The First Tycoon: The Epic Life of Cornelius Vanderbilt (111 page)

It was a grand accomplishment—one that immediately foundered. Two lines, one weak and one powerful, refused to take part. The Grand Trunk Railway of Canada declined to enter the compact because of its competitive disadvantages. As a long, roundabout line between the West and the Atlantic, it could only attract business with absurdly low rates, and so declined any price-fixing arrangement. President John W. Garrett of the Baltimore & Ohio, on the other hand, refused because of his competitive
advantages
. His was the shortest route between Chicago and a seaport (in this case, Baltimore), so he insisted on the right to set lower rates than the other trunk lines.
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Vanderbilt responded to this intransigence with patience and self-possession. On November 12, he and William stepped off a special train in Baltimore and went to Garrett's offices. There they met Thomas A. Scott and Hugh J. Jewett (the new president of the Erie). One observer described Garrett as “a portly figure” with a round face, “bluish-gray eye, and solid, unanxious tread and pace.… He had a hard, round head, a slow and gracious manner.” His firm pate and rotund dignity may have reminded the Commodore of Erastus Corning or Dean Richmond; in any case, he impressed Vanderbilt, and the two got along well. “We have had a very pleasant interview in Baltimore, as pleasant a one as ever was held when so much capital was represented,” Vanderbilt told the
Evening Post
. “I believe Mr. Garrett… to be a high-toned, honorable man, and that he is willing to concede to any equitable arrangement between all the parties, if the equities can be got at. As to the general principles of railroading, I find by conversation with him that President Garrett exactly agrees with me on all of them; or, in other words, I agree with him so far as he has expressed his views to me.”

Alas, it was not up to these two alone to make the peace. An obstacle arose, and its name was Thomas A. Scott, whose sleight-of-hand approach to managing the Pennsylvania aggravated Garrett. (It also landed Scott in trouble with his own stockholders, who launched an investigation of his regime in 1874.) Garrett insisted on the abolition of Scott's independent fast-freight corporations, which funneled much of their profits to the Pennsylvania's president; not surprisingly, Scott refused. The result was a highly personal spat between the two, who traded public recriminations in early 1875.
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When the Pennsylvania and the Baltimore & Ohio fought, the New York Central could not avoid the resulting repercussions. A desultory rate war raged through 1875. William managed the rise and fall of prices, though his father remained informed and engaged. On June 23, the eighty-one-year-old Commodore gave a long interview to the
New York Times
in which he discussed communications with James Joy, the rate war, and the condition of the Lake Shore. He bridled when asked if he was selling Lake Shore short. “That is a lie!” he snapped. “You may say that he who tries to injure the property which he is managing for stockholders, and endeavors by any means to deteriorate its value, is a thief.”
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And yet, he remained close friends with Daniel Drew, the past master of deteriorating his own corporations' value.

