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What is the Interstate Commerce Act?

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  • Written By: Dani Alexis R.
  • Edited By: J.T. Gale
  • Last Modified Date: 29 October 2016
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The Interstate Commerce Act of 1887 regulates shipping among the 50 states in the United States (US). Generally, the act shifted responsibility for regulating the US economy from the individual states to the federal government. Among the major changes the act made, it required railroad and other shipping rates to be reasonable and just, that rates had to be published, and that a railroad had to give at least ten days' notice before changing its rates. The act outlawed secret rebates and price discrimination against small markets. Also, the act created the Interstate Commerce Commission (ICC) — the nation's first federal regulatory agency.

As the power and wealth of railroad corporations increased during the 1800s, so did the public's concern about the railroads' abuses of power. In many places in the US, railroads had little or no competition, which enabled them to charge artificially high rates. Railroads also conspired with one another to fix high rates for passengers and shipping, and charged higher rates for short hauls than for long ones. Because railroads were the primary means of transportation for people and goods, the artificially high rates affected the entire nation.

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To combat the high prices, many states passed laws regulating rates for passengers and shipping. In 1886, however, the US Supreme Court ruled that such laws violated the Commerce Clause of the US Constitution, which stated that Congress had the exclusive power "to regulate Commerce with foreign nations, and among the several States, and with the Indian Tribes." In response to the Supreme Court's decision, Congress passed the Interstate Commerce Act that was signed into law by president Grover Cleveland in 1887.

The Interstate Commerce Act gave the ICC the power to enforce its provisions against railroads. Generally, the ICC could hear complaints against the railroads, hold hearings, and issue cease-and-desist orders against railroads that engage in unfair practices. The ICC was not always successful in enforcing the act, however, due to lack of funding or pro-railroad commissioners, and was not allowed to fix railroad rates itself.

Since 1887, the Interstate Commerce Act has been amended several times. Amendments have given the ICC the power to regulate shipping and travel over pipelines, waterways, and highways as well as railroads. Revisions in 1983 and 1994 simplified and reorganized the act, but did not add any substantive provisions.

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mobilian33
Post 3

When railroads and other large businesses began to complain about the regulations and investigations of the Interstate Commerce Commission, they eventually got what they wanted when Presidents began to appoint people, who were pro railroad and big business to the commission.

The railroads didn't get back as much power as they had previously, but they were able to practice business in ways that were more favorable to them without worrying about being penalized by the commission.

Sporkasia
Post 2

@Drentel - I understand your argument, but The Interstate Commerce Act actually helps more businesses than it hinders. Many small businesses that move products across state lines would more than likely be unable to compete without regulations to keep costs at a manageable level.

Technically, the act does interfere with free trade and commerce, but there are many laws that do this. Some of them make more sense than others, but we have to take the bad with the good, I guess.

Drentel
Post 1

The U.S. government may have had reason enough to enact the Interstate Commerce Act since the railroads were taking undue liberties with the power they had, but I can't say for certain one way or the other. However, I do think the government uses the Interstate Commerce Act definition to overstep the role it should play in free trade among the states.

The U.S. is founded on the ideas of capitalism and businesses should not be restrained in their efforts because congress feels a need to regulate every significant action. In a way, congress has replaced the railroads. I can't see where one is better than the other.

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