Chapter 3: Steamboats, States’ Rights, and the Power of Congress

Gibbons v. Ogden (1824)

During the summer of 1787, Philadelphia was the site of two notable events, one more obviously significant than the other, but both more important to the future of the United States than contemporary observers could possibly have realized. First, at the Pennsylvania State House (now known as Independence Hall) in the center of the city, a convention of political leaders produced the United States Constitution. This document became a workable framework for federal union among thirteen American states and a sturdy platform from which to expand the number of states and to regulate the interactions among them. Meanwhile, from the bank of the Delaware River flowing out of Philadelphia to the Atlantic Ocean, John Fitch launched a new kind of ship, a steamboat. Fitch’s crude but innovative vessel was later refined and used commercially, generating economic prosperity and constitutional controversies.

Thirty-seven years later, in 1824, there was a momentous intersection of the powers granted to Congress in the Constitution and the development of businesses based on steamboats. A dispute between two New York steamboat owners, Thomas Gibbons and Aaron Ogden, raised questions about the powers of Congress to regulate commercial activity within the states and among the different states of the union. Thus, the U.S. Supreme Court was called upon in Gibbons v. Ogden (1824) to settle for the first time a controversy about the meaning of the commerce clause in Article 1, Section 8 of the Constitution. This clause provides Congress with power “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”

Aaron Ogden and Thomas Gibbons had been partners in a steamboat business. Gibbons joined Ogden in managing a franchise purchased in 1815 from a steamboat company formed several years earlier by Robert Livingston and Robert Fulton, after they had successfully launched an improved steam-powered ship on New York’s Hudson River in 1807. The New York State government in 1808 had granted Livingston and Fulton or their heirs a thirty-year monopoly to operate steamboats on the waterways of the state and on contiguous coastal waters of the Hudson River, which divides the states of New York and New Jersey. Ten years earlier, John Fitch had died after failing to build a better steam-driven ship, and Robert Fulton had become the preeminent American steamboat developer.

By 1815, both Livingston and Fulton were dead, and the inheritors of the Livingston-Fulton Company controlled their potential and actual rivals, such as Aaron Ogden and Thomas Gibbons, by selling rights to them, under the terms of their monopoly grant, to operate steamboats between specified points within New York and New Jersey. Ogden and Gibbons became partners, and their business acquired a license to be the sole steamboat transporter of passengers from Elizabethtown, New Jersey, to New York City via the Hudson River.

Simmering personal antagonisms destroyed the Ogden-Gibbons partnership in 1818, and the former business associates became bitter rivals in competition for passengers on the same waterway their boats had once traveled in concert. The ruthless tactics of Gibbons’s tough teenaged assistant, Cornelius Vanderbilt, especially miffed Ogden, who lost passengers and profits to him. Later, as an adult, Vanderbilt used similar bold actions, on a larger scale, to develop railroads and related enterprises throughout the United States.

Ogden struck back at Gibbons through the state courts of New York. He claimed to be the rightful holder of the franchise granted by the Livingston and Fulton monopoly. So Ogden charged Gibbons with unlawfully operating an unlicensed steamboat, and in 1819 he successfully sued in the New York courts for an injunction to prevent Gibbons from competing with him. In 1820 the highest New York State court decided this case on appeal and granted a permanent injunction against Gibbons. Ogden seemed to have won. However, young Cornelius Vanderbilt, acting with approval from his boss, brazenly disregarded the injunction and continued to take steamboat business from Ogden. And Gibbons retaliated against Ogden through the federal judiciary with an appeal to the U.S. Supreme Court, which agreed to hear arguments on this case in 1824.

Gibbons based his appeal on a license he had acquired in 1818 under a federal statute, the Coasting Act of 1793. He claimed this federal law provided him the right to navigate his steamboats on the waterways of any state in the nation, and that it superseded any conflicting state statute, such as the New York laws establishing the monopoly that granted Ogden rights to operate on the Hudson. Further, Gibbons maintained that the commerce clause of the Constitution’s Article 1, Section 8 gave the U.S. Congress exclusive authority to regulate interstate commerce, as it had done through the federal Coasting Act, which made lawful his transportation of steamboat passengers from points on the Hudson River between New Jersey and New York.

