The Interstate Commerce Act 1887

The Interstate Commerce Act 1887

The Interstate Commerce Act 1887
Unfair and haphazard business practices by the railroad companies prompted Congress to enact the Interstate Commerce Act. Carleton Watkins (1829–1916) took this photo of a trestle on the Central Pacific Railroad in 1877.
The Interstate Commerce Act 1887

The Interstate Commerce Act, passed on February 4, 1887, established an Interstate Commerce Commission to monitor the railroad industry’s operations. The railways were the first industry to be regulated by the federal government as a result of this act.

The Interstate Commerce Act of 1887 made railways the first business to be regulated by the federal government. The law was primarily enacted in reaction to public demand for train activities to be controlled. The legislation also established the Interstate Commerce Commission, a five-member enforcement body. Railroads were privately owned and uncontrolled in the years following the Civil War. In the areas that they solely served, train firms had a natural monopoly.

Monopolies are often thought to be bad because they inhibit free competition, which affects the price and quality of goods and services available to the general population. In some geographic areas, railroad monopolies possessed the capacity to set prices, exclude rivals, and dominate the market. Although railroads competed for long-haul routes, there was little rivalry for short-haul ones. By granting rebates to major shippers or purchasers, railroads discriminated in the rates they charged passengers and shippers in various areas. These techniques were particularly detrimental to American farmers, who lacked the requisite export volume to gain better rates.

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