The Hepburn Act enacted by Congress in June 1906, gave the Interstate Commerce Commission (ICC) the power to set maximum railroad rates and led to the discontinuation of free passes to loyal shippers. In addition, the ICC could view the railroads' financial records, a task simplified by standardized bookkeeping systems. For any railroad that resisted, the ICC's conditions would remain in effect until the outcome of litigation said otherwise. By the Hepburn Act, the ICC's authority was extended to cover bridges, terminals, ferries, sleeping cars, express companies and oil pipelines.
The final version was close to what Roosevelt had asked, and easily passed Congress with only three dissenting votes. Securing passage for this bill proved problematic for Roosevelt.
Facing at one time a seemingly adverse Republican majority, President Roosevelt consented to the Bill being thrown into the hands of the Democrats, much to the confusion of the Republicans and to the gratification of the democrats, who expected to reap political advantage. But the Republicans pulled themselves together, voted solidly for the Bill, which deprived the Democrats of their expected political gain.
Roosevelt wrote of the contest:
I am now trying to see if I cannot get it through in the form I want by the aid of some fifteen or twenty Republicans, added to most of the Democrats.
The most important provision gave the ICC the power to replace existing rates with "just-and-reasonable" maximum rates, with the ICC to define what was just and reasonable. The Act made ICC orders binding; that is, the railroads had to either obey or contest the ICC orders in federal court. To speed the process, appeals from the district courts would go directly to the U.S. Supreme Court.
Anti-rebate provisions were toughened, free passes were outlawed, and the penalties for violation were increased. The ICC staff grew from 104 in 1890 to 178 in 1905, 330 in 1907, and 527 in 1909. Finally, the ICC gained the power to prescribe a uniform system of accounting, require standardized reports, and inspect railroad accounts.
Scholars consider the Hepburn Act the most important piece of legislation regarding railroads in the first half of the 20th century. Economists and historians debate whether it crippled the railroads, giving so much advantage to the shippers that a giant unregulated trucking industry—undreamed of in 1906—took away their business.
- Johnson, Emory R. Government Regulation of Transportation (1938) online edition
- Martin, Albro. Enterprise Denied: Origins of the Decline of American Railroads, 1897-1917 (1978)
- Morris, Edmund. Theodore Rex (2002), biography of Roosevelt excerpt and text search
- Sharfman, Isaiah Leo. Railway Regulation Railway Regulation (1915) complete edition online
- Stone, Richard D. The Interstate Commerce Commission and the Railroad Industry: A History of Regulatory Policy Praeger 1991 online edition
- The Letters of Theodore Roosevelt. Vol. V: The Big Stick, 1905-1907 edited by Elting E. Morison (1952)