Gibbons v. Ogden (1824)

The McCulloch v. Maryland decision in 1819 fanned the flames of controversy over States' rights and national supremacy. By 1824, Chief Justice John Marshall had reached the zenith of his historic tenure on the Court and was perfectly willing to consider the most difficult areas of law.

As the American frontier moved west and settlers pushed beyond the Appalachians into the Ohio and Mississippi river valleys, the question of commercial development became very important. In 1811, the National Government began construction of the great National Road to the west through the Cumberland Gap, and State governments engaged in a frenzy of canal building, capped by New York State's 363-mile wonder, the Erie Canal. Taxation and regulation of commerce through transportation was an important source of State income in the early years of the Republic, and interstate rivalries over rights to license and collect fees from transportation services became heated. Intense economic pressures mounted as some businessmen called for more free trade while other argued for States' rights in the management of internal matters of the State.

In 1807, Robert Fulton's steamboat, the North River Steamboat, successfully navigated the Hudson River in New York. Fulton and his partner, Robert Livingston, negotiated a deal whereby the New York State legislature would grant them an exclusive, long-term contract to operate and license all steam-powered vessels in the waters of New York. Aaron Ogden obtained a license from Livingston to operate steam-powered ferryboats on the Hudson River between New York and New Jersey. Meanwhile, in New Jersey, Thomas Gibbons made his living carrying passengers by steamboat from the small town of Elizabethtown, New Jersey to New York City. Gibbons operated under a coasting license granted by the Federal Government, rather than under a license issued by either State. Because Gibbons had no New York license, Ogden asked the New York courts to issue an injunction forbidding him landing rights to the port of New York. The New York courts issued the injunction.

Gibbons appealed to the U.S. courts, arguing that his possession of a federal coasting license superseded the licensing requirements of New York State.

The major debate involved the meaning of Article I, Section 8-specifically, the Commerce Clause. What was the meaning of the word commerce in the Constitution? What exactly could the Federal Government regulate under that provision? Was the carrying of passengers a form of commerce? Should the word commerce be read narrowly (that is, boxes and barrels) or broadly (to include all forms of business relations for the purpose of trade)? Were the steamboat licenses of the State of New York in conflict with the National Government's authority to regulate commerce? If so, was the requirement for all steamships in New York waters to be licensed by that State constitutional?

For Gibbons: The Court was urged to take a broad view of the word commerce, which would subject passengers on interstate transports as well as other tangible items of commerce to federal regulation. Presenters argued that the federal coasting license superseded any New York regulation, because the Commerce Clause gives the Federal Government exclusive control over interstate commerce.

For Ogden: The Court was urged to take a narrow view of the word commerce. As a sovereign State, New York was fully empowered to regulate business within its boundaries. New York had granted Ogden a legal exclusive franchise, and anyone who wanted to operate a steam-powered vessel in New York harbor, with landing rights in New York City, would have to pay him for the right. New York's effort did not interfere with the National Government's effort to regulate commerce. The Federal and State governments had concurrent power over commerce.

Chief Justice Marshall delivered the opinion of a unanimous (6-0) Court siding with Gibbons. On the definition of commerce, the Court broadly declared, “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.“

The decision called Gibbons's federal license a legitimate exercise of the regulation of commerce provided in Article I, Section 8 of the Constitution. The New York State law creating a commercial monopoly was therefore void, since it conflicted with the regulatory power of the Federal Government in the performance of its constitutional responsibilities. The Court ruled that Gibbons must be allowed to operate within the waters of New York State.

As in the McCulloch decision, Marshall again asserted his belief in the supremacy of the Federal Government and its laws over those of the States. “…[T]he act of a State inhibiting the use of [waters or ports] to any vessel having a license under the act of Congress, comes, we think, in direct collision“ with the constitutional prerogatives granted to Congress under the Commerce Clause. Thus, Marshall declared, “…the acts of New York must yield to the law of Congress….“

As a result of this decision, State-licensed monopolies on island waterways ended and business competition was encouraged. In 1837, the Court, under Chief Justice Roger B. Taney, would go one step further and effectively eliminate State-licensed monopolies across the board (in Charles River Bridge v. Warren Bridge).

The Gibbons decision established for all time the supremacy of the National Government in all matters affecting interstate and foreign commerce. The Marshall Court's broad reading of the Commerce Clause gave it a legal elasticity that was later extended to include federal regulation of railways, airlines, pipelines, television stations, telephone communication, and even racial segregation. Many constitutional scholars consider Marshall's opinion in the Gibbons case the Chief Justice's finest.