The interstate commerce commission was established in 1887 to

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Streamliners: America's Lost Trains | Article

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In 1887, Congress passed the Interstate Commerce Act, making the railroads the first industry subject to federal regulation. Legislators designed the law, which established a five-member enforcement board known as the Interstate Commerce Commission, largely in response to public demand that the railroads' conduct should be constrained.

In the years following the  Civil War, railroads were privately owned and entirely unregulated. Though each company held a natural monopoly as long as it serviced its own destinations, the railroads became fiercely competitive once they started expanding into each other's markets. They were regarded with distrust by much of the public, who charged them with anything from forming monopolies and wielding corrupt political influence to stock manipulations and rate discriminations. None of the accusations were unfounded.

The first attempt to regulate the railroad industry's practices came in 1871, at the state level. Illinois passed regulatory legislation first, and states across the South and Midwest quickly followed suit. The states, however, were powerless to regulate interstate commerce, and the railroads were expanding their operations across more state borders all the time.

The Interstate Commerce Act sought to address the problem by setting guidelines for how the railroads could do business. However, the task of establishing specific measures was complex, and regulators lacked a clear mission. The law sought to prevent monopoly by promoting competition, and also to outlaw discriminatory rate-setting. Its most successful provisions were a requirement that railroads submit annual reports to the ICC, and a ban on special rates the railroads would arrange among themselves. Determining which rates were discriminatory proved to be technically and politically difficult, though, and in practice the law was not highly effective.

The Hepburn Act of 1906 and the Mann-Elkins Act of 1910 strengthened the Interstate Commerce Commission, stating the government's regulatory power more definitively. The Hepburn Act empowered the ICC to change a railroad rate to one it considered "just and reasonable," after a full hearing of a complaint. The Mann-Elkins Act placed the burden of proof on the railroads; for the first time, they would have to actively demonstrate that a rate was reasonable. With these new powers, the ICC gained almost complete control over rail rates, and therefore much of rail competition.

In the following years, the government continued to strip the railroads of their power. One important piece of legislation, the Adamson Act of 1916, enacted an eight-hour workday for railroad workers. Government control culminated when President Woodrow Wilson seized American railroads in 1918; the once-private industry would now be a tool of the federal government in the war effort. Wilson promised to return the railroads to private ownership after a peace treaty was signed.

The Esch-Cummins Transportation Act of 1920, which returned the railroads to private hands, advocated a sharp reversal on past policies. The federal government, which had once been ardently anti-monopoly, now encouraged mergers, provided the mergers paired strong lines with weak ones. The ICC, in fact, dictated the merger combinations. In addition, Esch-Cummins empowered the ICC to fix minimum rates and dictate extensions and abandonments of routes. The railroad industry, which had long sought to eliminate unprofitable routes, was now saddled with them.

As devastating as the new legislation was, the railroads had a still greater enemy: increased competition from cars, buses, and trucks on an ever-growing network of roads. Passengers were electing more and more to travel by car or bus; freight shippers were increasingly choosing trucks for short- or long-haul jobs. Trucks, buses and cars could take flexible travel routes from point to point; railroads could not.

For 20 years the railroads' situation worsened. Although they were losing business to competing modes of transportation, they were still considered a threat. The Transportation Act of 1940 amended the Interstate Commerce Act to extend its reach to the other industries, but the fact remained that while regulations were not relaxed on railroads, private cars, trucks, and 90 percent of inland water carriers were exempt from government control.

It wasn't until 1958 that the government reversed its policy. Railroads, it was determined, no longer posed a monopoly threat; regulations could be loosened. By this time trucks had usurped much of the railroads' high-value freight traffic, and airplanes had taken the lion's share of long-haul passenger business, as well as the lucrative contract to carry the U.S. mail.

By the 1970s and 1980s, railroads were enjoying freedom they hadn't known since the Gilded Age of the 1870s. Unfortunately, business did not keep pace. In 1971, the government formed Amtrak, a federally-supported corporation, to operate intercity passenger train service. In 1980 the Staggers Act furthered railroad deregulation, but by then, many railroads were operating under greatly reduced circumstances, if they were operating at all.

By 1995, the Interstate Commerce Commission had lost most of its mandate. With deregulation complete, the ICC could no longer set rates, and the commission was dissolved in the ICC Sunset Act. The Surface Transportation Board, under the auspices of the U.S. Department of Transportation, now performs the few regulatory tasks that had remained with the ICC.

On February 4, 1887, both the Senate and House passed the Interstate Commerce Act, which applied the Constitution’s “Commerce Clause”—granting Congress the power “to Regulate Commerce with foreign Nations, and among the several States”—to regulating railroad rates. Small businesses and farmers were protesting that the railroads charged them higher rates than larger corporations, and that the railroads were also setting higher rates for short hauls than for long-distance hauls. Although the railroads claimed economic justification for policies that favored big businesses, small shippers insisted that the railroads were gouging them.

