at the turn of the twentieth century. These goals were (1) to regulate rates charged by the powerful railroads, and (2) to prevent further “monopolization” of markets through combinations, pooling of financial interests, or trade restraints. Until new laws strengthening rate regulation were passed in the first years of the new century (1903, 1906, and 1910), however, the ICC was not respected as a regulator of rates...
eBook - ePubThe Rise of Law and Economics
An Intellectual History
- George L. Priest(Author)
- 2020(Publication Date)
- Routledge(Publisher)
...2 The early development of the functional approach to law Though there were surely earlier precursors, the beginning most directly related to the modern use of the law functionally, to achieve identifiable economic effects, was the adoption of regulatory systems by many states. Massachusetts imposed regulation on railroads in 1871. State regulation was resisted by industry, but was held to be allowed by the U.S. Constitution in 1877, in a case involving the regulation of grain elevators (Munn 1877). The economic effect of these early regulatory efforts is not clear. They were designed to prohibit the most extreme forms of price fixing or revenue pooling, but their ultimate economic influence on societal welfare remains largely unmeasured. The effect of these new ambitions for state government, implemented through the law, on the consideration of private law issues has also not been studied. As firms in a great many American industries began to consolidate after the Civil War, advanced attention was given to means of controlling industrial behavior. Many states enacted anti-trust laws in the 1880s. 1 The U.S. Congress created the first agency to regulate an industry in 1887: the Interstate Commerce Commission, which was assigned the duty of regulating railroads. The principal provisions of the Interstate Commerce Act were to prohibit railroad pooling of revenues (which, obviously, was a method to share the resources from fixed prices); to regulate railroad tariffs, though not to directly set rates, but in particular to prevent railroads from granting rebates to shippers; and to eliminate differential rates, as between long- and short-haul transport. 1 Trusts were a legal technique of allowing firms to coordinate interstate commerce, since state incorporation grants at the time almost uniformly prohibited corporations within a state from ownership of shares of out-of-state corporations...
eBook - ePub- Kristofer Allerfeldt, Kristofer Allerfeldt(Authors)
- 2017(Publication Date)
- Routledge(Publisher)
...47). According to Kolko, “The railroads themselves could not have chosen a more sympathetic regulator … for Cooley completely identified himself with the railroads’ interests from at least 1882 on” (p. 47). Generalizing, he says, “Indeed, it is not unreasonable to assert that the primary commitment of the major directors of Commission policy was essentially pro-railroad” (p. 234). Presumably on the basis of the alleged prorailroad bias of a majority of the commissioners, Kolko concludes, “The Interstate Commerce Act was a bitter harvest for the farmers and merchants” (p. 53) and “railroad regulation essentially represented an internal class affair. The vast majority of farmers and the consumers were powerless and forgotten” (p. 56). In support of these sweeping strictures he relies principally on three lines of evidence, namely, (1) the nature of the Commission’s procedure, (2) its administration of the long-and-short-haul clause of the Act, and (3) its policies in connection with the early general rate advance cases. These will be examined in turn. With respect to the first of these matters, Kolko condemns the Commission’s heavy reliance upon informal settlement of complaints through investigation and correspondence as being “without authorization in law” (p. 153) and as prejudicial to the rights of shippers, in that it delayed or deterred resort to formal complaints and “essentially allowed the roads to judge themselves” (p. 56); “If the railroad was charitable the shipper was not greatly inconvenienced by this system” (p. 68)...
eBook - ePub- Harold Underwood Faulkner(Author)
- 2017(Publication Date)
- Routledge(Publisher)
...The transformation of the American railroad systems from a conglomeration of hundreds of independent lines to seven or eight huge combinations took place largely after 1897. Where such consolidations did not achieve an area monopoly, the railroads, as in New England, often reached out to control other types of transportation. Despite the fact that the railroads were admittedly consolidating to eliminate competition that endangered efficiency and profits, the Hepburn Act showed little interest in the strictly monopolistic aspects of the problem. An exception to this statement was the clause forbidding the railroads to carry commodities in interstate commerce (with some exceptions) produced or manufactured by companies owned or controlled by the carriers. The emphasis in the act was on the extension of government controls, perhaps on the theory that the Sherman Act, as interpreted by the courts, had taken care of the monopoly problem. Consolidation, of course, could and often did promote economy and efficiency in railroad transportation and much of it was for public as well as private benefit. It was not, however, until the Transportation Act of 1920 that Congress realized this fact sufficiently to encourage consolidation by federal legislation. Whether through internal consolidation or the increase of external supervision, the decline of laissez faire had been rapid. The revival of old forms of transportation, such as river and canal transportation and the construction of a new American merchant marine, seemed to point to a renewal of competition and free enterprise in the field of transportation. The appearance of the automobile promoted this tendency. But the results were to strengthen the pattern of government control as well as to revive competition. Rebuilding of canals and canalizing of rivers was done almost entirely by state and federal funds. Few projects were the result of private initiative...
