The First Tycoon

by T. J. Stiles

  If he had been disposed to dwell, he might have stewed gloomily on all that had happened in the previous two years: the death of his father, his defeat by Drew, his humiliation at the racetrack. By temperament and necessity however, he was given not to reflection, but to movement. The Legislator had exploded in his face, and he had gone ahead; his brother had barely survived a steamboat explosion, and he had gone ahead; he himself had narrowly overcome a deadly fever, and he had gone ahead. He saw no point in mulling over dangers when a world of competition demanded that he seize the next opportunity. Like one of his paddlewheelers caught in the currents of Hell Gate, he had to drive forward or be wrecked.

  Fortunately for Vanderbilt, whose entire business was transportation, transportation was precisely where the next opportunity appeared. The first rattling, chuffing, clanking trains of steam-drawn railway cars captured the public imagination—and no better example could be found than the Camden & Amboy the special project of the Stevens family. It set off what one magazine called a “fever,” for both the faster travel and the rich profits it promised to bring. “If any doubt existed as to the excitement about railroads,” it argued in 1831, “it could have been removed by a view of the crowds thronging for stock to the… Camden.” With the line now complete, the national press breathlessly reported that it carried passengers thirty-five miles in one hour and forty-six minutes, cutting the passage from New York to Philadelphia to just seven hours and forty-five minutes.57

  On November 8, 1833, Vanderbilt sailed over to South Amboy to examine it for himself. The locomotive resembled an oversize barrel with a smokestack in front; the engineer and fireman stood on a rear platform with no shelter from the elements. Three passenger carriages trailed behind, linked by heavy chains. Each car looked as if three stagecoaches had been fused together, with three compartments, each of which had a side door, topped by one continuous flat roof for baggage. The whole rested on a leaf spring, set high above the large cast-iron wheels with wooden spokes—two pairs of wheels connected by iron axles. Vanderbilt stepped up into the middle car (the last being reserved for baggage). The engine began to chug, building to twenty-five miles per hour.

  For Vanderbilt, as for almost all of the twenty-four passengers in his car, this was an entirely new sensation. The startling speed and relatively smooth ride (compared to stagecoaches) must have thrilled them—the woman from Washington, D.C., who cradled her baby, the minister from Pennsylvania, the gentleman from North Carolina. Just the day before the railroad had broken its own record, cutting the time between New York and Philadelphia to six hours and thirty-five minutes. The countryside slipped past them in a blur as they moved at a rate never known on land before.

  Without warning, an axle broke in the lead car. With only two axles per car, the result was catastrophic. The lead car jumped off the tracks; sitting in the one behind it, Vanderbilt saw its roof and walls suddenly spin. His car pitched down the embankment, then tumbled and bounced heavily on its side as the locomotive dragged it farther before the engineer could stop the train.

  Vanderbilt found himself at the bottom of the embankment. His clothes had been shredded, and his knees oozed blood where the skin had been torn off. He took a breath, and stopped at the knifing pain where his ribs had pierced his lungs, then suffered even greater agony when he convulsively coughed, blood filling his mouth. His body felt crushed, his back broken. Turning his eyes to the bodies splayed around him, he saw a man's thigh bone jutting through his pants; the woman from Washington, her arm broken, her baby motionless; a man with arms and legs mangled; and the North Carolina fellow, his rib cage driven over his face. The uninjured staggered past—including former president John Quincy Adams, who had been in the lead car.

  As Vanderbilt lay at the bottom of the ditch, unable to move, one thought overwhelmed all others: He was going to die.58

  Chapter Four

  NEMESIS

  On November 9, 1833, a messenger arrived at the home of Dr. Jared Linsly, a young physician who lived and worked in the four-story forest of buildings that was New York City There had been an accident; the cars of the Camden & Amboy Railroad had overturned. One of the doctor's patients had been severely injured—a Captain Van-derbilt.1

  Linsly pulled on his coat, gripped his bag, and rushed to the steamboat pier. The doctor had treated Vanderbilt's intermittent fever the year before, but he did not exactly look forward to seeing this difficult patient again. Linsly thought him “constitutionally irritable” and “dyspeptic.” He found Vanderbilt to be an overbearing man under the best of circumstances—as Linsly later put it, “He never would take direction from anyone.” And then there was the flatulence. “A great trouble,” he would muse, and “apparently constitutional, as others of his family had it.”