It took years for Congress to respond to these protests, due to members’ reluctance to have the government interfere in any way with corporate policies. In 1874 legislation was introduced calling for a federal railroad commission. The bill passed the House, but not the Senate. When Congress failed to act, some states adopted their own railroad regulations. Those laws were struck down in 1886, when the Supreme Court ruled in Wabash v. Illinois that the state of Illinois could not restrict the rates that the Wabash Railroad was charging because its freight traffic moved between the states, and only the federal government could regulate interstate commerce. Continued public anger over unfair railroad rates prompted Illinois senator Shelby M. Cullom to hold the hearings that led to the enactment of the Interstate Commerce Act.

That law limited railroads to rates that were “reasonable and just,” forbade rebates to high-volume users, and made it illegal to charge higher rates for shorter hauls. To hear evidence and render decisions on individual cases, the act created the Interstate Commerce Commission. This was the first federal independent regulatory commission, and it served as a model for others that would follow, from the Federal Trade Commission to the Securities and Exchange Commission and the Consumer Product Safety Commission.

Evolving technology eventually made the purpose of the ICC obsolete, and in 1995 Congress abolished the commission, transferring its remaining functions to the Surface Transportation Board. But while the ICC has come and gone, its creation marked a significant turning point in federal policy. Before 1887, Congress had applied the Commerce Clause only on a limited basis, usually to remove barriers that the states tried to impose on interstate trade. The Interstate Commerce Act showed that Congress could apply the Commerce Clause more expansively to national issues if they involved commerce across state lines. After 1887, the national economy grew much more integrated, making almost all commerce interstate and international. The nation rather than the Constitution had changed. That development turned the Commerce Clause into a powerful legislative tool for addressing national problems.

The Interstate Commerce Commission (ICC) formerly regulated the economics and services of specified carriers engaged in transportation between states from 1887 to 1995. The ICC was the first regulatory commission established in the U.S., where it oversaw common carriers. However, the agency was terminated at the end of 1995, with its functions either having been transferred to other bodies or in some cases rendered obsolete by deregulation. 

• The Interstate Control Commission (ICC) regulated entities involved in interstate transportation from 1887 to 1995.
• The ICC was eventually disbanded, and its remaining responsibilities were transferred to various government entities. 
• The ICC started due to complaints that railroad companies were abusing the existence of monopolies in their respective areas. 
• The powers of the ICC were consistently expanded through the first half of the 20th century.
• When laws were passed that led to the deregulation of these industries, the ICC weakened and eventually disbanded completely. 

The ICC was established under the 1887 Interstate Commerce Act originally to regulate railroads, but its powers were later expanded to cover other commercial transportation as well. Before the Act and the ICC, railroads were able to wield monopoly power due to the natural economies of scale and network effects involved with their design, construction, and operation.

Most economists consider regulation to limit the pricing and profits of such natural monopolies a legitimate function of government intervention in the economy in order to protect the interests of other businesses and consumers. The ICC was the first federal industrial regulatory body of its kind and was used as a model for later, similar federal commissions and agencies.

Arguments have been made that the ICC, despite its intended purpose, was often guilty of assisting the companies it was tasked to regulate in building their power over would-be competitors. 

The ICC was established in 1887, following increasing public indignation in the 1880s over abuses and malpractices by the railroad companies. Originally established to regulate the railroads, the ICC had jurisdiction over all common carriers—excluding airplanes—by 1940.  

By 1910, the ICC had been granted the authority by Congress and the Supreme Court to set rates and profit levels of railroads, as well as to organize mergers. Its jurisdiction was also extended to cover areas such as sleeping car companies, oil pipelines, ferries, terminals, and bridges. This came about due to an overwhelming amount of complaints regarding the rates charged by railroads on routes within which there was no source of competition. Regulatory control over telephone, telegraph, wireless, and cable was also given to the ICC in 1910, and it exercised authority over these until the establishment of the Federal Communications Commission (FCC) in 1934.

The ICC’s enforcement powers to set rates were extended in the 1940s, as were the investigative powers by which it could fairly determine what fair rates were. The ICC was also assigned the task of consolidating railroad systems, as well as managing any and all labor disputes that occurred within the scope of interstate transport. The ICC also played a vital role in enforcing Supreme Court decisions on the desegregation of the railroads in the 1950s and 1960s.

In 1966, the ICC's safety functions were transferred to the Department of Transportation (which was established in that year), but the ICC retained its rate-setting and regulatory functions. A general move toward deregulation subsequently saw the ICC's authority over rates and routes in both rail and trucking ended as a result of the implementation of the Staggers Rail Act and Motor Carriers Act in 1980. Both of these acts played a major role in the deregulation of these industries, which took a major toll on the powers of the ICC. 

Most ICC control over interstate trucking was abandoned in 1994, with its powers having been transferred to the Federal Highway Administration and the newly created Surface Transportation Board (both under the auspices of the Department of Transportation). The Commission was subsequently shut down in 1995.

The primary organization that took over the duties of the now-defunct ICC is the National Surface Transportation Board. Other services were transferred to the Federal Motor Carrier Safety Administration or to the Bureau of Transportation Statistics within DOT.