Interstate Commerce Act 24 Stat. 379 (1887)

• Author: David Gordon
• Pages: 1396-1397

Page 1396

This act, which initiated federal authority in ECONOMIC REGULATION, created an administrative commission to wield federal power. Congress's approach, in Isaiah Sharfman's words, was "tentative and experimental" because doubts existed whether the government could so act. The

Page 1397

legislation nevertheless marked a first attempt to organize an increasingly chaotic field.

Until the 1870s railroads had been free to expand and operate, essentially unregulated, yet encouraged by land grants and public subsidies. As speculation, rate discrimination, and other abuses increased, popular opinion grew correspondingly negative. State legislatures, especially in the Midwest, began setting maximum rail rates and establishing commissions to maintain their reasonableness. Although the Supreme Court sustained such regulation in the GRANGER CASES (1877), it soon retrenched and, in Wabash, St. Louis & Pacific Railway v. Illinois, (1886) the Court asserted the states' inability to regulate rates even partly interstate. The Court thus created a vacuum?the states could not regulate and Congress had not regulated.

Compromise legislation finally passed Congress in 1887, the outcome of over 150 bills in nearly twenty years. The act applied to "any common carrier or carriers engaged in the [interstate or foreign] transportation of passengers or property," and specifically exempted INTRASTATE COMMERCE. Reiterating the COMMON LAW, the act ordered all charges to be "reasonable and just." The act created the INTERSTATE COMMERCE COMMISSION (ICC), empowered it to set aside unjust rates, but neglected to give it the power to replace them with new ones. The ICC also had authority to investigate complaints; significantly, an individual need not demonstrate direct damage to file a complaint. Several sections forbade devices such as rebates, pooling, and LONG HAUL-SHORT HAUL DISCRIMINATION. The act also required publication of rate schedules, rendering the carriers liable for injuries sustained as a result of any violations. Courts were to consider ICC findings prima facie EVIDENCE but commission orders became effective immediately only if voluntarily obeyed. Carriers took advantage of this loophole to APPEAL virtually every order, leaving them free to disregard the ICC until a court sustained it. Demanding to hear cases de novo, the courts implicitly invited the carriers to withhold evidence from the ICC; courts reversed ICC orders...