William Henry Vanderbilt

• Born: May 8, 1821
• Birthplace: New Brunswick, New Jersey
• Died: December 8, 1885
• Place of death: New York, New York

American railroad magnate

Vanderbilt inherited $100 million when his father, Cornelius Vanderbilt, died. Vanderbilt expanded the family’s railroad empire, amassing a fortune of almost $200 million by the time of his death.

Sources of wealth: Inheritance; railroads

Bequeathal of wealth: Spouse; children; charity

Early Life

William Henry Vanderbilt (VAN-duhr-bihlt) was born on May 8, 1821, to Cornelius and Sophia Vanderbilt. As a child, William was frail and often sickly. Because of his ill health, his father never thought much of William and regularly insulted him. Even into adulthood, Cornelius believed that William was not smart enough to run the family business and called him names like “beetlehead,” “blockhead,” and “good for nothing.” When William was a teenager, Cornelius got him a job in a New York banking house. The two men had a falling-out when William was nineteen and decided to marry Maria Louisa Kissam. Cornelius felt that his son’s decision to marry the daughter of a poor minister from Brooklyn exhibited bad judgment.

First Ventures

Cornelius bought a seventy-acre farm on Staten Island and sent William to run it. All eight of William and Louisa’s children were born while living on the farm. Under his management, the farm grew to 350 acres and became increasingly profitable.

It was at William’s urging that the Vanderbilts entered the railroad business. In 1857, he convinced his father to put him in charge of the small Staten Island railroad that was bankrupt. William expanded the railroad, and soon it was turning a profit. By this point, his father had started to take notice of his “blockhead” son’s business sense.

Cornelius moved William and his family back to Manhattan in 1864. By then, Cornelius had left the steamboat business and had bought the New York and Harlem Railroad. He made William a vice president of this line. After his father took over the New York and Hudson River Railroad, William also became vice president of this railway.

The two men worked together for several years, during which William learned a great deal about his father’s business. He also made suggestions for expanding the family’s growing railroad empire. It was William who encouraged his father to buy the Michigan Central Railroad and the Lake Shore and Michigan Southern Railway. The Vanderbilts’ New York railroad was now connected with Detroit and Chicago.

Mature Wealth

As Cornelius reached old age, he decided he would not fragment the family fortune by dividing it equally among his many children. Upon his death in 1877, Cornelius left $200,000 to each of his eight daughters. His son, Cornelius Jeremiah, who was a drunken gambler and could not be trusted with the business, received $300,000. The bulk of Cornelius’s estate, $100 million, was bequeathed to William. The other Vanderbilt children sued William for a larger share of the inheritance. He agreed to pay each of his sisters an additional $500,000, and he made a similar deal with his brother. Having satisfied his siblings, William established himself as the new head of both the Vanderbilt family and the railroad empire.

Vanderbilt continued to expand his railroad company in the Midwest, including the cities of St. Louis and Indianapolis. He acquired the Chicago and Northwestern; Nickel Plate; and Cleveland, Columbus, and Cincinnati Railroads, as well as other rail lines. In 1879, Vanderbilt sold more than half of his shares of stock in the New York Central Railroad in an attempt to quiet antimonopoly activists and negative coverage from news reporters. He hired a young financier, J. P. Morgan, to handle the sale without causing the price of the stock to plummet. Morgan sold the shares, brought in a number of European investors, and received $30 million for the stock. Vanderbilt paid Morgan’s investment group $3 million in commissions and gave Morgan a position on the New York Central’s board of directors.

Vanderbilt is probably best remembered for a statement he made to a reporter in October, 1882. When asked whether he felt that railroads should be run for the benefit of the public, Vanderbilt answered that he was working for his stockholders and, “the public be damned!” The railroad industry at this time was highly competitive. Smaller companies would often build rail lines nearby the operations of larger railroads and then charge lower rates than their larger competitors. The small lines hoped that the larger companies would then buy them out. Shortly after Vanderbilt bought the Nickel Plate Railroad, the West Shore Railroad began advertising competing fares and faster routes. The Pennsylvania Railroad was rumored to be buying large amounts of stock in West Shore, expecting to profit when Vanderbilt’s New York Central bought out the company. Vanderbilt, however, opted to start a rate war to force the Pennsylvania Railroad out of business. In 1883, Vanderbilt retaliated against the Pennsylvania line by purchasing controlling stock in the Southern Pennsylvania Railroad. Vanderbilt had also made a deal with the major steel producers in Pittsburgh, who were unhappy with the Pennsylvania Railroad. He then conducted a two-year survey of the state of Pennsylvania and began building tracks rivaling the Pennsylvania Railroad’s routes. In 1885, Morgan negotiated a deal that gave the Pennsylvania Railroad control of the Southern Pennsylvania and Beech Creek Railroads. In exchange, Vanderbilt was able to buy out the bankrupt West Shore. In the late 1930’s, Vanderbilt’s planned Pennsylvania rail routes were turned into the country’s first turnpike, a testament to his extensive surveying and planning.

