Elkins Act

The Elkins Act of 1903 was named for Senator Stephen B. Elkins of West Virginia. This piece of legislation was championed by the Pennsylvania Railroad as a way to end the practice of rebates. Rebates were refunds to businesses which shipped large quantities on the railroads, and many railroad companies disliked it. Shippers could demand rebates and threaten to take their business elsewhere in the overbuilt and highly competitive American railroad network of the late nineteenth century. Urged by the Pennsylvania Railroad, Elkins placed the bill bearing his name before the Senate in early 1902 and it passed in February 1903, moving unanimously out of the Senate and passing by a 250 to 6 vote in the House.

The Elkins Act gave federal courts the power to end rate discrimination. Widely supported by larger railroad companies, the Elkins Act upheld the rates published by the Interstate Commerce Commission. The Act outlawed rebates and made the railroad company itself liable for punishment along with the entity receiving the refund. Railroad directors informed President Theodore Roosevelt of their desire to cease the practice of rebates and he supported the bill in private correspondence. Roosevelt’s vocal support for later legislation to regulate the industry—notably the Hepburn Act—and the use of the Sherman Anti-Trust Act to end monopoly powers, as in the Northern Securities Case, can be traced in part to lessons learned during passage of the Elkins Act.