The ICC, freight rates, and the Great Depression

Abstract

When the Interstate Commerce Commission first gained substantial control over railroad freight charges in the early years of the 20th century, it used its power to ensure adherence to published tariffs and, hence, to reduce the volatility of freight charges. Following the passage of the Transportation Act of 1920, the Commission's dominant regulatory objective changed to one of providing railways with an adequate return on their invested capital. The Commission's attempts to attain this new objective resulted in substantial increases in real freight charges during economic contractions. The increase in real freight charges at the beginning of the Great Depression almost certainly increased its severity.