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Government Regulation of Railroad Abuses: Historical Significance

Explore the need for government regulation of railroad abuses throughout history, from pooling agreements to anti-competitive practices. Learn the impact of Granger laws and the Interstate Commerce Act of 1887 in curbing railroad misconduct, leading to the Sherman Anti-Trust Act of 1890. Discover how these laws set the stage for federal oversight of interstate commerce and the fight against monopolies.

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Government Regulation of Railroad Abuses: Historical Significance

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  1. Need for Government Regulation of Business

  2. Abuses by Railroads • Pooling Agreements • Divide the sales territory and fix prices • Long haul, short haul discrimination • Charge more for short distances where there is no competition

  3. (Abuses of Railroads) • Rebates and kickbacks to special customers • Unannounced rate increases • Free passes to government officials

  4. Granger laws to help out farmers • Farmers complained about poor service and high rates charged by railroads • States passed “granger laws” to regulate railroads within the state • Granger laws were challenged in the Supreme Court

  5. Federal Legislation

  6. Interstate Commerce Act – 1887 • Created the Interstate Commerce Commission to end abuse by railroads • No pools, rebates, special deals • Public posting of rates, must be fair and reasonable • Set precedent for federal regulation of interstate commerce

  7. Sherman Anti-Trust Act – 1890 • Declared combinations in the form of a trust in restraint of trade to be illegal (if it lessens competition) • Weak, vague language but set the principle that the government should break up monopolies

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