Born May 27, 1794 (Port Richmond, New York)
Died January 4, 1877 (New York, New York)
When Cornelius Vanderbilt died in 1877, he left an estate valued at $100 million. Vanderbilt's astonishing fortune ranked him as the richest American in his lifetime, and his wealth had seemed to grow right along with the rapidly expanding new nation. Known as the "Commodore," he made his first fortune in shipping and went on to own a large section of the railroad tracks that connected the East Coast to Chicago, Illinois. Vanderbilt had a skill for recognizing coming changes and trends, and his talent for investment opportunities made him one of the American Industrial Revolution's leading figures. His estate also created one of the country's great family fortunes.
"I for one will never go to a court of law when I have the power in my own hands to see myself right."
An early start in the shipping business
Born in May 1794 on Staten Island, New York, Vanderbilt came from a Dutch farming family who lived in Port Richmond, on the north shore of the island. His great-great-great-grand-father, Jan Aertson, came to New York in 1650 as an indentured servant, a common form of contract labor in the era and a way for poor men and women to try their luck in the New World. In exchange for promising their labor for a number of years, the indentured servant was provided with transportation to North America and food and shelter during his work years. Aertson had been born in a village called De Bilt in the Netherlands, and the van ("from") added to it gave the family its surname.
Vanderbilt was the fourth of nine children in his family. His father had a boat business, and as a youngster Vanderbilt grew to love the sea and sailing. He left school at the age of eleven to work with his father, and by the time he turned sixteen he badly wanted his own boat. He struck a deal with his mother, who lent him $100 in exchange for plowing eight acres of rocky soil on which she wanted to plant crops. Vanderbilt then turned to his friends for help with the job, offering them rides in his new boat as payment for their labor.
Using that boat Vanderbilt started his own transport and freight service that carried goods between Staten Island's farmlands and New York City's Manhattan, an emerging center of commerce. In time he repaid his mother the amount of that first loan plus an extra $1,000. When he was eighteen years old, the War of 1812 (1812–15) erupted between the United States and England over a variety of complaints, including the capture of American sailors for enforced duty in the English Royal Navy. Vanderbilt profited during the three-year conflict after winning a government contract to carry supplies to the numerous military forts along the New York and New Jersey shorelines. With the money he earned from that project, he built a schooner, a ship with at least two masts that was capable of carrying a much heavier volume of cargo. His ship serviced the communities located on the shore of the Long Island Sound on the Atlantic Ocean, and he soon added two more schooners to his fleet. By 1817 he had saved up $9,000.
In 1818 Vanderbilt sold all of his boats. They were all sailing vessels that relied on the wind to power them, and he was convinced that steamships were going to dominate the shipping industry instead. A little more than a decade earlier, a wealthy New York lawyer and politician named Robert Livingston (1746–1813) had joined with American inventor Robert Fulton (1765–1815), and their first steamship made the trip on the Hudson River from New York City to Albany, New York, in record time. Their next vessel made its maiden voyage from Pittsburgh, Pennsylvania, to New Orleans in 1811. Vanderbilt wanted to learn as much as possible about the new technology and went to Thomas Gibbons, a steamboat ferry operator. Gibbons's boat ran between New Brunswick, New Jersey and New York City, and Vanderbilt promised to increase its profits in exchange for a salary of just $1,000 a year.
Epic legal battle
Vanderbilt delivered the profits as promised. He revised the schedules to make the service more reliable and made the boats more comfortable for passengers. After convincing Gibbons that a larger ferry was needed, he learned to captain the new vessel himself. But Vanderbilt's time with Gibbons was important for another reason, and one that had a far more lasting impact on the American economy: the newly successful Gibbons line came into conflict with Fulton and Livingston, who believed they had the rights to all steamship travel on the Hudson River. A generation earlier, states commonly granted monopolies (the exclusive possession or right to produce a particular good or service) to companies or individuals. This dated from the first years of the new nation, when lawmakers and leaders wanted to encourage invention and investment in their communities, but had no funds to do so yet. Granting monopolies in certain industries and sectors was one way to promote business and innovation.
Some years earlier the New York legislature had granted a monopoly for steamboat travel to John Fitch (1743–1798; see entry), whose version of a steam-powered boat came before Fulton's. Fitch even demonstrated it before the delegates at the Constitutional Convention in Philadelphia, Pennsylvania, and Livingston was one of the attendees. Fitch died in poverty, and Livingston later managed to secure his New York rights, probably through political connections. Gibbons took Livingston to court over the monopoly rights, and the case advanced all the way to the U.S. Supreme Court. The landmark case, Gibbons v. Ogden, was decided in 1824 and eliminated all state monopolies. It also gave Congress some authority over interstate commerce (commerce that crossed state lines), a legal first that would later play a significant role in a wave of regulatory laws for American corporations in the early years of the twentieth century.
