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Vanderbilt, Cornelius (1794-1877)

Cornelius Vanderbilt (1794-1877)

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Shipping magnate, railroad tycoon

Beginnings. Fittingly, the man who built Americas largest Civil War-era shipping and railroad empire was raised on the edge of the Narrows below New York on the threshold of the city that would, over the course of his lifetime, become the financial capital and commercial center of the nation. Cornelius Vanderbilt was born in 1794 and moved with his family the following year to Stapleton, New York, between the Upper and Lower Bays. He embarked on his career as a shipper at a young age, purchasing a small sailboat when he was sixteen and immediately going into business ferrying passengers and freight between Stateri Island and Manhattan. Over the course of his career, Vanderbilts vessels grew progressively larger and grander, and eventually they would travel transoceanic routes, but his business would remain essentially the same until he made a decisive shift to railroads and multiplied his fortune several times over.

Growth. Vanderbilts initial foraythe Staten Island ferrying servicelaunched his career fortuitiously. Charging as little as 25 cents per round trip, Vanderbilt amassed $1,000 in his first year in business. During the War of 1812 he landed a government contract supplying six of the forts lining the Upper Bay. By 1817 he had compiled working capital of $10,000 and a fleet of five coasting vessels which he ran on trips from Boston to Delaware Bay, along with the ferry business. In 1818 Vanderbilt tied his fortunes to the new technology transforming shipping when he went to work for Thomas Gibbons operating a steamboat between New Jersey and New York. It was dicey work at first, since Gibbons operated in violation of a state monopoly Robert Fulton and Robert Livingston had secured from the New York legislature (and leased in turn to Aaron Ogden). But in 1824 Gibbons, with Vanderbilt as his lieutenant, managed to put the case before the U.S. Supreme Court, where John Marshall broke the monopoly in a famous decision, Gibbons v. Ogden, which reserved the regulation of interstate commerce for the federal government. By the time Gibbons died three years later, the Union Line under Vanderbilts stewardship was earning an annual profit of $40,000. Unable to buy the line and unwilling to join Gibbonss son as a partner, Vanderbilt pulled out (buying several boats from the line as he left) and set up the Dispatch Line, which ran between New York City and Philadelphia and coordinated several steamboat legs with interim stage service. Competing directly with the Union Line, Vanderbilt forced his rival to buy him out in 1830.

The Commodore. The transaction set a pattern Vanderbilt repeated several times as the scope of his shipping interests expanded: invest in modern, upscale facilities, build profitable lines, and eventually either sell out to or buy out competing lines. From the mid-Atlantic coastal routes, Vanderbilt shifted to the Hudson River, where he went head-to-head with Daniel Drew (who would become an occasional ally as well as an archrival) and then with the Hudson River Steamboat Association. The former he bought out; the latter he forced to buy him out for the lucrative sum of $100,000 plus annual payments of $5,000. In 1835 he turned back to the sea, to the Long Island Sound route between New York and Providence. By the early 1840s the Commodore, as Vanderbilt was starting to be known, was worth more than $1 million.

The Transit. Vanderbilts most ambitious projects lay ahead of him. With the discovery of gold in California and the explosion of development on the Pacific Coast, Vanderbilt set up the Transit Company running steamships down to the Central American isthmus on the Atlantic side and up to San Francisco on the Pacific side. To connect the overland link, Vanderbilt explored the possibility of bisecting the isthmus with a canal. Though the Panama Canal in fact took more than half a century to realize, Vanderbilt managed to sell most of his holdings in the Transit at a considerable profit in 1852, when he took a hiatus from business.

New Shipping Ventures. On returning to business several years later, Vanderbilt developed several grand projects. He returned to the Central American/West Coast line, first setting up a line competing with the Transit Company, then buying up enough stock in his old company to take it over. Eventually in 1859 he formed the Atlantic & Pacific Steamship Company and built a railroad across Panama. Meanwhile, he had begun running steamships on a transatlantic route between New York and Le Havre, France (which earned only modest profits). During the Civil War he turned his larger ships over the Union navy (while continuing to run smaller vessels in the Atlantic & Pacific). In 1864, at the age of seventy, Vanderbilt retired from shipping with a fortune of nearly $30 million.

