Cornelius Vanderbilt

American industrialist

• Born: May 27, 1794
• Birthplace: Port Richmond, Staten Island, New York
• Died: January 4, 1877
• Place of death: New York, New York

Vanderbilt was one of the great capitalist successes of all time, and his name has come to symbolize the possibilities of American free enterprise. He created a worldwide shipping and railroad business that was both efficient and profitable and endowed a university that was later named for him.

Early Life

Cornelius Vanderbilt was one of nine children of Cornelius and Phebe Vanderbilt. His parents had difficulty supporting their huge household, yet managed, for the most part because of his mother’s careful monitoring of family finances. His mother came from a family of New Jersey farmers. She tempered her husband’s visionary schemes to get rich quick, and her strength and fortitude were the backbone of the family. Young Cornelius’s father was of the third generation of a family that had migrated to America from Holland in search of the freedom to practice their Moravian religion; like the family of Mrs. Vanderbilt, they were farmers.

Thus, young Cornelius Vanderbilt was born into a situation that was not promising. Vanderbilt hated school, preferring to spend his time outside involved in sports and even work. He was tall and strong for his age and was an excellent swimmer, an unsurpassed climber, and a wrestler whom few could beat. Despite his distaste for school lessons, he had a vigorous mind and quickly learned to sail and to use tools.

Vanderbilt took to the water, and it became his substitute for the schoolhouse. He spent entire afternoons watching craft navigate upon the beauty of New York Bay. It was alleged that in time he knew by sight every ship that used the port, and that he had learned the rig and outline of every fishing boat or coaster that navigated on the rivers.

Vanderbilt became adept at sailing the clumsy family boat, and he became the one who was trusted to take farm produce into New York. At sixteen, his attraction for the sea became so strong that he announced to his mother he was running away from home to become a sailor. His mother intervened, and the two reached an agreement. Vanderbilt would be paid one hundred dollars to plough some hard, rough family land, and his earnings would be used to purchase a boat.

Vanderbilt quickly closed his first “contract.” Like a crafty Tom Sawyer, he enlisted help from the neighborhood boys, promising his workers rides in his new boat. Vanderbilt put his new boat to work immediately and spent sixteen hours a day ferrying passengers for eighteen cents a trip. At the end of the first year, he repaid his mother the one hundred dollars and earned an additional one thousand dollars as well. At the end of the second year, he gave her one thousand dollars and bought partial interest in several other boats. Thus, he had devised on a small scale the system that would one day make him one of the wealthiest men in the world.

At nineteen, Vanderbilt fell in love with Sophia Johnson, the attractive daughter of his father’s sister Eleanor. Both his parents objected, yet Vanderbilt married Sophia without their blessing on December 19, 1813.

Life’s Work

To support his family, Vanderbilt set up a ferry system, and with his good reputation for delivery he obtained a contract to supply six forts around New York. The work was hard since it took a full day to supply one fort and that left Sunday as his only day off. However, profits were large, and new schooners were added to a growing fleet.

When Robert Fulton launched the Clermont, Vanderbilt was not alone in realizing that the steamboat was the future of sea travel. For several years, Vanderbilt worked for Thomas Gibbons, commanding boats and streamlining procedures. During this period, the two men fought the state-granted monopoly Fulton enjoyed. The Supreme Court of the United States, after a wait of seven years, finally heard the case and declared that such monopolies were unconstitutional.

Because of his independent spirit and vision of the future, Vanderbilt resigned from his position with Gibbons and moved his family from New Brunswick back to New York in 1829. In the spring of 1830, with forty thousand dollars in savings, he entered the New York steamboat business. He constructed better boats than his competition and delivered services that were cheaper and more efficient. For the first five years, he made thirty thousand dollars a year and then his income in 1836 rose to sixty thousand. None of his more than one hundred vessels was ever burned, wrecked, or destroyed. He chose only the best captains and carried no insurance.

By age forty, Vanderbilt was worth $500,000. The Vanderbilts had twelve children (one son died in infancy) and lived at No. 10 Washington Place in New York City. Vanderbilt was all but brutal to his family, running it with more sternness than the captain of a vessel, and brooked no disobedience or contradiction. He educated all of his children, and George Washington Vanderbilt, his favorite, was sent to West Point. The sons were expected to earn their own living rather than count on their father’s wealth. William Henry Vanderbilt, who was especially distasteful to his father, married against Vanderbilt’s wishes and lived with his wife on nineteen dollars a week.

It is ironic that this man, who will forever be associated with the railroad industry, was nearly killed in a train accident. In 1833, Vanderbilt was thrown from a train, dragged along the track, and flung down an embankment. He broke several ribs that punctured his lungs but survived despite archaic medical treatment.

As Vanderbilt aged, he looked more and more aristocratic, as if he had been born to be wealthy and handsome throughout his life. Time had caused the top of his head to go bald, but the sides of his head still sported the white, bushy sideburns that created a look of distinction.

By 1864, Vanderbilt had sold his steamships to Daniel B. Allen and Cornelius K. Garrison for three million dollars. He then began to shift his investments into the railroad industry. He was nearly seventy and was worth not less than twenty million dollars.

Vanderbilt’s success in the railroad industry must be credited in some small part to his son William, whom Vanderbilt had treated so harshly in his youth. Without his father’s help, William was soon quite wealthy himself, owning a house, a farm, and land, with the farm yielding twelve thousand dollars a year.

