Have you ever made an agreement with someone only to get stabbed in the back? Believe it
or not, this common dramatic situation was the cause of one of the landmark Supreme Court
Cases, Gibbons v. Ogden in1824. The original problem started when steamships
were first created by Robert Fulton and Robert Livingston. The state of New York gave the
two inventors a monopoly over all navigation routes in New York. The two used their monopoly
to sell franchise rights to other businessmen to operate certain routes. In other words,
Fulton and Livingston would sell different businessmen papers that would give them the
right to operate a route. And since Fulton and Livingston were granted a monopoly by
the state of New York, it was all legal! The old adage is to not mix business with
friendship. And this is the case that happened in Gibbons v. Ogden. Originally, Gibbons and
Ogden were business partners who bought a route between New York and Elizabethtown from
Fulton and Livingston. But Gibbons betrayed Ogden by beginning to operate his own two
ships on the same route. Ogden believed that he had the right to control the route because
he had received the franchise from Fulton and Livingston. Gibbons, instead, justified
his routes based on a separate federal license he obtained.
Ogden sued Gibbons in New York State Court to force him to stop operating his steamship
route. The New York State court agreed and issued an injunction against Gibbons. An injunction
is a court order to stop an action. Gibbons then appealed to the Supreme Court to help
him keep operating his route. Gibbons was represented by one of the most
famous lawyers of early America, Daniel Webster. Webster argued on behalf of Gibbons that the
federal law was supreme above all state laws. Furthermore, the federal government's laws
superseded state laws because of the Constitution's granting to Congress the right to control
interstate commerce. Ogden's attorneys argued that state laws and
federal laws could coincide with one another. They argued that Congress only had the right
to regulate commerce right at the borderline between two states. All other commerce within
the state was the sole control of states. According to the Constitution, Congress has
the ability to regulate interstate commerce. But a key problem that the Court had to consider
is what, exactly, constitutes interstate commerce. Interstate commerce is any activity that moves
between two states. To flesh this out, imagine two states next to each other. One state,
say Florida, produces a lot of oranges and the other, Georgia, produces a lot of peaches.
If Floridians sell oranges to each other inside their own state, this is called intrastate
commerce because it stays inside the state. But if Georgians begin trading their peaches
for Florida oranges, commercial activity has occurred between the two states, which we
would call interstate commerce. Borders are funny in that way -- when you cross one, you
really don't feel like much has changed. But from a legal perspective, the crossing of
a state border has broad implications. The question posed to the Court in Gibbons
v. Ogden was this: Does interstate commerce only occur at the point when the goods cross
the border, or is it the whole process -- from the creation of the object to the transportation
to the other state? If you take the view that Congress only has oversight at the borders
between states, then Congress has very little power in regulating commercial activity between
states. But if you take the view that Congress has oversight over all steps of interstate
commerce, including the transportation of goods, then the power of Congress is far greater.
The Supreme Court was led by Chief Justice John Marshall. Writing the majority opinion,
Marshall sided with Gibbons. Marshall's majority opinion held that any time any business goes
between two states, it is automatically interstate commerce during the whole trip, from when
it began to when it ended. As a result, Marshall concluded that this implied that the federal
government had the right to regulate all roads, railways, and waterways that connected between
two states.
Using only the interstate commerce clause, the Marshall court held that the only time
that federal law does not supersede state law is when a commercial activity is 100%
inside the border of a state. The Gibbons v. Ogden decision served to vastly
expand the power of Congress and the federal government. Now, Congress could regulate any
commercial activity which moved between two states. This meant that the vast majority
of business could become regulated by the United States. This represented a vast expansion
of federal authority. Although the Supreme Court briefly limited
the scope of the interstate commerce clause at the end of the 19th century, the power
of Congress was extended beyond Gibbons v. Ogden in the 1930s. Today, the Federal government
can even regulate a commercial activity that is completely internal to a state simply if
it has an effect on interstate commerce. The 1824 case of Gibbons v. Ogden was a landmark
case in the history of the United States Supreme Court, determining that any time any business
goes between two states, it is automatically interstate commerce during the whole trip
(from when it began to when it ended). This came up due to a business disagreement between
two men, Gibbons and Ogden, who were business partners that split when Gibbons betrayed
Ogden. This turned into a debate about how much authority the federal government had
regarding interstate commerce, which is any activity that moves between two states.
Ultimately, Chief Justice John Marshall sided with Gibbons, the federal government had the
right to regulate all roads, railways, and waterways that connected between two states.
A ruling that has remained, to this day, and even strengthened somewhat, in the early 20th
century.