Vanderbilt managed to prosper during the years he worked for Gibbons, with some credit going to his wife, Sophia Johnson Vanderbilt (1795–1868), whom he had married in 1813. In the town of New Brunswick, which was the halfway point between Manhattan and Philadelphia, she ran a hostel for travelers on the Gibbons ferry line. In 1829, after a decade working for Gibbons, Vanderbilt decided to start his own steamboat line. With the immense sum he had saved—around $30,000 by then—Vanderbilt began a service that ran between New York City and Peekskill, New York, a Westchester County town on the Hudson River. This project sparked his first business battle with another transportation owner, Daniel Drew (1797–1879). Vanderbilt beat his competitor by charging much cheaper rates, a practice that Vanderbilt would continue for the remainder of his career.
In his next venture, a steamship line that ran to the state capital of Albany, Vanderbilt went up against the Hudson River Association, a group of boat operators that set rates amongst themselves. Again Vanderbilt's line charged a much lower rate, and the association finally decided to pay him to keep out of the Hudson River traffic. Vanderbilt agreed to give up his Hudson River line for the next ten years and earned $100,000 plus another $5,000 annually from the deal. For the next several years, he concentrated on shipping and ferry services along Long Island Sound and up the Atlantic seaboard to towns in Connecticut and on to Providence, Rhode Island, and Boston, Massachusetts. Vanderbilt's passenger ferries were known for their safety and their somewhat fancy interiors, and they also used a more efficient boiler that saved on operating costs by burning much less fuel.
Profited from California gold rush
By the time Vanderbilt celebrated his fortieth birthday in 1834, he possessed a fortune worth $500,000, a huge amount at the time. His lines prospered and later the following decade he moved into long-distance travel. The California gold rush, which began in 1848 with the discovery of a gold nugget near Sutter's Mill in the northern part of that state, caused a massive migration of prospectors hoping to make their fortunes in gold mining. There was no transcontinental railroad (spanning the country from one coast to the other) yet, and New England and Atlantic seaboard residents who planned to move to California to prospect for gold had two sea transportation options. One was to board a ship that sailed around Cape Horn, the southernmost tip of South America, which was known for its dangerous storms. The other involved booking passage to Panama in Central America, and then making a trek over land through the Isthmus of Panama. This was a tropical jungle, and newcomers were at risk of contracting malaria (a sometimes deadly disease spread by mosquitoes that causes chills and high fever). When they made it across, they had to wait for another ship that would carry them up the Pacific coast to San Francisco, California.
Vanderbilt found a shorter route, through Nicaragua, and charged half the price of the leading company's rate for both legs of the journey. In 1815 he made the first trip on his new Accessory Transit Company (ATC) venture himself to oversee its smooth operation. He also began meeting with wealthy London, England, bankers with the hopes of obtaining financial backing to build a canal through the Isthmus of Panama. In the end the English bankers declined to get involved, though by 1880 construction had started on what would become the Panama Canal, originally financed by a French consortium.
In Panama Vanderbilt learned that the two executives, Charles Morgan and Cornelius K. Garrison, whom he had put in charge of ATC had betrayed him through a stock manipulation that resulted in their gaining a controlling interest in the company. Realizing that a lawsuit would, at best, result in monetary damages the two men were unlikely to pay, he vowed to ruin them instead. He formed a rival company to the ATC and managed to put the ATC out of business within two years. Known for his competitive streak and ruthlessness in dealmaking, Vanderbilt sometimes paid New York state officials and judges to help him out. He was known to have many contacts inside the Tammany Hall political machine (power structures identified with political parties that were led by a boss and his associates) in New York City. Similarly stubborn in his personal affairs, he treated his wife and twelve children poorly.
Moved into railroads
Vanderbilt soon sold most of his fleet and left the shipping business altogether. In the early 1860s he ventured into railroads. His first purchase was the New York and Harlem Railroad, which again put him into competition with Daniel Drew. Known for his stock manipulation schemes, Drew attempted to block Vanderbilt's purchase by selling short, or selling stock shares that did not technically exist under law. Vanderbilt managed to win this battle by buying the stock anyway, using his political connections to have the stock declared valid, and thereby gaining a controlling interest in the railroad. Furthermore, the price of the shares rose from $90 to $285 in five months. Drew lost that confrontation badly and was determined to take revenge on Vanderbilt at the next opportunity.
In 1864 Vanderbilt bought the failing Hudson River Railroad, which ran from New York to Albany. His next purchase was the New York Central Railroad in 1867, which connected Albany and Buffalo, New York. He merged it with the Hudson River Railroad and then leased the Harlem Railroad to it. He called the new company the New York Central and Hudson River Railroad. In 1866 he tried to purchase the important Erie Railroad line. Drew was the treasurer of this company, and the business rivalry between the two men became known as the Erie War. Again Drew issued fraudulent stock, teaming with financial backers Jay Gould (1836–1892) and James Fisk (1834–1872). And once again Vanderbilt kept buying up as many shares as he could, but this time he nearly went bankrupt doing so. Drew, Gould, and Fisk fled to New Jersey but eventually surrendered to authorities. Vanderbilt used his political connections to have the fraudulent stock authorized as valid shares. Gould and Fisk later betrayed Drew in their own financial scheme, and Vanderbilt's major business rival, Drew, had lost his fortune by the time he died in 1879.
