by T. J. Stiles
As Walker's downfall played out in the siege of Rivas, a serious question arose: Who owned the transit rights—the transit steamboats and property, and even the geographical route? Costa Rica and Nicaragua both claimed the San Juan River, but after the war Costa Rica remained in possession of it, along with the steamers Spencer had seized. Vanderbilt's final struggle to reopen the transit would center on this simple but weighty question of ownership.
He even had to fight for the Accessory Transit property within the United States. As a major creditor of the bankrupt company, he forced the sale of its steamships to himself and his family, including son-in-law Daniel Torrance and son Billy, who remained a farmer on Staten Island. Vanderbilt was accused of stripping the corporation of its assets, but he argued that he was pursuing the stockholders' interests; if other creditors forced the sale of the ships at auction, they would be unavailable to restart the line. At the annual meeting on May 5, 1857, he assured the stockholders “of his design to re-establish the company and save the property,” the New York Herald reported. “He expressed a confident belief that everything would work out in the most satisfactory way, and advised that no one should part with a share of stock.”17
In his fight for the transit route and property in Nicaragua, Vanderbilt faced two opponents, one old, one new. The new adversary was an Englishman named W. R. C. Webster. Webster had met the talkative Spencer in Costa Rica, and drew out of him the details of his mission with the skill of a practiced confidence artist. Webster then passed himself off as Vanderbilt's agent. Vanderbilt repudiated his every act, but Webster fooled President Mora, convincing him of the riches the transit could bring.
On May 6, Vanderbilt sent Spencer back to Central America with written orders. “You will proceed to Nicaragua, and to Costa Rica, if necessary, in the name and behalf of the Accessory Transit Company,” he wrote, “and… take possession of the steamboats and all other property.” When Spencer met Mora in San José on June 5, the president refused to cooperate. “He thought it was better that said steamers and other properties should remain in the possession of the Costa Rican Government until they could consummate some arrangement with the… company in relation to the Transit,” Spencer reported.18 Once again, Vanderbilt had been betrayed. Faced with the staggering expense of the war, Mora had been swayed by Webster's talk of Yankee gold into holding the steamboats and transit route hostage.
Vanderbilt's other adversary would prove even more troublesome. He was Joseph White, the one consistent villain in the Nicaragua tale. Every time Vanderbilt drove him out, he found a way back to preen and pronounce with consummate arrogance. As the New York Times sarcastically wrote, “Great is the Transit Company, and White is its prophet!”19 Now that he was truly locked out of Accessory Transit, he revived the dormant American Atlantic & Pacific Canal Company, drawing in the well-respected Henry G. Stebbins (a past and future president of the New York stock exchange) to serve as financier and president. Then he negotiated for a transit grant with Antonio Yrisarri,* newly designated as Nicaragua's minister to the United States. On June 19, they agreed to a contract; Yrisarri, it was rumored, received a large gift of stock in return. The document went off to Nicaragua for ratification.20
On one side, Vanderbilt was pressed by President Buchanan to reopen the Nicaragua route; on the other, he was obstructed by the conniving of confidence men and Central American authorities. Still the Commodore believed he would win out. What he did not count on was the most unpredictable factor of all: William Walker. For all the strategic interests of the United States and isthmian republics, for all the calculations of Vanderbilt and his enemies, Walker's megalomania would rule the day.
THE WAR VANDERBILT WAGED in Nicaragua made him feared on Wall Street, but did not garner him esteem. The merchants of New York were a provincial group in their own way; despite their sway over the national economy, they knew and respected best those businesses located in Manhattan, amid their homes and offices. In early 1857, the Commodore attended to two vast operations rooted in New York, operations that reflected his rising status and would raise it still higher.
