The First Tycoon: The Epic Life of Cornelius Vanderbilt

by T. J. Stiles

  “I knew it was the 290 at first sight,” Read added. “When I first saw her she was coming up behind us, a mile and a half in the rear, as near as I could guess. She is a splendid ship, and could sail around us with ease. The Capt. put on all steam, and hoped he could get off, but she [the Alabama] turned broadsides, and shot two heavy balls. I stood on deck, close to the aft, or back, mast. Saw the smoke rise, the balls leave the guns and come tumbling and whizzing towards me.” One round neatly severed the forward mast. At the urging of a marine officer on board, Jones surrendered.72

  “I was very anxious to destroy this ship,” Semmes wrote, “as she belonged to a Mr. Vanderbilt of New York, an old steamboat captain who had amassed a large fortune in trade, and was a bitter enemy of the South.” After Captain Jones went aboard the Alabama, Semmes told him that “Vanderbilt had given one of the finest steamers in the world to the Government with which to run him down, and he would destroy everything of his he fell in with,” according to the London Times. “Capt. Jones says the only ship that Semmes fears is the Vanderbilt,” the Chicago Tribune reported. “He [Semmes] made many inquiries regarding her speed and armament, but obtained no information whatever. He laughs at all the other ships we have.”

  Semmes planned to burn the Ariel after landing the passengers in Jamaica, but reports of a yellow fever epidemic there caused him to change his mind. Instead, he had Jones sign a bond obliging Vanderbilt to pay $261,000 to the Confederacy thirty days after the United States extended it formal recognition. Then he let the steamship go. Not only had Semmes captured a Panama steamer headed in the wrong direction, his preoccupation with the Ariel caused him to miss the Champion, which arrived safely in New York with a million dollars in gold.73

  The fate of the Ariel, on the other hand, remained unknown in New York. Vanderbilt and the specie shippers waited with growing anxiety for its return from Panama. A report that it had encountered the Alabama reached the city but not word of the ultimate outcome. As the New York Times reported, they were “prepared to mourn her.” Then, on December 28, it finally arrived unharmed, “and cut short the several obituaries that were in preparation for the occasion.”74

  “It strikes me that the rebel steamer Alabama is now looking for a homeward-bound California steamer,” Vanderbilt wrote to Welles the next day. “If the steamer Vanderbilt, or some other of sufficient speed, could be placed in the Caribbean Sea to convoy the steamers on leaving Aspinwall for two and one-half or three days up to the west end of Cuba, then returning to Aspinwall to be ready for the sailing of the next steamer, which is ten days apart, it would give ample security and would give her a better chance to fall in with the 290.” He said he would order his ships to sail by way of the western end of Cuba; he anticipated little trouble north of the island, given the presence of a U.S. blockading squadron in the Florida Keys. Welles agreed, and forwarded Vanderbilt's letter to the captain of the USS Connecticut with orders to carry out his instructions.75

  Semmes considered Vanderbilt not only a symbol of Union power and resolve, but a major force in his own right for the South's defeat. The rebel captain would not get a second chance at the Atlantic & Pacific liners, now that the Commodore had arranged for a naval convoy, but he did see a chance to strike at another enterprise organized by “the bitter enemy of the South.” From the newspapers he captured, he learned about Banks's expedition. The press did not know where it was headed, but Semmes sifted through the various guesses and came to a wise conclusion. He accordingly set his course for the Gulf of Mexico; with any luck, he would descend on the vulnerable transports and blow them out of the water, along with their thousands of Union troops and countless tons of arms.

  On the evening of January 11, 1863, Semmes closed in on a line of ships off the Gulf Coast. It turned out not to be Banks's expedition, but a blockade squadron. Semmes had guessed wrong, sailing to Galveston, Texas, rather than the mouth of the Mississippi. One of the Union ships, a side-wheeler named Hatteras, pulled out of formation and gave chase. Semmes ordered the Alabama about and ran, firing all the while with a large gun mounted on a pivot at the stern, throwing eighty-five-pound explosive shells. In a battle of just fifteen minutes, the Alabama sank the Hatteras.