Railroads. He did not, however, retire from business altogether. Indeed, the scale of Vanderbilts financial empire-building increased considerably in his last dozen years, as he plunged more deeply into the world of railroad finance. This involvement dated back to the 1840s, when Vanderbilt had begun investing in the New York & Harlem and other New York lines. In 1865 he built up his stake and buttressed his competitive position, when he engineered the consolidation of the New York & Harlem and the Hudson Line (which ran along the line of the Erie Canal to Buffalo). Several years later, he moved against the New York Central, which connected the Vanderbilt lines to western points, by refusing to accept the Centrals passengers or freight and thereby cutting it off from its port connections (a maneuver Vanderbilt carefully timed for the winter, when freezing conditions had shut down the Erie Canal). Forced to capitulate, the Central relinquished control of its board to Vanderbilt, consolidating his hold on rail traffic from the West to New York City. Only the Erie Railroad eluded the Commodores grasp, when speculators Daniel Drew, Jay Gould, and Jim Fisk successfully thwarted Vanderbilts bid for control in 1867-1868.

Grand Central. Perhaps Vanderbilts most enduring monument to posterity was Grand Central Station, which he had constructed in 1871 as the terminus for the Central. He had already built an impressive freight terminal for the Hudsona monumental structure three stories high, with a facade 150 feet long and 30 feet high, decorated with a bas-relief depicting the various stages of Vanderbilts business career, framing a huge statue of the Commodore himself. The Grand Central passenger terminal was executed in even grander style, running 250 feet along Forty-second Street. The New York City public was suitably impressed, but was determined to force Vanderbilt to put the tracks below street level, which the city eventually required him to do (softening the blow by paying for half the cost).

Legacies. Vanderbilt died in 1877, passing along most of his $100 million estate to his son William, in the form of New York Central and Hudson River Railroad stock. His less tangible and more public legacy was an early taste of empire building, railroad style. As Charles Francis Adams put it, Vanderbilt involuntarily excites feelings of admiration for himself and alarm for the public. His ambition is a great one. It seems to be nothing less than to make himself master in his own right of the great channels of communication which connect the city of New York with the interior of the continent, and to control them as his private property. To a striking extent, he had succeded.

Source

Wheaton J. Lane, Commodore Vanderbilt: An Epic of the Steam Age (New York: Knopf, 1942).

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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). □

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Vanderbilt, Cornelius (1794-1877)

Cornelius Vanderbilt (1794-1877)

Sources

Railroad and steamship promoter

Hard-Boiled Apprenticeship. Born on Staten Island in 1794, Cornelius Vanderbilt left school at eleven to go to work. While still a teenager Vanderbilt started his own ferry service in New-York harbor, and the War of 1812 found him investing in his own fleet of sailing ships, competing on some of the major coastal routes to the South and New England. But the ambitious young man wanted to get into the steamship business, and in 1818 he hired on as a steam-ferry captain with Thomas Gibbons, who was in the process of defying the Fulton-Livingston steam navigation monopoly in the profitable New York harbor market, now owned by Aaron Ogden. Until the Supreme Court ended steamboat monopolies in Gibbons v. Ogden (1824) Gibbons operated his ferry service in violation of a state court injunction, leaving intrepid young Captain Vanderbilt to drop passengers at constantly shifting spots on the New York waterfront to avoid process servers. The experience gave Vanderbilt knowledge of the steamboat business and the capital, savvy, and competitive edge to make it in the new industry.

