=The Regulation of Railways.=—­The first attempts to use the government in a large way to control private enterprise in the public interest were made by the Northwestern states in the decade between 1870 and 1880.  Charges were advanced by the farmers, particularly those organized into Granges, that the railways extorted the highest possible rates for freight and passengers, that favoritism was shown to large shippers, that fraudulent stocks and bonds were sold to the innocent public.  It was claimed that railways were not like other enterprises, but were “quasi-public” concerns, like the roads and ferries, and thus subject to government control.  Accordingly laws were enacted bringing the railroads under state supervision.  In some cases the state legislature fixed the maximum rates to be charged by common carriers, and in other cases commissions were created with the power to establish the rates after an investigation.  This legislation was at first denounced in the East as nothing less than the “confiscation” of the railways in the interest of the farmers.  Attempts to have the Supreme Court of the United States declare it unconstitutional were made without avail; still a principle was finally laid down to the effect that in fixing rates state legislatures and commissions must permit railway companies to earn a “fair” return on the capital invested.

In a few years the Granger spirit appeared in Congress.  An investigation revealed a long list of abuses committed by the railways against shippers and travelers.  The result was the interstate commerce act of 1887, which created the Interstate Commerce Commission, forbade discriminations in rates, and prohibited other objectionable practices on the part of railways.  This measure was loosely enforced and the abuses against which it was directed continued almost unabated.  A demand for stricter control grew louder and louder.  Congress was forced to heed.  In 1903 it enacted the Elkins law, forbidding railways to charge rates other than those published, and laid penalties upon the officers and agents of companies, who granted secret favors to shippers, and upon shippers who accepted them.  Three years later a still more drastic step was taken by the passage of the Hepburn act.  The Interstate Commerce Commission was authorized, upon complaint of some party aggrieved, and after a public hearing, to determine whether just and reasonable rates had been charged by the companies.  In effect, the right to fix freight and passenger rates was taken out of the hands of the owners of the railways engaged in interstate commerce and vested in the hands of the Interstate Commerce Commission.  Thus private property to the value of $20,000,000,000 or more was declared to be a matter of public concern and subject to government regulation in the common interest.