Vanderbilt used ruthlessness and intimidation to fight his way to the top of the railroad industry.
Also known by the sobriquetCommodore, was an American industrialist and philanthropist who built his wealth in shipping and railroads. He was also the patriarch of the Vanderbilt family and one of the richest Americans in history. He provided the initial gift to found Vanderbilt University, which is named in his honor.
Cornelius Vanderbilt’s great-great-grandfather, Jan Aertson or Aertszoon, was a Dutch farmer from the village of De Bilt in Utrecht, Netherlands, who emigrated to New Yorkas an indentured servant in 1650. The Dutch van der (“of the”) was eventually added to Aertson’s village name to create “van der Bilt” (“of De Bilt”), which was eventually condensed to Vanderbilt.
Born in Staten Island, New York, Vanderbilt began working on his father’s ferry in New York Harbor as a boy, quitting school at the age of 11. At the age of 16 Vanderbilt decided to start his own ferry service. According to one version of events, he borrowed $100 from his mother to purchase a periauger (a shallow draft, two masted sailing vessel). However, according to the version of the first published account of his life, published in the magazine Scientific American in 1853, the periauger belonged to his father and he received half the profit. He began his business by ferrying freight and passengers between Staten Island and Manhattan.
On December 19, 1813, Vanderbilt married his first cousin, Sophia Johnson (1795–1868), daughter of his aunt Elizabeth Hand Johnson. They moved into a boarding house on Broad Street in Manhattan. He and his wife eventually had 13 children, one of whom died in childhood. In addition to running his ferry, Vanderbilt bought his brother-in-law John De Forest’s schooner Charlotte, and traded in food and merchandise, in partnership with his father and others. But on November 24, 1817, a ferry entrepreneur named Thomas Gibbons asked Vanderbilt to captain his steamboat between New Jersey and New York. Though Vanderbilt kept his own businesses running, he became Gibbons’s business manager.
When Vanderbilt entered his new position, Gibbons was fighting against a monopoly on steamboats in New York waters, granted by the New York State Legislature to the politically influential patrician, Robert Livingston, and steamboat designer Robert Fulton. Though both Livingston and Fulton had died by the time Vanderbilt went to work for Gibbons, the monopoly continued in the hands of Livingston’s heirs, who had granted a license to Aaron Ogden to run a ferry between New York and New Jersey. Gibbons launched his steamboat venture because of a personal dispute with Ogden, whom he hoped to bankrupt. To accomplish this, he undercut prices, and also brought a landmark legal case – Gibbons v. Ogden – to the United States Supreme Court to overturn the monopoly.
Working for Gibbons, Vanderbilt learned to operate a large and complicated business. He moved to New Brunswick, New Jersey, a stop on Gibbons’s line between New York and Philadelphia, where his wife Sophia operated a very profitable inn, using the proceeds to feed, clothe, and educate the children. Vanderbilt also proved a quick study in legal matters, representing Gibbons in meetings with lawyers. He also went to Washington, D.C., to hire Daniel Webster to argue the case before the Supreme Court. Vanderbilt appealed his own case against the monopoly to the Supreme Court, which was next on the docket after Gibbons v. Ogden. The Court never heard Vanderbilt’s case, because on March 2, 1824, it ruled in Gibbons’s favor, saying that states had no power to interfere with interstate commerce. The case is still considered a landmark ruling, and is considered the basis for much of the prosperity the United States later enjoyed.
C. Vanderbilt, Hudson River steamer owned by Cornelius Vanderbilt (oil on canvas by James and John Bard).
After Thomas Gibbons died in 1826, Vanderbilt worked for Gibbons’ son William until 1829. Though he had always run his own businesses on the side, he now worked entirely for himself. Step by step, he started lines between New York and the surrounding region. First he took over Gibbons’ ferry to New Jersey, then switched to western Long Island Sound. In 1831, he took over his brother Jacob’s line to Peekskill, New York, on the lower Hudson River. That year he faced opposition by a steamboat operated by Daniel Drew, who forced Vanderbilt to buy him out. Impressed, Vanderbilt became a secret partner with Drew for the next thirty years, so that the two men would have an incentive to avoid competing with each other.