In 1873 Vanderbilt achieved a legendary feat in American railroad expansion by extending his New York Central and Hudson River Railroad all the way to Chicago. He did so by acquiring other regional lines, such as the Lake Shore and Michigan, the Canadian Southern, and the Michigan Central. Vanderbilt's trunk line, or major railroad route that operated across a large geographical area, was the second largest in its day and spurred major growth in the New York cities of Syracuse, Rochester, and Erie, as well as in Cleveland, Ohio, Toledo, Ohio, and South Bend, Indiana. Only the Pennsylvania Railroad trunk line, which connected New York, Philadelphia, Washington, D.C., Chicago, and St. Louis, Missouri, was larger.
Early corporate raider
Like Drew and other wealthy company owners in an era when American business was largely unregulated by the government, Vanderbilt also manipulated the stock in his own companies by issuing stocks at an inflated price—that is, a price not warranted by the company's real assets. But his were successful operations that usually returned large dividends (sums or bonuses) to their shareholders. He was known for sometimes buying properties at a price that was considered far too high but then making them quite profitable due to his cost-cutting measures. A century later such corporate strategy became known as the leveraged buyout. Even during the Panic of 1873, when the country's leading private bank failed, causing a financial crisis in which nearly a quarter of U.S. railroads went out of business, Vanderbilt managed to prosper.
Vanderbilt died in January 1877. After Sophia died in 1868 he had married Frances Crawford of Mobile, Alabama, who was more than forty years younger than he was. She encouraged him to donate some of his wealth to good causes, and he gave $50,000 to the Church of the Strangers in New York City and $1 million to Central University in Nashville, Tennessee, which was renamed Vanderbilt University in his honor. The rest of his estate, estimated at nearly $100 million, was left largely to his son, William Henry Vanderbilt (1821–1885), whom he had put in charge of one of his railroads. Vanderbilt believed that of his four sons, William was the only one with a talent for business, but he regularly mocked him with nicknames that included "beetlehead." Another son of Vanderbilt's died of malaria, and the other two were disinherited. There were eight Vanderbilt daughters, and each received about $500,000 from their father's estate. Two of them joined with a brother to contest their father's will, but they lost in court. One son, Cornelius Jeremiah, committed suicide in 1882.
When Cornelius Vanderbilt died in 1877, his last will and testament left $95 million, or the majority of his fortune, to his son William Henry. By the time William died in 1885, just eight years after his father, he had managed to double that amount to nearly $200 million. His was the generation of Vanderbilts that was finally granted entry into elite New York society, which had been dominated by older money, such as the fur-trading fortune of the Astor family, before then. Unlike his father, William H. Vanderbilt was a generous patron of the arts and one of the founders of the Metropolitan Opera in New York. William was perhaps best remembered, however, for uttering the famous line, "The public be damned." This was his answer to journalists who asked him if he was running his railroad for the public benefit or not. In the second half of his retort, which is rarely quoted, Vanderbilt reminded the reporters that he was more concerned about his stockholders and their investment in his company.
William H. Vanderbilt had nine children. His second son, William K. II (1849–1920), inherited a fortune of $60 million after his father's 1885 death. William K.'s daughter, Consuelo (1877–1964), a noted beauty, was forced into a loveless 1895 marriage by her ambitious mother. The groom was Charles Spencer-Churchill (1871–1934), the ninth Duke of Marlborough, which made Consuelo the first American woman to marry a titled noble from Europe.
Another of William H.'s sons, Cornelius II (1843–1899), left much of his fortune to his son, Reginald Claypoole Vanderbilt, a notoriously immoral man who died at the age of forty-five in 1925 from liver failure after years of heavy drinking. Reginald's second wife was Gloria Morgan (1904–1965), another woman of exceptional beauty. Their daughter, also named Gloria, inherited most of her father's fortune. She was just two years old when he died, and at the age of eight she became the focus of a bitter and highly publicized custody trial between her mother and paternal grandmother in the early 1930s. Her aunt, Reginald's sister Gertrude Vanderbilt Whitney (1875–1942), took custody of her for a time. Gertrude was a well-respected patron of the arts and the founder of what became New York's Whitney Museum of American Art.
Gloria Vanderbilt, who was a successful clothing designer during the 1970s and 1980s, married several times. With her fourth husband, writer Wyatt Cooper, she had two sons. One of them, Carter, committed suicide in 1988. The second son was Anderson Cooper, a Cable News Network (CNN) anchor during the early twenty-first century.
Vanderbilt's influence in nineteenth-century America was a profound one. He made his fortune by investing in new technologies when they were still mostly untested and others remained skeptical. His skill at turning any enterprise into a profitable one played a key role in the expansion of the transportation industry in the greater New York City area and beyond, and that expansion helped make Chicago the second-largest city in America shortly after Vanderbilt's death.
For More Information
Auchincloss, Louis. The Vanderbilt Era: Profiles of a Gilded Age. New York: Scribner, 1989.
Klein, Maury. "The First Tycoon." Forbes (October 22, 1990): p. 44.
"The House of Vanderbilt." Vanderbilt Mansion National Historic Site. http://www.nps.gov/vama/house_of.html (accessed on July 7, 2005).
