The First Tycoon: The Epic Life of Cornelius Vanderbilt

by T. J. Stiles

  The Norfolk Herald was the first newspaper to give him the honorific title of “Commodore.” At the time, it was the highest rank in the United States Navy, and had been given before to notable steamboat men. The nickname made little impact at the time; though reprinted in New York's Journal of Commerce, it came and went, a passing tribute to Vanderbilt's aggressiveness. Yet it was also a sign of a change in his disposition.53

  The captain had always played a double role—that of creator and destroyer, provider and plunderer. He had built his wealth through piratical raids, scourging monopolies with a mastery of tactics and “an economy not known to your opponents,” as John W. Richmond put it, until they paid him blackmail. He also had established his own lines, which he fiercely defended. But the balance within him subtly began to shift, as he formulated the words he would later say to Dr. Linsly: “I think I have been spared to accomplish a great work that will last and remain.” His buccaneering days were far from over, but he rather liked the title of commodore. It spoke of a commander, not a despoiler. By the end of the next decade, it would be a title associated with no one else.

  * Faro is a card game in which players bet against the dealer, or “banker,” who draws two cards per turn.

  Chapter Five

  SOLE CONTROL

  On March 8, 1878, the murmuring and rustling of a crowded courtroom in lower Manhattan suddenly fell still. Eighty-year-old Daniel Drew rose from his seat and cautiously ascended to the witness chair. He had been in court more than once that winter, his fragile bones and papery skin “wrapped up in sealskins and mufflers,” the press reported, lips tight and pinched as if they had been sewn shut. He sat slowly, settled his hands on the armrests, and “looked shrewdly at the lawyers with his small gray eyes.” He had been called to testify in what newspaper headlines called “THE GREAT WILL CONTEST.”

  When prompted, he tersely admitted “that he knew Commodore Vanderbilt very well,” according to the New York Sun. He knew his sons, too, who now sat across the aisle from one another: William Henry Vanderbilt, plump and content, wearing a slight smile between the huge sideburns that clung to his cheeks like frightened monkeys, having “apparently inherited good health as well as nearly all the wealth of his father,” a reporter commented; and Cornelius Jeremiah Vanderbilt, “looking pale, thin, and meek,” disinherited, epileptic, and unhappy. “Occasionally Cornelius cast a furtive glance at William, but William never noticed Cornelius.”

  Drew could have told stories of his secret cooperation with Vanderbilt over the decades, a partnership that had first blossomed at the end of the 1830s. But he did nothing of the sort. Yes, he told the court, he had had many conversations with Vanderbilt; unfortunately, he could not remember the substance of a single one of them. As the New York Times put it, “His testimony was of no importance.” Vanderbilt would have been proud. If there was one trait that had led him to trust Drew, a man notorious for self-interest, it was his silence. And in the aftermath of the Panic of 1837, there had been much to be silent about.1

  THE STONINGTON COULD CHANGE everything. On November 10, 1837, the first train had passed down its full fifty miles of track from Providence, where it connected to the Boston & Providence by ferry, to Stonington, Connecticut, a village seaport on Long Island Sound. Officially called the New York, Providence & Boston Railroad, and better known as the Stonington, it cut inside dreaded Point Judith, where steamboats ran into rough seas, which eliminated three hours and much seasickness from the trip between New York and Boston.

  Soon after that first locomotive opened the route, Cornelius Vanderbilt investigated the line for himself. His nearly fatal accident four years earlier had not made him hostile to trains, as some later claimed; he keenly understood that control of traffic on Long Island Sound lay in the strategic balance between steamboats and railroads—and between rival railroads, as this and other lines neared completion. So he took a steamer to Stonington, boarded a train, and rode up the line to Providence. “There's nothing like it,” he told the line's chief engineer three years later. “The first time I ever traveled over the Stonington, I made up my mind.” It was the fastest route to Boston, potentially the key to the entire battle for the Sound.

  And yet, the Stonington was a crippled giant. Its exorbitant construction costs “were a scandal,” according to one railroad historian. “Its fifty miles, through a far from forbidding territory, had taken $1,300,000 in stock and $1,300,000 in bonds.” Everyone who looked into its affairs could see that the interest on that staggering debt would weigh heavily for years to come.2 Strategically situated, financially vulnerable, the Stonington gave Vanderbilt much to think about as he returned to New York.

