Interstate Commerce Act

The Interstate Commerce Act of 1887 is a United States federal law that was designed to regulate the railroad industry, particularly its monopolistic practices. The Act required that railroad rates be "reasonable and just," but did not empower the government to fix specific rates. It also required that railroads publicize shipping rates and prohibited short haul or long haul fare discrimination, a form of price discrimination against smaller markets, particularly farmers. The Act created a federal regulatory agency, the Interstate Commerce Commission (ICC), which it charged with monitoring railroads to ensure that they complied with the new regulations.

The Act was the first federal law to regulate private industry in the United States. It was later amended to regulate other modes of transportation and commerce.

The act was passed in response to rising public concern with the growing power and wealth of corporations, particularly railroads, during the late nineteenth century. Railroads had become the principal form of transportation for both people and goods, and the prices they charged and the practices they adopted greatly influenced individuals and businesses. In some cases, the railroads were perceived to have abused their power as a result of too little competition. Railroads also banded together to form pools and trusts that fixed rates at higher levels than they could otherwise command. Railroads often charged a higher price per mile for short hauls than for long hauls. The practice was decried as one that discriminated against smaller businesses.

Responding to a widespread public outcry, states passed numerous pieces of legislation. Through the 1870s various constituencies, notably the Grange movement representing farmers, lobbied Congress to regulate railroads. While the Senate would investigate and report its findings and recommendations in 1874, Congress declined to step in, mirroring the lack of consensus in approach. In the 1886 decision on Wabash, St. Louis & Pacific Railway Company v. Illinois however, the U.S. Supreme Court ruled that state laws regulating interstate railroads were unconstitutional because they violated the Commerce Clause of the Constitution, which gives Congress the exclusive power "to regulate Commerce with foreign nations, and among the several States, and with the Indian Tribes." With many of those questions of approach decided, Congress passed the Interstate Commerce Act the following year; it was signed into law by President Grover Cleveland on February 4, 1887.

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