476 Chapter 17 An Industrial Giant Emerges
commissions were incompetent and even corrupt.
When the Supreme Court, in the case of Wabash,
St. Louis & Pacific Railroad v. Illinois (1886),
declared unconstitutional an Illinois regulation out-
lawing the long-and-short-haul evil, federal action
became necessary. The railroad had charged twenty-
five cents per 100 pounds for shipping goods from
Gilman, Illinois, to New York City but only fifteen
cents to ship goods from Peoria, which was eighty-six
miles farther from New York. Illinois judges had held
this to be illegal, but the Supreme Court decided that
Illinois could not regulate interstate shipments.
Congress filled the gap created by theWabash
decision in 1887 by passing the Interstate
Commerce Act. All charges made by railroads “shall
be reasonable and just,” the act stated. Rebates,
drawbacks, the long-and-short-haul evil, and other
competitive practices were declared unlawful, and so
were their monopolistic counterparts—pools and
traffic-sharing agreements. Railroads were required
to publish schedules of rates and forbidden to
change them without due public
notice. Most important, the law
established an Interstate Commerce
Commission (ICC), the first federal
regulatory board, to supervise the
affairs of railroads, investigate
complaints, and issue cease and
desist orders when the roads
acted illegally.
The Interstate Commerce Act
broke new ground, yet it was nei-
ther a radical nor a particularly
effective measure. Its terms contra-
dicted one another, some being
designed to stimulate, others to
penalize, competition. The chair-
man of the commission soon char-
acterized the law as an “anomaly.”
It sought, he said, to “enforce
competition” at the same time that
it outlawed “the acts and induce-
ments by which competition is
ordinarily effected.”
The new commission had less
power than the law seemed to give
it. It could not fix rates; it could
only bring the roads to court when
it considered rates unreasonably
high. Such cases could be extremely
complicated; applying the law
“was like cutting a path through a
jungle.” With the truth so hard to
determine and the burden of proof
on the commission, the courts in nearly every
instance decided in favor of the railroads.
Nevertheless, by describing so clearly the right of
Congress to regulate private corporations engaged in
interstate commerce, the Interstate Commerce Act
challenged the philosophy of laissez-faire. Later legis-
lation made the commission more effective. The
commission also served as the model for a host of
similar federal administrative authorities, such as the
Federal Communications Commission (1934).Interstate Commerce Actat
http://www.myhistorylab.comThe Government Reacts to Big
Business: The Sherman Antitrust Act
As with railroad legislation, the first antitrust laws
originated in the states, but they were southern and
western states with relatively little industry, and most
of the statutes were vaguely worded and ill-enforced.ReadtheDocumentA farmer with a pitchfork, wearing a hat identifying him as a Granger, warns of an oncoming
railroad train. But the American people—one reads a newspaper, another smokes a cigar, but
most doze—are oblivious of the danger that will soon crush them.