The Commodore. By 1829 Vanderbilt had begun his own steamboat service from New York City to New Brunswick, New Jersey, the first leg in the busy and lucrative route from New York to Philadelphia. Soon he was successfully competing on the Hudson River, Long Island Sound, Providence, and Boston routes. When the gold rush started in 1849, Vanderbilt constructed a line of steamers that cut travel costs to California by 30 percent. By building his own roads across the Nicaraguan isthmus, Vanderbilt removed the extra time, expense, and danger of steaming around Cape Horn. Then in 1854 he entered the Atlantic packet competition by sailing head to head against the government-subsidized British Cunard Line. Worth well over $11 million by the mid 1850s, his wealth, his million-dollar fleet, and his competitive edge had earned Vanderbilt the nickname Commodore.

Competitor. Vanderbilt succeeded not only because he provided the best in speed, comfort, service, and safety but also because of his ruthless tactics. On the Long Island Sound routes Vanderbilt captured market share by cutting fares to Hartford, Connecticut, from $5 to $1. In the late 1820s Vanderbilt started running two steamboats from New York City to the state capital just to force the dominant line to buy him out, which they did. Knowing that the fastest steamboats usually acquired the most business, Vanderbilt always tried to outrun his competitors. At the age of fifty-three Vanderbilt challenged John Law, a competing steamboat owner, to a race from New York to Sing Sing with a $1, 000 prize. Vanderbilt lost the race, but unlike Law he raced his own boat. With Vanderbilt it was always personal, and when competitors found out he was entering their particular regions, they often bought him off rather than deal with his bulldog mentality. When Vanderbilt threatened to open a Panama steamboat service in addition to his Nicaraguan line, the owners of the current Panamanian line paid him $56, 000 a month just to stay away. In short, Vanderbilt became for many the model, for better or worse, of the nineteenth-century American business tycoon, the quintessential robber baron.

The Public Be Damned. By the late 1850s Vanderbilt had decided it was time to try his hand at the railroad business. Employing his usual combination of shrewd investment strategy and hardball business tactics, Vanderbilt first gained control of several New York rail lines and then consolidated them into the New York Central, later purchasing two crucial rail connections to the Chicago market. With an estate estimated at $100 million Vanderbilt was considered the richest man in New York City when he died, and his children would continue the Vanderbilt legacy well into the next century. But Vanderbilts baronic style of business eventually alienated the American public. Vanderbilt had always maintained that railroads were not run on sentiment, but... to pay and when asked by a reporter in the midst of the terrible depression of 18731877, But dont you run it [the New York Central] for the public benefit? Vanderbilt barked back, the public be damned. Later generations of tycoons would be reticent to voice such sentiments publicly even if they agreed privately.

Sources

Robert Greenhalgh Albion, The Rise of the New York Port, 18151860 (New York: Scribners, 1939);

Wheaton J. Lane, Commodore Vanderbilt: An Epic of the Steam Age (New York: Knopf, 1942).

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Vanderbilt, Cornelius

Cornelius Vanderbilt, 1794–1877, American railroad magnate, b. Staten Island, N.Y. As a boy he ferried freight and passengers from Staten Island to Manhattan, and he soon gained control of most of the ferry lines and other short lines in the vicinity of New York City. He further expanded his shipping lines and came to be known as Commodore Vanderbilt. In 1851, when the gold rush to California was at its height, Vanderbilt opened a shipping line from the East Coast to California, including land transit across Nicaragua along the route of the proposed Nicaragua Canal. In Central America he came to be a violent opponent of the military adventurer William Walker.

After the outbreak of the Civil War, he entered the railroad field, and by 1867 he had gained control of the New York Central RR. Although his efforts to gain control of the Erie RR proved unsuccessful, Vanderbilt vastly expanded his railroad empire and by 1873 connected Chicago with New York City by rail. He amassed a great fortune and gave $1 million to found Vanderbilt Univ.

A son, William Henry Vanderbilt, 1821–85, b. New Brunswick, N.J., succeeded Cornelius Vanderbilt as president of the New York Central RR and augmented the family fortune. He gave liberally to Vanderbilt Univ., to the College of Physicians and Surgeons (now part of Columbia Univ.), and to various other institutions.

