In the 1907 case of Central Railroad Company of New Jersey v. Jersey City, the U.S Supreme Court ruled in favor of the railroad company, stating that it was unconstitutional for Jersey City to impose a tax on its ferry boats and wharves. The court held that these properties were instrumentalities of interstate commerce and therefore could not be subjected to local taxation under federal law. This decision reinforced the principle that states cannot interfere with or regulate interstate commerce - a power reserved exclusively for Congress by Article I, Section 8, Clause 3 (the Commerce Clause) of the U.S Constitution.

In the dissenting opinion for Central Railroad Company of New Jersey v. Jersey City, Justice Harlan argued that the majority's decision to uphold a tax imposed by Jersey City on the railroad company was unconstitutional. He contended that this case should have been treated as one involving interstate commerce and thus subject to federal jurisdiction rather than state or local authority. Harlan believed that railroads were instrumentalities of interstate commerce and therefore could not be taxed by states or municipalities without violating the Commerce Clause of the Constitution. Furthermore, he asserted that allowing such taxation would lead to an undue burden on interstate commerce as every municipality through which a railroad passed could impose its own taxes, leading potentially to excessive taxation and disruption in commercial activities across state lines.