Economics and Business

Income Tax

When was the Interstate Commerce Commission formed?

The Interstate Commerce Commission (ICC) was established by act of Congress in 1887. The agency is responsible for regulating the rates and services of specified carriers that transport freight (goods, whether raw or finished) and passengers between states. Its jurisdiction, expanded by subsequent acts of Congress, includes trucking, bus services, water carriers, expedited delivery services, and even oil pipelines. The regulatory agency, the nation’s first such body, was borne out of necessity in the late 1800s, as farmers in particular charged the railroads with discriminatory freight practices. With rail lines crisscrossing the nation, the question of who would control rates and monitor practices had become an increasingly difficult one to answer. Many states, particularly in the Midwest, set up their own regulatory boards, but because the rail companies operated between states, enforcing state laws on them proved cumbersome and impractical. Meanwhile the railroads, operating without the purview of any effective regulatory body, set their own standards and practices, which resulted in many abuses.

In an 1877 U.S. Supreme Court ruling, in the case of Munn v. Illinois, the authority of the state boards to regulate the railroads was upheld. But less than a decade later, in the case of Wabash, St. Louis and Pacific Railway Company v. Illinois, the high court invalidated its earlier decision and proclaimed that only the U.S. Congress has the right to regulate interstate commerce. Citing Section 8 of Article 1 of the U.S. Constitution (1790), which states that “Congress shall have the power … to regulate commerce with foreign nations, and among the several states, and with the Indian tribes,” the Interstate Commerce Act was passed in 1887, setting up the Interstate Commerce Commission to regulate the interstate railroads. The agency’s purview was later expanded to include all ground and water carriers that operate on an interstate basis. In addition to controlling rates, the agency also enforces laws against discrimination. The ICC’s authority was strengthened by congressional legislation including the Hepburn Act (1906) and the Mann-Elkins Act (1910).


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