← Civics & Coffee: A History Podcast
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Welcome to Civics and Coffee, a history podcast. The show all about United States history, delivered to you in the time it takes to enjoy your morning cup of coffee. I'm your host, Alicia, a historian trained in United States history with a passion for telling both the known and unknown parts of America's past. So grab your coffee and get ready for some bite sized history. Hey everyone. Welcome back. In the winter of 1877, several months before workers would rise up against the very industry that helped propel him to new heights, Americans read about the death of Commodore Cornelius Vanderbilt. Sticking to the facts, one paper wrote, partially quote, he was originally a poor boy and commenced business as a master of a small boat. After giving the briefest of summaries of Vanderbilt's multi decade career, the homage ended plainly. His enterprise, genius and success have been felt the world over. Up to the time of his death, he had the chief control of the New York Central and Harlem railroads. End quote. It is perhaps an understatement to say that Cornelius Vanderbilt was part of a transformative moment in American economic history. During his lifetime, the United States evolved from a rural, mostly agrarian, independent economy reliant on local farmers and traders, to a nation that was connected, industrious and ready to compete on the global market. When I released my episode on the Tycoons a few months back, which included a blurb on Vanderbilt, I. I mentioned that I would be willing to do deeper dives if you asked. Well, dear listeners, you made your wishes known. Cornelius Vanderbilt casts a large shadow. So large in fact, that it was hard to get even just the important bits into a single episode. So this week I am starting my coverage of the original American capitalist Cornelius Vanderbilt. What is his origin story? How did he make his early millions? And how did he handle those who betrayed him? Grab your cup of coffee, peeps. Let's do this. Cornelius Vanderbilt's life story is what so many view as the prototype, the dream of what it means to grow up in America. Born into modest circumstances, with minimal education, Cornelius Vanderbilt used his grit and determination to become a self made millionaire. But for all the hard work, and the man definitely worked hard, Vanderbilt also had a bit of luck and relied on his family throughout his career. From receiving financial assistance from his parents in his earliest days to reaping the benefit of the labor of cousins and in laws. But before we get into all of that, let's start at the beginning. I do also want to give credit to TJ Stiles, whose research provided the bones of these episodes. I generally try to steer clear of relying so heavily on a single source when crafting episodes. But Cornelius Vanderbilt is a bit of an oddity. Despite being one of the most well known men in history, there is surprisingly little written about him that is both accessible and reliable. I've done my best to incorporate other source material where I could, but I feel okay relying on styles here, given that his book won both the Pulitzer Prize and the National Book Award, and he received positive academic reviews by historians Cornelius Vanderbilt entered the world on May 27, 1794, on the shores of Staten island, when the United States was still under the leadership of first President George Washington, known as Cornell. As child, the man who would go on to dominate transportation industries received little education, with some estimates placing his formal training at just three months. Biographer T.J. stiles describes how, despite Vanderbilt's lack of customary education, the future titan learned to read well enough, but never truly mastered the English language and spent the rest of his life with a tenuous grasp with the nuances of spelling and grammar. Vanderbilt started working young, helping with his father's fairy business. When an older brother passed away, the young boy took to the sea and in a trend that would come up again and again throughout his life, found it difficult to work for someone else, even if that someone was his father. According to one biographer, Vanderbilt's father was simply not up to the challenge of running a fairy business. And so in 1810, Vanderbilt Vanderbilt borrowed money to run his own boat. Though he paid a commission to his parents, he eventually saved enough money to purchase shares in other boats, the profits from which he got to keep in their entirety without having to share with his parents. And Vanderbilt was also the beneficiary of war, as during the war of 1812, the young captain secured a government contract to ferry supplies to various government outposts throughout the city. As biographer Daniel Alif highlights quote by the end of the War of 1812, Vanderbilt controlled most of the ferry traffic in New York waters. Perhaps feeling like he was coming into his own, Vanderbilt also started a family, marrying his cousin Sophia on December 19, 1812. Together, the couple would have what contemporary audiences may find a jaw dropping 