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Competition

1824-1860: Better boats and “cut throat” competition

The Supreme Court ruling in Gibbons vs. Ogden was a resounding defeat for the Fulton-Livingston interests, and effectively ended their monopoly. Anyone was now free to build and operate a steamboat on the Hudson River.

This decision launched a massive effort to put steamboats into service on the river, not only for the New York City-to-Albany service, but for steam ferries across the river and local steamboat service for many towns. In 1819 there were only eight steamboats on the Hudson River. By 1840 there were over one hundred.

The court decision also launched an era of technological innovation. The size, speed and comfort of steamboats dramatically increased. These advances, however, were somewhat muted with the commencement of the era of bare-knuckled capitalism in the steamboat business that lasted almost to the eve of the Civil War.

Cornelius Vanderbilt and Daniel Drew, names that by the end of the 19th century were deservedly included in that rogue's gallery of "robber barons," got their start in the Hudson River steamboat business. While the steamboat monopoly granted to Fulton and Livingston had been broken legally, there was no reason a new monopoly could not be rigged. Within a few years, the North River Association was organized by steamboat owners to control passenger service and fares on the Albany-to-New York City run. If anyone dared to compete with them, the association would slash its fares until the competitor gave up. If this didn't work, it would buy out the competitor and then restore the higher fares.

Vanderbilt’s steamboats competed with the association’s boats and operated so successfully that the association felt compelled to buy him out. Soon after, Daniel Drew emerged upon the scene in direct competition to the association, but he would not sell out to them. Instead, he battled against them until they sold out to him in 1845. Drew’s interest in the steamboat business waned within the next decade when he found more lucrative money-making opportunities in the “gold rush” and the “iron horse.”