Farmers were very upset with the railroad companies because these companies charged them higher rates to ship their products than other businesses had to pay. When the Supreme Court ruled in the case of Wabash v. Illinois that states couldn’t regulate railroad rates, the federal government created the Interstate Commerce Commission to control railroad rates and trade between the states.

In 1903, under the presidency of Theodore Roosevelt, the Elkins act was passed; this forbade railroad companies from offering rebates to companies that shipped large amounts of products by train. In 1906, the Hepburn Act was also passed, which gave the Interstate Commerce Commission the power to set railroad rates. President Roosevelt believed that when businesses put their interests ahead of the public’s, the federal government should step in and protect the public. He believed that it was wrong for the railroad companies to single out farmers and small business owners by either charging them higher rates or by failing to offer them rebates that other, bigger businesses received.

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.

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.