The U.S. Supreme Court case Smyth v. Ames in 1897 revolved around the issue of railroad rates and their regulation by state legislatures. The Nebraska State Legislature had passed a law setting maximum freight and passenger rates for railroads operating within the state, which was challenged by several railroad companies as unconstitutional under the Fourteenth Amendment's due process clause, arguing that it deprived them of property without fair compensation. The Supreme Court ruled in favor of the railroads, stating that while states have power to regulate industries such as railroads for public interest, they cannot do so in a way that is confiscatory or does not allow businesses to earn reasonable profits on investments made into infrastructure and operations. This ruling established an important precedent known as "fair value" standard where regulatory bodies must consider investment costs when determining rate limits.

In the dissenting opinion for Smyth v. Ames, Justice Harlan argued that the Court's decision to strike down Nebraska's maximum railroad rate law was a dangerous overreach of judicial power into legislative territory. He contended that it was not within the purview of courts to determine whether or not a state legislature had set rates too low; rather, this should be left up to elected representatives who were accountable directly to their constituents. Furthermore, he expressed concern about what precedent this case would set in terms of federal interference with states' rights and powers. Ultimately, Harlan believed that if railroads felt they were being treated unfairly by state laws, their recourse should be through political channels - lobbying lawmakers or appealing directly to voters - rather than through litigation in federal court.