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Vanderbilt, Cornelius - Overview, Personal Life, Career Details, Chronology: Cornelius Vanderbilt, Social and Economic Impact

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Beginning at the age of 16 with one sailing vessel worth $100, Cornelius Vanderbilt eventually assembled a coast-to-coast transportation empire that included not only ships but also trains. In his heyday, he was the richest man in the entire country. When he died at the age of 82, he was the largest employer in the United States and had amassed a personal fortune of over $100 million. (This was during an era when $100,000 was enough to finance a lifetime of comfort.) As a result of the efforts of this remarkable self-made man, the Vanderbilt name became synonymous with unimaginable wealth and power.

Personal Life

Cornelius Vanderbilt was born on May 27, 1794, at Port Richmond on Staten Island, New York. Although his father was from a long line of Dutch farmers, he also had a side business in commercial boating. Young Cornelius developed a great love for the water and quit school at the age of 11 to work for his father. Five years later, he persuaded his mother to pay him $100 for plowing and sowing a rocky, eight-acre field so that he could buy his own boat. This he accomplished by promising some friends that he would take them sailing if they helped him with the farm work.

Vanderbilt’s sailboat was not just a pleasure craft, however. He soon opened a transport and freight service between Staten Island and New York City. Although he had a rough, coarse manner, he developed a reputation for honesty and for working hard at a reasonable price. By the end of his first year in operation, he was able to repay his mother in full and give her an additional $1000. In fact, Vanderbilt’s business prospered so rapidly that by the age of 18 he was the owner of two vessels and captain of a third.

In 1813 Vanderbilt married Sophia Johnson, and the next year they moved to New York City. There he became a familiar sight on the docks with his lusty personality, salty vocabulary, and burning desire to compete and win. Early in his career, Vanderbilt developed his strategy of offering bargain rates that either drove his rivals out of business or forced them to pay him to withdraw. This allowed him to expand his business, which eventually included not only commercial vessels but also luxury passenger liners. By 1850 Vanderbilt, or “the Commodore” as he was known, was the first name in shipping and passenger service. He then applied what he had learned to the task of acquiring and building railroads.

Vanderbilt had four sons (one of whom died in the Civil War) and nine daughters. A year after the 1868 death of his first wife, Sophia, he married Frances Crawford, a young Southern belle from Mobile, Alabama. Before their marriage, Vanderbilt had shown no interest whatsoever in charitable projects or other causes. But with Frances acting as his advisor, he began to display a more philanthropic bent. In 1873, for instance, he contributed $1 million to Nashville’s Central University, renamed Vanderbilt University in his honor.

Vanderbilt’s lifestyle was one of hard work and aggressive competition right up until his death on January 4, 1877, at the age of 82. Cornelius once admitted, “I have been insane on the subject of moneymaking all my life.” A Vanderbilt Mansion website includes a brief description of him that notes “he despised all routine office work, kept his figures in a vest-pocket book, ate sparingly; never speculated in stocks, never refused to see a caller, rose early, read Pilgrim’s Progress every year, and, for diversion, played whist and drove his trotters whenever he could.”

Vanderbilt amassed a fortune of more than $100 million during his lifetime. Upon his death, most of it was passed on to his eldest son, William Henry (1821-1885), with the exception of $11 million given to each of four grandsons and another $11 million that was split among his nine daughters. William Henry died a mere eight years after his father with a net worth that was twice the amount he had inherited. He left large shares to his two oldest sons, both of whom were managers of the New York Central Railroad.

Cornelius Vanderbilt’s grandsons, most notably Frederick William (1856-1938) and William K. II (1849-1920), multiplied their inheritances into vast business and real estate holdings. They also spent money in ways that their grandfather would have considered frivolous. They owned mansions along New York City’s Fifth Avenue and “cottages” in the country or at the seashore. They dressed in expensive suits with top hats and attended the opera, often escorting ladies who wore diamond tiaras. They also collected art, gave to worthy causes, and married women with European titles. And because of their millions, Vanderbilt’s children and grandchildren were able to gain admission to high society, a privilege denied the Commodore because of his humble background and rough demeanor.

Career Details

On both water and land, Cornelius Vanderbilt constructed great American systems of transportation. From his first sailing vessel to his expansive railroad holdings, he was always looking toward the future, a practice that put him one step ahead of the competition. The War of 1812 created his first significant opportunity. At that point, 18-year-old Vanderbilt had been in the freight business about two years and had done quite well ferrying goods between Staten Island and New York City. He then landed a contract with the federal government to supply the various forts around the region, thus expanding the scope of his operations to include the Hudson River and along the eastern seaboard from New England to Charleston, South Carolina. The profits from this venture allowed him to build a schooner that plied the waters of Long Island Sound and two more ships for handling the coastal trade. By 1817, the young entrepreneur’s fortune amounted to $9,000, plus the value of his fleet.

