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United States Supreme Court
Commercial rivalries between the newly independent states nearly destroyed the new nation in the 1780s,
and the need for a unified regulation of commerce was one of the principal needs prompting the Annapolis
Convention and the Constitutional Convention in 1787. State import taxes and regulatory barriers designed
to protect and preserve local merchants, manufacturers, and markets oppressed commerce between the states
and hindered the formation of a truly national economy. Delegates to the Constitutional Convention wanted
to curb state restrictions on commerce and thus avoid the negative aspects of regulation. They recognized
the need for national policies to promote trade and commerce, even if they could not agree on what these
policies should be. This desire to promote growth throughout the country is one of the reasons behind
the Commerce Clause, recognized then and now as one of the great accomplishments of the Constitution.
In the early nineteenth century, the steamboat was vital to American commercial development. With it,
transportation was possible upstream against the current, allowing for two-way trade on the nation’s rivers.
This meant opening up new markets for trade and settlement. The steamboat also reduced the time and expense
of transporting goods along the coast and on lakes. But state attempts to grant monopolies on their waters
and thus gain a share of the profits threatened the rapid expansion of the national economy in the 1820s.
Thomas Gibbons and Aaron Ogden were business partners who had a falling-out. Gibbons went into business
for himself to compete with Ogden and received a federal coasting license, which allowed him to trade
along the Eastern seaboard. However, Ogden had an exclusive license to run his steamboats in New York,
a license granted by the official New York steamboat monopoly. The costly legal battle almost wrecked
both men.
At issue was the potential for rapid expansion of the United States economy, as well as the power of the
national government. If commerce had to observe the boundaries of states it would be crippled. If commerce
was defined narrowly, and the powers of the Commerce Clause strictly constructed, the government would
be "unequal to the objects for which it was . . . to be instituted." What four questions did
Chief Justice Marshall use to summarize the key issues of the case? When Marshall defined commerce to
cover all forms of economic intercourse and navigations within the limits of every state in the Union,
all types of business dealings were instantly covered. This meant not only the power to avoid the negative
aspects of state regulations, but potential benefits of future federal regulations. As for the power granted
by the Commerce Clause, Marshall declared "the power is complete in itself . . . may be exercised
to the utmost, and acknowledge no limitations." What happens when state laws and national laws regulating
commerce overlap and conflict, as the state monopoly did with the federal coasting license in this case?
This decision was just what a developing nation needed, promoting freedom to develop the country and promote
the economy. Destructive economic capitalism between the states was prevented then and ever since. Steamboats,
railroads, and later the airlines were kept free from state monopolies, and this allowed a national transportation
system to develop. Can you imagine the effect on businesses or your own personal travel, if your were
forced to change planes or other carriers at each state line to allow the state-licensed carrier to move
you along? Marshall’s decision was even popular this time, because any monopoly was unpopular with the
people.
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