How did abuses in the railroad industy lead to the first efforts at industrial regulation by the federal government?
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In the late 1800s and early 1900s, many people felt that the railroads abused their power. They felt, for example, that the railroads overcharged people who relied on them to get goods to and from market. Because of this, there came to be a great deal of pressure on the federal government to regulate the industry. This led, among other things, to the creation of the Interstate Commerce Commission. This entity was supposed to be able to regulate the railroads and force them to charge rates that were fair and were not discriminatory. This was one of the first major moves by the federal government to regulate industry.
The primary perceived abuse by the railroads was the pricing charged to farmers who were at the mercy of the railroads to ship their produce to market. The railroads offered preferential pricing to their best customers; but then charged much higher rates for smaller customers, usually small farmers. The abuse was so great that the Populist party proposed in its platform that the railroads should be nationalized:
The time has come when the railroad corporations will own the people, or the people must own the railroads.
As a result of widespread outcry, Congress passed the Interstate Commerce Act which required railroads to charge uniform rates per ton mile regardless of the identity of the shipper or the amount shipped; and to post rates in advance.
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