It should come as no surprise to anyone that Republicans and the Trump Administration have been enthusiastically deregulating many industries. They have had a particular interest in curbing the red tape in the financial sector that has existed since the Dodd-Frank bill was passed by Democrats in the wake of the 2008 financial crisis. The back-and-forth nature of regulation in the economy can appear counterproductive indeed, but it is helpful to know that this is not a new phenomenon. Politicians have been imposing their will on businesses since the late-19th century and it will likely continue unabated.
Most contemporaries would identify the Interstate Commerce Act of 1887 as the first major piece of legislation designed to regulate industry in the United States. The bill gave birth to the Interstate Commerce Commission which was the first independent agency and was created to oversee the railroad industry, to ensure fair rates and to eliminate rate discrimination. Originally, the ICC’s powers were limited and constant litigation from railroad companies greatly reduced its powers to enforce its own policies. However, new legislation passed later on would give the agency a legitimate say in the way the railroad industry would evolve.
Most of the complaints that lead to the creation of the ICC came from the agriculture industry who used the railroads to ship their products all over the country. But railroads were also becoming extremely powerful politically. They began to influence local governments and were offering free transportation to newspaper editors, local government officials and other opinion leaders. It wasn’t until 1906 when congress passed the Hepburn Act that the ICC would have the authority to not only outlaw free passes and rebates but also to set maximum fair rates. By putting a ceiling on the amount railroads could charge it was essentially putting a ceiling on how profitable the railroads could be. The next year the US economy experienced a severe banking panic and recession which was caused by a perfect storm of various happenings. But considering that railroads made up such a vast part of the American stock market at the time, the Hepburn act and the capping of profits were certainly a contributing factor.
In many ways the scrutiny applied to the railroad industry then is not all that different to the attention paid to the financial sector today. Both make up a huge part of the economy and have tremendous influence over the political process. I suspect that in the future the technology industry will be the next target regulators take aim at.