BORN: May 27, 1794 • Staten Island, New York
DIED: January 4, 1877 • New York, New York
Entrepreneur; railroad magnate
Although Cornelius Vanderbilt died just as the Gilded Age began, he is included in that era's history because of his phenomenal wealth. (The Gilded Age was the period in history following the Civil War and Reconstruction [roughly the final twenty-three years of the nineteenth century], characterized by a ruthless pursuit of profit, an exterior of showiness and grandeur, and immeasurable political corruption.) Considered the first robber baron (a businessman who becomes wealthy by unethical means), Vanderbilt made a large part of his fortune in the railroad industry. Vanderbilt's lifestyle is the perfect example of Gilded Age grandeur and prosperity, the levels of which had never before been realized.
"I have been insane on the subject of moneymaking all my life."
Born of modest means
Cornelius Vanderbilt, born May 27, 1794, was the fourth of nine children born to Cornelius and Phebe Vanderbilt. His father was a farmer and ferryman, and Vanderbilt worked in the ferry business from an early age. By the age of eleven, he had quit school; his formal education would go no further. When Vanderbilt failed to convince his father to expand the family business, he secured a loan from his mother to start his own ferry company. By age sixteen, he was ferrying passengers and cargo between Staten Island and Manhattan, a direct rival of his father's business.
The War of 1812 proved profitable for the young entrepreneur (self-employed business owner). The federal government contracted with Vanderbilt to transport goods and supplies to forts around New York City. He did so using sailing schooners, and it was during this time that he earned the nickname "Commodore," a name that would stay with him throughout his lifetime.
Enters the steamship industry
As the number of steamboats on New York's waters increased, Vanderbilt realized his chances for success would also increase if he switched his focus to these more advanced sailing vessels. In 1818, at the age of twenty-four, he sold his ferries and schooners and went to work for a man named Thomas Gibbons (1757–1826), who owned a small steamboat. Vanderbilt learned to operate the technologically advanced vessel. Soon, he persuaded his boss to build a steamship of Vanderbilt's design. Gibbons also recognized Vanderbilt's business aptitude and let him run the business.
Breaks up monopoly
Vanderbilt used that ship, named Bellona, to ferry passengers between Manhattan and New Jersey. That route was already in use by steamboat inventor Robert Fulton (1765–1815) and his partner, Robert R. Livingston (1746–1813). Since 1807, the two men had been granted a monopoly (in which one company has complete control of the production and distribution of a service or product, leaving no room for competition) on that route for thirty years. Vanderbilt was in direct defiance of that monopoly, and he made the situation worse by undercutting Fulton's passage fee. Fulton charged $4; Vanderbilt charged each passenger just $1 to ride his boat. The reduced fare was less than it cost him to take the passenger, so Vanderbilt made zero profit. To make up for making no money on the fare, Vanderbilt charged more for food and drink served in the ship's bar.
Fulton and Livingston sued Vanderbilt, and the case went before the U.S. Supreme Court. Vanderbilt won the case in 1824. The monopoly was declared illegal on the grounds that it violated the commerce clause of the U.S. Constitution, which states that only the federal government can regulate interstate commerce.
With the monopoly dissolved, passengers enjoyed lower rates all around, and other steamboat operators began to run on the route between New Jersey and Manhattan. Vanderbilt was already accustomed to charging low rates, so their business did not suffer with the increase in competition. Vanderbilt invested in updating his boat with new technology, which allowed for faster travel, and soon he was making a huge profit.
Opens own steamboat business
By 1829, thirty-five-year-old Vanderbilt had saved $30,000, and he used that money to start his own steamboat business. His first service operated a route between Philadelphia, Pennsylvania, and New York City. Many steamboats already operated on this route. To increase his business, Vanderbilt cut rates, which threatened the other steamship companies. Their owners mistakenly assumed he still worked for Gibbons (who had sold his business, retired, and died during the previous several years). Together, the owners collected a handsome sum to bribe Vanderbilt into leaving their waters. He did so, happily, after just one year on the route.
From there, Vanderbilt took his business to the Hudson River market, where he competed directly with the Hudson River Steamboat Association. Again, he cut fares, this time from $3 to $1 and finally, to nothing. With two boats, he made up for losses by increasing the cost of food and drink on board. The Association paid him $100,000 in advance, and an annual fee of $5,000 for ten years to leave the Hudson River. Again, Vanderbilt complied. From there, he went to the Long Island Sound market and the coastal trade. It was only a matter of time before he dominated both markets. By the 1840s, Vanderbilt had increased his fleet to include one hundred ships run by more men than any other American business. He was worth several million dollars.
Throughout his reign as steamboat king, Vanderbilt established the business sense that would make him the richest man in America. He worked hard and was so competitive that he was willing to cut prices to increase business. And wherever he set up shop, prices in the industry dropped, a bonus for customers.
Like the War of 1812 before it, the California Gold Rush of 1849—which inspired hundreds of thousands of hopeful prospectors to leave their homes from around the country—afforded Vanderbilt an opportunity to make a staggering sum of money. He did just that, by offering a shortcut via Nicaragua to California. In doing so, he cut the journey by 600 miles (965 kilometers) and two days (from thirty-five to thirty-three) and was able to charge $400 instead of the $600-per-person fare charged by those boat operators going through Panama. Vanderbilt eventually cut the rate to $150 per person and still made a profit.