  It was, in many respects, a lucky victory. Semmes's business was to avoid Northern warships, not fight them. And the hardest to avoid was the biggest and fastest, the one specially assigned to hunt him down. “He thinks the Vanderbilt much too heavy for him,” a South African newspaper reported on September 13, 1863. “In commenting upon the probable consequences of an encounter with the Vanderbilt, Captain Semmes spoke with much modesty about the power of his own ship.… His opinion is, that the Vanderbilt has much greater speed than the Alabama, and that it will be impossible for him to get away from her.” Referring to each ship's broadside, Semmes fretted that the Vanderbilt “threw twice my weight in metal.”

  For a few days near the Cape of Good Hope, the Vanderbilt came close to catching the famous Confederate commerce raider—even passing close by in a fog bank—but the prey slipped away. In June 1864, the USS Kearsarge finally destroyed the Alabama in battle off the French port of Cherbourg. By then, the rebel cruiser had captured or destroyed sixty-four merchant ships, nearly crippling the U.S. commercial fleet.76

  VANDERBILT'S INSTRUCTIONS for convoying the Panama steamers marked a virtual end to his direct involvement in the Civil War. Cynicism would color later assessments of his efforts, growing out of the deep suspicion of nineteenth-century Americans—particularly newspaper editors—toward wealthy and powerful men. Cynicism, of course, always seems to be the most sophisticated position to take; yet it is also the laziest (along with hero-worship, its direct opposite).

  An honest reading of the evidence shows a proud, prickly, and highly capable man of immense personal force—one who was also deeply patriotic. Welles's refusal to accept the Vanderbilt as a gift, or any of Vanderbilt's steamers at a fair purchase price, essentially forced the Commodore to take enormous sums of money from the federal government in charters fixed by brokers who had every interest in running up the rates. When given the chance, he served his country to the utmost while refusing any remuneration. The notion of a scandal surrounding the Banks expedition does not stand scrutiny. Just one ship out of the entire fleet slipped through inspection when it clearly should not have—and this at a time when Vanderbilt was chartering every steamer available in New York under a tight deadline. Southard exacted a commission (on the sailing ships only) through methods so indirect that Vanderbilt can hardly be blamed. Furthermore, Southard did his job, fitting out the vessels with the expertise expected of him. Vanderbilt's prompt and capable response to the Merrimack scare throws new light on this oft-told tale, for he played an important part in a strategic victory that usually is credited to the Monitor alone. And the gift of his eponymous steamship was an unprecedented act of patriotic charity, worth nearly $1 million.

  Vanderbilt needs no special pleading. A man of his unfathomable wealth, obsessed with maintaining the power to defend himself against his enemies, could (and did) withstand a great deal of cynicism. But perhaps his elemental humanity requires a few words of defense. Derided by the most sneering of his contemporaries, he remains unreasonably fixed in the historical imagination as lacking all sensitivity, as an iron-hearted man of money. A man of money he most definitely was, often harsh and profane. But he possessed a tenderness that had become more and more visible in the years after the cruise of the North Star in 1853. Here we read a comment of how he and Sophia enjoyed their trip together to Washington; there we read Vanderbilt's truly warm letters to the family of his daughter-in-law, Ellen Williams Vanderbilt. Such signs would continue to accumulate.

