Copyright

The Elkins Act of 1903 & Mann-Elkins Act of 1910

Instructor: Jason McCollom
Both the Elkins Act and the Mann-Elkins act empowered the Interstate Commerce Commission to more strictly regulate the operations of major railroad companies. Learn about these landmark Progressive Era measures, and test yourself with a quiz.

The Interstate Commerce Commission

In the first decade of the 20th century, trust-busting and swash-buckling president Teddy Roosevelt divided big business into two very scientific categories: 'good' businesses and 'bad' businesses. 'Good' business served their customers fairly and contributed in important ways to the American economy. 'Bad' businesses engaged in unfair practices and gouged their customers. For Roosevelt and many other progressives of the early 20th century, there was no better representation of 'bad' businesses than the big railroad companies.

Many railroads monopolized shipping from rural areas, and thus charged exorbitant freight rates to farmers and other small-time shippers. Railroads would also offer rebates (reduced pricing) for high-volume shippers, who were usually other big businesses and corporate interests. In 1887, these unfair shipping practices led to the creation of the nation's first federal regulatory agency, the Interstate Commerce Commission (ICC). The ICC kept a watchful eye on the industry to be sure the big railroad companies were not engaging in unfair practices.

The Elkins Act, 1903

The ICC had its work cut out for it. The agency was not very effective in keeping the railroad industry in line. This is where Teddy Roosevelt comes in. As president, Roosevelt pressed Congress to amend the Interstate Commerce Act. This amendment, formally named the Elkins Anti-Rebate Act (1903), outlawed the practice of rebates, which were cash refunds on freight charges, usually given to favored high-volume shippers. Any railroad found charging anything other than its published rates faced a stiff fine.

President Teddy Roosevelt spearheaded the railroad regulations of the Elkins Act.
roosevelt, teddy

The railroad companies loved this law! They were happy to sponsor the Elkins Act, because now railroad companies were protected from handing out shipping rebates to powerful corporations. The Elkins Act actually saved the railroads a lot of money because they were legally bound not to favor a big shipper over anyone else. In fact, the Elkins Act reduced rate competition - which had kept prices reasonable - and created higher freight rates all around.

The Mann-Elkins Act, 1910

The Elkins Act couldn't stop railroads from charging high shipping prices, as long as those prices were published. When 24 western railroads all raised rates significantly (some up to 50%) at the same time, it shocked the administration of William Taft. His Attorney General threatened antitrust prosecution against the offending price-hikers.

This spurred Congress to pass another amendment to the Interstate Commerce Act: the Mann-Elkins Act (1910). The Mann-Elkins Act gave the ICC the power to set maximum freight rates. The ICC also gained the right to suspend any changes to freight charges for up to 10 months, so that the agency could study existing rates.

When western railroads companies raised rates in 1910, Congress responded with the Mann-Elkins Act.
rr 1910

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