Heads to the Atlantic
In 1855, Vanderbilt took his business to the Atlantic Ocean region. As was his habit, he cut fares. At this time, he invested $600,000 to build the Vanderbilt, the largest ship ever to sail the Atlantic up to that time. It was 335 feet long and weighed 4,500 tons. Vanderbilt spared no expense and equipped his sailing vessel with the most advanced power plant, which made it the fastest boat on the water.
The Civil War (1861–65) gave Vanderbilt yet another opportunity to make money off of conflict, and he sold or leased most of his ships to the Union (North). By 1863, Vanderbilt was worth $40 million.
Turns to the rails
During the Civil War, Vanderbilt realized that the future of transportation lay not on the high seas but on land. Already in 1857, he had become director of the New York & Harlem Railroad (NY&H). His interest in the steamboat industry had kept him from actively participating in the running of the railroad. In 1862, he began investing in a rival of his railroad, the Hudson River Railroad (HRRR). By 1863, he owned a healthy portion of stock in the HRRR, but his primary interest was still with the NY&H. His interest switched focus that summer, however, when a group of stock traders began selling the HRRR short. (This is a method by which a profit can be made from stock that is declining in value.) Vanderbilt devised a scheme in which he convinced these unethical traders that the supporters of the railroad were low on cash. Supporters sold their stocks to these traders for cash and the option to buy back their stock at a slightly higher price within thirty days. But instead of holding onto the stock, the traders immediately sold it. Little did they know that the very men who sold them that stock bought it back, along with all the other shares on the market. By July, the stocks in the HRRR were cornered and the traders lost large sums of money.
Vanderbilt and his followers took control of the HRRR's board of directors in 1864, and the scheming millionaire became its president the following year. He added one more line to his fold in 1867, when he became president of the New York Central (NYC), one of the largest railroads in operation.
Vanderbilt merged the NYC and the HRRR and doubled the worth of the combined lines to around $90 million by 1869. Without remorse, he watered stock (issued stock in the railroads at a price greater than its actual value) and set the amount according to what he anticipated the railroads would make. He gave himself a $20-million bonus in stock and another $6 million in cash.
Fights the Erie
In 1868, Vanderbilt decided he needed to buy the New York & Erie Railroad (Erie) to put an end to competition for New York City freight. Around that same time, he came to the conclusion that to remain competitive with the other major lines (Pennsylvania and the B&O), he needed to extend his route into Chicago.
The Erie Railroad was owned by Daniel Drew (1797–1879), James Fisk (1834–1872), and Jay Gould (1836–1892; see entry), men who, like Vanderbilt, employed unethical tactics to make millions. Vanderbilt tried to undercut the Erie by lowering shipping rates, but his ploy backfired this time. When he lowered the cattle fare to $1 a head, Fisk took advantage of the low rate and bought cattle in Buffalo, New York, which he then shipped home using Vanderbilt's NYC line. Fisk made a hefty profit on the beef when he sold it. Vanderbilt lost money because he had to ship so many head of cattle at a discounted rate that he had little room to ship anything else.
The Erie War, as it came to be known, lasted from 1867 to 1868. Between 1864 and 1872, Gould saturated the market with watered stock. Vanderbilt took advantage of the falsely (but unbeknownst to him) inflated value and bought more and more shares of stock in his competitor's railroad. The more he bought, the more stock Gould issued. Vanderbilt was incredibly wealthy, but even his fortune was not enough to buy out the competition. He took a loss of $1.5 million and admitted defeat. Gould, Fisk, and Drew were left with a railroad company that was nearly bankrupt (unable to pay its debts).
To his good fortune, Vanderbilt had more luck securing railroads that traveled all the way to Chicago. He bought the Lake Shore & Michigan Southern as well as the Northern Indiana railroads. By 1873, Vanderbilt had control of a consolidated system running from New York City to Chicago.
Vanderbilt did not rely solely on acquisition to build his railroad fortune. In the final years of his life, he improved his railroads and expanded them. Despite being publicly scolded for it by fellow railroad tycoons and others who believed it was impractical and foolish, Vanderbilt quadrupled the track for the NYC line from Albany to Buffalo. Two tracks were for passenger trains, the other two for freight. This expansion greatly improved the productivity of the NYC and made Vanderbilt's profits skyrocket.
Dies richest man in America
Unlike some of the other robber barons of the Gilded Age such as Andrew Carnegie (1835–1913) and John D. Rockefeller (1839–1937), Vanderbilt was not generous with his money. He did not engage in philanthropy (donations of wealth) with any sort of regularity. However, when he was seventy-nine, the millionaire donated $1 million to build Vanderbilt University in Nashville, Tennessee. It was his one major philanthropic act. As of 2006, the university was a private research facility that employed more than two thousand full-time faculty. It was the largest private employer in the state.
A Prominent Family
In 1813, Cornelius Vanderbilt married his cousin, Sophia Johnson. The couple had thirteen children, one of whom died in infancy. It was the beginning of a family that would produce some famous Americans of the Gilded Age and beyond:
William Henry Vanderbilt (1821–1885): Son of Cornelius. Took over the railroad empire his father established; donated money to establish the New York Metropolitan Opera and the Young Men's Christian Association (YMCA).
