Charles River Bridge Case

The article “The Charles River Bridge Case,” from Quarrels that have Shaped the Constitution, Revised Edition, edited by John A Garraty, Harper & Row, the author describes Charles River Bridge decision espoused newly popular Jacksonian political beliefs, which favored free enterprise. Arguably, the case altered the course of economic Jurisprudence in the United States. The facts of Charles River Bridge began in 1650 when the state of Massachusetts granted a charter to Harvard College to operate for profit a ferry over the Charles River between Boston and Charlestown. Later, in 1785, the Massachusetts Legislature granted a charter to a group of Charlestown businessmen to build the Charles River Bridge. These entrepreneurs were to fund the bridge's construction and in return the state would allow them to collect revenue from a specified toll for the next forty years. As part of the agreement, the entrepreneurs were to pay an Annuity to Harvard College to replace ferry profits lost by the building of the new bridge.

The bridge was immediately successful and immensely profitable. Prompted by its popularity, the Massachusetts Legislature in 1792 chartered the building of a second bridge, known as the West Boston Bridge. To appease the proprietors of the Charles River Bridge, who faced competition from the West Boston Bridge, the state of Massachusetts extended the Charles River Bridge charter from forty to seventy years. The Boston community was now enjoying the convenience of two bridges, and Harvard College was enjoying annually the use of money in compensatory payments. As the traffic on both spans increased, the tolls poured in and the value of the stock grew apace.

By the 1820s, Massachusetts chartered a third bridge, the Warren Bridge, which was to be constructed within a few rods of the Charles River Bridge. The Charles River Bridge proprietors strongly objected to this third bridge because the competition would diminish their profits. But Massachusetts citizens viewed the Charles River Bridge as monopolistic and welcomed competition and reduced tolls. The Warren Bridge was completed as planned. Within a year the Charles River Bridge suffered a 40 percent drop in revenues. The bridge's proprietors, represented by Daniel Webster and Lemuel Shaw, went to court, seeking an Injunction against the Warren Bridge. Webster and Shaw argued that the Warren Bridge's charter with the state violated the Contracts Clause of the U.S. Constitution by interfering with the state's separate obligations under its charter with the Charles River Bridge proprietors. They maintained that as successors to the original ferry service charter held by Harvard College, the Charles River Bridge proprietors had an implied exclusive right to tolls charged for crossing the Charles River. Moreover, they said that judicial policy should protect investments; without security in investments, entrepreneurs would not be willing to take risks in technological developments such as bridges and railroads. And this reluctance to take risks would only prove detrimental to the public.

In anticipation of the opening of the Warren Bridge on Christmas Day, 1828, the stockholders of the Charles River Bridge reckoned anew the anticipated loss in tolls. Lawyers for the Warren Bridge proprietors countered that no exclusive rights existed for transportation over the Charles River and that judicial policy should favor technological progress and free enterprise over the rights of those investing in private property. After hearing oral arguments in October 1829, the Supreme Judicial Court of Massachusetts ruled in favor