In the 1920 case of Seaboard Air Line Railway Company et al. v. United States et al., the U.S Supreme Court ruled in favor of the United States, upholding a decision by The Interstate Commerce Commission (ICC). The ICC had ordered several railway companies to stop charging higher rates for shorter distances than longer ones on freight traffic between certain points in Florida and Atlanta, Georgia. This practice was deemed discriminatory and violated the 'long-and-short-haul clause' of Section 4 of the Interstate Commerce Act which prohibits unreasonable preferences or advantages to any particular person or locality. The railway companies argued that this order interfered with their ability to compete with water carriers who were not subject to such regulations but their argument was rejected by both lower courts and eventually by Supreme Court as well.

In the dissenting opinion for Seaboard Air Line Railway Company v. United States, it was argued that the Interstate Commerce Commission (ICC) did not have the authority to mandate a specific rate of return on railway investments. The dissenters believed this overstepped its regulatory powers and infringed upon private property rights protected by due process under the Fifth Amendment. They contended that while ICC could ensure rates were just and reasonable, setting an exact profit margin went beyond their jurisdiction as it effectively guaranteed income regardless of management efficiency or market conditions. This, they asserted, risked creating a system where railroads would be incentivized to operate inefficiently knowing profits were assured rather than striving for better performance through competition and innovation.