In 1808 the Legislature of the State of New York granted to Robert R. Livingston and Robert Fulton exclusive navigation privileges of all the waters within the jurisdiction of that State, with boats moved by fire or steam, for a term of thirty years. Livingston and Fulton subsequently also petitioned other states and territorial legislatures for similar monopolies, hoping to develop a national network of steamboat lines, but only the Orleans Territory accepted their petition and awarded them a monopoly on the lower Mississippi. Aware of the potential of the new steamboat navigation, competitors challenged Livingston and Fulton by arguing that the commerce power of the federal government was exclusive and superseded state laws. Legal challenges followed, and in response, the monopoly attempted to undercut its rivals by selling them franchises or buying their boats. Former New Jersey Gov. Aaron Ogden had tried to defy the monopoly, but ultimately purchased a license from the Livingston and Fulton assignee's in 1815, and entered business with Thomas Gibbons from Georgia. The partnership collapsed three years later, however, when Gibbons operated another steamboat on Ogden's route between Elizabeth-town, New Jersey, and New York City, that had been licensed by the United States Congress under a 1793 law regulating the coasting trade. The partners ended up in the New YorkCourt of Errors, which granted a permanent injunction against Gibbons in 1820. In the interim Gibbons also had taken on Cornelius Vanderbilt as his ferry captain, and later, his business manager.
Case
filed a complaint in the Court of Chancery of New York asking the court to restrain Thomas Gibbons from operating on these waters. Ogden's lawyer contended that states often passed laws on issues regarding interstate matters and that states should have fully concurrent power with Congress on matters concerning interstate commerce. Gibbons' lawyer, Daniel Webster, argued that Congress had exclusive national power over interstate commerce according to Article I, Section 8, Clause 3 of the Constitution and that to argue otherwise would result in confusing and contradictory local regulatory policies. The Court of Chancery of New York and the Court of Errors of New York found in favor of Ogden and issued an injunction to restrict Gibbons from operating his boats. Gibbons appealed to the Supreme Court, arguing as he did in New York that the monopoly conflicted with federal law. After several delays, the court began discussing the meaning of the commerce clause in 1824, which by that time had become an issue of wider interest. Congress was debating a bill to provide a federal survey of roads and canals. Southerners, in particular, were growing more sensitive to what the resolution of these issues would mean to them as sectional disputes, especially over slavery, were increasing.
Decision of the U.S. Supreme Court
The U.S. Supreme Court ruled in favor of Gibbons. Congress had the right to regulate interstate commerce. The sole decided source of Congress's power to promulgate the law at issue was the Commerce Clause. Accordingly, the Court had to answer whether the law regulated "commerce" that was "among the several states." With respect to "commerce," the Court held that commerce is more than mere traffic—that it is the trade of commodities. This broader definition includes navigation. The Court interpreted "among" as "intermingled with." "If, as has always been understood, the sovereignty of Congress, though limited to specified objects, is plenary as to those objects, the power over commerce with foreign nations and among the several states is vested in Congress as absolutely as it would be in a single government, having in its constitution the same restrictions on the exercise of the power as are found in the Constitution of the United States." The part of the ruling which stated that any license granted under the Federal Coasting Act of 1793 takes precedence over any similar license granted by a state is also in the spirit of the Supremacy Clause, although the Court did not specifically cite this clause. The Court did not discuss the argument pressed for Gibbons by U.S. Attorney General Wirt that the federal patent laws preempted New York's patent grant to Fulton and Livingston. That question remained undecided for the next 140 years until the Supreme Court held in Sears, Roebuck & Co. v. Stiffel Co. that federal patent law preempted similar state laws.
Opinion excerpts
The power to "regulate Commerce" is:
In interpreting the power of Congress as to commerce "among the several states":
