Illinois v. Wabash 1886



BACKGROUND & INTRO



Around the late 19th century, the Railroad Industry was controlled by a rich few, who exploited property, shipping costs, and labor in order to produce the most profit. In a similar US Supreme Court case in 1877 known as Munn v. Illinos, it was ruled that states could regulate certain businessess within their borders, including railroads. Nine Years later, the Supreme Court would find this ruling unconstitutional in the Illinois v. Wabash case because regulating shipping rates was a matter of insterastate commerce to be controleld by Congress, not by individual states. This case would give rise to the first modern Regulatory agency, allowing the Federal government to have full control of Railroad rates.

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"Hauling charges should vary upon distance instead of having one fixed rate for carry. Long hauls should cost more than short hauls and vice versa. To charge customers a fixed rate is unconstitutional and such power deserves to be put in the hands of the Federal Government!"
VS.
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"Come on! Please let our industry control the prices! Most of the business we get lately is short distance and we need to make the most profit!





















The Case


The Wabash Case was first brought into court when the St. Louis & Pacific Railway (Wabash) violed an Illinois staute prohibiting unfair hauling rates. The St. Louis & Pacific Railway was charging more to transport goods from Gilman, Illinois to New York than from Peoria, Illinois. Gilman was eighty six miles closer to New York than Peoria and both were within state lines, so the legality was brought into question. Because the case invovled trading from one state to another, not only did the Court rule upon the unfair priceing, but on the matter of interste commerce as well. Wabash was ruled unconstitutional under Artilce 1, Section 9, Clauses 5-6, which state,"No Tax or Durty shall be laid on article exported from any state," and, "No Preference shall be given by any regulation of Commerce or Revenue to the Ports of one State over those of another: nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another." This simply means that goods traveling from one state into another should not have to pay any extra taxes to ship.

The Supreme agreed with the state court in saying that, "this Court follows the Supreme Court of Illinois in holding that the statute of Illinois must be construed to include a transportation of goods under one contract and by one voyage from the interior of the State of Illinois to New York" and that it "is national in its character, and its regulation is confided to Congress exclusively, by that clause of the Constitution which empowers it to regulate commerce among the states" (Wabash). All in all, the Supreme court ruled that rate determination was to be left in the hands of the Federal Government instead of the State Government.

Another example of Federalism!



The Troubling Aftermath


The Wabash case is noted as one of the first instances when the government assumed responsibility for economic affairs that had previously been delegated to the states. In the following year the government passed the Interstate Commer Act, making the Railroads the "first industry subject to Federal regulation" (Act). Along with the Act, a five-person agency was gathered to administer the act, known as the Interstate Commerce Commission (ICC).
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The Interstate Commerce Act of 1887 :
  • Banned discrimination in rates between long and short hauls
  • Required that railroads publish their rate schedule and file them with the government
  • Declared that all interstate rail rates must be "resonable and just" (although the act did not define what that meant)

Although the Interstate Commerce Act and Commission seemed to be good ideas at first, they soon became troublesome. The Act's vagueness in relation to "reasonable and just" rates on interstate shipping led to wide interpretation by the courts. Therefore, without the courts ruling, the Interstate Commerce Commission had nothing to rely on and, ultimately, became impractical.




Bibliography:

Act of February 4, 1887 (Interstate Commerce Act), Public Law 49-41, February 4, 1887; Enrolled Acts and
Resolutions of Congress, 1789-; General Records of the United States Government, 1778 - 1992; Record Group 11; National Archives.


Brinkley, Alan. "From Stalemate to Crisis." American History: A Survey. 12th ed. Boston: McGraw-Hill, 2007. 527. Print.


GORDON, DAVID. "Wabash, St. Louis & Pacific Railway v. Illinois 118 U.S. 557 (1886)." Encyclopedia of the American Constitution. Ed. Leonard W. Levy and Kenneth L. Karst. 2nd ed. Vol. 6. Detroit: Macmillan Reference USA, 2000. 2817.U.S. History In Context. Web. 24 Mar. 2013.




H, Cassi. "Government Involvement." Industrial Railroads and Government Involvement. Weebly, 2011. Web. 24 Mar. 2013.


Shoemaker, Rebecca S. "Wabash, St. Louis & Pacific Railway v. Illinois, 118 U.S. 557 (1886)." Encyclopedia of the Supreme Court of the United States. Ed. David S. Tanenhaus. Vol. 5. Detroit: Macmillan Reference USA, 2008. 161-162. U.S. History In Context. Web. 24 Mar. 2013.


Wabash, St. Louis & Pacific Railway Company v. Illinois. U.S. Supreme Court. 25 Oct. 1886. Justia.com. U.S. Supreme Court Center. Web. 8 May 2011.