Hepburn Act

The Hepburn Act of 1906 was a bill that fortified the powers of the Interstate Commerce Commission (ICC) and strengthened federal regulation of railroads. Named for Rep. William Hepburn of Iowa, chairman of the House Commerce Commission, the Act passed after a series of unpopular rate increases by railroad corporations. The railroads, enjoying improved demand for their services and victims of their own economic sophistication, realized by the turn of the century that costs were increasing, a phenomenon we now call inflation. In an effort to attract much-needed investment capital to improve efficiency and safety, the railroads raised the rates they charged for their services. Passengers and shippers reacted with anger at the announcement of the rate hikes.

The Hepburn Act expanded the powers of the 1903 Elkins Act. It gave ICC rulings the force of law (where before only the courts could enforce the regulations) and allowed the Commission to set maximum—though not minimum—“fair, just, and reasonable” rates. It also prohibited giving free passes except to railroad employees and created standard bookkeeping methods. Railroads were required to submit annual reports to the ICC, which therefore employed professional staff to examine railroad accounts. The number of Commissioners grew from five to seven and their term went from six to seven years.

President Roosevelt took an intense interest in passage of the bill and wholeheartedly supported the Hepburn Act. Alternately cooperating with Republicans and Democrats he worked to keep more stringent regulations out of the legislation. He thought improved government regulation of the industry was a middle way between the chaos of unfettered competition (which included the formation of monopolies) and government ownership of the railroads.