Interstate Commerce Act 1887
On February 4, President Cleveland signed into law the first bill regulating the railroads. The act, which called for just and equal rates, also limited pooling (secret pacts between railroads). This measure received broad support in the Congress.
The Interstate Commerce Commission was the first federal regulatory agency. The mandate of the I.C.C. was to insure that railroads stopped discriminating against small businesses in favor of large ones.
The Commission had minimal enforcement capabilities until the administration of Theodore Roosevelt, when it was given additional powers.
By the 1880’s railroads were rapidly consolidating. They were the largest companies of the time and much of the economy was dependent on them. Often railroads had monopolies on certain areas and raised their prices creating an outcry. Railroads gave shippers who shipped long distances discounts thus raising the ire of local businesses. Many states passed laws to regulate the rails. However, in 1886 in the case of Wabash St Louis & Pacific Railway v. Illinois, the Supreme Court ruled that the various state laws regulating railroads violated the Commerce Clause of the constitution.
That decision threw the need to regulate the railroads directly at the national government. The Congress then passed the Interstate Commerce Act which was signed into law by Cover Cleveland on February 4, 1887. The Act forced companies to publish their rates. It also made rebates and discriminative pricing illegal. Finally it created the Interstate Commerce Commission to hear complaints against railroads and take action against the railroads.