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Need for Government Regulation of Business

Need for Government Regulation of Business. 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. (Abuses of Railroads).

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Need for Government Regulation of Business

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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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