A disaster which changed the rules occurred on July 28, 1852 when the sidewheeler Henry Clay caught fire near New York City. That morning about 350 passengers boarded the Henry Clay in Albany for their journey to the city on a ship described as one of the finest steamers on the Hudson River. She was 200' long and launched only the year before so she was one of the newest as well.

Nice accolades the owners surely enjoyed, but there was one they did not hold, the fastest on the Hudson. The Armenia held that record and on this summer day a direct challenge would be made by the Henry Clay. The boats raced each other down river until there was a collision between them near Kingston at which time the Armenia slowed down and the Clay continued on her way apparently without much reduction in speed.

Little or no damage was caused by the collision, however the passengers were not pleased with the captain and ship's officers for engaging in such folly. Among the passengers were several prominent members of society including Stephen Allen, from 1821 to 1824 he was the Mayor of New York City. Andrew Jackson Downing was also aboard along with his mother-in-law Caroline DeWint. Jackson had designed, among other things, the grounds of the White House, DeWint was the granddaughter of John Adams, 2nd President of the United States. The sister of writer Nathaniel Hawthorne, Maria, was also aboard, none of them would live through the day.

As the ship approached Westchester a fire started near the furnace for the boilers, the ship began to burn amidships which divided the passengers between bow and stern. Not being far from shore the Clay was turned and grounded in an attempt to keep her from sinking, she came to rest near the border between present day Yonkers and the Bronx. The people on the bow easily jumped off the ship on to shore, however those on the stern could not reach land and had to jump into the river or die in the fire.

Of course they did not have lifebelts and the attire of the day was not compatible with an afternoon swim. All these factors led to the high death toll that day. As those on the stern jumped into the water, their clothing weighed them down and many drowned with the safety of land just a couple hundred feet away. The exact figure is unknown, but the number of those killed that day was more than eighty men, women and children.

For the U.S. Government this was a catalyst to update the regulations in the steamboat industry. Up until then regulations covering steamboats was lacking, and as many of these terrible accidents happened far from the big city of New York the bureaucrats in Washington felt little need to bother taking action, even though hundreds of people were killed each year. But since this happened within eyesight of New York it was now felt something should be done.

On Aug. 30, 1852 the Steamboat Act of 1852 was enacted by Congress, the intention was to "provide for the better security of the lives of passengers on board of vessels propelled in whole or in part by steam; and for other purposes." this formally established the Steamboat Inspection Service in the Department of the Treasury.

The captain, owners and some of the ship's officers were put on trial for manslaughter, but all were acquitted.