The railroad war proved to be Vanderbilt's main point of interest in the management of Western Union, still run by William Orton. On November 17, 1875, Garrett wrote to the Commodore to inform him that the Baltimore & Ohio was ejecting Western Union from its line along that railroad in favor of Gould's upstart Atlantic & Pacific telegraph company. As Orton succinctly summarized the situation, “The competition between the Railroad Companies for Western business has caused the rivals of the New York Central to strike at the Western Union for the purpose of injuring the Commodore.” Still, Vanderbilt, for the most part, was content to let Orton manage Western Union, as William did his railroads.
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This conflict would not end in a glorious victory. Rather, it offered a quiet affirmation of William's capable management and the Commodore's strategic gifts. As it dragged on through 1876, the New York Central continued to pay 8 percent dividends; in fact, the board made them automatic, issued on a quarterly basis. Even the Lake Shore resumed dividends. By glaring contrast, the Pennsylvania and the Baltimore & Ohio were forced to halt dividends altogether. Of all the competitive advantages that entered into this feat, the most important was the great infrastructure envisioned by the Commodore and completed by the end of 1874: the St. John's Park Freight Depot, the Grand Central Depot, the Fourth Avenue Improvement, a huge North River grain elevator, a double-track bridge at Albany, and especially the four-track line to Buffalo. The Central cut expenses by more than 20 percent on the freight traffic that now increased with the low rates. “This enormous gain is due chiefly… to the separate freight tracks, permitting a uniform moderate speed for freight trains,”
Railroad Gazette
wrote at the end of 1876. The Commodore's calculations were proved correct.
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The rate war also led to Vanderbilt's last great acquisition: the Canada Southern Railway. Launched in 1871 by Daniel Drew and John F. Tracy as a rival to the Great Western of Canada, it was completed from Detroit to the Niagara Suspension Bridge in 1874, just as rates began to plummet. By the end of 1875 it was penniless, with $700,000 in floating debt, $1.4 million in unpaid bonds, and a workforce that received nothing but promissory notes for their wages. Indeed, it was in a far weaker condition than any company the Commodore had taken over in the past. But, given its strategic geographical location, its very weakness made it a threat. Left alone, it would likely fall into the hands of, or make an alliance with, the Grand Trunk, to the Central's injury. And it did possess a well-laid-out line with low grades. Vanderbilt opened negotiations with the Canada Southern directors to rescue their line, and they arrived at an agreement on December 18, 1875. He purchased 48,195 shares (of nearly 100,000 total) for $10 per share, with the right to acquire the remaining fifty thousand shares as they became available. By January 1, 1876, Vanderbilt owned a total of 85,000. On that day, he gave Worcester the stock certificates and ordered him to put ten thousand shares in the name of William; one thousand each in the name of William's sons William K. and Frederick; ten thousand in Worcester's own name; ten thousand in the name of Augustus Schell; and ten thousand in the names of several others. Worcester had each of these individuals endorse the certificates, then handed them back to the Commodore.
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Other business battles raged during these years, such as squabbles over the Wagner sleeping-car company (in which William owned much stock), pooling arrangements with the Fort Wayne, and the telegraph war with Gould's company. These were managed by William and Orton. From the Commodore's perspective, the storm that began in 1873 had come and gone (though the depression would continue to 1879). He had triumphed.
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VANDERBILT MADE A HABIT
of facing eternity. Even after marrying the pious Frank, he occasionally tried to speak to the dead. Mary E. Bennett, a friend of the Commodore's, would recall how he took her to a séance in the fall of 1874. They sat at a table, two raps sounded, and the medium intoned, “This is for you, Commodore. It is from your wife.”

“Business before pleasure,” Vanderbilt said. “I want a communication from Jim Fisk. Give me some paper.” He wrote a question for Fisk's ghost.

“Jim Fisk is here,” the medium said. Vanderbilt asked a question aloud about the stock market, and the medium gave an answer.

“That can't be so,” Vanderbilt said, “but I will watch and see if you are right or I am.” At that, Bennett recalled, he began to joke with Fisk, “and asked him how he liked it on the other side. Fisk said he liked it pretty well, and told the Commodore he would find out soon enough, for he was pretty near the end of his line.” Then Vanderbilt contacted Sophia and asked her for advice about Corneil.
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Bennett's account reveals Vanderbilt's ongoing interest in the world beyond—specifically his need to stay in contact with those who had died before him—and his continuing faith in his own sagacity even in the face of the supernatural. The Commodore found the sessions with the dead comforting, but he kept his own counsel.

