Tuesday, May 12, 2015

Time Warp Continued - Gibbons V. Ogden

A continuation of our last post:

The idea of Federal regulation of the Erie Canal was partially underlying the answer to Liz Covart’s Time Warp question during a recent Ben Franklin’s World podcast with Janice Fontanella, Schoharie Crossing State Historic Site Manager.  This thought has crept up a few times when speaking with people, in particular those that are just as interested in the railroads as they may be in canals.  A recent talk by Craig Williams at the Schenectady County Historical Society operated Mabee Farm in Rotterdam, NY hit on this partially as well - when a member of the audience asked a question about the tolls operated on the canal verses funds from the railroads in terms of passenger and freight cargo. 


While a simple answer may be that in the early Republic, the concepts of government regulation were still seen as tyrannical and the finer nuances of authority and power were developing, we must remember that we have the advantage – if we want to think of it that way – of viewing those matters in hindsight and having the perspective of the era in which we live today. 
Those inquiries have recalled the case of Gibbons V. Ogden (1824) and the constitutional questions of commerce regulation that it grappled with.  Those questions combined with the issue of a states right to apply its own regulatory authority present themselves in this early Supreme Court case.  Below is posted an essay on that court case as it pertains to the aspects of Article I Section 8 of the U.S. Constitution as well as how it began the ever evolving development of federal regulation of commerce throughout the country. 


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Gibbons V. Ogden
22 US (9 Wheat) 1 (1824)

            For centuries navigation on waterways has been vital to the welfare of societies.  Through such exploration, trade and access peoples have generated a network on which reliance and dependability is essential.  During the early era of the new republic of the United States, transporting goods, as well as people secured the success of the nation by developing a reliable economy and dissemination of knowledge as well as culture.  In the years that have ensued, progressive actions following expansionism across the continent have both been fueled by such use of waterways, technology and economics.  The advent of new technology has brought with it the need for examining how the intercourse between people may be to the benefit or welfare of the populous.  A case brought before the United Supreme Court in 1824 provides an example of how a new republic grappled with this in the perspective of commerce regulation.  Gibbons Vs. Ogden established a foundational precedent that has been utilized by the Federal government to expand its authority to regulate such intercourse in order to foster economic growth or administer legislative decree. 
            The case itself hinged on several factors, most notable of which is found in Article I, Section VIII of the U.S. Constitution.  These “enumerated powers” given to Congress provided for it “To Regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes” (Harper 27-29).  But in order to understand where that clause applies, one must gain background on navigation of the era, the new reaches of technology as well as the business and political elements involved. 
Robert R. Livingston Jr.
            In the decades that followed the American Revolution, migration of people, ideas and culture shifted into high gear.  Travel of those people and knowledge, much like goods and produce, relied on navigable waterways.  The area around New York City provided an astonishing hub for such travel either north up the Hudson River, south along New Jersey and beyond, as well as into the open sea to global markets.  By 1798, wealthy landowner and political figure Robert R. Livingston Jr. maintained a monopoly over the waters of New York and in 1807 he along with the man credited with steamboat invention, Robert Fulton created a partnership (Cox 641).   Steamboat travel increased and the journey from Manhattan to Albany, that once took days by sails that depended on prevailing winds and water current, could be accomplished in thirty-six hours.  This would be improved upon so that one could arrive in less than twenty-four (Adams 747).
Robert Fulton
            The business venture was successful on the Hudson River and was able to secure monopoly rights to navigation on that waterway from the New York State legislature.  As steamboat travel was recognized as profitable, competitors – particularly business man Aaron Ogden – crept in.  Ogden was a “lawyer, statesman, and former governor of New Jersey” and was attempting to gain footing in steamboat traffic.  Faced with repeated New York Court injunctions against him and his competing business – gained by the well connected Livingston and Fulton – Ogden eventually bought into their venture as he purchased business operators from their company (Cox 641).  
           
