Hepburn Act

The Hepburn Act is a 1906 United States federal law that gave the Interstate Commerce Commission (ICC) the power to set maximum railroad rates and extended its jurisdiction. This led to the discontinuation of free passes to loyal shippers.[1] In addition, the ICC could view the railroads' financial records, a task simplified by standardized bookkeeping systems. For any railroad that resisted, the ICC's conditions would remain in effect until the outcome of legislation said otherwise. By the Hepburn Act, the ICC's authority was extended to cover bridges, terminals, ferries, railroad sleeping cars, express companies and oil pipelines.

Hepburn Act
Great Seal of the United States
Long titleAn Act to amend an act entitled "An act to regulate commerce," approved February fourth, eighteen hundred and eighty-seven, and all Acts amendatory thereof, and to enlarge the powers of the Interstate Commerce Commission
Enacted bythe 59th United States Congress
EffectiveJune 29, 1906
Citations
Public lawPub.L. 59–337
Statutes at Large34 Stat. 584
Codification
Acts amendedInterstate Commerce Act of 1887
Legislative history
  • Introduced in the House as H.R. 12987
  • Signed into law by President Theodore Roosevelt on June 29, 1906

OverviewEdit

The Hepburn Act was named for its sponsor, twelve-term Republican congressman William Peters Hepburn. The final version was close to what President Theodore Roosevelt had asked for, and it easily passed Congress, with only three dissenting votes.[2] The Act, along with the Elkins Act of 1903, was a component of one of Roosevelt's major policy goals: railroad regulation.

The most important provision of the law gave the ICC price control power to replace existing rates with "just-and-reasonable" maximum rates, and authorized the Commission to define what was just and reasonable.[3][4] The Act made ICC orders binding; that is, the railroads had to either obey or contest the ICC orders in federal court. To speed the rate-setting process, the Act specified that appeals from rulings of the district courts would go directly to the U.S. Supreme Court.

Anti-rebate provisions were toughened, free passes were outlawed, and the penalties for violation were increased. The ICC staff grew from 104 in 1890 to 178 in 1905, 330 in 1907, and 527 in 1909. Finally, the ICC gained the power to prescribe a uniform system of accounting, require standardized reports, and inspect railroad accounts.[5]

The limitation on railroad rates depreciated the value of railroad securities, a factor in causing the Panic of 1907.[6]

SignificanceEdit

Scholars consider the Hepburn Act the most important piece of legislation affecting railroads in the first half of the 20th century. Economists and historians debate whether it crippled the railroads, giving so much advantage to the shippers that a giant unregulated trucking industry—undreamed of in 1906—eventually took away their business.[7]

Follow-up legislationEdit

Congress passed the Mann–Elkins Act in 1910 during the administration of President William Howard Taft, to address limitations in implementation of the Hepburn Act. The Mann–Elkins Act authorized the ICC to initiate reviews of railroad rate increases, rather than simply responding to complaints from shippers. The 1910 law empowered the ICC to set "just and reasonable" maximum rates and placed the burden of proof upon the railroad for demonstrating reasonableness.[8]

See alsoEdit

ReferencesEdit

  1. ^ United States. Hepburn Act, 59th Congress, Sess. 1, ch. 3591, 34 Stat. 584, enacted 1906-06-29.
  2. ^ Morris, Edmund (2002). Theodore Rex. Modern Library. p. 446. ISBN 978-0-8129-6600-8.
  3. ^ Debate Handbook on Wage and Price Controls, by J. Weston Walch, James P. McGough, p. 23 (1970)
  4. ^ The American Presidents: The Office and the Men, by Frank Northen Magill, p. 469 (1986)
  5. ^ Stone, Richard D. (1991). The Interstate Commerce Commission and the Railroad Industry: A History of Regulatory Policy. Praeger. p. 12. ISBN 978-0-275-93941-0.
  6. ^ Edwards, Adolph (1907). The Roosevelt Panic of 1907. New York: Anitrock. p. 66.
  7. ^ Martin, Albro (1971). Enterprise Denied: Origins of the Decline of American Railroads, 1897-1917. New York: Columbia University Press. ISBN 978-0-231-03508-8.
  8. ^ United States. Mann-Elkins Act, 61st Congress, 2nd session, ch. 309, 36 Stat. 539, enacted June 18, 1910.