  This emotional inner life was certainly affected by the fate of that other member of his immediate family who was called to national service during the Civil War. Lieutenant George W. Vanderbilt commanded the inglorious recruiting station in Boston until April 1, 1862. On April 17, the regular army promoted him t
o the rank of captain, and named him aide-de-camp to General John C. Frémont, commander of the Mountain Department. But it seems unlikely that George ever saw duty beyond the Back Bay. He fell sick and went on a leave of absence even before his promotion. The illness—consumption, by one account—was clearly serious. At some point in 1862 or 1863, he traveled to Nice, France, to recover his health. Curiously, another George W. Vanderbilt from New York fought in the war, a doppelgänger to the Commodore's son, winning glory as a cavalry officer that the George of West Point and Washington Place would never earn.77

  It was a bitter twist for Vanderbilt, who dearly loved both his country and his youngest boy. He offered his son as a sacrifice to the nation in its hour of greatest need, and the nation took it. But the sacrifice was wasted, without purpose, without honor, leaving George only the pain and humiliation of a body that refused to function.

  If Vanderbilt suffered as his son departed for Europe with a doubtful future, he also maintained that single-minded strength of will that had carried him to such heights. As the Civil War continued to rage in 1863, he went into battle to protect his private interests with a cunning and ferocity that would astonish the world—and seal his place in history.

  *1 Merrimack was commonly spelled without the final “k.”

  *2 Writers often mistakenly describe the gold premium as the price of gold per ounce, which only would be true if the weight of a gold dollar was 1/100 of an ounce. (It was, in fact, more than five times that amount.) Setting the price of gold by the ounce emerged far later. The distinction is important, for it speaks to the true nature of the gold market in the 1860s as a currency exchange.

  Chapter Fourteen

  THE ORIGINS OF EMPIRE

  Few men in wartime New York were better known than Cornelius Vanderbilt—or so often misjudged. Thousands recognized him as he drove his fast horses through the streets each day, sitting erect on a light racing wagon with reins in hand, long white sideburns flowing down his cheeks, keen eyes squinting ahead. The fastidious Commodore always dressed in black and wore a white cravat typical of a passing generation, now affected largely by clergymen. One afternoon he left his office on Bowling Green and caught a stage headed north on Broadway. In front of him sat two young men dressed in the street finery favored by New York thugs. “I looked them over rather sharply, as I am accustomed to do,” Vanderbilt recounted to a friend. One of the pair turned and looked back; he did not recognize the dignified old man in the white cravat, but assumed that he was a minister of the gospel. “I suppose you think I'm going to hell?” the rough asked. “No,” Vanderbilt replied. He told the youth (as he later related) that “he seemed pretty badly off just then, but he appeared to have good stuff in him, and I guessed he'd come out all right.” The stranger turned to his friend and exclaimed, “Universalist, by God!”1

  Individuals far better informed than this one came to wrong conclusions about the clerical-looking Commodore (who spent very few of his many days in any kind of church, Universalist or otherwise). They still do. Even in retrospect, it is difficult to appreciate the true dimensions of his wealth and the power it gave him. The American economy grew rapidly but unevenly. New York towered over the rest of the developing nation as would be impossible in later centuries; wealth concentrated there, and financial markets matured there, far faster than anywhere else. It was the preeminent American port, the preeminent banking center, the home of the preeminent stock exchange. Securities held in New York could be liquidated or hypothecated rapidly. Vanderbilt was not only far richer than most rich men, he also occupied a strategic location in which he could use his fortune as a lever to move even greater masses of wealth and personally affect the economy nationwide.2

  Vanderbilt himself struggled to describe his role as his financial capacities grew. “I… am connected with shipping,” he vaguely told a Senate committee on December 30, 1862. Then he felt obliged to add, “I run steamship lines.” Then he qualified again, observing, “Some would call me a merchant.” In some ways, this old-fashioned and highly general term remains the best description. Shipper? Financier? Industrialist? Railroad director? He was all these things. He guided the Atlantic & Pacific Steamship Company, and managed its strategic relations with Pacific Mail. His engine works and shipyard produced pistons, boilers, and steamers. He purchased half a million dollars in Connecticut state bonds. He served on the boards of the Harlem, Erie, New Jersey Central, and Hartford & New Haven railroads.3

