The First Tycoon: The Epic Life of Cornelius Vanderbilt (52 page)

A more significant oversight concerned Vanderbilt's attitude toward subsidies. He undoubtedly took a dim view of federal payments to private businesses—but he had no intention of operating at a disadvantage. He wanted for himself those federal dollars now flowing to Collins, though he was willing to take smaller helpings. To get them, he would embark on a dramatic new lobbying campaign in Washington.

Before he did so, he may have seen an opportunity to make a quick return on his investment in
the Ariel
. Sometime around January
1855
, he reportedly called upon Collins in his office. The sixty-year-old Commodore bluntly stated his proposition: he planned to fight for the subsidy in Congress, but “he would refrain from doing so if he (Mr. Collins) would put back two of his ships to the Allaire Works for repair, and purchase the steamer
Ariel
, then on the stocks, for $250,000,” wrote the
New York Times
some weeks later. “Mr. Collins declined, considering the
Ariel
worth not over $150,000, and that $100,000 was asked simply as ‘hush money’” If the story was true, Collins badly underestimated the
Ariel's
value. In conversations with friends, Vanderbilt reportedly shook his head over his foe's stupidity in turning down a very fair price (especially in light of his long history of commercial extortion). Then again, the story may have been false, as it was reported by the openly hostile
Times
. The newspaper surmised, “The fact is, the ‘Commodore’ has become so accustomed to bringing down his game, that it is not to be wondered at if he
does
expect it to fall the instant he points a gun.”
¹⁵

Collins himself brimmed with confidence. In the age that saw the great flowering of lobbying, he lobbied more effectively than anyone. In 1847, he had convinced Congress to pay him a subsidy for ten years in return for building five ships capable of conversion into military transports or men-of-war. He built four, all luxury passenger liners. The sums his company drew were staggering for the time. Its ships, each roughly 2,800 tons, cost an average of $736,035, an extravagance that Vanderbilt would never have tolerated—though he never had federal loans to cover his expenses. By 1855, federal payments to the line had risen to $858,000 annually, or $33,000 per trip; one congressman calculated that it had sucked $7,874,000 out of Washington since its formation. Collins lavished luxuries on his ships, built them to be very fast, and ran them hard. “They used twice the coal of other ships,” writes historian Mark Summers, “and cost more in repairs after six years than the original outlay for construction.”
¹⁶

“A great deal is said about the excellence of these steamers,” one congressman quipped. “They are certainly the deepest-draught steamers I have ever yet heard of—drawing thirty-three feet in the National Treasury.” Collins secretly pooled earnings with the Cunard company, and earned an average annual profit of 40 percent per year, though inventive accounting made it seem that his line ran at a loss. “Any observer,” Summers concludes, “could see how well it did by a glance at the Brussels tapestries, chandeliers, silver tea-services, and rosewood furniture on board.”

To keep Congress from so observing, Collins marshaled the most effective lobbyists in Washington, including banker and gambling-house proprietor W. W. Corcoran and former House clerk Benjamin B. French. “While others got their thousands for aiding in the Collins steamer appropriation, I got $300,” French complained in 1852. “True I worked only
one day
, but if I had not worked that day, their appropriation would have been lost, for my intimacy with a single member caused him to remain at home, & his vote against it would have defeated it. They ought to have given me ten times what they did.” Another of Collins's “borers” (as they were called), a man notorious for his effectiveness in greasing money out of Congress, was described by a close friend as suffering from only one flaw: “He is such an infernal scoundrel.” Collins worked the Capitol in person, bringing the lavishly appointed
Baltic
up the Potomac in 1852 to entertain congressmen desperate for amusement in backwater Washington.
¹⁷

The borers, the Collins subsidy, and the lucrative mail contracts for the California lines all represented a simmering crisis in American politics, as the ideology of an earlier generation broke down in the face of economic and territorial expansion. Radical Jacksonians condemned both active government and business corporations; yet the growing nation clearly needed transportation enterprises on a vast scale. This contradiction resulted, perversely enough, in large public payments to private corporations to do the work, with an attending frenzy of corruption.
¹⁸
Ironically these circumstances set up Vanderbilt to play the Jacksonian champion even as he reached new heights of stockjobbing.