  After crossing the bay, Linsly found his way to the crash site and was directed to a small cottage nearby. There he discovered two other doctors already in attendance. Edging his way to the bed, he saw the familiar leathery face of the thirty-nine-year-old Vanderbilt. His body had been shattered. Linsly noted the injuries as he examined his patient: “External bruises and the ribs badly fractured in the front and back on the right side. The knees were torn and bruised.” Then the captain began coughing, an act that clamped him in pain; when somone wiped his mouth, the cloth ran red. “The ribs penetrated the lungs, as I knew by the escape of air under the skin and from his coughing up blood,” Linsly explained later. “He suffered very much at that time trying to clear his lungs from the clotted blood.”

  Then Vanderbilt spoke, calmly, evenly. “Rational,” the doctor noted. Rational indeed, from the very moment Vanderbilt had opened his eyes at the bottom of the embankment the day before, with boiling water and steam still spilling out of the overturned locomotive, the cars upended and broken, the people who had sat next to him almost all dead and mangled. Vanderbilt explained to Linsly that he had not wanted to die anonymously, so he had called out to a bystander and told him his name. That simple act of self-assertion had seemed to clear his brain. He noticed the cottage they were now in, and had choked through his mouthful of blood to order the fellow to carry him here. Then he had sent for help.

  The thirty-year-old Linsly was just four years out of the College of Physicians and Surgeons, but it occurred to him that he had never seen anyone with such self-possession while in the gnawing jaws of pain. Lying in the mud with shattered bones and a punctured lung, Vanderbilt had organized his own rescue, taking command of those around him as surely as if he were ordering about the crew on the Cinderella.

  Close encounters with death have a reputation for transforming lives, for starting dramatic new departures. Vanderbilt's near extinction concentrated his existing qualities—his decisiveness, his will to dominate, his ability to rapidly assess a chaotic situation. Indeed, it could be argued that this gruesome accident had nothing to do with the transformation that he would undergo in the next decade, from obscure captain to fearsome commodore, whose name alone would terrify hardened businessmen. But as he lay there impatiently in that cottage over the next four weeks, slowly healing under Linsly's care, the incident took on iconic significance for him. For one thing, Vanderbilt became an ardent admirer of the young doctor. You saved my life, he would often tell him. “If I had died in Jersey in 1833,” he would add, decades later, “the world would not have known that I had lived. But I think I have been spared to accomplish a great work that will last and remain.”2

  AS THE CAPTAIN SLEPT IN HIS BED, the general waged war on the monster. Not just any monster—the Monster, as President Andrew Jackson called it. Without a doubt, General Jackson (as everyone called him) saw himself as St. George in arms against the dragon, an infernal, demonic entity that must be destroyed. The Monster, he told Martin Van Buren, “is trying to kill me, but I will kill it.” This political battle would define not only American politics for the next generation, but also Vanderbilt's new and increasingly public role as a businessman. Coming at the moment of his brush with death, it would
prove to be, in many ways, his resurrection.

  The Monster, formally known as the Second Bank of the United States (and more commonly as the Bank), originated as the brainchild of Alexander Hamilton. He had desired a counterpart to the famed Bank of En gland: a federally chartered but privately owned institution to hold the government's funds, extend loans to private merchants, facilitate longdistance transfers of money, regulate the flow of credit from state-chartered banks, and provide a stable national paper currency. Jeffersonians had thought a federal bank unconstitutional, and had destroyed the original Bank of the United States in 1811, only to revive it under the fiscal strain of the War of 1812. Jackson despised it. On July 10, 1832, he had vetoed a bill to recharter the Bank, and had run for reelection that year on the promise to permanently eradicate it.3