Vanderbilt, noticing William’s success, decided to test him by placing him in charge of the failed Staten Island Railroad. William knew next to nothing about railroads but sold his farm and accepted the challenge. In two years, almost miraculously, he took the railroad from bankruptcy and no credit to solvency. His astonished father looked on in the background as William was made president of the Staten Island Railroad.

After some resistance, Vanderbilt entered the railroad industry on a larger scale in the winter of 1862-1863 by buying heavily the stock of the Harlem Railroad. The stock doubled and kept rising based on the magic name of the owner. Vanderbilt continued buying. The stock had sold for three dollars a share in 1857; on April 22, 1860, it sold for seventy-five dollars.

Vanderbilt was president of Harlem Railroad. His son William was made vice president and again implemented the procedures he had learned when he turned around the Staten Island Railroad. Within time, William created a second success.

Vanderbilt began adding more railroads to his empire, beginning with stock in the Hudson River Railroad. He was not interested in speculation but rather in making the railroads profitable. Soon he had full control of the Hudson and, as the Harlem Railroad began to show profits, Vanderbilt rewarded William by naming him vice president of the Hudson.

Next, Vanderbilt began to buy the stock of the New York Central, using two million dollars he had made off Harlem, thus repeating his practices in the steamship business. At the age of seventy-three, he took over the New York Central, and the massive improvements that took place on the Harlem and the Hudson River railroads were repeated, this time with an even tougher overhauling, and the connections were multiplied.

Vanderbilt consolidated his New York railroads into the New York Central, thereby maximizing efficiency. He made William vice president, and the railroad profited quickly under his now experienced leadership.

On August 17, 1868, Sophia Vanderbilt died. Within a year, Vanderbilt married Miss Frank A. Crawford, a much younger woman who was a distant relative of Vanderbilt’s mother.

Vanderbilt continued to add railroad lines to his holdings like so many toys in a child’s closet. In time he owned Canada Southern, Michigan Central, and Great Western. The combined railroad was 978 miles long and worth $150 million, half of which he owned. However, this was the man who had fought against monopolies.

At eighty-one, Vanderbilt remained in good physical and mental health. He had accumulated one of the world’s great fortunes, and, despite his tyranny and ruthlessness, he had created remarkable transportation systems for the United States. On January 4, 1877, Vanderbilt died at his home in New York.

Significance

Cornelius Vanderbilt must be labeled one of the great capitalist successes of all time. Throughout his life, he fought for the principle of free enterprise as guaranteed by the Constitution. From his mother, he learned to be frugal and to save money; from his father, he learned that get-rich-quick schemes rarely worked and that, instead, one could make money through hard work and wise investment, delivering a good product for a fair price. Many of his business practices continue to be standards in the American trade world.

Vanderbilt was born with no privileges, yet his story could not exactly be called rags to riches. He did literally start with a one-hundred-dollar boat that in a lifetime of eighty-two years he turned into 100 million dollars. During his youth, he was an archetypal American child, a Huck Finn who loathed education and spent his time dreaming on the banks of New York’s waterways learning obsessively all that he could about boating.

After his death, some of his heirs continued the family empire until its dissolution in the twentieth century. The family homes in Newport, Rhode Island, and Asheville, North Carolina, would become museums. The Vanderbilt name would be kept alive through its association with railroads no longer owned by the family and, with true irony, through Vanderbilt University.

Bibliography

Andrews, Wayne. The Vanderbilt Legend: The Story of the Vanderbilt Family, 1794-1940. New York: Harcourt, Brace, 1941. Only the first two chapters center on Cornelius Vanderbilt. Because of its span, the book fails to cover much in detail. Includes a family tree, photographs, footnotes, a bibliography, and an index.

Brands, H. W. Masters of Enterprise: Giants of American Business from John Jacob Astor and J. P. Morgan to Bill Gates and Oprah Winfrey. New York: Free Press, 1999. Includes a chapter on the business activities of Vanderbilt and Jay Gould.

Croffut, William A. The Vanderbilts and the Story of Their Fortune. Chicago: Belford, Clark, 1886. Reprint. New York: Arno Press, 1975. Croffut received help from the Vanderbilts until a disagreement severed the connection. A balanced analysis of the story, although the prose is turgid and the book is dated. Presents Vanderbilt with his rough edges.

Gordon, John Steele. The Scarlet Woman of Wall Street: Jay Gould, Jim Fisk, Cornelius Vanderbilt, the Erie Railway Wars, and the Birth of Wall Street. New York: Weidenfeld & Nicolson, 1988. Focuses on the cutthroat competition among railroad barons, describing how Vanderbilt instigated a rate war between his New York Central Railway and the competing Erie line.

Hoyt, Edwin P. The Vanderbilts and Their Fortunes. Garden City, N.Y.: Doubleday, 1962. Well-researched account, emphasizing money and power. Tells how the fourth generation lost the empire. Contains a bibliography.

Jennings, Walter Wilson. “Cornelius Vanderbilt: Illiterate Giant of Transportation.” In Twenty Giants of American Business. New York: Exposition Press, 1952. Extracts from a variety of sources to summarize the high points of Vanderbilt’s life. A good starting point.

Stoddard, William O. “Cornelius Vanderbilt: Competition.” In Men of Business. New York: Charles Scribner’s Sons, 1894. Short overview in dated language, written to inspire careers in business. Overly positive.