MUNN V. ILLINOIS (1877)

In Munn v. Illinois (1877) the U.S. Supreme Court upheld an Illinois law which regulated the owners of grain elevators, declaring that government interference was constitutional in areas "affected with a public interest" (Munn vs. Illinois 94 US 113). The Court created a confusing void, however, with a later decision in Wabash, St. Louis and Pacific Railway Company v. Illinois (1886). It declared state laws regulating interstate railroads were unconstitutional because they violated the Commerce Clause, which gives Congress exclusive regulatory power "with foreign nations, the several states, and with the Indian tribes" (Article I, Sec. 8). This decision eventually led to the establishment of the Interstate Commerce Commission in 1887.

Long before the creation of the federal regulatory body, the business practices of the railroads had given rise to a movement led by the National Grange. The Grange was a powerful association of farmers who protested railroad rate structures, citing them as discriminatory and unfair. They pressured state lawmakers into taking action. Midwestern legislatures yielded to the outcry, passing laws that established regulatory commissions to monitor the practices of the railroads. In Illinois and Minnesota these commissions prohibited discrimination in rates and services, fixed maximum freight rates, and established standards of service. The bodies were also given the authority to enforce their standards.

When Munn vs. Illinois came before the Supreme Court in 1877, the issue of state regulation was raised. The Supreme Court upheld the power of the state to impose standards on businesses "clothed with a public interest." This decision was often later cited in support of other Granger laws that were passed, primarily in Midwestern states, to curb unfair business practices of the railroads. Ultimately the states found it difficult to enforce their laws on carriers that moved between states. The creation of the Interstate Commerce Commission in 1887 resolved these problems, placing responsibility for the regulation of interstate business transportation firmly in the hands of the federal government.