In the 1920 case of St. Louis & San Francisco Railway Company v. Public Service Commission of the State of Missouri, the Supreme Court ruled in favor of the railway company, stating that a state could not regulate interstate commerce rates as it violated federal law and jurisdiction. The dispute began when Missouri's Public Service Commission ordered reduced intrastate freight rates on certain commodities transported by rail within its borders. The railway company argued that this order was unconstitutional because it interfered with interstate commerce and conflicted with federal legislation governing railroad rate regulation under Interstate Commerce Act (ICA). The court agreed, holding that while states have power to control local aspects of trade within their boundaries, they cannot interfere or conflict with national policy regarding interstate commerce established by Congress through ICA.

In the dissenting opinion for the case of St. Louis & San Francisco Railway Company v. Public Service Commission of Missouri, Justice Holmes argued that states should have more authority in regulating their own affairs without federal interference. He believed that the state's power to regulate rates charged by railroads was a matter of local concern and did not interfere with interstate commerce, thus it should be free from federal control or oversight. Furthermore, he contended that if a railroad company found a state regulation unreasonable or unfair, its proper recourse was through negotiation with the state commission rather than appealing to federal courts for relief. In essence, his view emphasized respect for states' rights and autonomy within their borders.