Deregulation Case

Last week, the vital role transportation plays in business and supply chain logistics was explored. Now, the impact on transportation that regulation and later deregulation has had will be discussed at further length. In order to understand the topic, a brief history, the reasons for regulation and deregulation, the global impacts on United States' policies, and the possible benefits to regulation / deregulation will be identified. Through these areas, the paper will show how both regulation and later deregulation were necessary for America's economy. It will also highlight the same issues facing the global transportation industry.

During America's industrial revolution and the Westward Expansion, the rail system was increased exponentially. With this rapid expansion came several men who became titans of the various industries, importantly rail systems, and were later referred to as "Railroad Robbers" (Hazen & Lynch, 2008). This public animosity toward the titans of the industry was in response to the monopolies they held and the "highly abusive tactics" (Hazen & Lynch, 2008, p.43) they used to gain wealth. Regulation was needed to break up the monopolies and prevent the tactics, such as stock and rate manipulation, that were hampering the fair growth of the rail system. Though the titans of the rail system rose to dominance in a fair way, their tactics and abuses to amass great wealth after they achieved prominence were the main motivation in the country's movement toward regulation of the rail industry.

The march toward regulation was stymied temporarily by the Civil War, but quickly resumed at its close (Hazen & Lynch, 2008). A large motivation to regulate was the prevention of commodities being transported to the West due to the rampant abuses of rates. Illinois took the first step in the growing advance to regulating the transportation industry in 1871 by establishing maximum rates (Hazen & Lynch, 2008). The law was fought, but the Supreme Court upheld it, increasing the momentum of the movement. After the Illinois law was challenged again and defeated in the case Wabash, St. Louis and Pacific Railroad Company v. State of Illinois in 1886, the federal government was provoked to step in. The Act to Regulate Commerce, or Interstate Commerce Act, was passed in 1887. This allowed the federal government to regulate the railroad industry, in the hopes to break up the monopolies and level the playing field for all companies. Several modifications to the Act were passed between 1890 and 1940 to further even the field. Most notably, the Motor Carrier Act of 1935, the Civil Aeronautics Act of 1938, and Part III of the Interstate Commerce Act in 1940, brought motor carriers, airlines, and water carriers into the fold of federal regulation. It is commonly held that the Transportation Act of 1958 was the last major piece of regulation before the movement towards deregulation.