Cornelius Vanderbilt, the ‘Commodore’: the first of the robber barons. The Civil War broke his heart, but made his second fortune.
Cornelius was born in 1794 on Staten Island among the harbours that would make his first fortune. Aged 11, he started work with his father, a poor illiterate seaman, but by 16, he’s bought his first small ferry boat with a $100 loan. Even at this early age few could best him, in business, or on the street.
“He was a tough guy. Getting into scraps with other men, beating the hell out of them and knocking them unconscious.”
TJ Stiles, Vanderbilt Biographer
At 19, he marries his first cousin who will bear him 13 children. A cutthroat entrepreneur, he moves from sailboat to steamships, always undercutting, and then overcoming the competition.
His single island-hopping ferry expands to an ocean going fleet and he becomes synonymous with shipping earning the nickname ‘Commodore’. Defeating many monopolies along the way, he creates the largest shipping empire in the world. But before the Civil War, he sells nearly everything to invest in the new railways believing they’ll unite America.
By war’s end, he’s the richest man in America with a net worth of over $65 million equivalent to nearly $75 billion today. But the war costs him his favourite son and heir apparent and he dives into a drink fuelled depression. He relies on his less able son, William and makes him operations director of the Hudson Railroad.
By 1866, he’s 72, and 30 years past the average age expectancy. His railroad rivals think he’s weak and ready to fall. But he owns the only rail bridge into New York City, and it is both the gateway to country’s largest and busiest port and, in his hands, a weapon.
He orders his son to close Albany Bridge effectively blockading the millions of dollars of cargo of other rival railroads. Before their stocks become worthless, the rival rail road presidents try to sell their shares. When Wall Street realises, there’s a massive sell off. And when the price falls, Vanderbilt buys up. In just days, he creates the largest single railroad company in America.
Chicago is America’s fastest growing city and the Erie Line, the rail road connecting it to New York, the most profitable: And Vanderbilt doesn’t own it. So in 1867, Vanderbilt tries to buy up its shares demanding majority control by the end of the week, a move now known as a hostile takeover.
But middle managers, Jay Gould and Jim Fisk see a chance to cash in on the Commodore. They print over 100,000 new shares in a basement, diluting Vanderbilt’s ownership. This now illegal manoeuvre costs the equivalent of a billion dollars in today’s money.
But by 1871, his supremacy’s undisputed. Marking his conquest, he opens the Grand Central Depot, the biggest train station in the country. It covers 22 acres. He also gives the largest charitable donation in American history with a $1m gift to a university that still bears his name.
And Vanderbilt realises the rail network has been overbuilt and future profits will come from transporting new cargo, not from building new lines. He believes the demand for the kerosene that lights the lamps of the newly industrialising America will be explosive.
Vanderbilt homes in on Eastern Ohio, the Middle East of its day, and begins negotiations with a struggling oil man, John D Rockefeller. Vanderbilt wants the exclusive contract to transport his kerosene so his freight’s always full.
Initially, the deal suits Vanderbilt. But Rockefeller’s rise is meteoric enough to make Vanderbilt ally himself with railroad rivals. He hopes to control the Ohio oilman who seeks lower and lower rates for transportation.
Then, in 1877, in the depths of the economic depression, and holding the largest fortune in the US, Vanderbilt dies, aged 82. He leaves his $100m empire to his son William. And he leaves a template for the other robber barons to follow.