increasingly important to the expanding nation, and unfair railroad
practices proliferated. Rail lines extended cheaper rates to large shippers
by rebating a portion of the charge, operated to the disadvantage of
small shippers. Also, some railroads charged arbitrarily higher rates
to some shippers than to others between certain points, regardless of
competition held down freight charges between cities with several rail
connections, rates were excessive between points served by only one
line. Thus it cost less to ship goods 1,280 kilometers from Chicago
to New York than to places a few hundred kilometers from Chicago. And
by joint action to avoid competition -- pooling -- rival companies divided
the freight business according to a prearranged scheme that placed the
total earnings in a common fund for distribution.
at these practices stimulated state efforts at regulation. These had
some effect, but the
problem was national
in character and demanded congressional action.
In 1887 President
Grover Cleveland signed the Interstate Commerce Act, which forbade excessive
charges, pools, rebates and rate discrimination, and created an Interstate
Commerce Commission (ICC) to guard against violations of the act. In
the first decades of its existence, however, the railroads used conservative
Supreme Court decisions to thwart virtually all the ICC's efforts at
regulation and rate reductions.
Cleveland was also
active in combating the high tariff, which, adopted originally as an
emergency war measure, had come to be accepted as permanent national
policy under the Republican presidents who dominated the politics of
the era. Cleveland, a Democrat, regarded excessive tariffs as responsible
in large measure for a burdensome increase in the cost of living and
for the rapid development of trusts. After many years, during which
the tariff had not been a political issue, the Democrats in 1880 demanded
a "tariff for revenue only," and soon the clamor for reform became insistent.
In his annual message to Congress in 1887, Cleveland, despite warnings
to avoid the explosive subject, startled the nation by denouncing the
extremes to which the principle of protecting American industry from
foreign competition had been pushed.
The tariff became
the main issue of the presidential election campaign in 1888, and Republican
candidate Benjamin Harrison, a defender of protectionism, won in a close
race. The Harrison administration, fulfilling its campaign promises,
passed in 1890 the McKinley tariff bill, a measure designed to protect
established industries as well as to foster so-called "infant industries."
The new tariff's generally high rates contributed to high retail prices,
triggering widespread dissatisfaction.
During this period,
public antipathy toward the trusts increased. The nation's gigantic
corporations, subjected to bitter attack through the 1880s by such reformers
as Henry George and Edward Bellamy, became a hotly debated political
issue. To break the monopolies, the Sherman Antitrust Act, passed in
1890, forbade all combinations in restraint of interstate trade and
provided several methods of enforcement with severe penalties. Couched
in vague generalities, the law itself accomplished little immediately
after its passage. But a decade later, in the administration of Theodore
Roosevelt, its effective application earned the president the nickname