Some Important Info
Interstate Commerce Act
In 1887, congress passed the Interstate Commerce Act which was the first industry that was to be under federal regulation. It was passed by Congress because of a huge public for railroad operations to be regulated. It established a five member enforcement board known as the Interstate Commerce Commission.
Before the Interstate Commerce Act, there was little regulation, and many railroads were able to create a monopoly of their service. They could choose the shipping price, control the market, and exclude competitors. Railroads also had volatile prices that changed often, and there was no set price.
The Interstate Commerce Act set guidelines for how railroads could do business and made sure that railroads charged "just and reasonable" rates for shipping. It also prohibited from giving special rates to individual shippers. It's goal was to encourage competition and not allow railroads to control a monopoly.
Before the Interstate Commerce Act, there was little regulation, and many railroads were able to create a monopoly of their service. They could choose the shipping price, control the market, and exclude competitors. Railroads also had volatile prices that changed often, and there was no set price.
The Interstate Commerce Act set guidelines for how railroads could do business and made sure that railroads charged "just and reasonable" rates for shipping. It also prohibited from giving special rates to individual shippers. It's goal was to encourage competition and not allow railroads to control a monopoly.
Credit Mobilier Scandal
The Credit Mobilier Scandal of 1871 was an example of the corrupt industry practices. It started when major stockholders from the Union Pacific Railroad formed the company, the Credit Mobilier of America; they gave it contracts to build a railroad. The stockholders sold or gave their company shares to influential congressmen. To help increase the share value, congressmen would approve government subsidies for the railroad construction without much attention to expenses. It allowed railroad operators to make huge profits which in return benefited the politicians.
When New York Sun exposed the story on the eve of the 1872 election, Speaker of the House James G. Blain set up an investigative committee for the scandal. The House of Representatives censured two of the members involved in the scandal, Oakes Ames of Massachusetts and James Brooks of New York. It also ruined the careers of outgoing vice president Schuyler Colfax, incoming vice president Henry Wilson, and Representative James A. Garfield (Garfield denied charges and was later elected president.) |