  So began the Bank War, the result not merely of Jackson's obsessions, but the cultural crisis of the times. It broke out because two great waves now crashed into one another: the individualistic, anti-aristocratic, competitive impulse fostered by the Revolution, and the instinct to organize, amalgamate, develop, and bring order to the chaos of the marketplace. The first impulse was both radical and traditional, combining a suspicion of the wealthy elite with an outlook shaped by this world of small farms, stores, and workshops, where factories were few and self-employment was the standard. The second was both commercially advanced and highly conservative, as wealthy men both organized banks and corporations and tried to tamp down competition. Neither impulse was hostile to the market economy itself; indeed, out of this conflict would emerge a new American economic outlook, a culture that embraced equality of opportunity and fierce competition, as well as sophisticated business institutions.4

  But not yet. The Bank War revealed the vast distance still between these two views of the world. When Jackson vetoed the recharter of the Bank, he complained that it “enjoys an exclusive privilege of banking under the authority of the General Government, a monopoly of its favor and support.” But it was a very useful monopoly, protested Senator Daniel Webster. “In the absence of a Bank of the United States, the State banks become effectually the regulators of the public currency. Their numbers… give them, in that state of things, a power which nothing is competent to control.” Where Jackson saw danger in a government-granted monopoly, Webster saw the danger of an unregulated marketplace, the anarchy of unchecked competition.5

  To the president, Webster missed the entire point. As he wrote to Nicholas Biddle, the Bank's gifted chief, “I do not dislike your Bank more than all banks.” Jacksonians condemned banks, and corporations in general, with a particularly damning word: they were “artificial.” After all, what did banks do? In the best cases, they accumulated reserves of gold and silver coin, paid in by their shareholders, and made loans by issuing paper money, printed by the bank itself. The notes could be redeemed at the bank for gold and silver, but it was more convenient for people to continue to pay each other with the paper, keeping it in circulation. Even a conservatively run bank would issue notes worth at least three times its holdings in precious metals.

  To Jacksonians, this was a fraud: banks were loaning what they did not have. Paper money was a dangerous shell game that only worked as long as everyone agreed not to look for the pea. “Real money,” wrote William Gouge in an influential book of 1833, “is a commodity.” Gold and silver had intrinsic value; no special trust had to be placed in anyone before precious-metal coin was accepted in payment. By contrast, paper money had replaced “the old standard of value” with “the new standard of bank credit,” one that was subject to bank failures, to counterfeiting, to deliberate manipulation by greedy corporate officials. By 1833, Americans had already suffered panics in which note holders rushed to a bank all at once, forcing it to suspend specie payments, thus rendering its paper money virtually worthless.6

  Even worse, banks could only perpetrate this supposed fraud because of their government-granted monopolistic powers. Most states outlawed private banking; to issue paper money, a bank had to obtain a charter from a state legislature—“by certain arts of collusion, bribery, and political management,” declared William Leggett, radical editor of the New York Evening Post. “It is a matter of utmost notoriety that bank charters are in frequent instances obtained by practises of the most outrageous corruption.” And that struck at the heart of the Jacksonian ideal: the equality of opportunity for every individual, and the hatred of any government-favored class (or aristocracy, in the rhetoric of the day), especially men with corporate charters.7

  “Equality of talents, of education, or of wealth can not be produced by human institutions,” Jackson observed in his veto message. “But when the laws undertake to add to these natural and just advantages artificial distinctions… the humble members of society… have a right to complain of the injustice of their Government.” He and his followers accepted natural inequality—even celebrated the rise to wealth through hard work and intelligence—but hated anything that smacked of the artificial.

