The First Tycoon

by T. J. Stiles

  The Erie War proved to be a catalyst for rising anxieties over the place of the railroad corporation in a democratic society. In economic culture, railroads ran headlong against the deep Jacksonian belief that free competition was an essential component of democracy itself—that monopoly threatened free government. Their dual nature as both public works and private businesses presented a paradox: What was more important, to protect shareholders in their property rights, or to prevent a monopoly? Good management and returns on investment, or competition? When the Erie War brought this conundrum to a head, even business journals found themselves torn. The Round Table said, “It is very hard to understand why, if Mr. Vanderbilt does own a majority of the stock of the Erie Railway, he should not be allowed to manage it.” On the other side, the Merchant's Magazine wrote, “While allowing that Erie would be sure of a more efficient head under his supervision than under its present and late control, yet it would be a matter of regret” if Vanderbilt added it to his empire. The New York Times awkwardly dodged the monopoly question when defending him: “It may be right that the amalgamation… of the Erie with the Central and other Vanderbilt lines should be prohibited… [but] nothing can justify or even extenuate the conduct of the [Erie] directors in creating ten millions of stock for speculative purposes, or in otherwise abusing their power.”90

  The Times editorial introduces the second current of anxiety surrounding railroads: the corruption of government. The tales of bribery that flowed out of Albany reinforced stereotypes of public officials on the take, acting as if they were retainers of wealthy corporations, not representatives of the people. After Jay Gould took over as president of the Erie, he allied the railroad explicitly with the Tweed ring, naming “Boss” Tweed himself to the board, along with his close associate Peter Sweeney.

  The culmination of the Erie War, culturally speaking, would come in July 1869, with the publication in the North American Review of one of the most influential essays in American history: “A Chapter of Erie,” by Charles F. Adams Jr.91 (It would be reprinted in a collection, Chapters of Erie, that included articles by Adams's brother Henry.) Ironic, incisive, and impressively researched, it combined a detailed account of the Erie War with an exploration of its broader meaning. “Freebooters have only transferred their operations to the land,” he wrote. “It is no longer the practice of Governments and Ministries to buy legislators; but individuals and corporations of late not unfrequently have found them commodities for sale in the market. So with judicial venality.”

  Adams cogently expressed the anxiety that resulted from the combination of the corporation—that abstract entity feared since Jackson's day—with the size and wealth of the railroads. “Already our great corporations are fast emancipating themselves from the state, or rather subjecting the state to their own control,” he wrote. It was the Commodore's mastery of this process that made him such a terrifying figure.

  In this dangerous path of centralization Vanderbilt has taken the latest step in advance. He has combined the natural power of the individual with the factitious power of the corporation. The famous “L'état, c'est moi” of Louis XIV represents Vanderbilt's position in regard to his railroads. Unconsciously he has introduced Caesarism into corporate life. He has, however, but pointed out the way which others will tread.… Vanderbilt is but the precursor of a class of men who will wield within the state a power created by it, but too great for its control. He is the founder of a dynasty.

  Such power—concentrated in one man's hands through control of corporations—was only possible because of the centrality of the railroads to modern life. “As trade now dominates the world, and the railways dominate trade, his object has been to make himself the virtual master of all by making himself absolute lord of the railways.”92

  Adams's words captured a very real dilemma. American institutions and values stemmed from a largely rural, agricultural past in which businesses were limited in size and personal in nature. Corporations had arisen as a means of financing large public works without inflating the size and cost of government—yet they were also private property. This uncomfortable meeting of public and private aroused dark memories, particularly when focused on the person of Vanderbilt. “The country is not without experience of the dangers of intrusting so much power to an individual,” one man wrote to the Journal of Commerce. “Nicholas Biddle and the United States Bank furnish a warning too well remembered by us who passed through the fearful ordeal caused by his abuse of power, to look with composure on the power possessed by this railroad king.”93 Of course, Jackson could control Biddle by vetoing the Bank of the United States charter and withdrawing federal deposits. In 1868 there was no such recourse with Vanderbilt. Small wonder that Adams compared him to Louis XIV.