Ogden
Aaron Ogden was then himself at odds with a competitor.  Georgia business man
Thomas Gibbons began operating a rival boat service between New York City and New Jersey.  Gibbons operated and owned two steamboat vessels that traveled to and from Elizabethtown and New York under a Federal coastal license (Cox 641) (Vile 3).  When Ogden filed suit in New York Court against Gibbons for infringement of the monopoly in 1818, Gibbons held to his “Federal granted coasting license that superseded state law” (Cox 641).
Gibbons
            This created a Constitutional debate.  As previously mentioned, Article I, Section VII of the Constitution provides authority of power to Congress to regulate commerce.  This “wide ranging Commerce Clause, allow[s] Congress to regulate trade…among the states,” however, defining “commerce” and “among the states” generated differing opinions.  The intent of the clause was to ensure that States would not develop tariffs or other barriers to trade in fostering separate economies and allow for the “free flow of goods” between States as well as to global markets.  In this clause, Federal regulations supersede State legislation and Congress has since utilized their enumerated right to its authority over the economy through laws impacting “business across state borders” (Harper 27-29). 
North River Steam Boat Ad - 1807
            In the New York Court case between Gibbons and Ogden in 1820 the court ruled against Gibbons.  In his opinion statement, the Chief Justice of the New York Court James Kent declared that the Federal license only provided that Gibbons vessels were American and therefore no infringement was made against New York control of commerce.  Gibbons then appealed to the New York State Court for the Correction of Errors in 1820 and to the United States Supreme Court in 1821 (Cox 641). 
The Supreme Court took up the case in 1824.  Senator Daniel Webster from Massachusetts and Attorney General William Wirt represented Thomas Gibbons.  They argued on the grounds that the United States Constitutions’ commerce clause gave authority to Congress to regulate commerce and trade between the states – therefore the license as an instrument of that government overruled New York State’s legislation and licensing of the monopoly.  Gibbons license was obtained as part of the Federal Coasting Act of 1793 and regulation of such navigation was required as necessary by Congress to ensure no disputes occurred between local and/or state governments over authority of regulation or taxation. 
Aaron Ogden was represented by former New York State Attorney’s Thomas Oakley and Thomas Emmet, whom “insisted that both Congress and the States shared concurrent power over interstate commerce” and that the State of New York retained exclusive right of authority over the waterways within its borders.  In asserting that right, the State had the power to regulate monopolies that did not interfere with Federal statutes (Cox 641). 
            The United States Supreme Court handed down their unanimous (6-0) ruling on March 2nd, 1824 with the opinion that a State cannot assert exclusive rights over navigable waters and that “any matter that affects interstate commerce is within the power of Congress” (Vile 3); More so, Chief Justice John Marshall “stated that the New York State steamboat monopoly grant was
Chief Justice John Marshall
unconstitutional” and that Congress had sole authority to regulate.  Justice William Johnson concurred in his statement that the United States Constitutions’ commerce clause was sufficient to “invalidate the Fulton-Livingston monopoly” (
Cox 641) and thereby “nullified New York’s grant” (Lewis 740). 