13 children, only three of whom were sons. For a man who had become obsessed with legacy, the lack of male heirs would come to be a disappointment. Vanderbilt eventually moved his young family from the outskirts of Staten island to Manhattan, where, biographer Stiles explains, one acquired a reputation, and reputation was the axle of this informal personal economy. End quote. In the 1820s, Vanderbilt transitioned from ferry captain or periographer captain to the steamboat. He saw the potential in the new Technology and what it could mean for transportation. Again, Vanderbilt went to work for someone else, this time a man named Thomas Gibbons. And much like before, Vanderbilt grew to feel stymied after Thomas Gibbons passed away, and Vanderbilt was left to deal with the younger and, in his opinion, less capable son. Vanderbilt believed he could do things better on his own, and taking everything he learned from the senior Gibbons, Vanderbilt commissioned the construction of his own steamship, the Citizen, in 1828. Described as 106ft long and weighing 145 tons, Vanderbilt ensured that the captain of the vessels were members of his family and set the route from Elizabethtown to New York with stops on Staten Island's northern shore. He also acquired two other boats and interest in another steamship, all of which were already established and making consistent runs from Manhattan. Vanderbilt's new company was called the Dispatch Line and was in direct competition with his former employer, known as the Union Line. This triggered a fair war, prompting Vanderbilt to buy out his competition. When Vanderbilt ran into similar competition on the Hudson river, this time against the Hudson river association, resulting in yet another fair war, Vanderbilt won out when the association caved and paid Vanderbilt $100,000 plus a yearly fee if he agreed to stop using the Hudson River. Although it would be another couple of decades before he would be crowned the King of the Rail, Vanderbilt got an early preview on November 8, 1833, after hearing about a new form of transportation out in New Jersey. Again, as described by biographer T.J. stiles, quote, the locomotive resembled an oversized barrel with a smokestack in front. The engineer and fireman stood on a rear platform with no shelter from the elements. There were several passenger cars, and Vanderbilt and roughly two dozen others climbed aboard to see what the fuss was all about. On board with such luminaries, including President John Quincy Adams, Vanderbilt was lucky to survive when one of the train's axles broke, causing the car to jump the track and careen into a ditch, seriously injured. The accident was not enough to scare Vanderbilt away from the technology, and he would put his entire energy and attention on the railroad just a few decades later. But for the moment, Vanderbilt remained focused on monopolizing the waterways of the East Coast. The steamship captain was aggressive in his pursuit, challenging proprietors along the waterways, goading them into price wars and forcing them to either fold or buy him off. Stiles explains in his analysis that Vanderbilt was essentially taking advantage of a developing code of conduct for steamboat captains. The first proprietor to occupy a line assumed a sort of natural right to the route. A challenger who lasted long enough could expect an offer of a bribe to abandon the market, and should he accept, it would be expected to abstain from further competition. End quote. Vanderbilt built a small fortune playing this game and started to take over companies that provided transportation in the New York area. In 1843, Vanderbilt purchased 490 out of 998 shares of the Elizabeth Port Ferry Company, which essentially gave him control of the second major service to Staten Island. By March of 1844, he was the company's treasurer and relocated the offices to 34 Broadway. He continued to expand with the largest steamship ever built in the United states with the 320 foot long steamer called the Atlantic, which was commissioned by the Norwich Railroad. Unfortunately, the massive steamer wouldn't last very long, crashing along the rocks during a storm on November 27, 1846, killing 70 passengers on board. Not one to be deterred, Vanderbilt launched yet another steamer earlier the next year, titled of course, the Cornelius Vanderbilt. Despite his limited education, Vanderbilt demonstrated an intuitive understanding of a developing concept that would later dominate American business, the corporation. While still in its infancy, Vanderbilt utilized the corporation to his advantage in making himself one of the wealthiest men in history again. TJ Stiles argues that Vanderbilt was an exception to his contemporaries who struggled to see anything beyond the tangible. The corporation was something that could last beyond any one individual's lifetime and and Vanderbilt, as well as his business partner Daniel Drew, saw how stock could be manipulated to affect value. As Stiles lays out, quote, they saw that everything in the economy could be further abstracted into a substance less something that might be bought or sold that a banknote or promissory note or the right to buy a share of stock at a certain price could all be traded at prices that varied from day to day, end quote. This knowledge was critical in Vanderbilt's development and success as a businessman and served him well throughout his career. 