The First Tycoon: The Epic Life of Cornelius Vanderbilt (25 page)

Frugality was one of Vanderbilt's most potent weapons as he hammered his opponents in this year of desperation. The
Lexington
now formally connected with the trains of the Boston & Providence Railroad, which hit the Transportation Company hard. He dispatched two boats to smash Menemon Sanford at Hartford and New Haven. Not content to name merely a son after himself, he launched “the new and fast sailing Steam Boat C. VANDERBILT,” as he advertised it.

As he added vessels, he pioneered new routes. “The mode of arriving at the eastern part of Long Island has hitherto been by means of small sailing vessels, or by stage coaches,” the
New York Evening Post
observed on July 15. “A more rapid and direct means of conveyance is now provided. Captain Vanderbilt has made arrangements for running the fine steamboats
Cleopatra
and
Clifton
from this city to Oyster-Pond Point and Sag Harbor.” The paper helpfully noted, “The east end of Long Island offers a quiet and agreeable retreat from the noise, heat, and polluted air of the town.”
⁵²

He also scanned the map for more distant targets. The panic may have disrupted the South's economy, he realized, but it would soon recover. Now was the time to strike at its coastal trade, while the market was vulnerable to a newcomer. “The new and elegant steam packet
North Carolina
, Capt. Reynolds, recently built in New York, and owned by Commodore Vanderbilt, arrived here on Saturday night from that city on her way to Wilmington, N.C., between which place and Charleston she is to run,” declared the
Norfolk Herald
on November 26. “The
North Carolina
is 170 feet in length.… Her furniture, accommodations, and equipments, are all of the best description, and admirably arranged for the comfort and convenience of the passengers.”

The
Norfolk Herald
was the first newspaper to give him the honorific title of “Commodore.” At the time, it was the highest rank in the United States Navy, and had been given before to notable steamboat men. The nickname made little impact at the time; though reprinted in New York's
Journal of Commerce
, it came and went, a passing tribute to Vanderbilt's aggressiveness. Yet it was also a sign of a change in his disposition.
⁵³

The captain had always played a double role—that of creator and destroyer, provider and plunderer. He had built his wealth through piratical raids, scourging monopolies with a mastery of tactics and “an economy not known to your opponents,” as John W. Richmond put it, until they paid him blackmail. He also had established his own lines, which he fiercely defended. But the balance within him subtly began to shift, as he formulated the words he would later say to Dr. Linsly: “I think I have been spared to accomplish a great work that will last and remain.” His buccaneering days were far from over, but he rather liked the title of commodore. It spoke of a commander, not a despoiler. By the end of the next decade, it would be a title associated with no one else.

*
Faro is a card game in which players bet against the dealer, or “banker,” who draws two cards per turn.

Chapter Five

SOLE CONTROL

O
n March 8, 1878, the murmuring and rustling of a crowded courtroom in lower Manhattan suddenly fell still. Eighty-year-old Daniel Drew rose from his seat and cautiously ascended to the witness chair. He had been in court more than once that winter, his fragile bones and papery skin “wrapped up in sealskins and mufflers,” the press reported, lips tight and pinched as if they had been sewn shut. He sat slowly, settled his hands on the armrests, and “looked shrewdly at the lawyers with his small gray eyes.” He had been called to testify in what newspaper headlines called “
THE GREAT WILL CONTEST
.”

When prompted, he tersely admitted “that he knew Commodore Vanderbilt very well,” according to the
New York Sun
. He knew his sons, too, who now sat across the aisle from one another: William Henry Vanderbilt, plump and content, wearing a slight smile between the huge sideburns that clung to his cheeks like frightened monkeys, having “apparently inherited good health as well as nearly all the wealth of his father,” a reporter commented; and Cornelius Jeremiah Vanderbilt, “looking pale, thin, and meek,” disinherited, epileptic, and unhappy. “Occasionally Cornelius cast a furtive glance at William, but William never noticed Cornelius.”

