WABASH, ST. LOUIS AND PACIFIC RAILWAY COMPANY VS. ILLINOIS (1886)

In 1886 the U.S. Supreme Court decision in the case of Wabash, St. Louis and Pacific Railway Company v. Illinois declared that states could not regulate commerce that went beyond their boundaries. Instead, regulation had to come from the federal government. The decision provided the basis for the formation of the Interstate Commerce Commission in 1887.

With rail lines crisscrossing the nation, the question of who would control rail rates and monitor the practices of the railroads had become an increasingly difficult one to answer. Many states establish their own regulatory boards, but since the rail companies operated between states, enforcing state laws on them proved cumbersome and impractical. Meanwhile the railroads, operating without the oversight of any effective regulatory body, set their own standards and practices, which resulted in many abuses. When the Wabash, St. Louis and Pacific Railway Company challenged the intervention of the state of Illinois in its business, the case eventually went to the Supreme Court.

After the high court's ruling (1886), the federal government acted quickly to establish an independent U.S. government agency the following year, the Inter-state Commerce Commission (ICC). The ICC was the first regulatory commission in the country. Originally charged with supervising the country's interstate rail operations, its authority was eventually expanded to include all forms of interstate commerce, including trucking, shipping, and even oil pipelines. In addition to controlling rates, the agency also enforced laws against discrimination.

See also: Interstate Commerce Act, Interstate Commerce: Regulation and Deregulation, Munn vs. Illinois