In the 1918 case of Lake Erie & Western Railroad Company v. State Public Utilities Commission of Illinois ex rel. Camero, the U.S Supreme Court ruled in favor of the railroad company, stating that state regulations could not interfere with interstate commerce. The dispute arose when a local farmer and grain dealer from Illinois complained about unfair freight rates charged by the railroad company for intrastate transportation compared to lower rates for similar distances in other states (interstate). The State Public Utilities Commission ordered an adjustment to equalize these charges but was challenged by Lake Erie & Western Railroad Company on grounds that it violated their rights under federal law which governs interstate commerce. The court held that while states have power over local trade matters, they cannot regulate aspects related directly or indirectly to interstate commerce as this is exclusively within federal jurisdiction.

In the dissenting opinion for Lake Erie & Western Railroad Company v. State Public Utilities Commission of Illinois ex rel. Camero, Justice Holmes disagreed with the majority's decision to uphold an order by the Illinois Public Utilities Commission requiring a railroad company to construct and maintain a side track at its own expense for a private shipper. He argued that this constituted an unconstitutional taking of property without just compensation in violation of the Fourteenth Amendment's Due Process Clause. According to him, while it is within state power to regulate railroads as public utilities, such regulation should not extend so far as forcing them into serving particular customers or bearing costs which they would not voluntarily assume under normal business conditions. The justice believed that compelling railroads to provide facilities beyond what their general duty requires amounts essentially to conscription and goes beyond permissible regulatory measures.