  And yet, this discussion points to a widely shared alertness to encroachments on democracy. It reflected a deep suspicion, even cynicism, about private power and public corruption. Adams and his contemporaries—and historians who followed them—were quick to believe the worst, whereas the truth was complicated and difficult to find. Even the transparently corrupt Tweed ring was a mechanism for controlling a huge, decentralized city through payoffs. “The term ‘boss’ applied to William Marcy Tweed or to John Kelly, his successor, is a measure of the mystery which surrounded their activities, not of their political omnipotence,” writes historian Seymour J. Mandelbaum.

  Journalists often claimed that railroads “bought” or “owned” state governments, but corrupt officeholders squeezed corporations as much as they obeyed them. Starting as early as the 1840s, politics had become a breeding ground for manipulators and lobbyists—those “strikers”—who abused the power of the state for the purpose of extortion. Horace Clark, for example, testified about the use of “pro-rata” bills in the state legislature to shake down railroads. Such a law would have set a single per-mile rate and prohibited discounts on through freight from competitive points; in theory, it would destroy a trunk line's ability to compete. “I think it is a fact that the introduction of those bills… has been done with a view to extract money from railroad companies,” Clark said. “It is a very serious question for the railway managers to know what to do; and they do pay money, not to the members of the Legislature, for I don't believe that this money which is paid by a great corporation reaches members or is designed to, but goes to others who are preying upon the hopes and fears of men.” The strikers knew that railroads would think it safer to give them money than to ignore them. Such payments, Clark claimed, “are not bribes but ransoms.” Railroads feared government graft just as the public did, and suffered for it.94

  Contemporaries and historians alike have carelessly lumped Vanderbilt together with Gould, Fisk, and the Erie board in their accusations of bribery. In fact, the state senate's investigation found little evidence of corruption by Vanderbilt and his agents, by contrast with the abundant proof that the Erie had poured out cash to judges and legislators. Indeed, Vanderbilt's lobbyists in Albany testified that he forbade them from buying votes (at least, not explicitly).95 On close inspection, even the Commodore's relationship with the preposterous Judge Barnard proves to be more than a matter of graft. Little doubt exists as to Barnard's corruption, but there is no evidence that he simply took cash from Vanderbilt and did as he was told. Indeed, being a Tweed ally made him a foe of Horace Clark and Augustus Schell, who had started the Manhattan Club as a rival to the Tweed ring.96 Even Vanderbilt's bitterest enemies never accused him of bribing Barnard; rather, they pointed out that the judge was a close friend of the Commodore's son-in-law and broker, George A. Osgood, and speculated in Erie. John M. Davidson socialized with Barnard and quoted his opinions about stocks, but his letters show that Barnard often talked down New York Central shares and took positions hostile to the Commodore. Temperamental and self-important, Barnard had his own agenda, if a dishonest one. In the Erie litigation, it simply coincided with Vanderbilt's.

  These fine (but critical) details escaped opinion makers and newspaper-headlin
e writers, let alone the public itself. “Exaggeration, misapprehension, and well-grounded allegations mingled together, and created a sense of crisis,” writes Mark Summers, a historian of nineteeth-century corruption. This cynicism obstructed attempts to cure the underlying complaints. Regulation was the obvious method of keeping corporations answerable to democracy, and not the other way around—but why trust public officials to regulate if they were all on the take? The absence of a nonpartisan, professional civil service—still decades away—meant there was no easy answer. The power of the railroads gave rise to demands for a stronger government to control them, yet this same power aroused fears that they would simply corrupt a strong government, and grow still more powerful. As Adams wrote elsewhere, “Imagine the Erie and Tammany rings rolled into one and turned loose upon the field of politics.”97 Perversely, one lasting result of “A Chapter of Erie” was the doubt it cast on any solution to the problems it illuminated. And so the railroads grew still larger, and Vanderbilt more powerful.