Cornelius Vanderbilt, 1843–99, b. Staten Island, N.Y., was a son of William H. Vanderbilt. He took over the family holdings and helped to establish the Vanderbilt Clinic (affiliated with Columbia-Presbyterian Medical Center) and the Cathedral of St. John the Divine in New York City. With his wife, Alice Gwynne Vanderbilt, 1845–1934, he built the famous "Breakers" estate in Newport, R.I. Their daughter, Gertrude Vanderbilt Whitney, 1875–1942, became a sculptor, art patron, and founder (1930) of New York's Whitney Museum of American Art. Her niece and ward, Gloria Vanderbilt, 1924–, became a well-known designer of jeans and other clothes in the 1970s.

Another son of William H. Vanderbilt was William Kissam Vanderbilt, 1849–1920, b. Staten Island, N.Y., who also helped establish the Vanderbilt Clinic. He was a yachtsman, and his wife was a well-known society leader. The fourth son of William H. Vanderbilt was George Washington Vanderbilt, 1862–1914, b. Staten Island, N.Y. He engaged in numerous philanthropies, giving to agricultural research and donating land for the establishment of Teachers College, Columbia Univ. He also built the estate "Biltmore," near Asheville, N.C.

One of the sons of Cornelius Vanderbilt the younger was Alfred Gwynne Vanderbilt, 1877–1915, b. New York City. A noted horse breeder, he went down on the Lusitania. One of the sons of William K. Vanderbilt, Harold Sterling Vanderbilt, 1884–1970, born Suffolk co., Long Island, N.Y., gained note as a sportsman. He won the America's Cup yachting races three times. The modern game of contract bridge was largely invented by him. A grandson of the younger Cornelius Vanderbilt, Cornelius Vanderbilt, Jr., 1898–1974, became a well-known writer, newspaper publisher, and movie producer.

See biographies of Commodore Vanderbilt by W. J. Lane (1942) and T. J. Stiles (2009); W. Andrews, The Vanderbilt Legend (1941); E. P. Hoyt, The Vanderbilts and Their Fortunes (1962); C. Vanderbilt, Jr., Man of the World; My Life on Five Continents (1959).

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Vanderbilt, Cornelius

VANDERBILT, CORNELIUS


Cornelius "Commodore" Vanderbilt (17941877) was a shrewd businessman in the transportation industry. He built his fortune through freight and passenger boating lines, and later expanded to railroads. He was such a fierce and successful businessman that his competitors often paid him to vacate their markets. Vanderbilt left an estate of almost $100 million and founded Vanderbilt University.

Cornelius Vanderbilt was born on May 27, 1794, on Staten Island, New York. His father worked in boating, and Vanderbilt quit school at age 11 to join his father, working odd jobs on the waterfront. By the age of 16 young Vanderbilt was determined to become his own boatman. His choice of careers earned him the nickname "Commodore." To finance his new career, Vanderbilt struck a deal with his mother. If he would plow and sow an uncultivated eight-acre field, his mother would loan him $100 to buy a boat. Vanderbilt earned the money and began a transport and freight service between New York City and Staten Island. Charging 18 cents a trip, Vanderbilt was able to repay the $100 loan in a year and earned an additional $1000 in profits.

Vanderbilt quickly developed a reputation for being capable, reliable, and honest. He charged reasonable prices and worked tirelessly. With the War of 1812 (18121814) he was given a chance to expand his enterprise. When the British threatened to invade New York, Vanderbilt arranged a three-month government contract to supply the island forts around New York. This profitable venture gave him enough money to buy a schooner that traveled over Long Island Sound and two more boats to engage in coastal trade. By the age of 24 Vanderbilt had saved $9000 and owned interests in several periaugers (a small two-masted, flat-bottomed vessel) and coasting schooners.