            In the ruling, Marshall galvanizes further the understanding of the enumerated powers given to Congress in Article I, Section VIII.  Going further, he expounded on the fact that “commerce is more than traffic.”  Additionally that regulatory powers do not terminate at State borders and jurisdiction is provided to the Federal government even within the States boundaries as Federal law – even when in conflict with State laws – is “supreme” (Vile 3).  Regarding this case however, the fact that a Federal license overrode a State license was upheld, but it also left open the option moving forward for future State regulations within the scope of their own powers (Cox 641). 
            Marshall, in his ruling opinion, not only set out the courts judgment but also examined the understanding of commerce and the interpretation of the Constitution.  In that ruling, he stated that the case was brought before the court as it was thought that the State Court ruling was “erroneous” and “repugnant to the Constitution and laws of the United States.”  In response to this, it is cited that Congress not only has the power to regulate commerce but also “to that which authorizes Congress to promote the progress of science and useful arts” (Marshall) – further evidence that the idea of regulating navigation was more encompassing than just the materials or profit aboard vessels. 
            Arguments in the case insisted that the states “were sovereign” from each other but in Marshall’s opinion the court – and Congress – clearly utilize that in “league into a government” that they entered into and participate in the United States government.  They are in fact then, not separate entities.  Their union in the Federal system means they must adhere to the “enumeration of powers expressly granted by the people to their government” and if that is denied, the government may be deemed invalid and “crippled.”  It is at this point that the opinion expresses in terms of “understanding” views on strict constructionism and the interpretation of the Constitution; Something that continues as political debate even to this day in America.
            The opinion also declares that commerce is greater than mere traffic as it is additionally intercourse between people of ideas, services, goods, ideas and perhaps more – be that with “nations and parts of nations” and with that concerns the authority over regulation of navigation.  Marshall states that this has always been understood to be included within the idea of commerce. That providing that power to be given to the “supreme” government authority in Congress, it asserts that “American vessels…[will be] navigated by American seamen” and that “no sort of trade can be carried on between this country and any other to which this power does not extend” (Marshall).  This would be seen as an even greater extension of Congressional power in the subsequent decades.  As defined in broad terms by Marshall, commerce regulation has opened the door to increased Congressional authority in regards to laws overseeing interstate systems (Vile 3).
            At the heart of this particular court case is that term, “among” in the Commerce Clause.  Marshall lays out in his opinion that this is defined as “intermingled” and that any such commerce that exists within or between states may be viewed as such, regardless or indifferent to boundaries as each State is in agreement under the Federal system.  The concern of dissenters being that any enterprise with a State – even “completely interior traffic” in some way constitutes intercourse by that wide definition and therefore commerce that could be regulated by Congressional authority. 
            Marshall, in claiming “the genius” of the Constitution explains that “internal concerns” that solely concern or effect the state as “completely internal…may be considered as reserved for the state itself.”  However when commerce includes goods or products of any kind with distribution or import from foreign nations, it by definition must be under the jurisdiction of the United States Congress.  Since navigable waterways “penetrate our country” and pass into the interior sections of states, the right of Congress must be exercised. 
            That right may apply equally to all commerce, but in terms of navigation – as in this case – that “any matter, connected with commerce” may also be regulated under the same provisions.  The States for that matter may also exercise their powers internally as within their own jurisdictions if no Federal laws exist that forbids such power, to do so by Constitutional authority: When in conflict with congressionally legislated or Constitutional powers, the states “must yield to the law of Congress” (Marshall).
            The ruling did not clarify the issue overall and the debate over “State versus Federal control of commerce” would continue to be a matter brought before the Supreme Court.  The opinion given in the ruling for Gibbons v. Ogden (1824) was upheld in the case of Brown v. Maryland (1827) (Cox 641) which involved the requirement of foreign goods importers to obtain a Maryland State license.  In a six-to-one ruling, the Supreme Court ruled that the State could not mandate that licensing as a regulation on commerce as the Federal authority and control of trade with foreign nations superseded State regulation of business as per Article I, Section VIII of the United States Constitution (Vile 3-4).  The court placed restrictions on Congressional authority two years later in its ruling on Wilson v. Blackbird Creek Marsh Co. (1829) in which it upheld Delaware State law regarding the allowance of a company to place a dam across navigable waters (Marshall, Willson, et. al). 
            In the three decades following Gibbons v. Ogden (1824), and under Chief Justice Roger B. Taney the court shifted to support of State power regarding “immigration, slavery, alcohol, and unemployment compensation.” Nonetheless, a sectional divide germinated further.  Many Northern newspapers supported  the regulations as Southern concerns with the Federal Congress increasing control of economic devices and the effect on southern agriculture as well as the ever present issue overall of States’ rights.  In the years after, the ruling has been cited as precedent in the expansion overall of the Federal government “control of interstate commerce” in other cases of varying means of transport – such as: Wabash Railway v. Illinois (1886) and in Swift v. United States (1905) (Cox 641).    The Wabash case continued an increase in the limitation of State rights and furthered Congressional control of interstate commerce by effectively leading to the establishment of the Interstate Commerce Commission as a regulatory body.  Railroads were determinate on State laws and taxation – in its’ ruling the Supreme Court stated,
“…It cannot be too strongly insisted upon that the right of continuous transportation from one end of the country to the other is essential in modern times to that freedom of commerce from the restraints which the State might choose to impose upon it, that the commerce clause was intended to secure” (Wabash)
The Swift v. United States case was again based on the Congressional power to regulate commerce; however in this instance the violation of the Sherman Anti-Trust Act provided additional leverage in the ruling that went against a collaboration of “corporations, firms, and individuals” that were conducting manipulation of livestock markets.  The conspiracy violated the law due to “its effect upon commerce among the States” as “shipments and sales involved were between citizens of diverse States” (Vile 36).  The court decision validated further that Federal regulation would prevail and these cases as well as others extended the scope of what oversight Congress had of commerce and industry.  Many other decisions ranged from labor and wage suits to gun control and segregation (Cox 642) illustrating just how broad and encompassing the concept or understanding of “commerce” can be applied. 
Tuesday May 10th [1842]
            The decision in Gibbons v. Ogden (1824) was vitally important for New York State.  With the monopoly broken, an increase in business ventures and entrepreneurs came at a pivotal moment in history as steamboat companies and merchants as well as farmers and manufacturers could gain from “unrestricted trade” (Cox 641) – just in time for the completion of the Erie Canal.  A result in the increased competition was a steady decrease in transportation costs just as New York City entered a golden era becoming the global shipping and financial hub.  After the U.S. Supreme Court nullified New York’s licensing law, the decade of the 1840’s saw over one hundred steamboat companies operating in the State.  That, along with other waterway and boat improvements meant the trip from Manhattan to Albany could be made in approximately ten hours and cost relatively little (Adams 747). American distrust of corporate charters and specially granted licensing by the State now seemed prevailing, as in such cases as Gibbons v. Ogden and later rulings the sentiment provided was that citizens “had a legitimate interest in promoting transportation and prosperity” which Federal regulation could provide in a widespread and reaching manner by its power under the Constitution (Foner 322).   