  Back at his office, now at 169 South Street, he found Daniel Allen and Lambert Wardell waiting for him with bills and correspondence. His brother Jacob needed to speak to him concerning his plan to burn coal in the Lexington in an attempt to save fuel costs and deck space; the engineer had no experience with coal and had to be fired.3 But perhaps most pressing of all was the problem of Billy.

  Vanderbilt's oldest son, William, had now passed sixteen, the age when both Cornelius and Jacob had started out in life. Vanderbilt thought it was time for Billy (as he always called him) to make his own way. But the contrast between himself and his son distressed him. Vanderbilt radiated strength, and he grew more imperious every year. Wardell could not recollect a single instance of him admitting that he was wrong. “If he was interrupted when he was relating something,” noted Dr. Linsly “he would stop and never say another word—never resume the subject.” Allen later recalled, “He was always censorious towards people who differed with him.”

  Billy could not have been more different, Allen explained. “We were acquainted in our boyhood days, and the intimacy increased after I married his sister,” he said. “He never in all that time made, to my knowledge, a single objection to anything his father suggested, either in business or in other matters. His father's will with him was absolute.” Billy's lack of spine aggravated Vanderbilt, who expected more of his blood. He often pressed his “delicate” son, calling him a blatherskite and a blockhead. When he did, Allen saw Billy's face collapse into “a peculiar sort of expression—an expression peculiar to him—a falling down of his jaw, a sorrowful look and a whining sort of noise.”4

  After a brief education at the Columbia College grammar school, Billy had taken a job with a ship chandler, but the hard labor did not suit him. So Vanderbilt turned to Daniel Drew. This pious, deceitful, inn-keeping, cattle-dealing moneylender had adopted the People's Line name and competed against the Hudson River monopoly until he secured his own payoff in 1836. But Drew soon revived the line and assumed control of the monopoly himself. And that was why Vanderbilt and Drew grew so close, after so much enmity. They made an unwritten agreement to invest in the other's steamboats, precisely because neither had met a more dangerous opponent; giving a share to the other would make it in the interests of each to avoid competition.5

  Vanderbilt wanted Billy to have a post in Drew's brokerage house. Together with Nelson Robinson and Eli Kelley (and later Kelley's son Robert), Drew worked at the center of Wall Street, trading stocks and bonds and serving as a “banknote shaver.” The firm facilitated longdistance financial transactions by buying notes and bills of exchange of far-removed banks and merchants at a discount, securing payment from the issuer or reselling them at a profit. It was an extremely risky business, especially in the aftermath of the panic. “The banks will not discount under present circumstances freely to good and safe men. They are afraid of each other,” declared the New York Courier and Enquirer. “Nearly every transaction is for cash.” Drew, Robinson, & Co. were willing, but they demanded a stiff premium for their services.

  This kind of financial tightrope act would make a man out of Billy and teach him the value of money, his father seemed to think. Drew accepted the teenager as his clerk, but wanted something for himself: the use of the speedy new C. Vanderbilt for his People's Line on the Hu
dson, to run at the start of the season, in March 1838. Vanderbilt gladly let his secret partner use it, for he now took a share in the ownership of the People's Line as Drew established himself as the river's new monopolist. These former rivals were becoming close allies and friends. But Billy's fate was another matter entirely6

  “I DID SUPPOSE THAT ALL NAVIGABLE WATERS were public highways, and open to all,” Vanderbilt declared; “therefore I do not complain at any gentlemen running their boat against those that I may see proper to run.” The signed statement appeared in the Boston Daily Advertiser and Patriot in July 1838. By now there was nothing surprising about his Jacksonian rhetoric. In this case, he was replying to advertisements “signed by the Directors of the Steam boat Huntress… [which] seem to aim at me and my boat, the Augusta,” he explained. “And why? because of my having chosen to put a boat on the route between Boston and Kennebec River [in Maine]. Of this newspaper controversy between the Directors of incorporated Steamboat Companies, and individual owners of other boats… I leave the public to judge.” Once again, he championed the lone individual against amalgamated wealth with special corporate charters.

