More than three decades after the ratification of the Constitution, Gibbons v. Ogden (22 U.S. 1 [1824]) raised, for the first time, questions concerning the nature and scope of congressional authority in regulating interstate commerce. Chief Justice John Marshall, writing for a unanimous Supreme Court, held that Congress's power to regulate commerce extended to every species of commercial trade, including navigation, between the United States and foreign nations and between the states.
In 1798 New York granted to Robert R. Livingston and Robert Fulton the exclusive right of navigating the state's waters with steamboats. Livingston and Fulton subsequently granted Aaron Ogden the exclusive right to operate a ferry between New York City and several ports in New Jersey. The holders of this monopoly so dominated and energetically enforced it that other states threatened to pass laws in retaliation that would refuse to let steam-powered vessels from New York into their waters.
Thomas Gibbons, who possessed a federal permit under the 1793 Coastal Licensing Act, began to operate a service carrying passengers between New York and New Jersey. Boats belonging to Gibbons and his partner, Cornelius Vanderbilt, entered New York waters, attempting to gain as much business as possible. Ogden was successful in convincing the New Jersey courts to deny Gibbons the right to enter New York waters. Gibbons retained William Wirt, the U.S. attorney general, and Daniel Webster, the lawyer and congressman, to represent his interests at the Supreme Court.
In arguments before the Court that lasted four and a half days, Ogden's attorney, Thomas J. Oakley, held that navigation was not commerce under the meaning of the Constitution; thus intrastate commerce was left to the states to regulate. Wirt put forth the argument that the federal license issued to Gibbons took precedence over a state-granted monopoly. Webster went further, arguing that the commerce clause of the Constitution gave Congress sole power over commerce and that the state-granted monopoly was in conflict with this clause.
The Court ruled in favor of Gibbons but did not go as far as Webster would have liked. The ruling that Gibbons's federal license nullified the New York grant of monopoly had both immediate and longterm consequences. The opinion held that commerce involves more than the buying and selling of goods. The decision was popular because it broke up the monopoly, prevented further conflict between the states, and left the power to regulate intrastate commerce to the states; this last provision kept states' rights advocates happy. Furthermore, the public welcomed the ruling because, in stating that Congress had the power to regulate interstate commerce, the Court allowed for the nation's economy to operate under one set of laws. The decision was broad enough to apply to new technologies in transportation and communications and to support federal regulation over banking, industry, and labor throughout the nation.