The case of Gibbons v. Ogden began when the state of New York attempted to grant a private transit monopoly to a steamboat operator between New York and New Jersey. Here, the court struck this state act down because Congress alone has the power to control interstate commerce.
Gibbons v. Ogden is the seminal case in the initial era of debate concerning the scope of congressional power under the Commerce Clause. In this initial phase, the court in Gibbons broadly interpreted the scope of congressional commerce power. Since then, commerce power has fluctuated between broad and strict interpretation by the U.S. Supreme Court.
In Gibbons, Ogden is the licensee of Fulton and Livingston, who had been granted a monopoly for the operation of steamboats in New York waters by the state of New York. Gibbons operated a competing ferry business and argues that he had the right to such operation because his ferry was licensed under federal law as a “vessel in the coasting trade” and that this area of law fell under congressional commerce power.
The commerce clause of the constitution reads “Congress shall have the power to regulate commerce with foreign nations, and among the several states, and with the Indian tribes.” While the power to regulate commerce is explicit in the constitution, the definition of commerce is not.
The counsel for Ogden claims that commerce does not include navigation. The court, however, said that commerce can be defined as “commercial intercourse between nations, and parts of nations… and is regulated by prescribing rules for carrying on that intercourse.” The court went on to say that it is inconceivable that navigation would not be considered in a system whose purpose it is to regulate such intercourse.
If commerce does not include navigation, then the government has been over-stepping it’s authority from the beginning by regulating what constitutes an American vessel and requiring they be navigated by American seamen. Such power has long been exercised with the consent and knowledge of all concerned and has been understood, for the same period and by the same parties, to be a commercial regulation. The court argues that such intention by the framers to include navigation is ‘as expressly granted, as if that term had been added to the word ‘commerce.’”
It is clear from the constitutional text that all trade between this country and any other falls under the commerce power. It is less clear when and how the commerce power applies to interstate commerce. When does jurisdiction over a transaction move from state to federal? The court interprets commerce “among the states” to include any concerns which affect the states generally. If the transaction is entirely within a state and has no effect on any other, it is regulated by the state. If it impacts more than one state, it falls under the federal commerce power. In the case where a foreign voyage commences or terminates in a given state, the federal commerce power regulates.
While the powers of congress are limited in subject matter to those enumerated in the constitution, it has always been understood that power in those areas is absolute and unqualified. Because the power over international and interstate commerce is granted to congress, they must be allowed to regulate all aspects of it.
Gibbons’ expansive definition of commerce continued to be employed until the late 1800’s. In the 1890’s the Supreme Court began to narrow this interpretation, drastically limiting the federal commerce power.