An overflow audience gathered in the cramped courtroom of the Supreme Court to observe the start of oral arguments in Gibbons v. Ogden on February 4, 1824. Lively discussions about the issues of this case had been circulating throughout Washington, D.C., among newspaper reporters, members of Congress, and political leaders. They realized that more was at stake than the obvious issues of the steamboat monopoly case. Advocates of states’ rights in the South feared that a decision in favor of Gibbons would strengthen the commerce power of Congress such that it could be used to halt the internal slave trade or even to abolish the institution of slavery throughout the nation. In addition, members of the nationally dominant Democratic-Republican Party in all sections of the country, including those who opposed slavery, feared that the Court might once again interpret the Constitution broadly to the general detriment of state powers within the federal system. From its origin in the 1790s, the Democratic-Republican Party had supported states’ rights and powers within the federal system and had criticized previous decisions of the Supreme Court that supported the federal government’s powers relative to those of the states.

By contrast with the states’ rights supporters, many business owners yearned for a Supreme Court decision that would support the power of Congress to overturn state-protected monopolies controlled by a few rich individuals and to encourage free enterprise, productivity, and the accumulation of wealth among more and more people. Many also hoped that a decision based on an expansion of the federal government’s power would encourage Congress to enact laws in support of public works, such as federally funded highways, bridges, and canals, which would contribute to the development of business and industry throughout the country. Thus, they hoped, both individuals and communities nationwide could benefit from a freer and more prosperous economy.

In addition to the high-stakes issues of Gibbons v. Ogden, the nationally renowned lawyer Daniel Webster, representing Gibbons, attracted extraordinary public attention to the oral arguments. The physically imposing Webster, a flamboyant orator, had performed impressively in other cases before the Court and was a rising star in Congress as a representative from Massachusetts. Members of Congress do not typically represent clients in Supreme Court cases, but Webster was an exceptional lawyer. He readily accepted opportunities to promote his interpretation of the Constitution.

Webster argued that the commerce power of Congress was broad and exclusive; it was not a power shared equally by Congress and the state governments; and it could be used to regulate transportation on all the navigable waters of the country. Thus, Congress could legislate against state-granted monopolies or regulate other aspects of commerce among the states, if it wished to do so. If not, then its silence was sufficient to leave the matter for the states to resolve. But if so, the acts of Congress within this sphere of its authority would override conflicting state statutes.

Webster recognized that every state government had enacted various regulations regarding health, safety, and other public matters that pertained to both intrastate and interstate commerce. Webster, however, classified these regulations as traditional and valid uses of the state’s police power within the federal system, and not directly or exclusively connected to interstate and foreign commerce. This domain of the state’s police power, said Webster, was constitutionally protected against control by Congress and did not conflict with Congress’s constitutional grant of power over interstate commerce.

Finally, Webster argued for the supremacy of congressional power relative to state statutes that directly contradicted an act of Congress to regulate interstate commerce, such as the federal Coasting Act of 1793. Gibbons’s license under this federal law, said Webster, superseded any New York State–mandated monopoly granted to Ogden or anyone else, and gave his client the right to “navigate freely the waters of the United States.”

On March 2, 1824, Chief Justice John Marshall presented the unanimous decision of the participating justices in favor of Thomas Gibbons. (Associate Justice Smith Thompson did not participate because of the recent death of his daughter.) Marshall’s written opinion for the Court reflected the influence of Daniel Webster’s advocacy for Gibbons. Later, the cocky Webster bragged that Marshall had imbibed his arguments before the Court “as a baby takes in his mother’s milk.” This overstatement overlooked the eloquence of Marshall’s written opinion, in which he agreed with most of Webster’s ideas, but refined them into a durable decision that eventually became the sturdy foundation of constitutional law on the commerce power.

The first issue Marshall addressed was the meaning and scope of Congress’s commerce power. What is it? And what does it include? Marshall responded with a broad and flexible definition. He said, “Commerce undoubtedly, is traffic, but it is something more; it is intercourse. It describes the commercial intercourse between nations, and parts of nations, in all its branches, and is regulated by prescribing rules for carrying on that intercourse.”

According to the chief justice, the commerce power of Congress encompassed the regulation of steamboat navigation on the nation’s waterways. Marshall also argued that the power “to regulate Commerce . . . among the several States” implies the extension of federal power across the boundaries of states if the object of regulation pertains to more than one state. He wrote, “A thing which is among others, is intermingled with them. Commerce among the states, cannot stop at the external boundary line of each state, but may be introduced into the interior.”

The commerce power of Congress, Marshall explained, “is the power to regulate, that is, to prescribe the rule by which commerce is to be governed. This power, like all others vested in Congress, is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution.” Marshall said that “the sovereignty of Congress” in regard to its enumerated powers had always been “limited to specific objects,” but it was and is “plenary [or complete] as to those objects.” Thus, Congress’s commerce power includes “navigation, within the limits of every State in the Union, so far as that navigation may be in any manner connected with commerce with foreign Nations, or among the several States, or with the Indian Tribes.” In this part of his opinion for the Court, Chief Justice Marshall emphasized Congress’s power to fully regulate commerce within a state as long as it could be connected to commerce between the states, with one or more foreign countries, or with the tribes of native peoples. Further, Marshall held Congress’s commerce power to be supreme relative to the state governments as long as it is exercised within the limitations set forth within the Constitution.