Cornelius Vanderbilt II (1843–1899): Favorite grandson of Cornelius. Built one of the most famous Vanderbilt mansions, the seventy-room Newport, Rhode Island, summer home called the Breakers.
Gloria Vanderbilt (1924–): Daughter of Cornelius's youngest son. Began a career as an artist whose work was featured on Hallmark greeting cards; well known for her designer blue jeans.
Anderson Cooper (1967–): Son of Gloria Vanderbilt. As of 2006, was a television journalist employed by CNN Network.
Vanderbilt died at the age of eighty-three in New York. His estate was worth approximately $100 million, the bulk of which he left to his eldest son, William Henry. Although the son would live only eight more years after his father's death, his ruthless business tactics allowed him to double his worth, and he, like his father, died the richest man in the country.
Lives of splendor and extravagance
Vanderbilt lived his life in a modestly built New York home, where he and his wife Sophia raised twelve children. His children preferred to live lifestyles only the amazingly wealthy could afford. Throughout the twentieth century, the various members of the family would build ten remarkable mansions, many on New York's Fifth Avenue. One son, Frederick William Vanderbilt (1856–1938), had a fifty-room mansion built there in 1898. This mansion stands as a national historic site in the twenty-first century.
For More Information
Cashman, Sean Dennis. America in the Gilded Age. 3rd ed. New York: New York University Press, 1993.
Patterson, Jerry E. The Vanderbilts. New York: Harry N. Abrams, 1989.
Stasz, Clarice. The Vanderbilt Women: Dynasty of Wealth, Glamour and Tragedy. New York: St. Martin's Press, 1991.
Vanderbilt, Arthur T. II. Fortune's Children: The Fall of the House of Vanderbilt. New York: Morrow, 1989.
"Cornelius Vanderbilt." U-S-History.com.http://www.u-s-history.com/pages/h845.html (accessed on September 5, 2006).
"The History of Vanderbilt University." Vanderbilt University.http://www.vanderbilt.edu/history.html (accessed on September 5, 2006).
"The House of Vanderbilt." National Park Service: Vanderbilt Mansion National Historic Site.http://www.nps.gov/vama/house_of.html (accessed on September 5, 2006).
Poole, Keith T. "Cornelius Vanderbilt." Voteview.com.http://voteview.com/vanderb2.htm (accessed on September 5, 2006).
Beginning at the age of 16 with one sailing vessel worth $100, Cornelius Vanderbilt eventually assembled a coast-to-coast transportation empire that included not only ships but also trains. In his heyday, he was the richest man in the entire country. When he died at the age of 82, he was the largest employer in the United States and had amassed a personal fortune of over $100 million. (This was during an era when $100,000 was enough to finance a lifetime of comfort.) As a result of the efforts of this remarkable self-made man, the Vanderbilt name became synonymous with unimaginable wealth and power.
Cornelius Vanderbilt was born on May 27, 1794, at Port Richmond on Staten Island, New York. Although his father was from a long line of Dutch farmers, he also had a side business in commercial boating. Young Cornelius developed a great love for the water and quit school at the age of 11 to work for his father. Five years later, he persuaded his mother to pay him $100 for plowing and sowing a rocky, eight-acre field so that he could buy his own boat. This he accomplished by promising some friends that he would take them sailing if they helped him with the farm work.
Vanderbilt's sailboat was not just a pleasure craft, however. He soon opened a transport and freight service between Staten Island and New York City. Although he had a rough, coarse manner, he developed a reputation for honesty and for working hard at a reasonable price. By the end of his first year in operation, he was able to repay his mother in full and give her an additional $1000. In fact, Vanderbilt's business prospered so rapidly that by the age of 18 he was the owner of two vessels and captain of a third.
In 1813 Vanderbilt married Sophia Johnson, and the next year they moved to New York City. There he became a familiar sight on the docks with his lusty personality, salty vocabulary, and burning desire to compete and win. Early in his career, Vanderbilt developed his strategy of offering bargain rates that either drove his rivals out of business or forced them to pay him to withdraw. This allowed him to expand his business, which eventually included not only commercial vessels but also luxury passenger liners. By 1850 Vanderbilt, or "the Commodore" as he was known, was the first name in shipping and passenger service. He then applied what he had learned to the task of acquiring and building railroads.
Vanderbilt had four sons (one of whom died in the Civil War) and nine daughters. A year after the 1868 death of his first wife, Sophia, he married Frances Crawford, a young Southern belle from Mobile, Alabama. Before their marriage, Vanderbilt had shown no interest whatsoever in charitable projects or other causes. But with Frances acting as his advisor, he began to display a more philanthropic bent. In 1873, for instance, he contributed $1 million to Nashville's Central University, renamed Vanderbilt University in his honor.
