Federal governmental agency that regulates all interstate commerce and transportation.

In its 1886 session, the Supreme Court reached an important decision in Wabash, St. Louis, and Pacific Railway Co. v. Illinois.[case]Wabash, St. Louis, and Pacific Railway Co. v. Illinois[Wabash, St. Louis, and Pacific Railway Co. v. Illinois] In an earlier case, Munn v. Illinois[case]Munn v. Illinois[Munn v. Illinois] (1877), the Court ruled that in the absence of federal laws regulating the rates railroads charge to ship cargo in interstate commerce, state legislatures could regulate rates. The Munn decision created a confusing maze of rate regulations for interstate shipments and opened the door for the all-powerful railroads to exploit shippers, particularly farmers, who often found freight rate increases imposed just as their crops were ready for harvesting and interstate shipment to markets. In his influential novel, The Octopus (1901), populist writer Frank Norris graphically depicted the situation that existed before the enactment of legislation to standardize rates for interstate shipping.Commerce, regulation of

The ruling in Wabash made it clear that only Congress had the right to regulate interstate rates for transportation. In the following year, 1887, the ICC was established, based on Article I, section 8, of the U.S. Constitution, which, from 1789, had granted Congress the power to regulate interstate commerce, although Congress had not actively assumed this function through most of the nineteenth century.

The first transcontinental railroad in the United States was completed in the mid-1860’s, with President Abraham Lincoln driving the final spike that joined the roadbed of an eastern railway with that of a western railway. During the last half of the nineteenth century, railroads expanded enormously, becoming the major element in interstate commerce. A network of railroads crisscrossed the United States by the 1880’s, when tracks were laid in areas, such as Texas, that had previously lacked railway service. Railroads rapidly became the nation’s lifeline.

Despite the Wabash decision, the Court did not turn rate regulation over to Congress exclusively. It reserved the right to oversee rail rates and, in 1890, citing the due process clause of the Constitution, declared that rates set by state legislatures be subject to judicial review. In Smyth v. Ames[case]Smyth v. Ames[Smyth v. Ames] (1898), the Court ruled that the railroads had a constitutional right to a fair return on their investments and declared that the ICC had no implicit authority to set rates. The Court was vigilant in controlling what the commission could do under the law. Its ruling in Interstate Commerce Commission v. Alabama Midland Railway Co.[case]Interstate Commerce Commission v. Alabama Midland Railway Co.[Interstate Commerce Commission v. Alabama Midland Railway Co.] (1897) stripped the ICC of its power to regulate short-haul rates, which were inordinately high in comparison to long-haul rates.

The ICC originally lacked the power to enforce its rulings, existing in the dual shadow of the Court and the Congress. In 1906 however, the Hepburn Act, reflecting the progressivism of the times, gave the ICC, for the first time in its existence, the legal power to set railroad rates. Those who opposed this legislation requested a judicial review but were rebuffed by a Court that reversed some of its earlier decisions.

The Court declared that the ICC had the power to set rates, disregarding the question of whether the rates it set were wise and equitable. In the Minnesota Rate Cases[case]Minnesota Rate Cases[Minnesota Rate Cases] (1913), the Court further ruled that the ICC could regulate any intrastate rates harmful to interstate commerce, thereby significantly expanding the commission’s jurisdiction. In its ruling in Dayton-Goose Creek Railway v. United States[case]Dayton-Goose Creek Railway v. United States[Dayton-Goose Creek Railway v. United States] (1924), the Court gave additional power to the ICC, urging the commission to play a creative role in shaping the burgeoning national railway system, stating that railroads should fall more completely under the guardianship and control of the ICC.

Although the ICC’s power had been expanded considerably, the commission shunned much of the leadership role the Court hoped it would play. In the 1930’s the Court ruled against the ICC in a number of cases. The onset of the Great Depression in 1929 and the entry of the United States into World War II in 1941 vastly changed the political climate of the 1930’s and 1940’s.

Following the end of World War II in 1945, the ICC appeared unable to lead the nation in solving its transportation problems. In 1935 the commission gained authority to regulate truck and bus transportation. In 1940 transportation on inland waterways fell under its regulatory aegis. Through this entire period, the commission played a passive rather than a leadership role.

With the advent of widespread commercial air transportation, overland passenger travel decreased substantially. The commission ceased to control passenger train service when, in 1970, Congress created Amtrak, a semipublic company that operates both intrastate and interstate passenger trains. By 1976, new federal laws had given railroads increased freedom to set their own freight rates.

Additional laws enacted in 1980 and 1982 much diminished the commission’s control over trucking and passenger bus service. As ICC’s role in interstate commerce decreased, the need for the commission diminished. In 1995 Congress deregulated rail, truck, and bus transportation to the point that the ICC was abolished. Its remaining regulatory functions were assumed by the Surface Transportation Board and the Federal Highway Administration, both arms of the Department of Transportation.

• Hoogenboom, Ari, and Olive Hoogenboom. A History of the ICC: From Panacea to Palliative. New York: Norton, 1976.
• Marlette, Jerry. Interstate: A History of Interstate Public Service Rail Operations. Polo, Ill.: Transport Trails, 1991.
• Stone, Richard D. Interstate Commerce Commission and the Railroad Industry: A History of Regulatory Practices. Westport, Conn.: Greenwood, 1991.
• Wagman, Robert J. The Supreme Court: A Citizen’s Guide. New York: Pharos Books, 1993.

Commerce, regulation of

Common carriers

Interstate compacts

Judicial review

Munn v. Illinois

National Labor Relations Board v. Jones and Laughlin Steel Corp.

Progressivism

Sherman Antitrust Act

Wabash, St. Louis, and Pacific Railway Co. v. Illinois

Wickard v. Filburn