Interstate Commerce / Gibbons V

Interstate Commerce / Gibbons v Ogden

Throughout much of American history, the overall authority of Congress to regulate interstate commerce has largely been accepted as a fundamental power, bestowed upon them in the Commerce Clause of the Constitution. This simply states that, "The Congress shall have the power to regulate commerce with foreign nations, among the several states and among Indian tribes." ("U.S. Constitution -- Article 1 Section 8") However, prior to the Supreme Court case Gibbons v Ogden this overall scope of authority was very ambiguous at best. As the states often viewed, that they have the power to regulate commerce within the state itself and at its borders. This is because there never was a strong central government under the Articles of Confederation to regulated trade / commerce. What happened was the Articles of Confederation loosely committed the states to one another through: friendship, commonality and mutual defense purposes. However, beyond this scope the overall powers of the central government were restricted at best. Over the course of time, this would lead to a number of different issues that would underscore the need for regulation of trade throughout the country. Where, Congress had the power to regulate treaties with foreign countries, yet they had little power to regulate trade among the states. This lack of authority would create an uneven set of standards that would vary from state to state. As a result, various disputes were quickly developing on rivers that border different states. Where, both the states and the federal government would claim to have the authority of regulating trade at its borders. Consequently, many states began to create their own form of currency and began to impose tariffs / trade barriers, in an effort to regulate the overall amount of commerce that is taking place. As the various disputes became more heated, there were calls to scrape the Article of Confederation and create a new document that would give the central government more power, the Constitution. ("The Articles of Confederation") Once ratified the new document would increase the overall authority of the federal government dramatically. Yet, the scope of the different powers afforded to Congress were constantly challenged in the courts, one of the most notable would include: the power to regulate commerce. Where, many states continued to hold on to the belief that they have this power over Congress. At which point, this would lead to the Supreme Court case Gibbons v Ogden, which would have a number of different causes and effects going forward. It is through examining the case itself and how it affected the United States going forward, that will provide the greatest insights as to how much authority Congress has in the regulation of interstate commerce.

Background Gibbons v Ogden

Thomas Gibbons was steamship operator, who had received his license from Congress allowing him to engage in interstate trade, using his different ships. However, the State of New York had passed its own set of laws licensing who could use its waterways for commerce. In this particular case, New York decided to give a monopoly of the use of the waterway to a group of investors led by Robert Fulton. One of the partners in the business was Aaron Ogden. The two different laws would create showdown, between how much power the federal government would have over interstate commerce, in relation to the states. This was brought to the forefront when Gibbons attempted to use the same waterways that the Fulton Ogden group, had been licensed to use by the state. At which point, Gibbons was denied access to the use of the state's waterways; with law enforcement citing the New York State law as the most relevant. Later on, Ogden would file a lawsuit in the Court of Chancery of New York, asking them for an injunction against Gibbons from operating his ships on New York's waterways. At the heart of Ogden's argument's, were that states would often pass laws to regulate commerce within their borders. Therefore, under the Constitution, the states are given an equal amount of power to regulate trade in comparison with the federal government. The Court of Chancery of New York found in favor of Ogden, granting him the injunction against Gibbons using the waterways. At which point, Gibbons would appeal the case to the Court of Errors of New York (which upheld the lower courts decision). This would lead to the Supreme Court hearing arguments in the case. ("Gibbons v. Ogden")

Arguments Gibbons v Ogden

To support their views of the law, both sides presented a number of different cases and interpretations. According to the arguments presented by Gibbons lawyers, they felt that the State of New York was acting beyond the scope of the overall powers given to them. Where, they cited McCulloch v. Maryland, this is a Supreme Court case that took place in 1819. It is significant, because for the first time, the high court ruled that the federal governments laws are superior to state laws (when the two conflict). In this particular situation, the court interpreted the Article 6, Section 2 (the Supremacy Clause) of the Constitution to mean that the federal government has more power over the states, in regards to the various laws being passed. With the Supremacy Clause saying, "Under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any thing in the Constitution or Laws of any State to the contrary notwithstanding." According to lawyers representing Gibbons, this can be applied to areas of trade and navigation. Where, the federal government has the right to regulate commerce under Article I, Section 8 of the Constitution. They then cited the law passed by Congress in 1793 called C3. Under the law it says, "An act for enrolling and licensing ships and vessels to be employed in the coasting trade and fisheries, and for regulating the same. ("Gibbons v Ogden") In this situation when you apply the ruling form McCulloch v Maryland and the Supremacy Clause of the Constitution, it means that the federal laws would be superior to any kind of state laws. Then, there is a specific law that is granting Congress the power to issue licenses in regards to matters of trade. Therefore, the action that was engaged in by the state of New York in granting a steamship operator a license was in violation of the Constitution.