First was his transatlantic line. He had laid up his European steamships for the winter, when weather was especially rough and passengers few. But his competitors began to disappear as well. Collins withdrew his company's steamships for April, claiming that the reduced subsidy of $19,000 per month to carry the mail to Liverpool was insufficient. And the Ocean Steam Navigation Company, the mail line to Bremen, trembled on the brink of failure under the Commodore's pressure.21
He prepared to start the year's operations with his enormous, luxurious Vanderbilt. On April 27, he threw the ship open to the public, and it “was thronged throughout the day by ladies and gentlemen,” according to the New York Times. On May 5, the great five-deck sidewheeler departed on its maiden voyage, carrying $445,000 in gold and 212 passengers, including Sophia Vanderbilt on her way to Paris. The Vanderbilt reached England in the fastest first crossing of any ship to date. “While the new steam frigate Niagara is eighteen days crawling from New-York to Liverpool, the new passenger steamer Vanderbilt skims over in nine,” said the Albany Evening Journal. “The Niagara is the ‘crack sailer of the Navy!’”22
“The verdict from all competent judges is, that the Vanderbilt is bound to win the prize of Atlantic ocean popularity,” the Hartford Courant reported. The London Times wrote, “Great interest was excited in commercial circles on account of the size and power of this vessel, and the rapid passage she recently made from New York.… She is in many respects the finest steamship we have ever seen.”23 It regularly beat its fastest rivals, Collins's Atlantic and the Cunard steamship Persia. After its reputation for speed and luxury had been established, Vanderbilt slashed fares—and made a point of departing on the same day as the Collins Line. When the Le Havre and Bremen postal contract expired on June 1, Vanderbilt agreed to carry the continental mail for the postage alone. The Ocean Steam Navigation Company soon went bankrupt. As for the Collins Line, “The result is a very serious curtailment,” the New York Times concluded, “and unless their ships also reduce the price of passage it must inevitably be broken down.”24
When the Vanderbilt made its maiden voyage, the Commodore did not accompany his wife to Europe. He remained behind to look after his other operation of 1857, involving a venerable project of New York's mercantile elite: the New York & Harlem Railroad, organized in 1831 as the city's first railway. As workmen had extended the tracks up Fourth Avenue, across the Harlem River, into Putnam County and beyond, its directors had positioned the line inland from the Hudson River to avoid competition with steamboats. Unfortunately, the major towns between New York and Albany all lined the river, so the Harlem (as the railroad was called) had had difficulty attracting enough business to pay for its expansion. Finally, in 1852, it had connected to the Western Railroad, which provided access to through traffic from Albany and western New York. It also profited from a connection to the New York & New Haven, made in 1848, which allowed trains to run between Boston and New York at last. But heavy construction debts burdened the line.25
Fraud pulled together the troubled Harlem and the Commodore—the great fraud of Robert Schuyler in 1854. Schuyler's deep involvement in the railroad (his brother George served as its president until Robert's scandal bankrupted them both) enmeshed Vanderbilt in a pair of bitter disputes with it. First, there was a battle over the dividends owed on the one thousand shares of stock assigned to him by Schuyler. In October 1854, he had sued the railroad to force it to pay; on January 20, 1857, a jury found in his favor.26 Second, there was an ongoing fight over a block of $1 million worth of the Harlem's first-mortgage bonds. Vanderbilt had pledged to buy them from the Schuylers in 1854, paying $100,000 as an installment; after the Schuylers went bankrupt the railroad had declined to refund the down payment, leading to an intractable dispute.27
Make no mistake: the money mattered to Vanderbilt. But the railroad's refusal to honor the acts of its agent struck
at the heart of his commercial code. Over this matter, he did not sue; rather, he secured enough stockholders' votes and proxies to win election to the board of directors on May 19, 1857, along with son-in-law Horace Clark and Daniel Drew. Now he had a presence within the company—at a moment when it was highly vulnerable. In early 1857, the money market spasmed, and the company's floating debt (short-term loans, unstructured into bonds, that cost a high rate of interest) threatened to bring the corporation down.28
The railroad's precarious position made the other directors reluctant to meet Vanderbilt's demand—and also desperate for his help. Vanderbilt, too, was in a delicate position: he wanted his money back, but to get it he had to help restore the line to profitability. So the Commodore embarked on a subtle strategy of simultaneously frightening and sustaining the company. On June 15, he stood before the board and explained “the nature and circumstances of his claim,” as recorded in the minutes, “after which he and Mr. Clark withdrew.” On June 24, he tendered his resignation, terrifying his fellow directors. Yet he also arranged for Clark and Drew to make a large short-term loan to the line. Clark was not wealthy enough to have done so himself; he operated as a false front, disguising Vanderbilt's support for the company29
The hidden carrot and very visible stick worked. The board refused to accept his resignation; instead, it appointed a committee to settle with him—and secure his aid in rescuing the road. A decade later, Vanderbilt recalled how president Allan Campbell told him that the line would go bankrupt; with its assets sold off, his claim might be paid at last. “No,” he replied, “I will help you out and lend you what money you want, and am willing to do anything else than that. There will be a time, before a great many years, when this road's whole property will be worth par and it will be a stigma upon the man who will take this course [of bankrupting the company], and I won't take it.”30
How intricately his financial calculations interwove with his sense of honor: he foresaw a great future for the benighted railroad, a time when its stock would rise on the exchange to its par value; he was willing to let the situation mature until he could profit from its strengths. Yet he also wanted the credit—and resulting social prestige—for rescuing an enterprise so closely identified with the ambitions of New York's elite.