Vanderbilt's lifestyle was one of hard work and aggressive competition right up until his death on January 4, 1877, at the age of 82. Cornelius once admitted, "I have been insane on the subject of moneymaking all my life." A Vanderbilt Mansion website includes a brief description of him that notes "he despised all routine office work, kept his figures in a vest-pocket book, ate sparingly; never speculated in stocks, never refused to see a caller, rose early, read Pilgrim's Progress every year, and, for diversion, played whist and drove his trotters whenever he could."
Vanderbilt amassed a fortune of more than $100 million during his lifetime. Upon his death, most of it was passed on to his eldest son, William Henry (1821-1885), with the exception of $11 million given to each of four grandsons and another $11 million that was split among his nine daughters. William Henry died a mere eight years after his father with a net worth that was twice the amount he had inherited. He left large shares to his two oldest sons, both of whom were managers of the New York Central Railroad.
Cornelius Vanderbilt's grandsons, most notably Frederick William (1856-1938) and William K. II (1849-1920), multiplied their inheritances into vast business and real estate holdings. They also spent money in ways that their grandfather would have considered frivolous. They owned mansions along New York City's Fifth Avenue and "cottages" in the country or at the seashore. They dressed in expensive suits with top hats and attended the opera, often escorting ladies who wore diamond tiaras. They also collected art, gave to worthy causes, and married women with European titles. And because of their millions, Vanderbilt's children and grandchildren were able to gain admission to high society, a privilege denied the Commodore because of his humble background and rough demeanor.
On both water and land, Cornelius Vanderbilt constructed great American systems of transportation. From his first sailing vessel to his expansive railroad holdings, he was always looking toward the future, a practice that put him one step ahead of the competition. The War of 1812 created his first significant opportunity. At that point, 18-year-old Vanderbilt had been in the freight business about two years and had done quite well ferrying goods between Staten Island and New York City. He then landed a contract with the federal government to supply the various forts around the region, thus expanding the scope of his operations to include the Hudson River and along the eastern seaboard from New England to Charleston, South Carolina. The profits from this venture allowed him to build a schooner that plied the waters of Long Island Sound and two more ships for handling the coastal trade. By 1817, the young entrepreneur's fortune amounted to $9,000, plus the value of his fleet.
In 1818, however, having noted the advent of steamboats along the Hudson River, Vanderbilt sold all of his sailing vessels and went to work for Thomas Gibbons, who operated a ferry between New York City and New Brunswick, New Jersey. Over the next 11 years, at an annual salary of $1,000, Vanderbilt captained the ferry and made the line profitable with a tough, often ruthless, approach to the business that earned him the nickname "the Commodore." He did so despite opposition from competitors Robert Fulton (the inventor of the steamboat) and Robert R. Livingston, who claimed a legal monopoly on Hudson River traffic. In addition, Vanderbilt's wife, Sophie, managed the New Brunswick halfway house (located between New York and Philadelphia), where all travelers on the Gibbons line had to stay.
By 1829 Vanderbilt had decided to go out on his own. Over the protests of his wife and Gibbons, who offered to double his salary and sell him half the line, Vanderbilt moved his family back to New York City. There he took around $30,000 that he had accumulated and entered the competitive service between New York City and the Hudson River town of Peekskill, where he had the first of several encounters with Daniel Drew. Vanderbilt won this battle by cutting fares to as low as 12 1/2 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 that offered the passenger not only comfort but often luxury.
By the time he was 40, Vanderbilt's wealth exceeded half a million dollars. But he was still looking for new worlds to conquer. He eventually found one after the end of the Mexican War in 1848, when hundreds of thousands of people began heading to California in search of gold. Most of them went by boat to Panama, crossed the isthmus by mule, then boarded steamers that traveled along the Pacific coast. At the time, this was the only way to avoid the long transcontinental trek by wagon.
Vanderbilt proceeded to challenge the Pacific Steamship Company by offering similar service via Nicaragua, which saved 600 miles (thus eliminating two days' travel time between New York and San Francisco) and cut the fare by half. This move netted him more than $1 million a year. After a bitter political fight in Nicaragua and a battle on Wall Street, Vanderbilt won control of the Accessory Transit Company, a formidable rival of the United States Mail Steamship Company that operated across Panama. Finally, in 1859 he agreed to dispense with the Nicaraguan line for $56,000 per month and the sale of his private yacht for $400,000.
During the 1850s, Vanderbilt dabbled in the Atlantic carrying trade and managed to attain a strong position. But then he decided that the wave of the future was heading in another direction—the railroad. In 1862, at the age of 70, he acquired the New York and Harlem Railroad. After thwarting an attempt by stock manipulators to assert control, Vanderbilt made his son, William H., the vice president, and together they acquired the rundown Hudson River Railroad. Vanderbilt then spent large sums of money improving the lines' efficiency before watering the stock and paying substantial dividends. During the first five years of the venture, he is said to have cleared $25 million, enabling him to buy a controlling interest in the New York Central Railroad in 1867.
Chronology: Cornelius Vanderbilt
1810: Sailed his own commercial vessel between Staten Island and New York City.
1812: Expanded his ship transportation business to the Hudson River and the Atlantic coast.
1818: Began operating a ferry service between New Brunswick, New Jersey, and New York City.
1829: Established a steamboat service on the Hudson River.
1850: Established a shipping route to the West Coast through Nicaragua.
