← 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 1877, the Railroad Gazette wrote about the recently deceased Cornelius Vanderbilt. Evaluating his career. The piece highlighted that his early moves were distinguished by a series of bold, startling, revolutionary measures which attracted universal attention and had an effect reaching far beyond the lines and companies with which he dealt directly. The Vanderbilt era was the first great era of consolidations. In the last few years of his life, Cornelius Vanderbilt shifted his attention from steamships to the railroads and completely remade himself and the country. In the process, Cornelius Vanderbilt dominated every industry he entered, and the railroad was no different. A man born of meager means, Vanderbilt grew to be a titan of many industries, mastering and heavily influencing the modern economy. In the process, Vanderbilt took no prisoners and did not forgive those who had the temerity to betray him, preferring instead to crush them and and make them pay dearly for their mistakes. Last week I started my journey into America's original tycoon. So this week I am wrapping up my coverage of the Commodore and railroad king. How did Vanderbilt get involved in the Civil War? What drew him to the railroads? And what is his legacy? Grab your cup of coffee, peeps. Let's do this. When I left you last week, Cornelius Vanderbilt had successfully exacted revenge against former business partners Joseph Joseph White and the accessory Transit Company when the company refused to honor the terms of a settlement. At the close of the 1850s, Vanderbilt was a millionaire and could have easily ridden off into the sunset or off to Europe to enjoy the spoils of his various economic wars. Alas, there was a larger war brewing for which Vanderbilt would play a role. As the country welcomed the 1860s, Vanderbilt sat on a level of wealth and influence never seen before in American history. And the press was starting to take notice. The Chicago Tribune described Vanderbilt as having almost kingly power in a country that took pride in freeing itself from the reigns of a tyrannical king. Such a comparison must have been quite jarring for readers. Additionally, in 1859, the New York Times wrote a piece criticizing Vanderbilt, highlighting the precarity of increased concentration of wealth in a singular person. In an era before unions commanded any real strength or there was any federal oversight over Wall Street, Vanderbilt was a man walking alone. With only his conscience as a guidepost for what constituted right and wrong. As the country headed into civil war, Vanderbilt sought to help the Union by donating his largest steamship, the Vanderbilt. In a letter to the United States Navy Secretary, Vanderbilt wrote partially quote, I feel a great desire that the government should have the steamer, the Vanderbilt, as she is acknowledged to be as fine a ship as floats the ocean, and in consequence of her great speed and capacity, that with a proper armament, she would be of more efficient service in keeping our coast clear of piratical vessels than any other ship. The ship would require retrofitting to add a cannon and some rifles, but otherwise, the Commodore felt the ship was ready and was best suited for protecting the coast from attack. Vanderbilt was happy to allow the Navy to set the price, or, if they were so willing, he could donate the ship. He proposed the same offer for several other steamships. His offer was denied, either because the Union believed the war was going to be quick or due to a matter of pride. The US Navy declined to accept the ships in donation and opted to charter them instead. This meant that Vanderbilt received a significant amount in fees, over $300,000. The Navy did actually buy two boats in 1861 for $90,000 each. Two boats, ironically enough, that Vanderbilt did not really want to sell. As the war dragged on, Vanderbilt would eventually come face to face with President Abraham Lincoln in a meeting with Secretary of War Edwin Stanton, where they solicited the magnate's help. Vanderbilt finally donated his steamship and was later awarded a Congressional Gold Medal for his efforts. In 1863, at the age of 69, when others were slowing down, Cornelius Vanderbilt continued at full speed, transitioning into what would be the final phase of his career, the railroads. Vanderbilt's curiosity had been piqued way back in 1833, when he was thrown into a ditch from the primitive locomotive. But like the steamship, Vanderbilt saw the potential of the railroad and how it could remake the transportation industry, and had dabbled in the industry ever since the 1830s. He had so much faith in the earning power that Vanderbilt did something quite daring. He put his resources into a single industry. Had he failed, Vanderbilt's life may have been a cautionary tale, a warning of how not to invest in. As it turned out, the Commodore would become the railroad king and become one of the most culturally and economically significant people of his lifetime. Although Vanderbilt built a reputation as a ruthless power broker, biographer TJ Stiles argues that when it came to the railroad, Vanderbilt sought to, quote, pursue diplomacy with connecting railways, accepting war only as a last resort. Contented with his realm, he would conquer a neighbor in order to eliminate its harassment of his domain. End quote. According to the biographer, Vanderbilt's domination happened almost