In 1834, Vanderbilt competed on the Hudson River against a steamboat monopoly between New York and Albany. Using the name “The People’s Line,” he used the populist language associated with Democratic president Andrew Jackson to get popular support for his business. At the end of the year, the monopoly paid him a large amount to stop competing, and he switched his operations to Long Island Sound.
During the 1830s, textile mills were built in large numbers in New England as the United States experienced an industrial revolution. Some of the first railroads in the United States were built from Boston to Long Island Sound, to connect with steamboats that ran to New York. By the end of the decade, Vanderbilt dominated the steamboat business on the Sound, and began to take over the management of the connecting railroads. In the 1840s, he launched a campaign to take over the most attractive of these lines, the New York, Providence and Boston Railroad, popularly known as the Stonington. By cutting fares on competing lines, Vanderbilt drove down the Stonington stock price, and took over the presidency of the company in 1847, the first of the many railroads he would head.
During these years, Vanderbilt also operated many other businesses. He bought large amounts of real estate in Manhattan and Staten Island, and took over the Staten Island Ferry in 1838. It was in the 1830s when he was first referred to as “commodore,” then the highest rank in the United States Navy. A common nickname for important steamboat entrepreneurs, it stuck to Vanderbilt alone by the end of the 1840’s.
Ocean going steamship lines
When the California gold rush began in 1849, Vanderbilt switched from regional steamboat lines to ocean-going steamships. Many of the migrants to California, and almost all of the gold returning to the East Coast, went by steamship to Panama, where mule trains and canoes provided transportation across the isthmus. (The Panama Railroad was soon built to provide a faster crossing.) Vanderbilt proposed a canal across Nicaragua, which was closer to the United States and was spanned most of the way across by Lake Nicaragua and the San Juan River. In the end, he could not attract enough investment to build the canal, but he did start a steamship line to Nicaragua, and founded the Accessory Transit Company to carry passengers across Nicaragua by steamboat on the lake and river, with a 12-mile carriage road between the Pacific port of San Juan del Sur and Virgin Bay on Lake Nicaragua.
In 1852, a dispute with Joseph L. White, a partner in the Accessory Transit Company, led to a battle in which Vanderbilt forced the company to buy his ships for an inflated price. In early 1853, he took his family on a grand tour of Europe in his steamship yacht, the North Star. While he was away, White conspired with Charles Morgan, Vanderbilt’s erstwhile ally, to betray him, and deny him money he was owed by the Accessory Transit Company. When Vanderbilt returned from Europe, he retaliated with a rival line to California, cutting prices until he forced Morgan and White to pay him off. He then turned to transatlantic steamship lines, running in opposition to the heavily subsidized Collins Line, headed by Edward K. Collins. Vanderbilt eventually drove the Collins Line into extinction. During the 1850s, he also bought control of a major shipyard and the Allaire Iron Works, a leading manufacturer of marine steam engines, in Manhattan.
In November 1855, Vanderbilt began to buy control of Accessory Transit once again. That same year, the military adventurer, William Walker, took control of Nicaragua. Edmund Randolph, a close friend of Walker, coerced the Accessory Transit’s San Francisco agent, Cornelius K. Garrison, into opposing Vanderbilt. Randolph convinced Walker to annul the charter of the Accessory Transit Company, and give the transit rights and company steamboats to him; Randolph then sold them to Garrison. Garrison brought Charles Morgan in New York into the plan. Vanderbilt took control of the company just before these developments were announced. When he tried to convince the U.S. and British governments to help restore the company to its rights and property, they refused. So he negotiated with Costa Rica, which (along with the other Central American republics) had declared war on Walker. Vanderbilt sent a man to Costa Rica who led a raid that captured the steamboats on the San Juan River, cutting Walker off from his reinforcements from the United States. Walker was forced to give up, and was conducted out of the country by a U.S. Navy officer. But the new Nicaraguan government refused to allow Vanderbilt to restart the transit business, so he started a line by way of Panama, eventually constructing a monopoly on the California steamship business.
