The Interstate Commerce Act of 1887 created the Interstate Commerce Commission (ICC), the U.S. government's first regulatory agency. The initial purpose of the ICC was to control railroads and their unfair business practices. The U.S. government had to become a regulator because in 1886 the Supreme Court had ruled in the case of Wabash Railroad v. Illinois that states could not control interstate commerce.

Railroads presented some special problems because they were capital-intensive, had high maintenance costs, and had two types of rail lines. This led to unfair pricing practices. For

Police lieutenant Beavers Armstrong places a segregation sign.

major trunk lines, where there was competition, the railroads charged lower rates and even gave rebates. For spur lines, where there was a monopoly, the railroad charged higher rates for the same type of cargo.

Even with the federal government taking charge of regulating railroads...