  But the rhetoric was wearing thin for those who glimpsed a self-serving opportunism beneath it. “We have had a great fuss here about Vanderbilt's boats,” wrote a college student from Maine. “Vanderbilt's undisguised end is to drive the Huntress off the line and control it entirely himself.” Wherever Vanderbilt had a chance to dominate a route, in fact, he tried to destroy his rivals.7

  In April, for example, he had sat down with the president of the Stonington Railroad, Courtlandt Palmer, to offer his advice on how to defeat an opposition steamboat. Vanderbilt had put aside his competition on the Providence route to supply the railroad with the Lexington as a connecting boat, alongside one provided by his old foe, the Transportation Company. Now the Kingston, owned by a party in Boston, was undercutting the fare, and he wanted to fight them face-to-face. “Capt. Vanderbilt is in favor of breaking up the regular line and leaving at the same hour with the opposition,” Palmer wrote to William D. Lewis, senior officer of the Girard Bank in Philadelphia, a major holder of the company's stocks and bonds. “Capt. Vanderbilt, who has more experience than all of us united, says he is sure his plan is the right one for the interest of all concerned.”8

  Vanderbilt agreed with Palmer. In his July newspaper appeal, he saluted himself for his “20 years experience in steamboats;—it has been my whole study, and I have built and owned some twenty and can say, without any intention of boasting, that not one life has ever been lost in any of the number.” (Only a steamboat owner in 1838 would make a point of pride out of never having killed anyone in the ordinary course of business.) It was getting difficult to think of this forty-four-year-old as an outsider.

  Vanderbilt ruthlessly pursued his interests at the expense of his would-be partners. He even used his old enemy as a foil. When the Transportation Company canceled its contract with the Stonington at the end of April, he followed suit. Instead, he offered to lease the Lexington for $4,000 a month (plus the income from meals and the bar), the same deal offered by the Transportation Company for its steamer, the Narragansett. “His terms… are ruinous,” Palmer wrote to Lewis. “Vanderbilt is anxious to sell the Lexington, and offers her for 70,000 dolls.,” he added. “It is very desireable if we separate from the Transportation Co. to get Vanderbilt with us. If we do not take him, they will, & if we fight, we shall have to oppose both. But to pay 70,000 dolls. for the Lexington is buying him off at a price which is out of all reason.”

  It was “exorbitant,” as Palmer put it, to demand $70,000 for a steamer that had cost $75,000 to build—before it had endured three years of battering and erosion on the rough, salty seas around Point Judith—especially now that steamers 25 percent larger had become the standard on the Sound. But Vanderbilt read his target well. Courtlandt Palmer was weak. This thirty-seven-year-old native of Stonington cringed and fawned before Lewis, the elite Philadelphia banker. He often made marvelously brave noises and then collapsed under pressure. When presented with the lease terms offered by Vanderbilt and the Transportation Company, he roared, “We had better however shut up the road than to accede to either proposal.” Eleven days later, on May 3, he squeaked, “I think it for our interest to close with them [Vanderbilt and the Transportation Company] on the [lease] terms proposed. By doing so we avoid a collision.”9 No man afraid of a collision could withstand Vanderbilt.

  The Stonington sank ever lower. During the summer, Vanderbilt's old agent, John W. Richmond, ran an opposition boat at reduced prices. “She is a sure scourge to us, causing us to lose heavily,” Palmer noted. In October, Palmer negotiated a disastrous new contract with the Transportation Company, giving it 70 percent of the through fare between New York and Boston. Meanwhile the line issued more bonds, going deeper into debt.

  In the middle of November, with the leasing agreement terminated, Vanderbilt approached Robert Schuyler, the president of the Transportation Company. If the company did not buy the Lexington, he declared, he would run it to Providence at a fare of $1. Even adding the cost of a ticket on the Boston & Providence Railroad, this would allow travelers to go from New York to Boston for far less than the $5 (or more) that the Stonington demanded. “Our losses will probably be $30,000 in consequence,” Palmer fretted, “while the Trans. Co. would lose twice that or more.” He and Schuyler immediately opened negotiations. All the while turmoil reigned within the Stonington, as stockholders angrily protested the extraordinary debt that would soon place the corporation in the bondholders' hands (as they held a mortgage on the railroad's physical stock of rails, locomotives, cars, and depots).