Next, Marshall raised the issue of whether the federal government’s commerce power is exclusive, or whether the states also possess some power to regulate interstate commerce within their borders. In response to these questions, Marshall tempered his broad interpretation of the commerce power in recognition of the rights of states in the federal union. And he unambiguously recognized the state governments’ control over intrastate commerce:

The genius and character of the whole government seem to be that its action is to be applied to all the external concerns of the nation, and to those internal concerns which affect the state generally; but not to those which are completely within a particular state, which do not affect other states, and with which it is not necessary to interfere for the purpose of executing some of the general powers of the government. The completely internal commerce of a state, then, may be considered as reserved for the state itself.

Marshall accepted Webster’s argument against Ogden’s lawyers’ claim that the federal and state governments could equally share commerce power. However, the chief justice partially accommodated the concerns of states’ rights supporters when he accepted Daniel Webster’s classification of certain kinds of traditional state government regulations affecting interstate commerce as police powers. For example, when a state government enacted laws to protect the safety or security of travelers and goods involved in either interstate or intrastate commerce, the state exercised police powers reserved to it under the U.S. Constitution’s principle of federalism. Although these regulations may affect interstate commerce they do not conflict with Congress’s commerce power, because they are exercised by the states to maintain law, order, and the public good within their borders.

Marshall suggested, in line with Webster’s presentation, which he called the “silence of Congress argument,” that the states were free to exercise commerce powers in regard to any subjects not addressed by congressional laws. However, he did not rule conclusively on this matter. Thus the Court left open the possibility that the states might have partial power to regulate some aspects of interstate commerce within their borders. In addition, the Court did not rule exactly about the extent to which the states could regulate commerce that Congress was also regulating. As a result, important issues remained unresolved, leaving them open to fresh judicial interpretation in the future. These issues were addressed variously by decisions of the Court throughout the nineteenth and twentieth centuries.

The final issue of this case, and the one most important to Gibbons and Ogden, was settled exactly. Marshall stated directly that state statutes in conflict with a validly enacted federal law regarding commerce could not be sustained under the supremacy clause of the U.S. Constitution’s Article 6. Thus, because the New York State laws granting monopoly rights to steamboat companies such as Ogden’s conflicted with the federal Coasting Act of 1793, they were unconstitutional. Gibbons and his associates were licensed through this federal law to navigate freely the waterways of New York and New Jersey without state government interference.

Some states’ rights proponents blasted Marshall’s opinion for the Court, fearing that it could be used to strike against the interstate slave trade. Thomas Jefferson and his followers also saw the decision as one more instance, among many others, of Marshall’s excessive nationalism, disregard of powers reserved to the states, and wrongful exercise of federal judicial powers.

Despite criticism from states’ rights boosters and disappointed benefactors of steamboat monopolies, Marshall’s decision in Gibbons v. Ogden was one of his most popular opinions, and it won general public praise. Business owners and passengers alike generally hated the steamboat monopolies in New York and other states for their obstruction of free-flowing commerce and economic opportunity. A burst of entrepreneurial steamboat navigation in the wake of the Gibbons decision boosted industrial development and economic growth throughout the country.

In the short term, the federal government made slight use, beyond regulation of steamboat enterprises, of the expanded commerce powers provided by Marshall’s opinion in the Gibbons case. But the decision opened the way for a broad use of federal government regulation of commerce in the twentieth century. From the mid-1930s to the 1990s, Gibbons v. Ogden was the precedent that justified an expansive use of the commerce clause that enabled Congress to regulate manufacturing, child labor, workplace safety, farm production, mass media of communication, wages and hours of work, the activities of labor unions, protection of civil rights, buying and selling at marketplaces, and various other activities. Any activity affecting interstate commerce in some way seemed to be subject to federal government regulation.

During much of the twentieth century, Congress’s use of its commerce power brought a relative decline in the regulatory power of state governments relative to that of the federal government. However, during the 1990s the Court did strike down a few federal statutes as unconstitutional extensions of Congress’ commerce power. For example, United States v. Lopez (1995) struck down a federal law banning individuals from carrying a gun near a school. Nonetheless, on balance, the commerce power of Congress, based on the Court’s ruling in Gibbons v. Ogden, remains a strong instrument for federal government regulation within and among the states.