Drew could have told stories of his secret cooperation with Vanderbilt over the decades, a partnership that had first blossomed at the end of the 1830s. But he did nothing of the sort. Yes, he told the court, he had had many conversations with Vanderbilt; unfortunately, he could not remember the substance of a single one of them. As the
New York Times
put it, “His testimony was of no importance.” Vanderbilt would have been proud. If there was one trait that had led him to trust Drew, a man notorious for self-interest, it was his silence. And in the aftermath of the Panic of 1837, there had been much to be silent about.
¹

THE STONINGTON COULD CHANGE
everything. On November 10, 1837, the first train had passed down its full fifty miles of track from Providence, where it connected to the Boston & Providence by ferry, to Stonington, Connecticut, a village seaport on Long Island Sound. Officially called the New York, Providence & Boston Railroad, and better known as the Stonington, it cut inside dreaded Point Judith, where steamboats ran into rough seas, which eliminated three hours and much seasickness from the trip between New York and Boston.

Soon after that first locomotive opened the route, Cornelius Vanderbilt investigated the line for himself. His nearly fatal accident four years earlier had not made him hostile to trains, as some later claimed; he keenly understood that control of traffic on Long Island Sound lay in the strategic balance between steamboats and railroads—and between rival railroads, as this and other lines neared completion. So he took a steamer to Stonington, boarded a train, and rode up the line to Providence. “There's nothing like it,” he told the line's chief engineer three years later. “The first time I ever traveled over the Stonington, I made up my mind.” It was the fastest route to Boston, potentially the key to the entire battle for the Sound.

And yet, the Stonington was a crippled giant. Its exorbitant construction costs “were a scandal,” according to one railroad historian. “Its fifty miles, through a far from forbidding territory, had taken $1,300,000 in stock and $1,300,000 in bonds.” Everyone who looked into its affairs could see that the interest on that staggering debt would weigh heavily for years to come.
²
Strategically situated, financially vulnerable, the Stonington gave Vanderbilt much to think about as he returned to New York.

Back at his office, now at 169 South Street, he found Daniel Allen and Lambert Wardell waiting for him with bills and correspondence. His brother Jacob needed to speak to him concerning his plan to burn coal in the
Lexington
in an attempt to save fuel costs and deck space; the engineer had no experience with coal and had to be fired.
³
But perhaps most pressing of all was the problem of Billy.

Vanderbilt's oldest son, William, had now passed sixteen, the age when both Cornelius and Jacob had started out in life. Vanderbilt thought it was time for Billy (as he always called him) to make his own way. But the contrast between himself and his son distressed him. Vanderbilt radiated strength, and he grew more imperious every year. Wardell could not recollect a single instance of him admitting that he was wrong. “If he was interrupted when he was relating something,” noted Dr. Linsly “he would stop and never say another word—never resume the subject.” Allen later recalled, “He was always censorious towards people who differed with him.”

Billy could not have been more different, Allen explained. “We were acquainted in our boyhood days, and the intimacy increased after I married his sister,” he said. “He never in all that time made, to my knowledge, a single objection to anything his father suggested, either in business or in other matters. His father's will with him was absolute.” Billy's lack of spine aggravated Vanderbilt, who expected more of his blood. He often pressed his “delicate” son, calling him a blatherskite and a blockhead. When he did, Allen saw Billy's face collapse into “a peculiar sort of expression—an expression peculiar to him—a falling down of his jaw, a sorrowful look and a whining sort of noise.”
⁴

After a brief education at the Columbia College grammar school, Billy had taken a job with a ship chandler, but the hard labor did not suit him. So Vanderbilt turned to Daniel Drew. This pious, deceitful, inn-keeping, cattle-dealing moneylender had adopted the People's Line name and competed against the Hudson River monopoly until he secured his own payoff in 1836. But Drew soon revived the line and assumed control of the monopoly himself. And that was why Vanderbilt and Drew grew so close, after so much enmity. They made an unwritten agreement to invest in the other's steamboats, precisely because neither had met a more dangerous opponent; giving a share to the other would make it in the interests of each to avoid competition.
⁵

Vanderbilt wanted Billy to have a post in Drew's brokerage house. Together with Nelson Robinson and Eli Kelley (and later Kelley's son Robert), Drew worked at the center of Wall Street, trading stocks and bonds and serving as a “banknote shaver.” The firm facilitated longdistance financial transactions by buying notes and bills of exchange of far-removed banks and merchants at a discount, securing payment from the issuer or reselling them at a profit. It was an extremely risky business, especially in the aftermath of the panic. “The banks
will not
discount under present circumstances freely to good and safe men. They are afraid of each other,” declared the
New York Courier and Enquirer
. “Nearly every transaction is for cash.” Drew, Robinson, & Co. were willing, but they demanded a stiff premium for their services.