Daniel Drew said he would join Vanderbilt in endorsing the railroad's notes to see it through the crisis. “We will do it for two and a half percent [commission],” Drew said. “Mr. Drew,” the Commodore loftily replied, “I won't do it for two and a half percent! I will do it with you for one-half percent.” Drew agreed. As Vanderbilt recalled, the railroad “made the bargain, and they drew up, and drew up, and kept drawing and coming with things to sign—notes, if you please, and acceptances—until we got some [seven] hundred thousand dollars.”31
Thus the Commodore forced the Harlem to admit that he was right, even as he saved it from destruction. Within ten weeks, the railroad paid back his $100,000 with interest.32 The line would face further crises in the months to come, but Vanderbilt would be there to meet them. Once in Harlem, he would never leave.
FIVE POINTS WOULD HAVE its say about William Walker. Despite the deception of his recruiters in New York, despite the scores who died of disease and blundering tactics in his army in Nicaragua, he remained the greatest purveyor of freelance violence of all, and a hero in Five Points. So when Walker arrived at Pier No. 1 on the North River on June 16, a mass of laborers and rowdies cheered him. They followed his carriage to City Hall Park, where he addressed a crowd of thousands.33
Walker's arrival troubled Vanderbilt, who feared that he was preparing a fresh invasion of Nicaragua. Shortly afterward the Commodore went to Washington to ask Buchanan if he would prevent it. Publicly the president made no comment; he wished to avoid antagonizing the South, which strongly supported the filibuster, especially after Walker had reinstituted slavery in Nicaragua (an act that did not survive his rule). In private, Buchanan seethed. “That man has done more injury to the commercial & political interests of the United States,” he wrote, “than any man living.” He said as much to Vanderbilt. If Walker moved he would be “crushed out.”34
Less reassuring was Buchanan's refusal to commit to the cause of the Accessory Transit Company. Though the president was eager to reopen the Nicaragua route, he didn't particularly care who did it, which meant that Vanderbilt had to race to defeat White's maturing schemes. The Commodore corresponded with General José María Cañas, who commanded Costa Rica's troops on the San Juan River, in an attempt to regain Accessory Transit's steamboats. (Cañas hinted that he could carve out a new republic for the company along the transit route, but Vanderbilt thought that was going a bit too far.) He asked Goicouria to write to Nicaragua's new government to persuade them that White could not be trusted. He took Horace Clark on a visit to the White House in an attempt to convince Buchanan to refuse recognition of Yrisarri—White's coconspirator—as Nicaragua's minister. Finally he sent Daniel Allen to Nicaragua as his personal representative. Above all else, Vanderbilt had to secure the property and transit rights before Walker launched a second expedition.35
He failed. On November 25, Walker landed with 270 men on Punta Arenas.36 All calculations regarding the transit route immediately became obsolete.