1848, Vanderbilt took over the presidency of the Elizabeth Port Ferry Company and boasted a 20% dividend. That same year, Vanderbilt was able to buy full control of the Staten island Ferry for $80,000. And by the following year, word that gold had been discovered in California would prompt Vanderbilt to expand once again from regional steamships to oceanic steamships, where he proposed the idea of building a canal in Nicaragua. Vanderbilt became so dedicated to the idea that he even resigned from his position at the Stonington Railroad to try to see it through. The canal never came to fruition, but the transportation company he founded, Accessory Transit Company flourished. Passengers excited about the prospect of heading west enjoyed low fares and faster service, ensuring that as Stiles argues San Francisco remained an important port of entry even after the thrill of gold mining wore off. The 1850s was a rocky decade for the magnate. In July of 1852, a bridge collapse at the Staten island ferry terminal, killing 17 people, led to Vanderbilt being indicted for manslaughter. The charges would later be dropped. But trouble continued for Vanderbilt when he was betrayed by a business partner, Joseph L. White. The duo, who were partners in the accessory transit company, were also working together to raise funds for the canal in Nicaragua, and White traveled to London under the guise of securing additional funding for that purpose. Unable to convince London bankers to invest in the project, White lied about his failures long enough to offload his rights to the canal, burning Vanderbilt in the process. Vanderbilt had little recourse for White's actions on the Nicaragua front, so he sought revenge through their partnership in the accessory Transit company. Again, Vanderbilt's mastery of corporate structure and the stock market served him well in his revenge plot as he immediately went about manipulating the price of the company's shares. This, according to T.J. styles, was the basis for much of White's wealth and thus was a critical weapon in his tool chest. But the decision to attack his business partner also exposed just how profitable the accessory Transit Company had become. Vanderbilt tried to drive down the price of the stock in order to buy out White, but. But White remained steadfast. Vanderbilt next offered to sell the company his steamships for an inflated price, sending his son in law to secure the deal. Finally, on Christmas Eve, Vanderbilt received word. The accessory Transit Company agreed to purchase seven steamships for a combination of cash and bonds in the company, with payment due in one year's time. Yet White would again betray Vanderbilt, this time with Charles Morgan ousting him from the company and denying him payment. Furious, Vanderbilt first tried to manipulate the company stock value, which forced company president Charles Morgan to purchase shares to keep the price stable. Next, Vanderbilt launched a rival steamship line. And as was his calling card throughout much of his business life, the Commodore, as he was known, slashed prices in the first shots of a fare war, knowing that doing so would eat away at the accessory transit Company's profits and hurt their ability to pay a dividend and impact the overall share price. This was a costly battle of revenge that had consequences beyond the boardroom. For one, the public enjoyed much cheaper fares. But not everyone had the capital to weather such heavy and sustained losses. One man who partnered with Vanderbilt on the competing line, Edward Mills, was ruined by the magnate's thirst for blood going bankrupt. For Vanderbilt, however, the ends justified the means and his gamble paid off. Despite losing a significant sum, the Commodore was able to hold out long enough to compel a settlement offer. As Stiles makes plain, Vanderbilt, quote not only forced his foe to acknowledge he was right, he also forced Morgan to pay him three times in an inflated price for his steamships, in cash for his claims and in the stock market. In the end, Vanderbilt got his revenge and was victorious over his enemy. No matter who was hurt in the process, Vanderbilt sat atop the steamship industry as one of the wealthiest and most powerful people in the United States. Yet as influential as the Commodore was, there was still a whole industry waiting in the wings and a new level of domination coming in. The emergence of the Railroads Be sure to tune in next week as I wrap up my coverage of Cornelius Vanderbilt. Learn all about how he helped the Union Navy during the war and why he chose to charge headfirst into yet another industry in his twilight years. Thanks, peeps. I'll see you next time. Thanks for sitting down with me as I explored this chapter of American history. If you liked what you heard, be sure to subscribe and share with your friends. I look forward to our next cup of coffee together.