Copyright

Interstate Commerce Act of 1887: Definition & Passage

Instructor: Andrea Stephenson

Andrea has a Juris Doctor and has spoken at legal conferences on government transparency.

This lesson will discuss the Interstate Commerce Act of 1887. Learn about the history of this act's passage, its effectiveness and the purpose this act served in regulating the railroad industry.

Introduction

Can you imagine if the car, aviation and food industries were not regulated? How safe would those industries be for the public, and would there be any competition within the industry by different businesses?

In the late 1800s, most industries were not regulated, and there was concern of monopolies forming due to lack of competition. Monopolies occur when one company or individual is the only provider of a particular product. The railroad, which was the major form of transportation during this time, was one such industry the federal government worried about because most railroads were privately owned and operated. Although some states were successful in regulating the railroads within their own borders, railroads had become a major means of interstate commerce, or travel of business across state borders. How could this means of interstate commerce be regulated? The Interstate Commerce Act of 1887 was Congress's attempt to answer this question.

Image of an 1879 Tiffany Refrigerator Car advertisement for interstate commerce via train
train car

Definition

The Interstate Commerce Act of 1887 was the first act passed by Congress that made a particular industry subject to regulation by the federal government. The act was enacted to set guidelines for how railroads could do business.

History of the Act's Passage

Years before the passage of the Interstate Commerce Act, a number of railroad bills that proposed to regulate rates, prevent unfair practices and investigate complaints were introduced in the House and the Senate. From the 1870s to 1880s, all bills and other similar documents regarding railroad regulation were sent to either the Committee on Commerce or the Committee on Railroads (committees created within Congress). However, all attempts to enact intercommerce regulations failed up until the act's passage. In the meantime, states passed laws regulating the railroad industry within each state's respective border; these were called the Granger laws. Unfortunately, a number of these state laws were undermined by the 1886 Wabash, St. Louis & Pacific R.R. Co. v. Illinois decision of the Supreme Court of the United States. This decision declared that states could not regulate any commerce that went outside their borders.

Map of Wabash, St. Louis & Pacific R.R. lines across state lines in 1886
Wabash RR map

Finally, in response to state railroad laws being jeopardized and increased concern over unregulated railroads, Congress passed the Interstate Commerce Act in 1887. However, the act was not a well-oiled machine when it was passed. It was a messy amalgamation of very different House and Senate bills which unfortunately resulted in provisions that were vague and very diverse. Eventually, the act was strengthened by Congress, but it took nearly two more decades to do so.

Official Seal of the Interstate Commerce Commission
ICC seal

Regulations

One of the overall intents of the Interstate Commerce Act was to prevent the formation of railroad monopolies by promoting competition in the industry. One of the ways the act attempted to do this was to outlaw special rates that the railroads would agree on among themselves (called discriminatory rates). However, in reality, determining what rates were discriminatory and which were not turned out to be very technically and politically difficult and, therefore, not highly effective.

The act also created the Interstate Commerce Commission (ICC), which was tasked with monitoring the railroad industry and investigating and prosecuting railroad companies that violated the law. Hand in hand with the creation of the ICC, the act also required railroads to submit annual reports to the ICC. However, the newly created commission was only allowed to regulate those railroads that crossed state borders. If a certain railroad stayed only within one state, it was not subject to the review of the ICC.

To unlock this lesson you must be a Study.com Member.
Create your account

Register for a free trial

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use Study.com

Become a Study.com member and start learning now.
Become a Member  Back
What teachers are saying about Study.com
Free 5-day trial

Earning College Credit

Did you know… We have over 160 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it free for 5 days!
Create An Account
Support