1862: Began to purchase controlling interest in railroad companies.
1870: Established a railroad line from New York City to Chicago.
1873: Built Grand Central Terminal in New York City.
1873: Donated $1 million to Central University, which is renamed Vanderbilt University in his honor.
That same year, however, Vanderbilt ran into trouble when he attempted to gain control of the Erie Railroad, which was then in the hands of his old adversary Daniel Drew along with Jay Gould and James Fisk. As he had done in similar situations in the past, Vanderbilt bought all the stock offered for sale. But this time, Drew and his fellow investors released 100,000 shares of fraudulent stock on the market, which Vanderbilt continued to buy. He lost more than $1 million before he finally gave up on his plan. Instead, he extended his lines to Chicago by acquiring the Lake Shore and Michigan Southern railroads, the Canadian Southern, and the Michigan Central.
The last big project of Vanderbilt's life was also related to his railroad empire. During the financial panic of 1873, when he was nearly 80, he built Grand Central Terminal in New York City.
Social and Economic Impact
Cornelius Vanderbilt's contributions to society must be looked at primarily in terms of his transportation of passengers and freight throughout the United States. A shrewd and highly competitive businessman who was also a visionary of note, he managed to lower prices and improve quality, first on the nation's waterways and then on land. This he accomplished while outfoxing a series of formidable rivals. Although Americans no longer rely on his steamships, they still use the railroad lines and stations that he established well over 100 years ago.
At the time of its founder's death in 1877, the Vanderbilt empire employed more people than any other business in the United States. Thus, a substantial portion of the population owed its livelihood to the family whose very name came to stand for extraordinary wealth and power. Yet the Commodore himself was not particularly charitable, nor was he given to showy displays of any kind. In fact, during the later years of his life in particular, as the country suffered through growing pains that often resulted in economic chaos, he exerted a stabilizing influence on the nation's finances.
Sources of Information
Andrews, Wayne. The Vanderbilt Legend: The Story of the Vanderbilt Family, 1794-1940. New York: Harcourt, Brace, 1941.
Byers, Paula K. and Suzanne M. Bourgion, eds. Encyclopedia of World Biography, Volume 15. Detroit: Gale Research, 1998.
"Cornelius Vanderbilt." The Encyclopedia Americana, Volume 27. Danbury, CN: Grolier, 1997.
"Cornelius Vanderbilt." The National Cyclopedia of American Biography, Volume 6. New York: James T. White & Co., 1892. Reprint, Volumes 1-50. Ann Arbor, MI: University Microfilms, 1967-1971.
Croffut, William A. The Vanderbilts and the Story of Their Fortune. North Stratford, NH: Ayer, 1975.
Downs, Robert B., John T. Flanagan, and Harold W. Scott. "Cornelius Vanderbilt." Memorable Americans, 1750-1950. Littleton, CO: Libraries Unlimited, 1983.
Flynn, John Thomas. Men of Wealth: The Story of Twelve Significant Fortunes from the Renaissance to the Present Day. Freeport, NY: Books for Libraries Press, 1971.
Hoyt, Edwin Palmer. The Vanderbilts and Their Fortunes. Garden City, NY: Doubleday, 1962.
Hungerford, Edward. Men and Iron: The History of New York Central. New York: Ayer, 1938.
Mims, Edwin. History of Vanderbilt University. Nashville: Vanderbilt University, 1946.
National Park Service. "The Vanderbilt Mansion." Hyde Park, NY: National Park Service, 1998. Available from http://www.nps.gov/vama/vamahome.html.
WebScope. "The Vanderbilt Museum." Valley Stream, NY: Web-Scope, 1997. Available from http://www.stelcom.com/vanderbilt.
Vanderbilt, Cornelius (1794-1877)
Cornelius Vanderbilt (1794-1877)
Shipping magnate, railroad tycoon
Beginnings. Fittingly, the man who built America’s 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, Vanderbilt’s 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. Vanderbilt’s initial foray—the Staten Island ferrying service—launched 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 Vanderbilt’s stewardship was earning an annual profit of $40,000. Unable to buy the line and unwilling to join Gibbons’s 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. Vanderbilt’s 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 Vanderbilt’s 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 Central’s 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 Commodore’s grasp, when speculators Daniel Drew, Jay Gould, and Jim Fisk successfully thwarted Vanderbilt’s bid for control in 1867-1868.
Grand Central. Perhaps Vanderbilt’s 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 Hudson—a 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 Vanderbilt’s 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.
Wheaton J. Lane, Commodore Vanderbilt: An Epic of the Steam Age (New York: Knopf, 1942).
Cornelius "Commodore" Vanderbilt (1794–1877) 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 (1812–1814) 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 (1797–1879). 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
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 (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.
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). □
Vanderbilt, Cornelius (1794-1877)
Cornelius Vanderbilt (1794-1877)
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 Vanderbilt’s 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 1873–1877, “But don’t 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.
Robert Greenhalgh Albion, The Rise of the New York Port, 1815–1860 (New York: Scribners, 1939);
Wheaton J. Lane, Commodore Vanderbilt: An Epic of the Steam Age (New York: Knopf, 1942).