The First Tycoon: The Epic Life of Cornelius Vanderbilt (68 page)

On March 8, it seemed that the Confederates would stop McClellan's Peninsula Campaign before it could begin—indeed, that they would annihilate Union maritime power at will. That day, a strange craft steamed out of Norfolk harbor at the creeping speed of about four knots. It resembled a turtle or, as someone at the time described it, the roof of a submerged barn. It was the salvaged hull of the
Merrimack
, a U.S. frigate scuttled at the Norfolk naval yard that the Confederates had salvaged, covered in iron plate, and renamed the CSS
Virginia
. (The Union persisted in calling it the
Merrimack.)
It steamed straight for the Union blockade squadron at Hampton Roads, the waters at the mouth of the James River, where it sank two ships. A third, the
Minnesota
, ran aground in shallows where the deep-draft
Virginia
could not go with its deadly ram. During the fight, solid shot ricocheted off its armor shell. The
Virginia
suffered internal damage, but outwardly it seemed invincible.
²⁹

“Stanton was the most frightened man that I ever saw,” Gideon Welles afterward reflected in his diary. When news arrived of the
Virginia's
rampage, “I called at once on the President, who had sent for me,” he wrote a few years later. “Several members of the Cabinet soon gathered. Stanton was already there, and there was general excitement and alarm.” The secretary of war, he recalled, “was almost frantic.… The
Merrimac
,
^*1
he said, would destroy every vessel in the service, could lay every city on the coast under contribution, could take Fortress Monroe—McClellan's mistaken purpose to advance by the Peninsula must be abandoned.” Both Lincoln and Stanton, he added, “went repeatedly to the window and looked down the Potomac—the view being uninterrupted for miles—to see if the
Merrimac
was not coming to Washington.”

Welles's spies had followed the progress of the
Merrimack
turned
Virginia
all along. In fact, the navy secretary had multiple ironclads of his own under construction; one had just been completed in New York, and it departed immediately for Hampton Roads. It was a small, raft-like craft with a revolutionary rotating turret that mounted two guns. It was called the
Monitor
. On March 9, it battled the
Virginia
to a standstill.
³⁰

So ends one of the set-piece stories of the Civil War: the historic first clash of ironclads, the tale of the
Monitor
steaming onto the scene just in time to prevent the complete destruction of the Union fleet. Certainly that was the story that set itself firmly in the memory of Welles, who felt a deep antipathy toward Stanton. But history went on after the indecisive battle of March 9. The
Monitor
had not defeated the
Virginia;
it had merely stood off the enemy. The rebel ironclad still lurked. If the
Monitor
simply suffered a breakdown—a commonplace occurrence in a newly launched ship—then nothing could stand in the
Virginia's
way.

On March 14, five days after the clash between the two armored vessels, General John E. Wool, commander of Fortress Monroe, sent a frightened telegram to Stanton, arguing that the
Virginia
might “overcome the
Monitor
.” The next day, Stanton had an aide telegraph Vanderbilt in turn: “The Secretary of War directs me to ask you for what sum you will contract to destroy the
Merrimac
or prevent her from coming out from Norfolk—you to sink or destroy her if she gets out? Answer by telegraph, as there is no time to be lost.”
³¹
Welles later mocked Stanton's anxiety. “He had no faith in the Navy officers nor me, nor anyone else,” he wrote long afterward, “but he knew Vanderbilt had big steamers.” Welles apparently forgot that, on March 14, he himself assigned Gustavus V. Fox, the assistant secretary of the navy, to get the
Vanderbilt
from New York.
³²

The Commodore seems to have been away from home, but William B. Dinsmore, president of the Adams Express Company, tracked him down. Vanderbilt wired Stanton, through Dinsmore, that he would come to Washington on March 17.
³³
On that Monday morning, “I called at the War Department, where I saw for the first time Mr. Stanton, the Secretary of War,” the Commodore wrote four years later. “He requested me to accompany him to the Executive Mansion.” Vanderbilt and Stanton were similar men in many ways, both tough-minded, demanding, and immensely capable. They clearly got on well as they walked together to the White House, “where,” the Commodore went on, “I was introduced to Mr. Lincoln, to whom I was then personally a stranger.”
³⁴