  THE VANDERBILT FAMILY SEEMED to be falling apart. In 1868, after the Commodore battled back from the brink of disaster in the Erie War, he found himself helpless to save his own loved ones. The first to go was the most vulnerable: Frances Lavinia, the invalid. Vanderbilt and Sophia buried their daughter in the family vault on Staten Island in the first week of June. The Hartford Courant took the occasion to report that the old man intended to “bequeath the great bulk of his property, now estimated at sixty millions of dollars, to his son William.… The Commodore has shown much interest in his relatives, particularly young men, and has put many of them… on the high road to wealth.”98

  With the family gathered in grief at 10 Washington Place, Corneil pulled his mother away from the others, “& held a long & important consultation,” according to Ellen. “They both concluded it was best for him not to write his father again or in any way ask a favor at his hands.” Sophia advised him to go on living quietly until January; if the Commodore did not assist him then, Corneil should take “a political position, or enter into some safe & respectable business,” Ellen reported. In so many words, Sophia tried one last time to convince him to abandon his dreams of making a big score, of duplicating his father's success in one lucky strike.

  “On coming home,” Ellen wrote, “he seemed deeply impressed with his conversation with his mother & of his own accord assured me that he should not under any circumstances again trouble his father in any manner during the present year.” She suffered for her husband's penance as much as his crimes. The couple no longer had a house or carriage, and lived in relative poverty Even worse, Corneil sometimes turned against her in his frequent fits of self-hatred. When a close friend discussed Corneil's debts with her, he flared in anger at “this expose [sic] of my matters to a woman.… You certainly must know that I will stand no lecturing from any female.” Ellen, he wrote, “has got nothing to do with my business, and… I am not in the least responsible to her.” Yet still she defended him. “I fear you have a wrong impression in regard to his troubling his father,” she told Greeley “I know that for at least six months past he has neither personally nor by his letter asked his father a single favor, except that of recognition & this he immediately responded to satisfactorily. Cornelius has carefully avoided alluding to increase of allowance.” Then she added a caveat, one that said everything about his habits and associates: “Whatever his friend may have solicited on his behalf is of course another matter.”99

  As ever, Vanderbilt declined to assist his son, convinced that it would be wasted until he reformed himself. Yet, as the Courant observed, he made extraordinary efforts for other young relatives. On June 27, he beseeched President Johnson to restore his grandson, Vanderbilt Allen, to the commission that the young officer had abandoned. The Commodore observed that he was departing from his “uniform practice” of never requesting public office for his friends, but, he wrote, “He is a promising young man and I am anxious to save his pride.… After the war was over feeling that the country could spare his services—boy like—[he] foolishly resigned his place to make a trip to Europe in July 1865. I want to get him reinstated.” To Vanderbilt's disappointment, young Allen wanted to go into business. At least he took care of himself; the same could not be said for Jeremiah Simonson, the spendthrift nephew and master of the shipyard in Green-point. Vanderbilt sued him for $22,596.71 and won.100

  In the third week of July, the Commodore traveled to Saratoga Springs as usual. He checked into the Union Hotel, a favorite of Daniel Drew. Sophia was not feeling well; in hopes of regaining her health, she went to Lebanon Springs, on the Massachusetts border southeast of Albany. There she was advised to return at once to New York, for her health was too frail. Rather than go to 10 Washington Place, where she would be alone with the servants, she stayed with her daughter Maria Louisa and son-in-law Horace Clark at their home in Murray Hill.

  On August 6, a little more than two weeks after Vanderbilt went to Saratoga, he received a telegram that Sophia had collapsed with a stroke. Immediately he boarded a special train for Troy, and telegraphed an order to the Hudson River Railroad to ready a locomotive and car for him there, and to clear the track south. He found his car waiting for him, hitched to the D. T. Vail, driven by engineer S. F. Gregory Jr. The Vail roared down the rails at fifty miles an hour. “Gregory says that is the fastest he ever rode,” the Troy Times reported, “and quite as fast as he thinks it safe to run.”101

  Sophia remained bedridden at the Clark house, and showed encouraging signs of recovery. Her husband, who had brought her so much, who had put her through so much, remained with her. He was there at one thirty in the morning on August 17, when she suffered a second stroke and died. As Greeley wrote in the New York Tribune, “She had lived nearly 74 years without incurring a reproach or provoking enmity.”102