In February 1855, Vanderbilt launched his attack on Collins's subsidy with a formal proposal to carry the mail to Liverpool for $15,000 per voyage—less than half of Collins's fee. “I have had some experience in ocean navigation,” he wrote, “and am well satisfied that… the enterprise can be accomplished with great advantage to the country, and without loss to myself. I would not ask for the protection of $15,000 per voyage, were it not for the considerable compensation now allowed to the Cunard line by the British Government, and the still more stupendous protection afforded by our own Government to the Collins line.” In conversation with the press, he won sympathy by directly appealing to Jacksonian values. “He considers that the large sums now paid by the American and British governments for carrying the mail blights individual enterprise, and defies individual competition,”
Scientific American
reported.
¹⁹

And so commenced the great congressional struggle over the Atlantic mail subsidy. It would be forgotten in later years, overshadowed by more ominous events. In 1854, the Kansas-Nebraska Act had passed, repealing the Missouri Compromise and throwing open the question of slavery to the settlers of those newly opened territories. An organized land rush was under way, as free-soil migrants from the North moved into Kansas, where they confronted heavily armed, pro-slavery “border ruffians” from neighboring Missouri. The collapse of the old sectional compromises undermined the Whig Party; out of its ashes were arising the nationalist, anti-immigrant Know-Nothings (formally the American Party) and the free-soil Republicans. The Kansas-Nebraska earthquake was tearing apart the political landscape; already many were talking about the secession of the South, should slavery fail to expand into Kansas.
²⁰

On February 15, 1855, however, it was Collins's “enormous appropriation” that dominated the floor of the House of Representatives. Though the principles at stake would later seem minor compared to secession, they went to the heart of American politics. Simply put, it was a struggle between the old Democratic belief in individual enterprise and limited government, and the patriotic conviction that the United States must assert its place in the world, at least to the extent of carrying its own mail—in speed and style. “We live in a fast age,” declared Congressman Edson Olds of Ohio, chairman of the House Committee on the Post Office and Post Roads. “We have fast horses and pretty women [laughter]—and we want the fastest steamers in the world.” Olds's enthusiasm aroused skepticism in a congressman who later became quite an expert in government extravagance, one William M. Tweed. But Olds was adamant in his defense of Collins. “His line of steamers have done more for the American name and skill on the ocean than all the Government [Navy] steamers put together,” he claimed.

Olds spoke for a bill to lock in the Collins subsidy at its recently elevated level and eliminate Congress's option to cancel it with six months' notice. Congressman William Smith of Virginia stood up to interrupt him. According to the
New York Times
, Smith “said he listened with inexpressible surprise,” because Olds had denounced the subsidy in 1852. “Mr. Vanderbilt offered to do the service for a very considerably less sum than Mr. Collins, tendering good security but the proposition was rejected and duly disregarded, in order to continue the present monopoly,” Smith thundered. He “declared himself opposed to the whole scheme, viewing it as a source of corruption.” At that, Olds stood up and asked, “If the gentleman were so opposed to extras, how he got the name of ‘Extra Billy?’ [Laughter.]” Smith replied, “By extra and faithful service in the Democratic Party—not by dishonorable means or unworthy tricks. ‘Do you,’ he asked of Mr. Olds, ‘understand that?’ [Sensation.]”
²¹

The House of Representatives passed the Collins bill. In the Senate, Democrat Robert Hunter of Virginia pointed to bribery as the explanation, noting that just seven months earlier the House had defeated the same measure, as had the Senate. “Now look at both Houses and see the tendency to the other side. What has produced this? Have any new features come up? Shall we say the change is attributable to outside influences? Mr. Vanderbilt proposes to do this service without the extra pay and my constituents shall know that there is one Senator who is unwilling recklessly to squander the money of the people.”