Now approaching the age of sixty-eight, Vanderbilt experienced the rare sensation of meeting a much taller man. Lincoln asked if Vanderbilt could do anything to keep the enemy vessel from steaming out of Norfolk once more. “I replied to him,” the Commodore wrote, “that it was my opinion that if the steamship
Vanderbilt
was there properly manned, the
Merrimac
would not venture to come out; or if she did, that the chances were ten to one that the
Vanderbilt
would sink and destroy her.” Then the president asked his price. “I at once informed Mr. Lincoln that I was determined that I would not allow myself to do anything by which I could be ranked with the herd of thieves and vampires who were fattening off the Government by means of army contracts,” Vanderbilt recalled, “that I had no vessels to sell or bargains to make, except one.” He would give the
Vanderbilt
to the government on the condition that he, the Commodore, should control its preparations for battle. Lincoln replied, “I accept her.”

“They asked what my plan was,” Vanderbilt recollected, “and I said, to keep steam up and protecting my vessel as much as possible by various means; to run right into the rebel and drown him; that no vessel had been, or could be, made by the rebels that could stand the concussion or stand before the weight of the
Vanderbilt
.” Lincoln asked how soon he could have the great steamship at Hampton Roads. “The
Vanderbilt
should be at Fortress Monroe properly equipped and officered, under my direction, within three or four days at the farthest,” he answered. Vanderbilt then left immediately for New York. With the fate of McClellan's planned expedition in peril, with fears for the entire blockading fleet, he had no time to spare.
³⁵

During those rushed few days, Vanderbilt directed the refitting of his flagship in the Simonson shipyard at Greenpoint. His primary effort was to equip it as a ram. Treasury Secretary Salmon P. Chase inspected it soon afterward. “She was already strengthened [about] the bow with timbers,” he wrote, “so as to be little else for many feet (say 50) from the prow than a mass of solid timber plated outside with iron.” On March 20, the Commodore telegraphed Stanton to ask for formal authority to hunt for the
Virginia
. “The ship leaves to-morrow,” he wrote. The war secretary promptly wired back to Vanderbilt's office at 5 Bowling Green, “The President and this Department are highly gratified at your promptitude, and that you are so far forward.” In the formal order, Stanton wrote, “Confiding in your patriotic motives and purposes, as well as in your skill, judgment, and energy, full discretion and authority are conferred upon you to arm, equip, navigate, use, manage, and employ the said steamship
Vanderbilt
, with such commander and crew and under such instructions as you may deem fit.” The next day, Vanderbilt departed for battle.
³⁶

“Commodore Vanderbilt,” Stanton commented to General Henry Halleck on March 25, “is now at Norfolk to meet the
Merrimac
, and although not armor-clad, he is very confident of being able to run her down.” Many observers shared his optimism. “The immense size, great weight, and speed of the
Vanderbilt
especially would seem to make her a terrible opponent in an encounter of that kind,” remarked the
Journal of Commerce
. “An unwieldy floating battery, lying low on the water, could not survive many blows from a vessel of her weight.” The
Vanderbilt
was “put in fighting trim,” the London
Times
reported. “Her steam machinery has been protected by rails in the most ingenious way, and also by cotton bales and hay. Her prow has been armed with a formidable nose, with the intention to poke it right into the side of the
Merrimac.…
Its edge is made of steel, and very sharp.”
³⁷

Vanderbilt steamed up to Fortress Monroe in his titanic vessel, its immense sidewheels churning the water, smoke billowing out of its twin funnels. On going ashore, he consulted with General Wool and Commodore Louis M. Goldsborough, commander of the squadron so badly beaten in the first battle with the
Virginia
. Goldsborough impressed Vanderbilt, who turned his ship over to the officer (under the immediate command of Vanderbilt's own captain), despite Stanton's wish to keep it in the War Department's control. Vanderbilt returned to New York, sick with a cold, and explained himself to Stanton. “As for Commodore Goldsborough,” he wrote on March 31,
“he is a trump
. I think to be depended upon. He had given Captain Le Ferre directions, which accorded exactly with those that I had given him before leaving New York. So I left this matter undisturbed. My opinion is that the
Merrimac
will not venture outside of Fortress Monroe. If she does, I am quite certain she never can return.”
³⁸