On the other side of the argument, the lawyers for Ogden would make a number of different claims based on their own interpretations and previous-based legal traditions. The most notable would include: a different interpretation of Article 1, Section 8 of the Constitution. According to Ogden's lawyers, the federal government does not have the power to regulate trade under Article 1, Section 8. The reason why, is because the boats that were used by Gibbons were licensed with the intention of carrying freight. They were instead, used to carry passengers. This is Congress attempting to regulate movement, which is not a power granted to them in the Constitution. Next the attorneys for Ogden would cite the Tenth Amendment to support their claims. This says, "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." Under this interpretation there is no place in the Constitution that says Congress has the power to regulate navigation. Therefore, this power has been granted to the states. The lawyers for Ogden then, cited how under the Constitution the states are allowed to pass: quarantine laws, inspection laws, health laws and laws regulating trade within the borders of the state. Next Ogden's attorneys would cite the principals of shared powers. These are power that both the federal government and state exercise together such as the power to tax. Then, there are the traditions of all states being able to regulate trade going back to the earliest days after the American Revolution. Because of all of the different interpretations, precedents and principals cited; the lawyers for Ogden felt that the federal government had over stepped it bounds. As a result, they were pushing the court to uphold the injunction in place against Gibbons operating his steamships. Both arguments presented to the court would involve the overall scope of power that Congress and the states would have in regulating commerce. ("Gibbons v Ogden")

Ruling of the Supreme Court

The Supreme Court ruled in favor of Gibbons. At the heart of the issue, was that commerce was more than just the transportation of goods from one point to another. Instead, it was the free low of ideas, goods and services among different groups. Under the broader definition of trade, this meant that the arguments made by Ogden (mainly the transportation of people was regulating free movement) were irrelevant. This is because the broader definition was allowing for the free flow of people from one place to the next. As a result, Gibbons was providing a service and was helping ensure the free flow of ideas. The licensed that he received from Congress is regulating these principals. Based on this interpretation along with the previous case law decided in McCulloch v Maryland and the Supremacy Clause of the Constitution; New York State does not have the power to regulate trade. Instead, this power is solely reserved for Congress with the court saying, "The power to regulate commerce, so far as it extends, is exclusively vested in Congress, and no part of it can be exercised by a State. State inspection laws, health laws, and laws for regulating the internal commerce of a State, and those which respect turnpike roads, ferries, & c. are not within the power granted to Congress. The laws of N.Y. granting to R.R.L. And R.F. The exclusive right of navigating the waters of that State with steam boats, are in collision with the acts of Congress regulating the coasting trade, which being made in pursuance of the constitution, are supreme, and the state laws must yield to that supremacy, even though enacted in pursuance of powers acknowledged to remain in the States. A license under the acts of Congress for regulating the coasting trade, gives a permission to carry on that trade. The license is not merely intended to confer the national character. The power of regulating commerce extends to navigation carried on by vessels exclusively employed in transporting passengers. The power of regulating commerce extends to vessels propelled by steam or fire, as well as to those navigated by the instrument ability of wind and sails." ("Gibbons v Ogden") As a result, the significance of this decision would give the federal government a larger amount of power in areas of commerce over the states. This would lead to a number of different issues between the states and the federal government over areas power.

The Long-Term Effects on the United States

Gibbons v Ogden would lead to a number of different debates, as to the overall scope of what the decision would mean about the power that Congress would have over commerce. The initial fear from the case is that this would give the federal government the authority to consolidate all of the states power. Instead, the effects were that it opened up interstate commerce. This was significant, because prior to the ruling many of the different states had their own set of laws that they would impose on matters of commerce. This slowed the free flow of people, goods, services and ideas. As the various regulations and barriers made it far more difficult for one person to travel, much less conduct business in another state. Once this decision was handed down, the steamship industry would see a massive expansion as they were able to travel from one state to the next freely. This would allow for the development of the nations first transportation system, through the various rivers and waterways. Over the course of time, one could argue that the effects of this ruling allowed for the industrialization of America. Where, the free flow of goods and services between the states, would allow the federal government to create a number of different transportations systems (that would help promote commerce). To include: the interstate highway system, the railroad, national utility grids, the internet and the air transportation industry.