“I don't know nor care about Mr. Vanderbilt,” said Whig George Badger. “I do know what Mr. Collins has done. He has accomplished a successful rivalry with Great Britain, and I think for the honor of the country he should be permitted to proceed.”

“Mr. Vanderbilt is well known to us all,” countered Stephen R. Mallory of Florida. “His reputation is second to nobody.” But William H. Seward, the giant of New York's old Whig Party and an emerging Republican leader, came to Collins's defense. “It is said by some senators that this is an extravagant, a luxurious line,” Seward announced. “Sir, this line of steamers is, in my judgment, the proper diplomatic representative of the United States to the Old World.”
²²

The debate in the Senate raged on February 27 from one o'clock in the afternoon until nine at night. Finally the chamber passed the Collins subsidy bill. “Congress was
not
deluded—it was corrupted,” the
New York Tribune
declared. “Where the money came from, we do not legally know—we can only give a Yankee guess—but that money passed this bill—money not merely expended on borers and wheedlers, and the usual oyster-cellar appliances of lobby legislation—but money counted down into the palms of Members of Congress themselves—this is as clear as the noon-day sun.”
²³

At nine thirty a.m. on Saturday, March 3, the
Ariel
slid down the stocks into the East River. That same morning, President Franklin Pierce vetoed the Collins subsidy bill, denouncing it as a “donation” that would establish a monopoly and eliminate “the benefits of free competition.” The reaction on Capitol Hill was violent. “The veto of the Ocean Steamer Bill produced the greatest excitement in Congress today,” the
New York Herald
reported. “When it was read cries for impeachment were heard from different parts of the hall. Mr. Campbell of Ohio, with much vehemence, exclaimed, ‘The time for revolution has come!’”
²⁴

“The veto was bought by the opposition,” claimed one New York newspaper. “Vanderbilt is rich and bids high to carry his points, especially his enmities; and President Pierce has sold himself, and his friends, too so often, that his influence has become a marketable commodity. Fifty thousand dollars is supposed to be about the present price of a veto involving a million of dollars.”

The accusation led Vanderbilt to respond, in one of the most distinct expressions of his philosophy ever to be printed. It may well have been crafted by Horace Clark or one of his attorneys, though Lambert Wardell would later claim that Vanderbilt dictated his correspondence with great skill; certainly the letter he now sent to the
New York Tribune
crystallized sentiments he had expressed for the last thirty years. He suggested that he might file a lawsuit over the libelous accusation that he had bribed the president, but for the moment, “I desire that the public should know all that I have done and all that I wish to do,” he wrote. “After my return from my last visit to Europe, I became satisfied that the facilities of communication between the two countries were altogether insufficient.” The Cunard Line's interruption had brought matters to a head.

Now I have made no attack upon the Collins line, though I have never regarded, and do not now regard, any particular line of steamers as one of the institutions of the country… to venture to compete with which is treason. I am not inimical to that line, nor have I entertained aught of ill will toward the gentlemen who founded it.… I congratulate them on the prosperity which has hitherto attended their enterprise, and perhaps ought to applaud them for their ingenuity in its management.… They have succeeded in awakening a species of national fervor in favor of their enterprise till some seem to have considered that the measure of American patriotism is the extent of the public contribution to their treasury.

The tone of disdain hardly needs comment. But Vanderbilt went further, using impeccable Jacksonian language. “I assumed that the Atlantic Ocean was wide enough for two lines of steamers, and that if I saw fit to venture there, I encroached upon no private domain, and invaded no vested right,” he wrote.

But it is said that I am always in opposition, and that the same spirit of resistance which has often hitherto governed my action has influenced it now. In answer to this imputation I have only to say, that this is the same spirit which founded this great Republic, and which is now drawing the commerce of the world to our shores. It was the same spirit which unchained the fetters, which legislation similar in principle to that against which I now protest, once fastened upon the Hudson. Repress it if you dare, and before many centuries shall have passed away, your greatness and your glory, and your commerce will have gone still further west.