His enemies feared that he might be right. The rebels respected “the powerful steamer
Vanderbilt
, fitted with a ram expressly to attack the
Virginia”
as Confederate Flag Officer Josiah Tatnall reported on April 30. With its great speed, it could easily outmaneuver and run down the
Virginia
(which could do no better than five knots), and sink it with its enormous weight, even if the ram did not carve open the rebel ship. As one Confederate officer recalled, “We were primed for a desperate tussle.”
³⁹

By now McClellan had landed the Army of the Potomac on the peninsula and proceeded to waste week after week besieging Yorktown. In early May, Lincoln himself visited the front, accompanied by Treasury Secretary Chase. One day, he and his party saw the telltale trail of smoke that indicated the
Virginia
was coming to fight. On May 7, Chase wrote to his daughter of how “the
Merrimac
came down & out—how the
Monitor
moved up & quietly waited for her—how the big wooden ships got out of the way, that the
Minnesota
&
Vanderbilt
[might] have fair sweep at her & run her down—how she wdn't come when they cd—how she finally retreated to where the
Monitor
alone cd. follow her.” The
Vanderbilt
performed its task as Vanderbilt predicted: the Confederates refused to risk the
Virginia
against his ship. Lincoln personally ordered an attack on Norfolk, and the retreating rebels scuttled their ironclad.
⁴⁰

Vanderbilt did not win glory in battle, but he played a key role in bottling up the
Virginia
, allowing the federal authorities to regain their confidence and the Peninsula Campaign to proceed (though to ultimate failure in the Seven Days' Battles). His ship remained in the fleet, where he always had thought it belonged. It was indeed a magnanimous gift—and one that would be remembered by Captain Raphael Semmes.

IF WALL STREET HAD SAINTS
, then the college of financial cardinals would surely canonize Elbridge G. Spaulding. Spaulding, chairman of a House subcommittee on emergency measures, performed a true miracle: he conjured money out of nothing, and so contributed more toward the Union victory (and the future of New York's financial sector) than any single battlefield victory.
⁴¹
Though his eminently forgettable name is eminently forgotten today he was one of the most important architects of the invisible world of commerce that emerged in the nineteenth century. In the nation's darkest hour, he took the increasingly abstract economy and completely abstracted the most solid thing of all: the dollar.

In the opening months of the Civil War, the financial markets staggered along in doubt and fear. These “financial markets” included not only the stock exchanges, but also farmers in Missouri and Michigan, merchants in Danville and Davenport, who clutched the paper notes and deposit receipts issued by local banks; which in turn deposited much of their reserves in New York banks; which in turn made their surplus funds available as call loans to stockbrokers; who in turn provided credit to clients for purchases of securities on Wall Street. The uncertainty of war caused many across the country to withdraw deposits or return notes for gold, ultimately draining reserves in Manhattan. Then, too, Secretary Chase borrowed heavily in New York to finance the war. Following Jack-sonian treasury laws to the letter, Chase refused to open accounts with the banks; instead, he insisted that gold be carted from their vaults through the twisting streets of lower Manhattan to the federal subtreasury The specie lingered there, out of circulation, for weeks or even months before it was spent.

As banks struggled with reduced reserves, the Union suffered the string of setbacks that marked the fall of 1861: the loss of Lexington, Missouri, in September; defeat at Ball's Bluff, Virginia, in October; and McClellan's long refusal to advance on Richmond. When the navy seized two Confederate diplomats at sea, on their way to London, it seemed that war with Britain might ensue. Banknote holders rushed to redeem their paper money for gold, which they hoarded; banks called in loans; stock prices fell, causing panicked selling, causing prices to fall faster, erasing their value as collateral for borrowers. In short, a panic ensued. The banks of New York had no choice but to do the unthinkable (indeed, the illegal under state law): by mutual agreement, they ceased to pay note holders and depositors in specie on December 30.
⁴²