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The Steamboat Monopoly
Had the state-granted cartel held up, our history would have been unimaginably different
November 1993 | Volume 44, Issue 7
In 1803 the grant was renewed, provided Livingston produced a boat capable of traveling four knots against the current of the Hudson River. This requirement was considered impossible, and the measure was passed amidst gales of laughter in the legislature. But Livingston was then ambassador to France, where he was negotiating the Louisiana Purchase and funding the experiments of another American, Robert Fulton, who had a steamboat operating on the Seine that same year. In 1807 the two built the Clermont for the Hudson and made it to Albany from New York City in thirty-two hours, averaging about four and a half knots. The monopoly in New York waters was theirs.
Livingston knew, perhaps better than any other Easterner, the potential for steamboats in the Mississippi River Valley, which he had helped so mightily to bring under the American flag. He and Fulton moved to obtain a monopoly there as well as in New York, writing the various states and territories and asking for exclusive rights.
But while the Livingston name was potent in New York, it was, if anything, a liability in the far more egalitarian West, already resentful of Eastern money and commercial power. So the pair got nowhere, except in the Territory of Orleans. Livingston’s brother Edward had moved there after being mayor of New York and was soon a political power there. When the territory became a state, in 1812, Fulton and Livingston got their monopoly. Since New Orleans was the breakpoint between ocean- and river-going vessels, a monopoly in Louisiana waters was nearly as good as one over the whole Mississippi River system.
For a century after the Supreme Court’s decision, government monopolies in the United States were unthinkable.
In both New York and the West, the Fulton-Livingston monopolies were bitterly resented, by the public and by other would-be entrepreneurs. “Our road to market must and will be free,” thundered the Cincinnati Western Spy .
Many defied the monopolies. Henry Shreve, for whom Shreveport is named, ran his steamboat Enterprise into New Orleans and often evaded those trying to enforce the monopoly. Finally caught, he won the case when the court ruled that the territory had no authority to grant a monopoly. By this time Fulton and Livingston both were dead, and their heirs did not pursue the case in a higher court. The Mississippi was free.
Freight out of New Orleans increased from 65,000 tons in 1810 to 4,690,000 in 1860. As early as 1841 a Westerner could write: “Steam navigation colonized the West! … Steam is crowding our eastern cities with western flour and western merchants, and lading the western steamboats with eastern emigrants and eastern merchandise. It has advanced the career of national colonization and national production at least a century.”
The monopoly still held in New York waters, however. New York courts, under the thumb of the Livingstons and their allies, upheld the grant. Finally the case made its way to the U.S. Supreme Court in 1824. Sen. Daniel Webster and Attorney General William Wirt, acting as private lawyers, argued the case for the plaintiff. Webster’s presentation took two and a half hours to deliver, and it has been regarded ever since as a masterpiece of both legal histrionics and legal reasonings. No one present—the courtroom was packed—ever forgot it.
Webster argued that the federal government’s right to regulate interstate commerce was total and exclusive and that therefore, the monopoly was null and void, as were all other such laws. Chief Justice John Marshall and the rest of the Court bought Webster’s argument whole. Indeed, as Webster described it, with typical lack of reticence, “The opinion of the court … was little else than a recital of my argument.”
Regardless, the decision in the case of Gibbons v. Ogden is considered one of the great Chief Justice’s most important. Its immediate practical effect was considerable. A year after the decision the number of steamboats operating in New York waters had increased from six to forty-three.
Its philosophical effect, perhaps, was even greater. For a hundred years the idea of government monopolies in this country was unthinkable. One can only hope that it is becoming so again.