Interstate Commerce Commission

History

When the Civil War ended in 1865, the United States entered the Industrial Revolution with a vengeance. Thus the time was ripe for the railroad companies to emphasize profits and growth as they increased operations and expanded westward. The railroads had already formed monopolies in their designated areas, but increased industrialization led them to become fiercely competitive. Because public feeling against railroads was so intense, in 1871 Illinois became the first state to try to rein in railroads by regulating their activities within the state. Other states followed suit.

Only Congress had the power to regulate commerce that crossed state boundaries, however. Thus, the Interstate Commerce Act of 1887 gave the Interstate Commerce Commission the right to ascertain that prices set by the railroads were equitable. The ICC was the first independent regulatory agency created in the United States, and it became a model for those that followed. The ICC was initially composed of five members appointed by the president of the United States and confirmed by the Senate. That number increased over time. In order to guarantee objectivity, ICC members were banned from holding any financial interests in the industries they regulated. Despite having considerable authority, the ICC was weakened by the fact that it lacked enforcement power.

In the early 20th century, Congress attempted to strengthen the Interstate Commerce Commission by passing the Hepburn Act of 1906, which allowed the ICC to change railroad rates if those rates had been proven to be unjust or unreasonable during public hearings. Four years later, passage of the Mann–Elkins Act transferred the burden of proof to railroad companies, forcing them to demonstrate the reasonableness of their rate plans. By the 1920s, however, the trend was toward returning authority to railroad companies. Nevertheless, passage of the Esch–Cummins Transportation Act of 1920 allowed the ICC to [Page 851]oversee railroad mergers and mediate in labor disputes. During this same period, railroads began facing increased competition from trucking companies, which had a good deal more flexibility than railroads in establishing routes. By 1940, the ICC had been given the power to regulate commerce in every field of interstate transportation except aviation.

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