Vanderbilt was wise enough to recognize that steam was revolutionizing water transportation. The successes of steamboat inventors Robert Fulton and Robert R. Livingston persuaded Vanderbilt to sell all of his boating interests in 1818 and turn his attention to steamboats. Vanderbilt went to work for Thomas Gibbons, who owned one steamboat and operated a ferry between New Brunswick, New Jersey, and New York City. Vanderbilt started off working for $60 a month. In the 11 years that Vanderbilt worked for Gibbons, the line grew from one 25-ton steamboat to seven 200-ton boats. By 1828 Vanderbilt had saved more than $30,000.

A year later Vanderbilt moved his family to Manhattan, New York, and went into business for himself. He bought one of Gibbons' older steamboats and opened his own line running from New York to Philadelphia, Pennsylvania. He quickly slashed rates and sent his competitors into a panic. They responded by paying Vanderbilt generously not to run a line on their route. Vanderbilt then opened a line from New York to Peekskill, New York, and ran into competition from businessman Daniel Drew (17971879). Vanderbilt once again cut his rates immediately to increase business. When Drew followed suit, Vanderbilt purchased Drew's boat to eliminate the competition.

Vanderbilt's next venture was the New York-Albany route that brought him in direct competition with the powerful Hudson River Steamboat Association. Vanderbilt's line was so successful that once again he was paid off handsomely to not operate on that route. Vanderbilt quickly developed a successful business strategy: cut rates, drive away the competition or sell out, and then raise rates again. This approach was so successful that by the time he was 40, Vanderbilt was worth over $500,000 and operated over 1000 steamboats.

The Gold Rush of 1849 in California opened up new business possibilities for Vanderbilt. Most adventurers were traveling to California through Panama, but Vanderbilt opened a quicker and cheaper route through Nicaragua. The venture was a success and Vanderbilt's line carried 2000 passengers per month for nine years and made over $1 million in profits each year.


In 1853 Vanderbilt took a small break from business. He commissioned a 270-foot steam yacht, the North Star, and set off for Europe with his family. He sold his controlling interest in the Nicaraguan line to his partners, Charles Morgan and Cornelius K. Garrison, who were supposed to pay Vanderbilt 20 percent of the gross receipts while he was away. The partners, however, refused to pay him. Rather than take them to court, Vanderbilt determined to ruin them financially. When he returned from his trip, he organized a new line to California via Panama and slashed his prices to only $35. He had driven Morgan and Garrison out of business by 1857. Vanderbilt then terminated the service when two Panamanian steamship lines agreed to pay him not to run that route.

Despite his successes in shipping, Vanderbilt was always looking for new business opportunities. At the age of 70 he became interested in the railroads. In 1857 Vanderbilt purchased a controlling interest in the Harlem Railroad, followed by the Hudson River Railroad in 1865, and New York Central in 1867. He then consolidated his holdings into one system that extended from New York City to Buffalo, New York. Vanderbilt tried to acquire the Erie Railroad from his old steamboat adversary, Daniel Drew, but failed. He did purchase several other lines and extended his service to Chicago, Illinois. By 1877 the New York Central Railroad System covered more than 4,500 miles.

Through his various business ventures Vanderbilt accumulated over $100 million. He was not known for philanthropy until his final years, when he donated $50,000 to the Church of the Strangers and $1 million to Central University, which then became Vanderbilt University. "The Commodore" died on January 4, 1877.

See also: Daniel Drew, New York Central Railroad, Steamboat, War of 1812


FURTHER READING

Auchincloss, Louis. The Vanderbilt Era: Profiles of a Gilded Age. New York: Scribner, 1990.

Conkin, Paul Keith. Gone with the Ivy: A Biography of Vanderbilt University. Knoxville: University of Tennessee Press, 1985.

Foreman, John. The Vanderbilts and the Gilded Age: Architectural Aspirations. New York: St. Martin's Press, 1991.

Patterson, Jerry E. The Vanderbilts. New York: Harry N. Abrams Pub., 1989.

Vanderbilt, Arthur T. Fortune's Children: The Fall of the House of Vanderbilt. Oklahoma City, OK: Quill Press, 1991.

i have been insane on the subject of moneymaking all my life.

cornelius vanderbilt

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