However, the overall effects of Gibbons v Ogden can be seen much further than just the way that interstate commerce was developed. Instead, this case would have much more far reaching effects on how the federal government would regulate commerce, business and the role that it would play in the economy. After the Supreme Court decision the federal government began to expand the overall power that it had in relation to the states. Where, it could use its power to regulate commerce, as a way to effectively control the different states. This would empower Congress to pass various laws to regulate commerce and the economy in general. Some good examples would include: the Sherman Anti-Trust Act, the Securities and Exchange Act of 1934, the Federal Reserve Act, the Glass Stegall Act and the Investment Company Act. All of these different laws are significant, because in one way or another the federal government is attempting to control the overall amounts of commerce. For example, the Securities and Exchange Act of 1934 gives the federal government to regulate the nation's stock markets and the financial industry. This was in response to the 1929 stock market crash, where it was determined that one of the reasons why the crash took place was: no regulation of the stock market. To prevent the anything goes type of atmosphere, the federal government began to regulate these markets (because interstate commerce was involved). ("Securities and Exchange Act of 1934") In this particular aspect, this law is directly tied to the Supreme Court case Gibbons v Ogden, because it established the precedent that the federal government has the right to regulate commerce.

Yet, beyond the issue of commerce is the overall amount of power that the federal would have over the states. This is important because since the end of the American Revolution, the scope of powers that the federal government has would constantly be debated. Where, the ratification of the Constitution would be in question, because some of the opponents feared that it would give the federal government to much power over the lives of every day citizens. Many people feared that by giving the federal government this much control; will eventually lead to them seizing power from the states and implementing authoritarian rule (something the British did). As a result, the overall increase in power of the federal government would stoke these fears. Like what was stated previously, Gibbons v Ogden created fear among the general public and pundits that this would lead to a consolidation of federal power. However, the case would signify a shift in American political traditions, as the federal government would continue to play an important part in regulating the states. At the heart of the debate created by Gibbons v Ogden, was to the overall power that the federal government would have, in comparison with the states. Where, since that decision the power of the federal government would greatly expand over nearly 180 years. This is because the case would serve as a precedent that would allow their overall authority in a number of different areas to increase. What happened was, Gibbons v Ogden was a part of a series of Supreme Court cases that would quickly place any kind of power that the states did have in check. This because a number of different issues were constantly being brought to the forefront, in regards to the overall power that the federal government would have in comparison to the states. A good example of this can be seen by Cohen v Virginia, where it was decided before the ruling of Gibbons v Ogden. In this particular situation, the Supreme Court ruled that they have the power to review state court decisions. ("Cohens v Virginia") This is significant because it solidified the courts authority over all of the other parts of the judicial system. To include: finding the actions taken by the courts or state legislatures as unconstitutional. Signaling, the growing amounts of power that the federal government would have over the states.

However, the overall scope of powers of the federal government would continually be tested. Gibbons v Ogden affirmed the power to regulate commerce, yet, there was confusion about how and when such power can be applied. A good example of this can be seen with the Supreme Court case Willson v Black Bird Creek Marsh Company. In this 1829 case, the Black Bird Creek Company was given the power under Delaware law to construct a dam. When one of the citizens tore down this dam, the company filed a lawsuit claiming that they had violated Delaware state law. At the heart of the argument, was if the state had the power to impose laws that were given to Congress. This is despite the fact that Congress had never passed any laws on if the construction of the dam was illegal. The high court ruled in favor of the company, claiming that when there are no federal laws in place, the states have the right to create their own laws. ("Willson v Blackbird Creek Marsh Company") This significant because it shows how the federal government's power is expanding, yet it is limited to a certain extent. Where, there are clearly defined powers and responsibilities of the states. During situations where federal regulation is lacking, the state has the option of creating their own regulations to address these issues.

The Impact of the Gibbons v Ogden into the New Millennium and Beyond