by accident when in 1863, Vanderbilt decided to take control of a struggling line, the New York and Harlem Rail. Vanderbilt took control of the company and was elected president by the board. Forgoing a salary, Vanderbilt focused on turning the beleaguered rail line into something that was profitable. The endeavor pitted Vanderbilt against New York City's corrupt political officials. But through his ability to manipulate the markets, Vanderbilt again was able to come out on top. And perhaps more importantly, it helped lay the foundation for what would become a railroad empire. After Harlem, Vanderbilt sought out and took over the Hudson River Rail, the Lakeshore and Michigan Southern Railway, and the New York Central. But it was the New York Central that earned him the moniker of railroad king. Vanderbilt's quest for the New York Central Railroad in 1864 would stretch for an almost unbearable three years, leading to some fraught battles and Vanderbilt exacting his vengeance by practically isolating the city of New York during a blizzard. The move was a public relations misstep, with the New York Herald editorializing, railroad corporations, whether ruled by boards or held within the grasp of a single individual, should not forget that they owe some consideration to the people who grant them special and valuable privileges and to whose patronage and support they are indebted for their success. The incident prompted intervention by state legislators who mandated arbitration over any disputes. Forced to sit in front of a committee to answer questions, the elderly but still imposing, Cornelius Vanderbilt testified about the incident. Quote, it is not according to my mode of doing things to bring a suit against a man that I have the power in my own hands to punish. He continued, the law, as I view it, goes too slow for me when I have the remedy in my own hands. It was clear Vanderbilt cared very little about the law and felt that he had other means at his disposal to ensure those who failed to follow through on their agreements paid a hefty price. No sooner did his battle over the New York Central end did Vanderbilt have to contend with yet another foe, this time against longtime business partner Daniel Drew and the formidable Jay Gould. Drew was on the board of the Erie Railroad and had recently led a bear campaign on the company's stocks, much to the annoyance of Vanderbilt, who filed a legal injunction to prevent him from doing so again. Seeing Vanderbilt's legal action as a signal that perhaps the relationship was fraying, Jaygould approached Vanderbilt and shared that there was a small group coalescing together to Boot Drew from the board. Gould had come to ask Vanderbilt for the proxy on his 10,000 Erie shares for the vote. Vanderbilt was initially hesitant. He did not trust Gould and he told him as much. Gould promised the offer was sincere, even providing Vanderbilt a financial guarantee. Vanderbilt agreed. Somehow, Drew learned of the scheme and managed to convince the Commodore to change course and rescind his proxy. When the board held their election in October, he remained safely seated. Everything seemed to be fine until January 1868, when Erie stock began to fall. What Vanderbilt did not realize was that he had been double crossed. In showing Drew mercy, the Commodore actually gave his longtime business partner a chance to build an alliance with newcomers Jim Fisk and Jay Gould. Taking advantage of an incredibly flawed and under regulated system, the trio decided to short sell the Erie stock and converted railroad bonds into new shares of stock. The board authorized 5 million in what was called convertible bonds, which they then exchanged for 50,000 new shares of stock, which essentially diluted or watered down the existing stock in circulation and threatened Vanderbilt's financial position in the company. Perhaps a victim of hubris, Vanderbilt was convinced he could outspend the plot and just kept buying up the stock. The situation got so out of hand that eventually a judge stepped in and issued an injunction freezing the company from issuing any more stock certificates. Warrants were issued for Drew, Gold and Fisk, who absconded across the river to New Jersey, but not before taking $7 million in cash and Erie stock certificates beyond the reach of New York. The men continued issuing new certificates and Vanderbilt kept buying them up. Yet no matter how much Vanderbilt bought, he could never gain control, as the Erie board just kept printing more certificates. Vanderbilt rightfully criticized the stock issuance, arguing that the certificates were basically worthless and disreputable. The madness prompted the New York legislature to step in to consider whether it was in fact legal to issue a bunch of unsecured stock. Jay Gould made his way to Albany with cash to help convince anyone on the fence to vote their way. While legislators were debating the issue upstate, Daniel Drew was trying to negotiate a deal with the Commodore. On April 19, Drew offered to return Vanderbilt's money in return for the shares, apparently because Drew wanted to take over Erie himself. Drew's scheme did not last long, as it was quickly discovered by Fisk, who attached Drew's personal finances to the deal. Drew next switched to trying to settle with Vanderbilt, intentionally leaving Fisk and Gould in the dark. Vanderbilt finally agreed on the condition that he would not sell his shares back to the Erie railroad. The