American Civil War
When the Civil War began in 1861, Vanderbilt attempted to donate his largest steamship, the Vanderbilt, to the Union Navy. Secretary of the Navy Gideon Welles refused it, thinking its operation and maintenance too expensive for what he expected to be a short war. Vanderbilt had little choice but to lease it to the War Department, at prices set by ship brokers. When the Confederate ironclad Virginia (popularly known in the North as the Merrimack) wrought havoc with the Union blockading squadron at Hampton Roads, Virginia, Secretary of War Edwin Stanton and President Abraham Lincoln called on Vanderbilt for help. This time he succeeded in donating the Vanderbilt to the Union navy, equipping it with a ram and staffing it with handpicked officers. It helped bottle up theVirginia, after which Vanderbilt converted it into a cruiser to hunt for the Confederate commerce raider Alabama, captained byRaphael Semmes. Vanderbilt also outfitted a major expedition to New Orleans. But he suffered a personal loss when his youngest and favorite son and heir apparent, George Washington Vanderbilt, a graduate of the United States Military Academy, fell ill and died without ever seeing combat.
New York and Harlem Railroad
Though Vanderbilt had relinquished his presidency of the Stonington Railroad during the California gold rush, he took an interest in several railroads during the 1850s, serving on the boards of directors of the Erie Railway, the Central Railroad of New Jersey, the Hartford and New Haven, and the New York and Harlem (popularly known as the Harlem). In 1863, Vanderbilt took control of the Harlem in a famous stockmarket corner, and was elected its president. He later explained that he wanted to show that he could take this railroad, which was generally considered worthless, and make it valuable. It had a key advantage: it was the only steam railroad to enter the center of Manhattan, running down 4th Avenue (later Park Avenue) to a station on 26th Street, where it connected with a horse-drawn streetcar line. From Manhattan it ran up to Chatham Four Corners, New York, where it had a connection to the railroads running east and west.
Vanderbilt brought his son William Henry Vanderbilt in as vice-president of the Harlem. William had had a nervous breakdown early in life, and his father had sent him to a farm on Staten Island. But he proved himself a good businessman, and eventually became the head of the Staten Island Railway. Though the Commodore had once scorned him, he was impressed by William’s success, and eventually made him operational manager of all his railroad lines. In 1864, the Commodore sold his last ships, concentrating on railroads.
New York Central and Hudson River Railroad
Looking out the north end of the Murray Hill Tunnel towards the station in 1880; note the labels for the New York, Harlem and New York, and New Haven Railroads; the New York Central and Hudson River was off to the left. The two larger portals on the right allowed some horse-drawn trains to continue further downtown.
Statue at the modern Grand Central Terminal
Once in charge of the Harlem, Vanderbilt encountered conflicts with connecting lines. In each case, the strife ended in a battle that Vanderbilt won. He bought control of the Hudson River Railroad in 1864, the New York Central Railroad in 1867, and the Lake Shore and Michigan Southern Railway in 1869. He later bought the Canada Southern as well. In 1870, he consolidated two of his key lines into the New York Central and Hudson River Railroad, one of the first giant corporations in American history.
Gran Central Terminal
In 1869, he directed the Harlem to begin construction of the Grand Central Depot on 42nd Street in Manhattan. It was finished in 1871, and served as his lines’ terminus in New York. He sank the tracks on 4th Avenue in a cut that later became a tunnel, and 4th Avenue became Park Avenue. The depot was replaced by Grand Central Terminal in 1913.