Gibbons V. Ogden Decision: Fair Or Unfair Essay, Research Paper

The decision in the Gibbons v. Ogden case is, in my opinion, a very just

and fair one. Many believe it to be the first anti- trust decision in U.S.

history. The economic results cannot be over-estimated, a different

decision could have resulted in completely different circumstances than with

which we are accustomed to today. The free flow of commerce, which we

seem to almost take for granted in modern economics and business, may have

never been a possibility without decisions such as this. Monopolies did not

allow for equal division of business and therefore was unjust. If all men are

created equal they should be given equal opportunities. The New York

Livingston-Fulton monopoly clearly subjected any potential competition to

harsh conditions that would make it impossible for them to keep up in their

business. Travel by steamboat was much faster than any other means in the

time of this case and to give complete control to only one partnership was

unfair. Under the constitution Congress has the right to regulate commerce.

Although the monopoly was a form of internal state trade regulation it

directly impacted on inter-state trade after a number of states passed laws

to come back at the New York monopoly. Therefore, Congress had the right

to intervene and end the monopoly.

To completely understand the impact of the Gibbons-Ogden decision

it is necessary to understand the situation surrounding it. In 1798 Robert R.

Livingston secured an exclusive twenty year grant from the New York

legislature. By the terms of this grant he could exclusively navigate by

steam the rivers and other waters of the state, provided that within two

years he should build a boat which would make four miles an hour against the

current of the Hudson River. The legislature had no faith whatsoever in the

project but the decision was still made against the many jeers. The terms

of the grant were not met and it was renewed in 1803, this time to

Livingston and his new partner, Robert Fulton. It was renewed once more in

1807 and finally that August Fulton’s steamboat made its first successful

trip from New York to Albany. The following year the Legislature, fully

aware of the practical significance of Fulton’s achievement, passed a law

stating that for each new boat navigated on New York waters by Fulton and

Livingston that they should be provided with a five year extension to their

monopoly, which may not exceed thirty years. The monopoly was made

further effective by not allowing for the travel of any other steam boats

along New York waters, unless licensed by Fulton and Livingston. Any

unlicensed vessel should be forfeited to them. Naturally this monopoly

worked hardships against on what would be Fulton and Livingston’s

competition. Neighboring states began to pass retaliatory laws against the

New York partners. In other words, as Cushman states on p. 187, “an

achievement of which had seemed destined to enlarge the means of

communication and develop the commerce of the nation appeared to be

embroiling the states in bitter antagonisms and commercial warfare such as

prevailed during the dismal period of the Confederation.”

Ogden and Gibbons had once been partners. They became rivals and

Gibbons began to navigate steamboats between two points in New York

under the authority of a coasting license obtained from the United States

government. Ogden secured a license from Fulton and Livingston. Upon

Ogden’s petition the New York court had enjoined Gibbons from continuing

his business. Chancellor James Kent had wrote the opinion of the court in

this case claiming the whole Hudson River belonged to New York, upholding

the validity of the New York statute establishing the monopoly and

repudiating the idea that there was any conflict involved between federal

and state authority. (Cushman, 187) Gibbons appealed to the Supreme

Court, presenting the first case under the commerce clause of the

constitution-Article I, Section 8 which provides congress with the power to

“regulate Commerce with foreign Nations and among the several States, and

with Indian tribes.” In his decision, Mr. Chief Justice John Marshall held

that the New York monopoly was unconstitutional in that it interfered with

the power of Congress over interstate commerce.

Webster’s argument against the validity of the steamboat monopoly

may be his best ever before the Supreme Court and Marshall’s decision may

have been his only truly popular one. Marshall delivered the opinion of the

court, saying that the laws giving exclusive privilege are repugnant because,

“1st. To that clause in the constitution which authorizes Congress to

regulate commerce.

2d. To that which authorizes Congress to promote the progress of science

and useful arts…” (Cushman, 188) Marshall’s decision helped to start the

U.S. on the road to the free flow of business.

There is though, as always, another side to this case. The commerce

which Congress may regulate can be taken as the transportation and sale of

commodities. In this case, Gibbon’s coasting license could not protect him

since he was carrying passangers, not goods. The monopoly only requires

that boats, once in New York waters need to be operated by means other

than a steam if not licensed. This law then is only a regulation of internal

state trade, not of commercial inter-state trade, therefore Congress cannot

have regulate since it is not affecting inter-state trade.

I think it was made obvious that this law was affecting inter-state trade.

New Jersey, Connecticut, Ohio, Georgia, Massachusetts, Pennsylvania,

Tennessee, New Hampshire, and Vermont all passed laws as a result from the

Livingston-Fulton monopoly. Congress had the constitutional right to end the

monopoly, “so accustomed are we to the free flow of commerce among the

states that it is hard to conceive how the nations might have developed if

the arguments in favor of the monopoly had prevailed…”(Cushman, 187)

Marshall’s decision demonstrated a clear improvement of the government

under the Constitution, as well as began to set limits against trusts.

America, as a free nation developed from the needs of men to be equal,

should be equal economically too. Monopolies prevented free flow and fair

competition among businesses and was definitely an unconstitutional

characteristic of our nation. In today’s times it is hard to imagine business

life like that, but for our economic system to have made it this far,

decisions like Marshall’s were very necessary. Business, by its nature

consists of competition. Whether or not that competition will be beneficial

or not to the individual depends on many factors, but one of these factors

should not include monopoly laws preventing them to try and outdo rivals in a

fair way. Although some may argue that the intended effect of the

Livingston-Fulton monopoly law itself was internal, it had a impact causing a

total of 9 other states to react by passing laws to counteract it, so it

obviously had a impact on the rest of the nation-direct or indirect-and

needed to be taken care of and Mr. Chief Justice John Marshall took the

appropriate actions.