  The very diversity of his activities makes it difficult to understand his true significance, for it is often impossible to know where he placed the lever of his fortune. He made an art out of hiding his hand, having risen with the original generation of New York and New England's smart men, the wily pioneers of free-for-all commerce who knew how to speak and say nothing. He would make this connection himself in dodging an inquiry from a New York State Assembly committee. “Let me answer your question by asking another,” he would say, “as the Yankee does.”4

  In 1863, much of the mystery would disappear. That year he embarked on a new course, the last in his long business career. The results would cast a shadow over millions of people, if not the entire nation; indeed, Vanderbilt's historical importance would become apparent to all, rising above his furtive methods like a mountain peak above the clouds. In step with an increasingly specialized economy, he would concentrate his resources in a single industry, the most important of the nineteenth century: the railroads. So great would be his impact that a leading business journal could eulogize him, without fear of contradiction, as “the most striking figure in the American railroad world.”5

  Vanderbilt was striking enough already, with his vast wealth and control over major steamship lines, but his transformation from Commodore to railroad king would give him a significance that was cultural as much as economic. He would lead a revolution in American life, one that was terribly obvious to his contemporaries but perhaps less so to later generations. The lingering image of post-Civil War railroads is one of construction—think, for example, of the Chinese and Irish work crews who laid the transcontinental lines through mountains and wilderness—and it is an image with a solid basis in fact. After a wartime pause in new building, U.S. railroad mileage would more than double, from about thirty thousand in 1860 to seventy thousand by 1873, as the loose net of tracks that overlaid the American map became a fine mesh. But Vanderbilt would play little role in this process. Though he would build critical (and lasting) new infrastructure, he would lay few new lines and take no interest in the West, where construction through virgin land was most pronounced.

  Vanderbilt, rather, would pioneer the rise of the truly gigantic business corporation. This process would leave an imprint on American society every bit as deep as the expansion of the physical railroad network itself. His role in this revolution would prove more startling in his own day than the mere fact of his riches. As the Railroad Gazette would write of him in 1877,

  His early career as a railroad manager [i.e., starting in 1863] was distinguished by a series of bold, startling, revolutionary measures which attracted universal attention and had an effect reaching far beyond the lines and companies with which he dealt directly. The Vanderbilt era was the first great era of consolidations. That it was created by Vanderbilt would be too much to say; but he was the first great actor in it, and apparently hastened its coming.6

  Consolidations. The word seems quaint, an old-fashioned version of the eye-glazing phrase “mergers and acquisitions,” yet it was fraught with portentous meaning in the 1860s. Vanderbilt's consolidation of one railroad company into another into another into an empire would mark a profound change in the nature of the corporation itself. As late as the Civil War, a strong sense lingered that corporations were public bodies, chartered to channel private capital toward public ends—specific, limited ends. Early business corporations even operated under time constraints. The Richmond Turnpike Company had expired on schedule, and even the New York & Harlem Railroad had had to ren
ew its charter in 1859 before it lapsed. Most corporations had come into existence during the life-spans—indeed, the active careers—of their stockholders and managers, who did not necessarily imagine that their companies would outlast their own involvement in them. The Pacific Mail directors had tried to sell out to the Commodore in order to pay off the stockholders and shut down permanently.

  Starting in 1863, Vanderbilt would progressively destroy the last vestiges of this long-held conception. Drawing on his extensive experience with the corporate form, he would strip it of its remaining public character as he finished the long process of converting it into a vehicle for private gain alone. His consolidations would submerge older railroad companies into a behemoth to serve the requirements of efficiency and profitability; in so doing, he also would drown the original public purpose of these companies' charters, to serve specific localities over well-defined routes. Often these consolidations would prove highly beneficial for the public—though only incidentally because it was good business. And his takeovers would heighten the growing distinction between corporations and their flesh-and-blood shareholders and managers. He would separate companies from the individuals originally associated with them, transforming them into impersonal and permanent, or very long-lived, institutions.7