In 1818, however, having noted the advent of steamboats along the Hudson River, Vanderbilt sold all of his sailing vessels and went to work for Thomas Gibbons, who operated a ferry between New York City and New Brunswick, New Jersey. Over the next 11 years, at an annual salary of $1,000, Vanderbilt captained the ferry and made the line profitable with a tough, often ruthless, approach to the business that earned him the nickname “the Commodore.” He did so despite opposition from competitors Robert Fulton (the inventor of the steamboat) and Robert R. Livingston, who claimed a legal monopoly on Hudson River traffic. In addition, Vanderbilt’s wife, Sophie, managed the New Brunswick halfway house (located between New York and Philadelphia), where all travelers on the Gibbons line had to stay.

By 1829 Vanderbilt had decided to go out on his own. Over the protests of his wife and Gibbons, who offered to double his salary and sell him half the line, Vanderbilt moved his family back to New York City. There he took around $30,000 that he had accumulated and entered the competitive service between New York City and the Hudson River town of Peekskill, where he had the first of several encounters with Daniel Drew. Vanderbilt won this battle by cutting fares to as low as 12 1/2 cents, which forced Drew to withdraw. He next challenged the Hudson River Association in the Albany trade. After he again cut rates, the competition paid him a handsome sum to move his operations elsewhere. Vanderbilt opened service to Long Island Sound, Providence, Boston, and points in Connecticut. His vessels were stable craft that offered the passenger not only comfort but often luxury.

By the time he was 40, Vanderbilt’s wealth exceeded half a million dollars. But he was still looking for new worlds to conquer. He eventually found one after the end of the Mexican War in 1848, when hundreds of thousands of people began heading to California in search of gold. Most of them went by boat to Panama, crossed the isthmus by mule, then boarded steamers that traveled along the Pacific coast. At the time, this was the only way to avoid the long transcontinental trek by wagon.

Vanderbilt proceeded to challenge the Pacific Steamship Company by offering similar service via Nicaragua, which saved 600 miles (thus eliminating two days’ travel time between New York and San Francisco) and cut the fare by half. This move netted him more than $1 million a year. After a bitter political fight in Nicaragua and a battle on Wall Street, Vanderbilt won control of the Accessory Transit Company, a formidable rival of the United States Mail Steamship Company that operated across Panama. Finally, in 1859 he agreed to dispense with the Nicaraguan line for $56,000 per month and the sale of his private yacht for $400,000.

During the 1850s, Vanderbilt dabbled in the Atlantic carrying trade and managed to attain a strong position. But then he decided that the wave of the future was heading in another direction—the railroad. In 1862, at the age of 70, he acquired the New York and Harlem Railroad. After thwarting an attempt by stock manipulators to assert control, Vanderbilt made his son, William H., the vice president, and together they acquired the rundown Hudson River Railroad. Vanderbilt then spent large sums of money improving the lines’ efficiency before watering the stock and paying substantial dividends. During the first five years of the venture, he is said to have cleared $25 million, enabling him to buy a controlling interest in the New York Central Railroad in 1867.

Chronology: Cornelius Vanderbilt

1794: Born.

1810: Sailed his own commercial vessel between Staten Island and New York City.

1812: Expanded his ship transportation business to the Hudson River and the Atlantic coast.

1818: Began operating a ferry service between New Brunswick, New Jersey, and New York City.

1829: Established a steamboat service on the Hudson River.

1850: Established a shipping route to the West Coast through Nicaragua.

1862: Began to purchase controlling interest in railroad companies.

1870: Established a railroad line from New York City to Chicago.

1873: Built Grand Central Terminal in New York City.

1873: Donated $1 million to Central University, which is renamed Vanderbilt University in his honor.

1877: Died.

That same year, however, Vanderbilt ran into trouble when he attempted to gain control of the Erie Railroad, which was then in the hands of his old adversary Daniel Drew along with Jay Gould and James Fisk. As he had done in similar situations in the past, Vanderbilt bought all the stock offered for sale. But this time, Drew and his fellow investors released 100,000 shares of fraudulent stock on the market, which Vanderbilt continued to buy. He lost more than $1 million before he finally gave up on his plan. Instead, he extended his lines to Chicago by acquiring the Lake Shore and Michigan Southern railroads, the Canadian Southern, and the Michigan Central.

The last big project of Vanderbilt’s life was also related to his railroad empire. During the financial panic of 1873, when he was nearly 80, he built Grand Central Terminal in New York City.

Social and Economic Impact

Cornelius Vanderbilt’s contributions to society must be looked at primarily in terms of his transportation of passengers and freight throughout the United States. A shrewd and highly competitive businessman who was also a visionary of note, he managed to lower prices and improve quality, first on the nation’s waterways and then on land. This he accomplished while outfoxing a series of formidable rivals. Although Americans no longer rely on his steamships, they still use the railroad lines and stations that he established well over 100 years ago.

At the time of its founder’s death in 1877, the Vanderbilt empire employed more people than any other business in the United States. Thus, a substantial portion of the population owed its livelihood to the family whose very name came to stand for extraordinary wealth and power. Yet the Commodore himself was not particularly charitable, nor was he given to showy displays of any kind. In fact, during the later years of his life in particular, as the country suffered through growing pains that often resulted in economic chaos, he exerted a stabilizing influence on the nation’s finances.

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about 6 years ago

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