  On August 19, Vanderbilt sat surrounded by family and flowers as mourners came to 10 Washington Place to pay their respects. They filed past a sleek rosewood casket, viewing Sophia's body through a lid that was glass from the bust upward. The pallbearers included Cornelius's closest cohorts, Marshall O. Roberts, Charles O'Conor, John Harper, Augustus Schell, and John Steward, and the couple's wider circle of friends—Alexander T. Stewart, William H. Bradford, and A. S. Halsted. The guests included Daniel Drew, Edwin D. Morgan (now a U.S. senator), and others of note. A short funeral service was held at ten thirty in the morning, after which the Commodore escorted his deceased wife down to Whitehall Slip and across the harbor to the family tomb.103

  He returned to an empty house. Not literally empty, of course: the income tax assessor finally got a peek inside that year, and found an abundance of taxable possessions, including two fine watches, 468 ounces of silver dinnerware, and three carriages in the stables in the rear (in addition to $69,230 in taxable income, which did not include stock dividends).104 Then, too, there was the staff of Irish-born servants. Not emotionally empty either: the walls, floors, and cabinets abounded with mementos of their nearly fifty-five years together: paintings of each other, the gifts from their golden wedding anniversary. Each item served as a reminder of his loss.

  The image of Vanderbilt as a man of force burns brightly in the historical eye, making it difficult to penetrate the glare to perceive a subtler vision behind it. He often comes across as having been abusive and domineering to his wife. The truth was more nuanced. Daniel Allen, for example, thought that Vanderbilt's notorious dispatch of Sophia to an asylum in 1846 was justified, that she required treatment. Ellen's letters never hinted at anger between her in-laws—and Corneil would have tried any parents' patience. Cornelius and Sophia grew rich together, traveled together, had children together, buried children together, attended the weddings of grandchildren together. They were a couple.

  Perhaps the truth is not so nuanced after all: despite his shortcomings as a husband, Vanderbilt loved his wife. And her death left him alone. Of all the forms of stress that afflict human beings, one of the worst is loneliness, especially after the
loss of a spouse. His unmarried sister Phebe recognized the emotional vacuum, and stepped in to supervise the maids, keep up the house, and keep up her brother.105 He needed his sister in this hour; and through her, he glimpsed a future beyond his isolation and grief.

  * The Erie already had a broad gauge. Presumably Fisk misspoke or was misquoted, and meant a third rail on the Michigan Southern.

  Chapter Seventeen

  CONSOLIDATIONS

  In time, all things came to the Commodore. Wealth, like mass, exerts a gravitational pull, attracting power, social recognition, and more wealth. With each fresh accumulation, its pull grows stronger. Vanderbilt was the biggest man in the biggest thing in America, the railroads, and so he drew to himself the leading figures in politics, society, and the economy. “Cornelius Vanderbilt is a man of power, unquestionably,” the Chicago Tribune wrote. “Many fear, but few love him.… He is the railway king of America, and the great power of Wall Street.… He is so accurate a judge of men, so clear-sighted, so fertile of resource, so skilful an organizer of combinations, and the wielder of such an immense capital, that failure is next to impossible.… He is a foe even Wall Street stands in awe of.”1

  On April 18, 1868, in the midst of the Erie War, Vanderbilt beckoned to a thirty-year-old businessman from Ohio, a pious, long-faced oil refiner with a pinched mouth named John D. Rockefeller. Together with Henry Flagler, he had recently formed the Standard and Excelsior Oil Works in Cleveland. That put him at the forefront of one of the most important developments in the American economy. “Nothing in the history of this country,” Scientific American had declared in 1865, “if we except the furor that followed the opening of the gold fields of California, has caused so much excitement in business circles as the rapid development of the petroleum oil interests.”2 The industry had fulfilled that excitement in the years that followed, as oil gushed out of wells in northwestern Pennsylvania to be refined into kerosene for the world's lamps. By 1868, petroleum products were a leading export, much of it shipped from New York.