The Hepburn Act, passed in 1906, regulated the railroad industry and limited the power of monopolistic oil companies. It expanded the power of the Interstate Commerce Commission and set maximum rates for railway services. The law was part of the Progressive Era’s efforts to limit industrial monopolies.
The Hepburn Act is a piece of legislation passed by the United States Legislature in 1906 whose purpose was to regulate the railroad industry. At the time, monopolistic oil companies exercised their power over the railroads, and the Hepburn Act was a measure to check the growing power of those companies. The law took several steps to prevent monopolistic behavior and expanded the power of the Interstate Commerce Commission (ICC), the government agency charged with regulating railroads.
One of Theodore Roosevelt’s primary goals upon entering the presidency was to better regulate the railroads. The Hepburn Act, along with the Elkins Act, which was passed by the US Legislature just three years earlier, served to do just that. The law was part of the line of legislation enacted during the Progressive Era, which lasted from the 1890s to the 1920s, aimed at limiting the power of the growing number of industrial monopolies.
The biggest problem in the railroad industry at the time of the Hepburn Act was the amount of power the oil companies had over the various companies. The oil companies had invested so heavily in the railroads that they were able to demand rebates on the fees paid for the transit of their oil. After the Elkins Act made such discounts illegal in 1903, oil companies managed to get around that particular regulation by requiring free transit in some circumstances. The Hepburn Act limited the granting of these free passes, making it harder for oil companies to use their leverage to avoid paying taxes to rail companies.
The Hepburn Act also expanded the power of the Interstate Commerce Commission in several ways. After the law was passed, the ICC was able to dictate the maximum rates that the railways could charge for their services. The ICC also began requiring that rail companies adopt uniform accounting practices, which gave the ICC better ability to oversee operations. Furthermore, after the passage of the Hepburn Act, if a railway company were to challenge a decision of the ICC, the burden of proof now fell on the railway rather than on the ICC. In other words, the railroads had an obligation to show why the ICC was wrong on the appeal, whereas before the passage of the Hepburn Act, the ICC had an obligation to show why the particular railroad was in the wrong.
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