  At the beginning of January, the Transportation Company agreed to pay $60,000 for the Lexington, and the Stonington added a $10,000 bonus, thus matching the original demand. No one had any illusions about the reason for the purchase. They were “buying off Vanderbilt,” wrote banker Joseph Cowperthwait, a Stonington trustee. As Palmer put it, they were paying for the Lexington “to get rid of her as an opposition boat.” He estimated her worth at $30,000, making a bribe, or “bonus,” of some $40,000. “We found it unprofitable [to fight Vanderbilt],” explained Captain William Comstock, the Transportation Company's general agent, “and concluded that it was better to be at peace than at war, on any terms.”10

  Such was Vanderbilt's reputation that he not only forced his enemies to buy his too-small boat, but extracted $10,000 from a railroad even as it went bankrupt—and all without a single trip at a reduced fare. But a reputation is a slippery thing. “Before paying it, I sent for Mr. Vanderbilt and received from him a most positive pledge that he would never again in any way interfere with the Line,” Palmer wrote. “I asked it in writing but this he declined to give, remarking that I knew his verbal promise could be fully relied on.” The hard-bitten Captain Comstock, on the other hand, had “no confidence in him,” as he told Schuyler. He was sure that, before long, Vanderbilt would be back11

  ON THE WARM SUNDAY AFTERNOON of September 2, 1838, a very angry man with the very peculiar name of Oroondates Mauran stepped aboard the Samson, a steam ferryboat as large and powerful as its namesake. The fare collector greeted him respectfully, perhaps with the salutation “Commodore.” The Samson belonged to the Richmond Turnpike Company, and Mauran was its president and largest stockholder, as he had been for the previous seven years. “We always understood him to be the general agent as well as the President,” the collector explained. “That is what we call ‘Commodore.’ His word was will there.”12

  Shrewd and tough, Mauran was a merchant with a long history at sea. Twenty years earlier, when Vanderbilt first had met Vice President Daniel D. Tompkins, the founder of the Richmond Turnpike Company, Mauran had owned a three-masted ship, the Maria Caroline, and he still invested heavily in the Havana trade. But most of his money was in the Richmond Turnpike corporation, which ran a ferry between Staten Island and Manhattan's Whitehall Slip—as it had when John De Forest took com
mand of the Nautilus, the first steam ferry between the two islands, in 1817. Now he was having trouble with another of Vanderbilt's relatives: his cousin Oliver Vanderbilt.

  Mauran stood on the deck of the Samson as it floated at its Staten Island dock, and gave some last-minute instructions to its master, Captain Braisted. He wanted the boat to get an early start that day. Usually Oliver took the lead with his own ferryboat, the Wave, and delighted in taunting the Samson. “She generally started first and she would often stop opposite our dock and ring her bell to coax us off,” explained Braisted's son. “We would sometimes wait 15 minutes to let the Wave get off.”

  The harassment enraged Mauran—but then everything about Oliver Vanderbilt enraged him. Oliver had once been a Richmond Turnpike ferry captain and shareholder; on October 19, 1835, he had sold his stock with the explicit understanding that he would not compete against the corporation. “He meant to live on a farm,” Cornelius remembered him saying, “and have nothing more to do with a life on the water on account of his health.” Instead, Oliver had launched the Wave and began carrying passengers for sixpence, half the company's shilling fare. The rivalry had rapidly escalated to much more than the typical racing, as the boats crowded and nudged each other. “It was a common occurrence for the boats to come together 3 or 4 times a day,” one man observed.

  The collisions had grown more dangerous. In late August, just three or four days before this particular Sunday afternoon, Captain Braisted had come down to the deck to tell Mauran that the Wave was “crowding him out of his course.… She was a much smarter boat than the Samson.” Mauran had glared back at him. “If she ever does that again,” he had barked, “damn her, run into her, sink her.”