Background
In 1808 the Legislature of the State of New York granted to Robert R. Livingston and Robert Fulton exclusive navigation privileges of all the waters within the jurisdiction of that State, with boats moved by fire or steam, for a term of years. They subsequently also petitioned other states and territorial legislatures for similar monopolies, hoping to develop a national network of steamboat lines, but only Orleans Territory accepted their petition and awarded them a monopoly on the lower Mississippi.
Aware of the potential of the new steamboat navigation, competitors challenged Livingston and Fulton arguing that the commerce power of the federal government was exclusive and superseded state laws. Legal challenges followed, and in response the monopoly attempted to undercut its rivals by selling them franchises or buying their boats. Former New Jersey Gov. Aaron Ogden had tried to defy the monopoly, but ultimately purchased a license from the Livingston and Fulton assignees in 1815, and entered business with Thomas Gibbons from Georgia. The partnership collapsed three years later, however, when Gibbons operated another steamboat on Ogden’s route between Elizabethtown, New Jersey and New York City, that had been licensed by the United States Congress under a 1793 law regulating the coasting trade. The former partners ended up in the New York Court of Errors, which granted a permanent injunction against Gibbons in 1820. In the interim Gibbons also had taken on Cornelius Vanderbilt as his ferry captain, and later, his business manager.
Read more about this topic: Gibbons V. Ogden
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