"In the early 19th century … localities set their own time," said Bill Mosley, a public affairs officer at the U.S. Department of Transportation.
"It was kind of a crazy quilt of time, time zones, and time usage. When the railroads came in, that necessitated more standardization of time so that railroad schedules could be published."
In 1883 the U.S. railroad industry established official time zones with a set standard time within each zone. Congress eventually came on board, signing the railroad time zone system into law in 1918.
The 1918 law assigned the Interstate Commerce Commission to oversee the time zones, and legislated Daylight Saving Time. Later, the decision whether to observe DST was left up to the states. Link