During the twentieth-century and into the twenty-first, the debate has continued as to the Congressional role of regulation on business.  Each divisive side expounds on the welfare of the economic system as well as making use of Constitutional interpretations and Supreme Court rulings.  As Gibbons v. Ogden may remain a foundational case supporting the right of the Federal government to regulate commerce, the shift in political ideology as well as technological advances may factor into future outcomes.  The Supreme Court in 1824 understood this and perhaps that is why Chief Justice Marshall outlined their understanding of how the Constitution should be considered in such cases.  Regardless, it is obvious that the Court and Congress have increased the power vested into it by Article I, Section VIII in terms of regulating commerce. 


 
           



References:


Adams, Arthur G.. The Encyclopedia of New York State. Ed. Peter Eisenstadt. 1st ed. Syracuse, NY: Syracuse UP, 2005,  pp.747. Print.

Cox, Thomas. The Encyclopedia of New York State. Ed. Peter Eisenstadt. 1st ed. Syracuse, NY: Syracuse UP, 2005,  pp.641-642. Print.

Foner, Eric. Give Me Liberty!: An American History. New York: W.W. Norton, 2009. Print.

Harper, Timothy. The Complete Idiot's Guide to the U.S. Constitution. Indianapolis, IN: Alpha, 2007. Print.

Lewis, Tom. The Encyclopedia of New York State. Ed. Peter Eisenstadt. 1st ed. Syracuse, NY: Syracuse UP, 2005,  pp.740. Print.

Marshall, John. "Gibbons v. Ogden John Marshall 1824." Gibbons v. Ogden. Ed. Steve Hanna. CARRIE, A Full-Text Electronic Library; European University Institute, Italy, 1995. Web. 07 Feb. 2015.                AMDOCS: DOCUMENTS FOR THE STUDY OF AMERICAN HISTORY

Vile, John R. Essential Supreme Court Decisions: Summaries of Leading Cases in U.S. Constitutional Law. Lanham, MD: Rowman & Littlefield, 2014. Print.

"Wabash, St. Louis & Pacific Railway Company v. Illinois 118 U.S. 557 (1886)." Justia Law. Web. 08 Feb. 2015. <https://supreme.justia.com/cases/federal/us/118/557/case.html>.

“WILLSON AND OTHERS v. The Black Bird Creek Marsh Company, 27 US 245 - Supreme Court 1829.”  Google Scholar. 2015. Web. 07 Feb. 2015.  http://scholar.google.com/scholar_case?case=9453582131092714732


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