INTERSTATE COMMERCE ACT
The Interstate Commerce Act of 1887 (24 Stat.
379 [49 U.S.C.A. § 1 et seq.]) stands as a water-
shed in the history of the federal regulation of
business. Originally designed to prevent unfair
business practices in the railroad industry, the
statute shifted responsibility for the regulation
of economic affairs from the states to the federal
government. It has been amended over the years
to embrace new and different forms of interstate
transportation, including pipelines, water trans-
portation, and motor vehicle transportation.
Among its many provisions, it established the
INTERSTATE COMMERCE COMMISSION (ICC).
As part of its mission, the ICC heard com-
plaints against the railroads and issued cease-
and-desist orders to combat unfair practices. It
later regulated many other forms of surface trans-
portation, including motor vehicle and water
transportation. The ICC was abolished in 1995,
and many of its remaining functions were trans-
ferred to the TRANSPORTATION DEPARTMENT.
The Interstate Commerce Act was passed as
a result of 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 people and goods, and the
prices they charged and the practices they
adopted greatly influenced individuals and busi-
nesses. In some cases, the railroads abused their
power as a result of too little competition, as
when they charged scandalously high fares in
places where they exerted MONOPOLY control.
Railroads also grouped together to form trusts
that fixed rates at artificially high levels.
Too much competition also caused prob-
lems, as when railroads granted rebates to large
businesses in order to secure exclusive access to
their patronage. The rebates prevented other
railroads from serving those businesses. Larger
railroads sometimes lowered prices so much
that they drove other carriers out of business,
after which they raised prices dramatically. Rail-
roads often charged more for short hauls than
for long hauls, a scheme that effectively discrim-
inated against smaller businesses. These schemes
resulted in BANKRUPTCY for many rail carriers
and their customers.
Responding to a widespread public outcry,
states passed laws that were designed to curb
railroad abuses. However, in an 1886 decision,
Wabash, St. Louis, & Pacific Railway Co. v. Illi-
nois, 118 U.S. 557, 7 S. Ct. 4, 30 L. Ed. 244, the
U.S. Supreme Court ruled that state laws regu-
lating interstate railroads were unconstitutional
because they violated the COMMERCE CLAUSE,
which gives Congress the exclusive power “to
regulate Commerce with foreign nations, and
among the several States, and with the Indian
Tribes” (art. I, § 8).Wabash left a regulatory void
