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Landmark Cases of the U.S. Supreme Court

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Background Summary & Questions (••)

One of the enduring issues in American government is the proper balance of power between the national government and the state governments. This struggle for power was evident from the earliest days of American government and is the underlying issue in the case of Gibbons v. Ogden.

In 1808, Robert Fulton and Robert Livingston were granted a monopoly from the New York state government to operate steamboats on the state's waters. This meant that only their steamboats could operate on the waterways of New York, including those bodies of water that stretched between states, called interstate waterways. This monopoly was very important because steamboat traffic, which carried both people and goods, was very profitable.

Aaron Ogden held a Fulton-Livingston license to operate steamboats under this monopoly. He operated steamboats between New Jersey and New York. However, another man named Thomas Gibbons competed with Aaron Ogden on this same route. Gibbons did not have a Fulton-Livingston license, but instead had a federal (national) coasting license, granted under a 1793 act of Congress.

Naturally, Aaron Ogden was upset about this competition because according to New York law, he should be the only person operating steamboats on this route. Ogden filed a complaint in the Court of Chancery of New York asking the court to stop Gibbons from operating his boats. Ogden claimed that the monopoly granted by New York was legal even though he operated on shared, interstate waters between New Jersey and New York. Ogden's lawyer said that states often passed laws on issues regarding interstate matters and that states should be able to share power with the national government on matters concerning interstate commerce or business. New York's monopoly, therefore, should be upheld.

Gibbons' lawyer disagreed. He argued that the U.S. Constitution gave the national government, specifically Congress, the sole power over interstate commerce. Article I, Section 8 of the Constitution states that Congress has the power "[t]o regulate Commerce with foreign Nations, and among the several States. . . ." Gibbons' lawyer claimed that if the power over interstate commerce were shared between the national government and state governments, the result would be contradictory laws made by both governments that would harm business in the nation as a whole.

The Court of Chancery of New York found in favor of Ogden and issued an order to restrict Gibbons from operating his boats. Gibbons appealed the case to the Court of Errors of New York, which affirmed the lower court's decision. Gibbons appealed the case to the Supreme Court of the United States.

The key question in this case is who should have power to determine how interstate commerce is conducted: the state governments, the national government, or both. This was no small matter, as the nation's economic health was at stake. Before the U.S. Constitution was written, the states had most of the power to regulate commerce. Often they passed laws that harmed other states and the economy of the nation as a whole. For instance, many states taxed goods moving across state borders. Though many people acknowledged that these were destructive policies, they were reluctant to give too much power over commerce to the national government. The trick was to find a proper balance.

Chief Justice John Marshall's decision in this case was a precedent for determining what that balance should be and has far-ranging effects to this day.

Questions to Consider
  1. Under what authority, state or federal, did Ogden operate his steamboats? Gibbons?

  2. What argument did Ogden use to support his license to operate steamboats? Gibbons?

  3. Why might New Jersey object to New York's grant of a monopoly on steamboat operations on its waterways?

  4. The background information states that Gibbons relied on the Commerce Clause of Article I, Section 8 of the U.S. Constitution to justify his case. Ogden could have used the Tenth Amendment of the U.S. Constitution to back up his side of the case. What does the Tenth Amendment state and how could it be applied to this case?

  5. This case appears to be a local dispute between two businessmen. However, the decision in this case is one of the most important in constitutional history. Please explain.

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