New York Livingston Fulton Monopoly example essay topic

The decision in the Gibbons vs. Ogden case is, in my opinion, a very just and fair one. Many believe it to be the first anti- trust decision in U.S. history. The economic results cannot be over-estimated, a different decision could have resulted in completely different circumstances than with which we are accustomed to today. The free flow of commerce, which we seem to almost take for granted in modern economics and business, may have never been a possibility without decisions such as this. Monopolies did not allow for equal division of business and therefore was unjust. If all men are created equal they should be given equal opportunities.

The New York Livingston-Fulton monopoly clearly subjected any potential competition to harsh conditions that would make it impossible for them to keep up in their business. Travel by steamboat was much faster than any other means in the time of this case and to give complete control to only one partnership was unfair. Under the constitution Congress has the right to regulate commerce. Although the monopoly was a form of internal state trade regulation it directly impacted on inter-state trade after a number of states passed laws to come back at the New York monopoly. Therefore, Congress had the right to intervene and end the monopoly.

To completely understand the impact of the Gibbons-Ogden decision it is necessary to understand the situation surrounding it. In 1798 Robert R. Livingston secured an exclusive twenty year grant from the New York legislature. By the terms of this grant he could exclusively navigate by steam the rivers and other waters of the state, provided that within two years he should build a boat which would make four miles an hour against the current of the Hudson River. The legislature had no faith whatsoever in the project but the decision was still made against the many jeers.

The terms of the grant were not met and it was renewed in 1803, this time to Livingston and his new partner, Robert Fulton. It was renewed once more in 1807 and finally that August Fulton's steamboat made its first successful trip from New York to Albany. The following year the Legislature, fully aware of the practical significance of Fulton's achievement, passed a law stating that for each new boat navigated on New York waters by Fulton and Livingston that they should be provided with a five year extension to their monopoly, which may not exceed thirty years. The monopoly was made further effective by not allowing for the travel of any other steam boats along New York waters, unless licensed by Fulton and Livingston. Any unlicensed vessel should be forfeited to them. Naturally this monopoly worked hardships against on what would be Fulton and Livingston's competition.

Neighboring states began to pass retaliatory laws against the New York partners. In other words, as Cushman states on p. 187, "an achievement of which had seemed destined to enlarge the means of communication and develop the commerce of the nation appeared to be embroiling the states in bitter antagonisms and commercial warfare such as prevailed during the dismal period of the Confederation". Ogden and Gibbons had once been partners. They became rivals and Gibbons began to navigate steamboats between two points in New York under the authority of a coasting license obtained from the United States government. Ogden secured a license from Fulton and Livingston. Upon Ogden's petition the New York court had enjoined Gibbons from continuing his business.

Chancellor James Kent had wrote the opinion of the court in this case claiming the whole Hudson River belonged to New York, upholding the validity of the New York statute establishing the monopoly and repudiating the idea that there was any conflict involved between federal and state authority. (Cushman, 187) Gibbons appealed to the Supreme Court, presenting the first case under the commerce clause of the constitution-Article I, Section 8 which provides congress with the power to "regulate Commerce with foreign Nations and among the several States, and with Indian tribes". In his decision, Mr. Chief Justice John Marshall held that the New York monopoly was unconstitutional in that it interfered with the power of Congress over interstate commerce. Webster's argument against the validity of the steamboat monopoly may be his best ever before the Supreme Court and Marshall's decision may have been his only truly popular one. Marshall delivered the opinion of the court, saying that the laws giving exclusive privilege are repugnant because, "1st. To that clause in the constitution which authorizes Congress to regulate commerce.

2d. To that which authorizes Congress to promote the progress of science and useful arts... ". (Cushman, 188) Marshall's decision helped to start the U.S. on the road to the free flow of business.

There is though, as always, another side to this case. The commerce which Congress may regulate can be taken as the transportation and sale of commodities. In this case, Gibbon's coasting license could not protect him since he was carrying passengers, not goods. The monopoly only requires that boats, once in New York waters need to be operated by means other than a steam if not licensed. This law then is only a regulation of internal state trade, not of commercial inter-state trade, therefore Congress cannot have regulate since it is not affecting inter-state trade. I think it was made obvious that this law was affecting inter-state trade.

New Jersey, Connecticut, Ohio, Georgia, Massachusetts, Pennsylvania, Tennessee, New Hampshire, and Vermont all passed laws as a result from the Livingston-Fulton monopoly. Congress had the constitutional right to end the monopoly, "so accustomed are we to the free flow of commerce among the states that it is hard to conceive how the nations might have developed if the arguments in favor of the monopoly had prevailed... ". (Cushman, 187) Marshall's decision demonstrated a clear improvement of the government under the Constitution, as well as began to set limits against trusts.

America, as a free nation developed from the needs of men to be equal, should be equal economically too. Monopolies prevented free flow and fair competition among businesses and was definitely an unconstitutional characteristic of our nation. In today's times it is hard to imagine business life like that, but for our economic system to have made it this far, decisions like Marshall's were very necessary. Business, by its nature consists of competition. Whether or not that competition will be beneficial or not to the individual depends on many factors, but one of these factors should not include monopoly laws preventing them to try and outdo rivals in a fair way.

Although some may argue that the intended effect of the Livingston-Fulton monopoly law itself was internal, it had a impact causing a total of 9 other states to react by passing laws to counteract it, so it obviously had a impact on the rest of the nation-direct or indirect-and needed to be taken care of and Mr. Chief Justice John Marshall took the appropriate actions.