Question

In Wabash, St. Louis, and Pacific Railroad Company v. Illinois, the U.S. Supreme Court ruled that a. railroads could not grant rebates to big shippers. b. the Interstate Commerce Commission could not regulate railroad rates. c. individual states could not regulate railroad rates. d. railroads could keep the subsidies granted for constructing the transcontinental railroad.

Answer 1

Answer: C

Explanation: In 1886, the Supreme Court ruled in Wabash v. Illinois that the state of Illinois could not regulate the rates that the Wabash Railroad was charging as its freight traffic was Interstate. It emphasized that only the federal government, through Congress had the power to regulate interstate commerce.

This case overturned the earlier Munn vs. Illinois case, whereby states had the power to regulate businesses dealing with interstate commerce.

The Wabash decision led to the creation of the Interstate Commerce Commission in 1887; this was the first modern regulatory agency of its kind.