The Interstate Commerce Act of 1887 shifted the responsibility of regulating the US economy from individual states to the federal government, creating the Interstate Commerce Commission (ICC). The act required rail and shipping rates to be reasonable and fair, outlawed secret discounts and price discrimination, and gave the ICC the power to enforce its provisions against the railroads. The act has been amended several times, giving the ICC the power to regulate transportation on pipelines, waterways, highways, and railways.
The Interstate Commerce Act of 1887 regulates shipping between the 50 states of the United States (USA). Overall, the act shifted the responsibility for regulating the US economy from individual states to the federal government. Among the major changes the act made, it required that rail and other shipping rates be reasonable and fair, that rates must be published, and that a railroad must give at least ten days’ notice before changing its rates. The act outlawed secret discounts and price discrimination against small markets. Additionally, the act created the Interstate Commerce Commission (ICC), the nation’s first federal regulatory agency.
As the power and wealth of the railroad companies increased during the 1800s, so did public concern about the railroads’ abuses of power. In many places in the United States, the railroads had little or no competition, which allowed them to charge artificially high fares. The railroads also conspired with one another to set high fares for passengers and freight, and charged higher fares for short trips than long ones. Because railroads were the primary means of transportation for people and goods, the artificially high fares affected the entire nation.
To combat high prices, many states have passed laws regulating passenger and freight rates. In 1886, however, the United States Supreme Court ruled that these laws violated the Commerce Clause of the United States Constitution, which stated that Congress had the exclusive power “to regulate commerce with foreign nations, and between various states, and with Indian tribes. In response to the Supreme Court decision, Congress passed the Interstate Commerce Act which was signed into law by President Grover Cleveland in 1887.
The Interstate Commerce Act gave the ICC the power to enforce its provisions against the railroads. In general, the ICC could hear complaints against the railroads, hold hearings, and issue cease and desist orders against railroads engaging in unfair practices. The ICC was not always successful in enforcing the act, however, due to a lack of funding or pro-rail commissioners, and was not allowed to set rail fares itself.
Since 1887, the Interstate Commerce Act has been amended several times. The amendments gave the ICC the power to regulate shipping and transportation on pipelines, waterways, highways and railways. The 1983 and 1994 revisions simplified and reorganized the law, but did not add any substantive provisions.
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