  In the Jacksonian mind, the fear of monopoly and aristocracy was intertwined with a deep anxiety over the mysterious abstraction of commercial institutions. Features that were gradually emerging as standard for all corporations—their legal character as artificial persons, immortality and limited immunity which protected shareholders from liability for a corporation's acts—they saw as strange and alarming special privileges granted through political favoritism. “All corporations are liable to the objection that whatever powers or privileges are given to them, are so much taken from the government or the people,” wrote Leggett. And so government had given rise to a race of man-made monsters, with the Bank merely chief among them. “If a man is unjust, or an extortioner, society is, sooner or later, relieved from the burden, by his death,” glowered Gouge. “But corporations never die.” The implications were frightful. Since they “live forever,” fretted Massachusetts governor Marcus Morton, their property was “holden in perpetual succession”—unlike individuals, whose estates were divided upon death. Eventually corporations would own everything.8

  This idea rested on the notion that the amount of property was constant (rather than growing in a growing economy), and that only physical things—land, goods, animals—could be property, never shares in corporations. Stock and paper money had no value of their own, Jacksonians believed; they were a conjuration that transferred wealth from real producers to stockjobbers who made nothing (except potentially money). Such a fundamentalist mind-set deeply frustrated the president's opponents, especially the Yankee businessmen who were learning to use the sophisticated devices of commerce. Daniel Webster argued that banknotes were money, that the definition of “currency” should include “all that adjusts exchanges and settles balances in the operations of trade and business,” from precious metals to bills of exchange. The corporation was a “truly republican institution,” declared John Quincy Adams, “of which every class of the community may share in the benefit, proportionate to their means and their resources.” Jacksonians saw corporations as the grasping of rich men for special privileges; but one bank president argued that America's “absence of large capitalists [had] been remedied by corporate associations, which aggregate the resources of many persons.”

  This was the birth of a kind of abstract thinking never before required in everyday life. It sparked a fierce resistance. On a daily basis, most Americans rarely interacted with corporations; they still lived in a society of farms, small businesses, and independent proprietors. Jacksonians viewed corporations in much the same way that the evangelists of the Second Great Awakening saw the Masons or popery: as a corrupt conspiracy, a mysterious encrustation on the beautiful simplicity of the true religion. As artificial beings, Gouge intoned, “corporations have neither bodies to be kicked, nor souls to be damned.”9

  Jackson's veto of the Bank recharter marked only the beginning of the Bank War. The Bank still had six years left under its original authorization; its president, Biddle, still hoped to survive. He
elected to systematically corrupt Congress by handing out loans and legal fees, and even bribed newspaper editors for friendly articles. Furious, Jackson launched a plan to withdraw the federal government's deposits and place them in friendly state banks, nicknamed the Pet Banks. Biddle retaliated, calling in loans, returning state banknotes for specie, and curtailing new credit. “All the other Banks and all the merchants may break,” he growled, “but the Bank of the United States shall not break.”

  “The subject of the removal of the bank deposits increases daily in interest,” wrote a New York merchant on January 11, 1834. “Nobody talks or thinks of anything else.” Nobody, of course, but Vanderbilt, lying broken in that Jersey cottage, spitting up blood within earshot of the trains of the Camden & Amboy. They were weeks of torment for the country and himself. As merchants and brokers along Wall Street pushed back their top hats and worried aloud, he had himself carried up to the railroad tracks, then placed in a special horse-drawn car he had ordered. Each rattle along the rails must have been agony, but it was better than one of the famously uncomfortable carriages that bounced down the turnpike. At South Amboy his crewmen lifted him out and placed him in one of his steamboats for the return to New York.

  There the city's businessmen fretted over their own casualties. One of those worriers was Philip Hone, a former mayor of New York, a wealthy merchant, and a member of the old Anglo-Dutch elite. His life would repeatedly intersect Vanderbilt's, despite their sharply contrasting social backgrounds. Most nights he sat at his desk and wrote in his diary in a tidy cursive script, recording the events of the day in eloquent, highly opinionated prose that makes him an ideal witness to Vanderbilt's world. “Wall Street was thrown into consternation this morning by the failure of John G. Warren & Son,” Hone wrote on January 31. Like most of the city's conservative merchants, he blamed the president, not Biddle. “If Gen. Jackson had visited Wall Street this morning, he might have been regaled with a sight similar to that of the field of battle at New Orleans. His killed and wounded were to be seen in every direction, and men enquiring with anxious solicitude, ‘Who is to fall next?’”10