Cornelius Vanderbilt

Cornelius Vanderbilt

Cornelius Vanderbilt (1794-1877), American steamship and railroad builder, executive, and promoter, transferred his attention from boating to railroads in his later years. He left an estate of almost $100 million.

Cornelius Vanderbilt was born on May 27, 1794, on Staten Island, N.Y. His father, from a long line of Dutch farmers, was imaginative but unthrifty. He engaged in boating. Young Cornelius developed a great love for the water and quit school at the age of eleven to work for his father. When he turned 16, he persuaded his mother to give him $100 for a boat on condition that he plow and sow an 8-acre rocky field. This he accomplished with the aid of friends to whom he promised rides in his new boat.

Vanderbilt opened transport and freight service between New York City and Staten Island and, by the end of the first year, returned his mother's loan with an additional $1, 000. He charged reasonable prices and worked prodigiously. Rough in manners, he developed a reputation for honesty. The War of 1812 created new opportunities for expansion, and Vanderbilt received a contract to supply the forts around New York. The large profits from this allowed him to build a schooner which traveled over Long Island Sound and two more vessels for the coastwise trade. By 1817 he possessed $9, 000 besides his interest in the sailing vessels.

Apparently well on the way to fame and fortune, in 1818 Vanderbilt sold all his interests and turned his attention to steamboats. Observing the success of Robert Fulton and Robert R. Livingston with vessels on the Hudson River, Vanderbilt correctly chose the wave of the future. He entered the employ of Thomas Gibbons, who operated a ferry between New Brunswick, N.J., and New York City. Working for $1, 000 a year, Vanderbilt made the line profitable, despite opposition from Fulton and Livingston, who claimed a legal monopoly on the Hudson River traffic. In addition, Vanderbilt's wife, whom he married in 1813, managed the New Brunswick halfway house (between New York City and Philadelphia), where all travelers on the Gibbons line had to stay.

By 1829 Vanderbilt had decided to go on his own. Over the protests of his wife and Gibbons, who offered to double his $2, 000 salary and sell him half the line, Vanderbilt moved his family (which eventually included 13 children) to New York City. There he took his accumulated $30, 000 and entered the competitive service between New York and Peekskill, where he had the first of several encounters with Daniel Drew. Vanderbilt won this battle by cutting rates to as low as 12½ cents, which forced Drew to withdraw. He next challenged the Hudson River Association in the Albany trade. After he again cut rates, the competition paid him a handsome sum to move his operations elsewhere. Vanderbilt opened service to Long Island Sound, Providence, Boston, and points in Connecticut. His vessels were stable craft which offered the passenger not only comfort but often luxury.

By the time he was 40, Vanderbilt's wealth exceeded $500, 000, but he still looked for new fields to conquer. Hundreds of thousands of people rushed to the gold fields of California after 1849, most of them going by boat to Panama, by land across the Isthmus, onto steamers on the Pacific coast. Vanderbilt proceeded to challenge the Pacific Steamship Company by offering similar service via Nicaragua, which saved 600 miles and cut the going price by half. This move netted him over $1 million a year. He sold controlling interests to the Nicaragua Transit Company, which failed to pay him. In a famous incident, he told them that the law was too slow; rather, he would ruin them. This he did within 2 years by running another group of steamers.

Commodore Vanderbilt dabbled in the Atlantic carrying trade in the 1850s and attained a strong position but, nearing the age of 70, decided once again that the wave of the future was in another direction—the railroad. He first acquired the New York and Harlem Railroad, in the process again defeating Daniel Drew. Vanderbilt made his son, William H., the vice president, largely on the basis of prior railroad experience. The Vanderbilts next acquired control of the rundown Hudson River Railroad, which Cornelius wanted to consolidate with the Harlem. Again Drew attempted to sell the stock short, defeat the consolidation, and make a substantial profit. But, as before, the Commodore won the battle by buying every share Drew and his cohorts sold, thereby stabilizing the price.

Vanderbilt then acquired the Central Railroad (1867), merged it with the Hudson River Railroad, and leased the Harlem to the new company. After these acquisitions, Vanderbilt spent large sums of money improving the lines' efficiency and then watered the stock and paid large dividends. In the first 5 years he is said to have cleared $25 million.

The Commodore finally hit a snag in 1867, when he attempted to gain control of the Erie Railroad, then in the hands of his old adversary, Daniel Drew. Again Vanderbilt bought all the stock offered for sale, but this time, Drew, Jay Gould, and James Fisk threw 100, 000 shares of fraudulent stock on the market, which the Commodore continued to buy. The trio fled to Jersey City after warrants for their arrest were issued. Vanderbilt, tottering on the brink of failure, fought back. Although the illegal stock was finally authorized by the legislature, the trio surrendered in order to return to New York. Vanderbilt lost between $1 million and $2 million and forgot the Erie. The Vanderbilts extended their lines to Chicago by acquiring the Lake Shore and Michigan Southern railroads, the Canadian Southern, and the Michigan Central.

The Commodore's first wife died in 1868, and the next year he remarried. He was never known for philanthropic activities, his only unsolicited contributions being $50, 000 for the Church of the Strangers in New York City and $1 million to Central University, which then became Vanderbilt University. He died on Jan. 4, 1877.

Further Reading

There is no definitive biography of Vanderbilt. Studies include Meade Minnigerode, Certain Rich Men (1927); Arthur D. Howden Smith, Commodore Vanderbilt (1927); Wayne Andrews, The Vanderbilt Legend (1941); and Wheaton J. Lane, Commodore Vanderbilt (1942). The "Erie war" is best described in Charles F. Adams, Jr., and Henry Adams, Chapters of Erie, and Other Essays (1871). □