In the case of Postal Telegraph-Cable Company v. City of Richmond (1918), the U.S. Supreme Court ruled in favor of the City of Richmond, upholding its right to impose a tax on telegraph companies operating within city limits. The Postal Telegraph-Cable Company had argued that this local taxation was unconstitutional as it interfered with interstate commerce and violated their rights under federal law which granted them permission to operate nationwide without being subjected to such taxes by individual cities or states. However, the court disagreed, stating that while Congress had indeed given telegraph companies certain privileges and protections related to interstate commerce, it did not exempt them from paying reasonable business license taxes imposed by state or municipal authorities for conducting business within their jurisdictions.

In the dissenting opinion for Postal Telegraph-Cable Company v. City of Richmond, Justice Holmes argued that the city's ordinance requiring telegraph companies to bury their wires underground was not an unreasonable exercise of police power and did not constitute a violation of due process rights under the Fourteenth Amendment. He contended that it is within a municipality's authority to regulate businesses in order to promote public safety and welfare, even if such regulations impose additional costs on those businesses. Furthermore, he disagreed with the majority's view that this particular regulation was discriminatory against telegraph companies because other utilities were also required by law or contract to place their lines underground. Therefore, he believed there was no basis for striking down the ordinance as unconstitutional.