Page 453 - Encyclopedia of Business and Finance

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Interstate Commerce

INTERSTATE COMMERCE charges without unjust discrimination, undue preferences,
COMMISSION ESTABLISHED or advantages or unfair or destructive competitive prac-
The Interstate Commerce Commission (ICC), an inde- tices. Forty years later, President Jimmy Carter signed into
pendent U.S. government agency established in 1887, was law the Airline Deregulation Act of 1978, which phased
responsible for the economic regulation of services of out the Civil Aeronautics Board and let the airlines deter-
specified carriers engaged in transportation between mine their own pricing and routes. It was thought that a
states. The first regulatory agency formed within the fed- lack of competition had made the industry unresponsive
eral government, it was established in response to mount- to consumers. As a result, the industry became deregu-
ing public indignation against railroad malpractices and lated and the pricing wars began.
abuses. The ICC’s effectiveness, however, was limited by
Many other federal regulatory agencies and laws deal
the U.S. Congress’s failure to give it enforcement power, with interstate commerce. The Federal Trade Commission
by the U.S. Supreme Court’s narrow interpretation of its
(FTC) was established in 1914 with investigatory powers
powers, and by the vague language of its enabling act.
to be used in preventing unfair methods of competition.
Beginning with the Hepburn Act of 1906, the ICC’s
The FTC enforces laws and guidelines regarding business
domain was gradually extended beyond railroads to all practices and takes action to stop false and deceptive
common carriers (except airplanes) by 1940. It was also
advertising, pricing, packaging, and labeling. It assists
given the task of consolidating railroad systems and man- businesses in complying with both state and federal laws,
aging labor disputes in interstate transport. In the 1950s
and it evaluates new business methods each year. It holds
and 1960s, the ICC enforced Supreme Court rulings that
required the desegregation of passenger terminal facilities. conferences on electronic commerce (e-commerce), which
is the newest form of interstate commerce. When general
Part I of the Interstate Commerce Act grouped
sets of guidelines are needed to assist businesses involved
together a series of laws that were enacted in the late
in interstate commerce, the FTC encourages firms within
1800s and early 1900s. The first of these laws required
that industry to establish a set of trade practices voluntar-
that railroad carriers publicize their rate schedules and for-
bade rate changes without due notice to the public. Sub- ily.
sequent acts increased regulation and extended the ICC’s The Clayton Antitrust Act, passed in the same year
jurisdiction. Part II of the act extended federal authority that the FTC was created (1914), prohibits specific prac-
to motor carriers engaged in interstate commerce. Part III tices such as price discrimination, exclusive dealer arrange-
gave the federal government authority to regulate com- ments, and stock acquisitions whose effect may notably
mon carriers operating in interstate commerce in the lessen competition or tend to create a monopoly.
coastal, intercoastal, and inland waters of the United In addition, the Federal Communications Commis-
States. Part IV comprised regulations governing the oper-
sion (FCC) has evolved as a crucial regulatory component
ations of freight operators.
in e-commerce development. The FCC regulates commu-
Subsequently, the ICC’s jurisdiction expanded to nication by wire, radio, and television in interstate and
included trucking, bus lines, water carriers, freight for- foreign commerce. This agency has been undergoing
warders, pipelines (those not already regulated by other
rapid changes as a result of the need for e-commerce reg-
agencies), and express-delivery agencies. The ICC con- ulation.
trolled rates and enforced federal and local laws against
discrimination in these areas. The safety functions of its
jurisdiction were transferred to the U.S. Department of CURRENT INTERSTATE
Transportation in 1967, and the deregulation of the late COMMERCE ENVIRONMENT
1970s and the 1980s further reduced the ICC’s role. Most The transportation environment in the early twenty-first
ICC control over interstate trucking was removed in century is much different from that of the twentieth cen-
1994, and the agency was terminated at the end of 1995. tury. The shift from a rural to an urban economic base,
Many of its remaining functions were transferred to the policy changes, and technological and organizational
National Surface Transportation Board. innovations have changed the way in which products and
services are distributed in the United States. Fewer than
FEDERAL OVERSIGHT 10 percent of the people living in nonmetropolitan areas
Interstate commerce is supervised by several federal agen- are employed in farming, forestry, fisheries, or mining.
cies. At one time, this included the Civil Aeronautics Farms in the 2000s tend to be larger and more capital
Board, created by the Civil Aeronautics Act of 1938 to intensive. Large tractor-trailer trucks are rapidly replacing
oversee the airline industry. This act dealt with the airline smaller vehicles in the delivery of production inputs to
industry’s ability to provide efficient service at reasonable farms and products to market.

430 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION