Effectiveness of Competition to Limit Rail Rate Increases Under Deregulation: The Case of Wheat Exports from the Southern Plains

Much of the early 1860s discontent with railroads was centered in agricultural regions, particularly the new regions of the West, where monopolistic price discrimination was most easily practiced by railroads. Because of unavailable or inaccessible forms of competing transportation and numerous small shippers, railroads were able to exploit their monopolistic position (Meyer et al.). Agrarian political action in the 1860s resulted in unsuccessful regulatory efforts by states, but laid the base for the cornerstone of federal transportation regulation, the Act to Regulate Commerce, which was passed in 1887. The Act requires that all rates be “just and reasonable” and provides that “every unjust and unreasonable charge” is unlawful.