Wabash, St. Louis & Pacific Railway Company v. Illinois, 118 U.S. 557 (1886), more commonly known as Wabash vs. St. Louis or The Wabash Case, is a U. S. Supreme Court case which led to the creation of the Interstate Commerce Commission.
As railroads expanded throughout the United States in the 1800s, they created a difficult legal issue. As various railway companies were private but operated across state borders, it became increasingly difficult to regulate them. Although individual states instituted their regulations, enforcing them across state borders was impractical. This lack of oversight allowed railroads to set their standards and practices, leading to various abuses.
The initial cause for the litigation was the fact that transporting the same goods, using the same railroad, by train to New York from Gilman, Illinois, cost more than it did from Peoria, Illinois. However, Gilman was closer to New York, leading to allegations of discrimination by the state’s regulations. Previously, the U. S. Supreme Court ruled that state policy interfering in private industries that affected public interest was justified “for the common good,” according to the Munn v. Illinois (1876) case. The federal government had limited regulatory power over the railroad companies, deferring it to the state officials.
The U. S. Supreme Court’s decision on the Wabash Railroad v Illinois case was that the state’s direct intervention in interstate commerce is forbidden by the Constitution of the United States’ Commerce Clause. According to that decision, Congress was empowered to regulate commerce among states, but not the states themselves. Therefore, railroads that crossed state lines were outside of the states’ jurisdictions. Indirect burdens, such as state safety regulations, however, were still permitted.
The case led to further legislation to regulate railroads and interstate trade. In 1887, it culminated in the signing of the Interstate Commerce Act. This act served to curtail railroad companies’ monopolistic tendencies and combat price discrimination. Such discrimination meant lower prices for certain customers, providing preferential treatment to specific shippers, and reducing competition. Furthermore, the act forced companies to make their rates public.
The Interstate Commerce Act created a federal regulatory agency, the Interstate Commerce Commission (ICC). The Commission directly addressed the issues of discrimination outlined in the Wabash Railway v. Illinois case, as well as prevent railway companies’ attempts to gain influence over local governments. ICC was the first independent agency, operating outside of the Executive branch. Initially, it only regulated railways but was later expanded to include other common carriers, such as bus lines and telephone companies.
Ultimately, the Wabash v. Illinois’ case significance is clarifying and determining the regulations relating to interstate commerce. Furthermore, it led to the establishment of the Interstate Commerce Commission to regulate interstate railways and, later, bus lines and telephone companies. Moreover, the ICC set the pattern for future independent agencies (sometimes referred to as the Fourth Branch). The Supreme Court case, Wabash v. Illinois, established the principle that interstate commerce and common carriers are a federal issue, and individual states have no regulatory power over them.