IN THE MID-1850S, George Templeton Strong contemplated the metropolis of New York—from Alexander T. Stewart's gleaming marble department store at Broadway and Chambers to the squalor of Five Points to the domed Crystal Palace up on Forty-second Street—and marveled about it all in his diary. “There is poetry enough latent in the South Street merchant and the Wall Street financier,” he wrote;
in Stewart's snobby clerk chattering over ribbons and laces; in the omnibus driver that conveys them all from the day's work to the night's relaxation and repose; in the brutified denizen of the Points and the Hook; in the sumptuous star courtesan of Mercer Street thinking sadly of her village home; in the Fifth Avenue ballroom; in the Grace Church contrast of eternal vanity and new bonnets.37
This was the New York that Vanderbilt had helped to create: commercial, mobile, and individualistic—yet increasingly polarized into rich and poor. The age of unspecialized merchants and skilled artisans began to fade as mills, factories, banks, and railroads rose in their place. Most Americans still worked on their own farms, in their own shops, or for small partnerships or personal businesses, but New York (and New England) presaged a future of industrialization and incorporation, of stockholders, managers, and wage workers. Unquestionably the new economy worked wonders, creating a highly productive, exceedingly wealthy society; but in 1857 the great self-directed orchestra of New York threatened to break apart into cacophony and chaos.
In the middle of June, New York's policemen divided into two camps: the Metropolitan Police, organized by the Republican-controlled state legislature, and the Municipal Police, under the control of Mayor Wood. Skirmishes broke out over station houses; then an all-out battle erupted on the steps of the city hall as the largely Anglo-American Metropolitans tried to fight their way through a phalanx of largely Irish Municipals in order to arrest the mayor. On July 4 and again on the 8th, the conflict drew in the city's leading gangs, the Irish Dead Rabbits and the nativist Bowery Boys, the first fighting for the Municipals, the latter for the Metropolitans. Finally the state militia marched into the city to suppress what appeared to be an insurrection.38
Scarcely had this mayhem died away than the nation fell into the greatest financial crisis in twenty years—the Panic of 1857. In retrospect, the warnings of a collapse look all too clear. There was railroad overexpansion: of the twenty thousand miles of line built in the 1850s (tripling the total length of track), 2,500 were constructed in 1857 alone. There was the end of the Crimean War: Russian wheat now flooded the international market, hurting American exports. There was France's need for money: French banks borrowed from those in England, which raised English interest rates, which led British investors to sell off their American securities and invest at home, whic
h undercut stock prices in the United States. And there was the heady effect of nearly nine years of California gold, which had fed speculation and inflated credit. Since the start of the gold rush, the number of banks in America had doubled, to more than 1,500. The monetary expansion reached a peak in early August. “And then there came on a sharp money market,” Vanderbilt recalled, “and everything broke down.”39
On August 24, the New York branch of the Ohio Life Insurance and Trust Company announced that it could no longer pay its bills. “The high credit enjoyed by that concern, and the fact that its solvency had hardly been questioned, made the failure a matter of… importance,” the New York Herald reported. It “opened the first great seal of the revulsion.” Constantly borrowing and lending in New York's intricate web of banks and investment houses, it ripped the financial lattice apart when it failed.40
On September 2, Vanderbilt welcomed his wife back from Europe. It would be the only happy event for many weeks to come, as banks and merchants collapsed. On the 18th, word spread through the city that the U.S. Mail steamship Central America (formerly the George Law) had sunk in a storm on its return from Panama. It was a terrible blow for Vanderbilt's troubled friend and ally Marshall Roberts, who was president of the corporation; already the North River Bank, of which Roberts owned half the stock, had failed and gone into liquidation. Even worse, the Central America carried down $1.6 million in gold from California, desperately needed in New York's constricted money market. In the afternoon, Vanderbilt went in person to the U.S. Mail office and asked for the details of the disaster. “He expressed his deep sympathy for the passengers on the ill-fated steamer,” the New York Times reported, “and commiserated with the Company [i.e., Roberts] for the heavy pecuniary loss entailed upon them by her loss.”41