As for his most famous intermediaries with the spirit world, Victoria Woodhull and Tennie C. Claflin, he had turned against them years before. For a time after Vanderbilt's second wedding, it was rumored that John Morrissey relayed his messages to the sisters. But their notoriety grew, and with it the Commodore's disenchantment. One by one, their brokerage customers—most of them women who wanted to patronize a female-run firm—began to sue as the sisters' extravagant promises fell through. Whether they invested any money on the stock market at all was an open question. They and Col. Blood spent most of their time on
Woodhull & Claflin's Weekly
, “devoted to the interests of free love and the ‘pantarchy’ whatever that may mean,” the
Times
wrote. They became embroiled in lawsuits with their mother, herself a shady character, and were evicted from their fine townhouse on East Thirty-eighth Street. Woodhull briefly became a leading figure in the women's rights movement, and offered herself as a candidate for president in 1872. She and her sister were also indicted for sending obscene material through the mail that year, the fastidious federal authorities judging their radical weekly to fit the definition. Finally they launched a vicious attack on Vanderbilt in lectures and their newspaper, for he had spurned them. Called to testify on January 4, 1875, in yet another lawsuit against them by a duped investor, he said, “I have not had business relations with them as bankers or brokers. I do not recollect of any authority given by me to them to use my name in their business.” By then, his connection with them had become a distant memory.
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Decay and death continued to claim Vanderbilt's friends. In March 1876, Daniel Drew went bankrupt. He had been battered repeatedly in stock market battles with Jay Gould, and never recovered from the Northwestern corner in 1872. His failure, one newspaper reported, “causes no special disturbance, as it would have done a few years ago.… The whole story of ‘Uncle Daniel's’ disasters is summed up in three words—he was tricky.”
Railroad Gazette
remarked that Drew “has been a great railroad man in his way, which way has been almost entirely that of a speculator in railroad securities.” This judgment was not entirely fair. Drew had been a great steamboat entrepreneur, and had helped start the Canada Southern, though that railroad proved to be a disaster for him, perhaps even the final blow. The real victims of his failure were his charities, especially Drew Seminary. He had endowed them with promissory notes which he could not pay. Vanderbilt said he was “sorry for Daniel Drew, whom he always advised to stop speculating and turn pious in real earnest.”
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A reporter called on Drew, seeking his reflections on his rise and fall. “I had been wonderfully blessed in money-making; got to be a millionaire afore I know'd it hardly,” he said. “I was always pretty lucky till lately, and didn't think I could ever lose very extensively. I was ambitious to make a great fortune like Vanderbilt, and tried every way I knew, but got caught at last. Besides that I liked the excitement of making money and giving it away.” He should have quit Wall Street long ago, he mused, when he was worth $8-$10 million. “One of the hardest things I've ever had to bear has been the fact that I couldn't continue to pay the interest on the notes I gave to the schools and churches. And then my children ought to have been left with large fortunes, as they had a right to expect. The thought of these things at first came near killing me or driving me crazy, but I have got over the worst feelings now.”

The reporter asked Drew who he thought were the richest men in New York. Alexander T. Stewart, he guessed, was worth $40 million, “but Vanderbilt was surely worth a hundred millions of money if he owned a dollar.”
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Stewart did not hold that fortune for much longer. He died on April 10. Three days after, the city saluted the department-store magnate with “an immense funeral,” as the
New York Herald
described it, attended by the rich and powerful, including William H. Vanderbilt. The Commodore did not go to his friend's service. He was sick in bed himself.
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On April 14, Frank sent word to Dr. Linsly asking him to come see the Commodore. Linsly found his patient in great distress. Vanderbilt's autopsy would show that he had an enlarged prostate—common in older men—which led in turn to cystitis, or an infection of the bladder, which was not draining properly. This condition was painful enough, but Vanderbilt also had terrible bowel disorders. He had anal stenosis, a constriction often caused by scar tissue—in his case, the result of surgery he had had decades earlier for hemorrhoids. In particular, he appears to have suffered from diverticulitis, another ailment that commonly afflicts the elderly, in which a pouch (diverticulum) forms in the lining of the colon and becomes infected and inflamed.
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Internal abdominal pain may well be the most unbearable of all. Vanderbilt loathed opiates, the only effective pain medication available. Even when he took them, they increased the constipation from his stenosis, which forced his waste into the infected pouch in his colon. The press reported, “His physical condition is rapidly going to pieces.”

Unfortunately, Dr. Linsly was thrown from his carriage in a severe accident on April 15, and would remain bedridden for several weeks. Vanderbilt demanded an “electrical physician,” William J. Bennett, who found the Commodore “howling like a wild beast with pain, so that he could be heard all over the house, calling upon God to relieve his sufferings and asking why the Lord persecuted him so much.”
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Vanderbilt's world had narrowed to the perimeter of his bed—to the surface of his skin—and it was aflame, with no hope of dousing the fire. He screamed; he exploded at those around him; he felt helpless after a lifetime in command.