As the head of a corporate empire, Vanderbilt felt he needed a home that reflected his status. He purchased the block of Fifth Avenue in New York City between Fifty-first and Fifty-second Streets, the site of a run-down mansion that had been damaged during the 1863 draft riots. Vanderbilt had two massive homes built on the block beginning in 1879, and he and his family moved in two years later. The mansion on the southern section of the property, at the corner of Fifth Avenue and Fifty-first Street, was the home of William, Louisa, and their teenaged son George. The residence on the northern section was divided in two parts and was occupied by Vanderbilt’s daughters Emily and Margaret and their husbands.

Vanderbilt was generous with his fortune. In 1869, an ancient Egyptian obelisk, known as Cleopatra’s Needle, was given to the United States. Vanderbilt paid all the expenses to transport the gift from Egypt to America, where it was erected in Central Park in 1881. The obelisk is located across the street from the Metropolitan Museum of Art. In 1884, Vanderbilt gave $100,000 to Vanderbilt University in order to finance a theological school. That same year he also donated $500,000 to create Columbia University’s College of Physicians and Surgeons.

William Henry Vanderbilt died in his home, unexpectedly, around two o’clock in the afternoon on December 8, 1885. Unlike his father, William divided his nearly $200 million fortune more equally among his widow, sons, and a number of charities. He left $200,000 to Vanderbilt University, $100,000 to St. Luke’s Hospital, $100,000 to the New York YMCA (Young Men’s Christian Association), $100,000 to the Metropolitan Museum of Art, $50,000 to the American Museum of Natural History, and $450,000 to other charities and religious organizations.

Legacy

William Henry Vanderbilt first interested his family in the railroad business, convincing his father Cornelius to let him run a small rail line in 1857. Vanderbilt surprised his father with his financial and business abilities, and he later extensively increased the railroad empire he inherited from his father. In the less than nine years that Vanderbilt lived after Cornelius’s death, he almost doubled the family fortune to nearly $200 million. Vanderbilt also secured his family’s place in society and built two elaborate mansions on Fifth Avenue in New York City. He filled his home with one of the largest private collections of artwork and sculpture in the world. Several of his descendants followed his example by building extravagant mansions of their own. William was also a great philanthropist, donating hundreds of thousands of dollars to various hospitals, museums, churches, universities, and other organizations.

Bibliography

Craven, Wayne. Gilded Mansions: Great Architecture and High Society. New York: W. W. Norton, 2008. An illustrated history of famous mansions where members of high society, including the Vanderbilts, resided during the Gilded Age. Includes great detail about their lives, as well as the construction, design, and furnishing of their homes.

Daughten, Joseph, and Peter Binzen. The Wreck of the Penn Central. Frederick, Md.: Beard Books, 1999. A history of the New York Central and Pennsylvania Railroads merger that lasted just over a year and resulted in one of the biggest bankruptcies in American history. Includes background information, including the role played by the Vanderbilt family.

Patterson, Jerry. The Vanderbilts. New York: Harry N. Abrams, 1989. Traces the history of the Vanderbilt family from the years before Cornelius became a millionaire through succeeding generations. Includes several photographs and a family tree.

Rickman, Ellen. Biltmore Estate. Mount Pleasant, S.C.: Arcadia, 2005. A history of the Vanderbilts’ Biltmore home, describing the purchase of the land, the construction of the building, and the lives of those who lived there. Relies heavily on photographs and illustrations.

Shank, William H. Vanderbilt’s Folly: A History of the Pennsylvania Turnpike. York, Pa.: American Canal and Transportation Center, 1985. Details Vanderbilt’s attempt to take over the Pennsylvania Railroad and the brutal competition within the railroad industry. His failure laid the groundwork for the first turnpike in the nation.