railroad king wanted nothing to do with Erie, even the offloading of the company's stock. So, on paper, Daniel Drew paid Cornelius Vanderbilt for his 100,000 shares of Erie stock. But the eerie war, as it would go down in history, would be one of Vanderbilt's roughest defeats. None of his normal tricks worked. He wasn't able to corner the market. His efforts at exacting vengeance failed, and in the end it had cost him some significant money. While Vanderbilt had recouped most of his financial losses, the mogul, perhaps for the first time in his career, suffered a catastrophic blow to his reputation. And what made it worse is that this blow came at the hands of relative newcomers Jim Fisk and Jay Gould. On April 20th, the New York State legislature passed the Erie bill legalizing the issuance of diluted stock by the Erie Railroad Company. Despite fighting the Erie war, Vanderbilt was a man dedicated to his business and focused on increasing his bottom line. Thus, while battling it out with the likes of Gould, Fisk and Drew, Vanderbilt was also reviewing how else his New York line may increase profits. This led him to a meeting with John Rockefeller, one of the other titans of industry covered in my episodes a few months back. Rockefeller was just coming into his own as Vanderbilt was an established magnate. A lot of oil shipped out of New York and Vanderbilt asked to meet with Rockefeller to establish a partnership. Rockefeller, a little cocky in his youth, tried to make the railroad king come to him. But he quickly learned that Vanderbilt's magnetism was strong. Overseeing New York's rail service, Vanderbilt realized there was a need for a centralized station for the various lines to operate. Thus, in 1869 he commissioned construction for the Grand Central Depot on 42nd Street. Known today as Grand Central Station, the depot opened in 1871 and boasted improvements such as elevated platforms that were even with the train car to allow for easy entry and exit, as well as modern comforts for those waiting for their trains, including restaurants and waiting rooms. At the time of its opening, the Grand Central Depot was the largest in the world and could accommodate up to 150 train cars at once. Vanderbilt's life's work had been building to a critical moment. And it all came together on January 27, 1870, when the new York Central and Hudson River Railroad convened its first stockholders meeting. As T.J. stiles explains, quote, the creation of the New York Central and Hudson river stands as a historical landmark, showing us where the era of big business, the Vanderbilt era, well and truly began. The massive railroad became one of the largest corporations in American history with a valuation of $90 million, easily eclipsing even the most profitable competitors. The amount of growth was simply Incredible, as just 20 years prior, the most profitable company had not exceeded $10 million in value. The corporation was in fact massive and counted 740 miles of physical track, 400 locomotives, and in 1870 transported more than 7 million passengers. Vanderbilt enjoyed his massive success until January 4, 1877, when, when his body finally gave out at the age of 82. The immediate cause of death listed was exhaustion, which is understandable for a man who spent nearly his entire life dedicated to dominating industries and amassing incredible wealth. Upon his death, Cornelius Vanderbilt was worth an estimated $105 million, which is over 3 billion in today's currency. I am utterly depressed to say that despite being the wealthiest man in the country at the time of his death, Vanderbilt's estate today would not even put him in Forbes top 50 richest Americans gross of the men known today as the robber barons of the Gilded Age. I think Cornelius Vanderbilt is perhaps one who both witnessed and took part in the most transformative period in American history. Entering the world during the presidency of George Washington and living through the Civil War when it was not clear whether the United States would survive, Vanderbilt saw a nation completely remade in new and fascinating ways. He was also a significant part of at least some of those changes, helping to push forward the railroad that linked the country together. And as biographer TJ Stiles tells us, he was a true pioneer when it came to the growth of the business corporation. Vanderbilt was many things ruthless, forceful, powerful, unforgiving. But he was also a man who had a vision. Right or wrong, he helped remake the American economy and pave the way for mega millionaires that would become synonymous with the Gilded Age. And despite these two episodes, I still have only managed to scratch the surface of Vanderbilt's life and career. If you are interested in the minutiae that is Cornelius Vanderbilt, then I highly recommend picking up TJ Stiles biography the First Tycoon. It is comprehensive and it gets into the Commodore's personal life, something I had to mostly skip here. And before I sign off, I want to welcome Tibs to the Patreon. Welcome. You too can support the show where for as little as $3 per month you can access some bonus material via the Patreon feed. All the money goes back into the show through hosting fees and research materials. Plus you get a shout out like this and history stickers should you so choose. Learn how you can support the show through the website at www.c.civicsandcoffee.com. 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.