This kind of financial tightrope act would make a man out of Billy and teach him the value of money, his father seemed to think. Drew accepted the teenager as his clerk, but wanted something for himself: the use of the speedy new
C. Vanderbilt
for his People's Line on the Hudson, to run at the start of the season, in March 1838. Vanderbilt gladly let his secret partner use it, for he now took a share in the ownership of the People's Line as Drew established himself as the river's new monopolist. These former rivals were becoming close allies and friends. But Billy's fate was another matter entirely
⁶

“I DID SUPPOSE THAT ALL NAVIGABLE WATERS
were public highways, and open to all,” Vanderbilt declared; “therefore I do not complain at any gentlemen running their boat against those that I may see proper to run.” The signed statement appeared in the
Boston Daily Advertiser and Patriot
in July 1838. By now there was nothing surprising about his Jacksonian rhetoric. In this case, he was replying to advertisements “signed by the Directors of the Steam boat
Huntress…
[which] seem to aim at me and my boat,
the Augusta,”
he explained. “And why? because of my having chosen to put a boat on the route between Boston and Kennebec River [in Maine]. Of this newspaper controversy between the
Directors of incorporated Steamboat Companies
, and individual owners of other boats… I leave the public to judge.” Once again, he championed the lone individual against amalgamated wealth with special corporate charters.

But the rhetoric was wearing thin for those who glimpsed a self-serving opportunism beneath it. “We have had a great fuss here about Vanderbilt's boats,” wrote a college student from Maine. “Vanderbilt's undisguised end is to drive the
Huntress
off the line and control it entirely himself.” Wherever Vanderbilt had a chance to dominate a route, in fact, he tried to destroy his rivals.
⁷

In April, for example, he had sat down with the president of the Stonington Railroad, Courtlandt Palmer, to offer his advice on how to defeat an opposition steamboat. Vanderbilt had put aside his competition on the Providence route to supply the railroad with the
Lexington
as a connecting boat, alongside one provided by his old foe, the Transportation Company. Now the
Kingston
, owned by a party in Boston, was undercutting the fare, and he wanted to fight them face-to-face. “Capt. Vanderbilt is in favor of breaking up the regular line and leaving at the same hour with the opposition,” Palmer wrote to William D. Lewis, senior officer of the Girard Bank in Philadelphia, a major holder of the company's stocks and bonds. “Capt. Vanderbilt, who has more experience than all of us united, says he is sure his plan is the right one for the interest of all concerned.”
⁸

Vanderbilt agreed with Palmer. In his July newspaper appeal, he saluted himself for his “20 years experience in steamboats;—it has been my whole study, and I have built and owned some twenty and can say, without any intention of boasting,
that not one life has ever been lost in any of the number.”
(Only a steamboat owner in 1838 would make a point of pride out of never having killed anyone in the ordinary course of business.) It was getting difficult to think of this forty-four-year-old as an outsider.

Vanderbilt ruthlessly pursued his interests at the expense of his would-be partners. He even used his old enemy as a foil. When the Transportation Company canceled its contract with the Stonington at the end of April, he followed suit. Instead, he offered to lease the
Lexington
for $4,000 a month (plus the income from meals and the bar), the same deal offered by the Transportation Company for its steamer, the
Narragansett
. “His terms… are ruinous,” Palmer wrote to Lewis. “Vanderbilt is anxious to sell the
Lexington
, and offers her for 70,000 dolls.,” he added. “It is very desireable if we separate from the Transportation Co. to get Vanderbilt with us. If we do not take him, they will, & if we fight, we shall have to oppose both. But to pay 70,000 dolls. for the
Lexington
is buying him off at a price which is out of all reason.”

It was “exorbitant,” as Palmer put it, to demand $70,000 for a steamer that had cost $75,000 to build—before it had endured three years of battering and erosion on the rough, salty seas around Point Judith—especially now that steamers 25 percent larger had become the standard on the Sound. But Vanderbilt read his target well. Courtlandt Palmer was weak. This thirty-seven-year-old native of Stonington cringed and fawned before Lewis, the elite Philadelphia banker. He often made marvelously brave noises and then collapsed under pressure. When presented with the lease terms offered by Vanderbilt and the Transportation Company, he roared, “We had better however shut up the road than to accede to either proposal.” Eleven days later, on May 3, he squeaked, “I think it for our interest to close with them [Vanderbilt and the Transportation Company] on the [lease] terms proposed. By doing so we avoid a collision.”
⁹
No man afraid of a collision could withstand Vanderbilt.