The First Tycoon: The Epic Life of Cornelius Vanderbilt (74 page)

A final enigma surrounds Vanderbilt's intentions, now that he controlled the Harlem. He had turned sixty-nine on May 27, an age generally associated with retirement—or death—rather than beginnings. He himself had written of “this late day” in his life. Yet he showed every sign of embracing his new role as chief executive despite his insistence on a vice president to run daily affairs. Over the ensuing months he would correspond with everyone from the Harlem's chief engineer to Edwin D. Stan-ton about everything from machine shops to individual locomotives.
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His long-term plans, on the other hand, remain shrouded. More than likely, he had little notion of the epic wars to come.

THE HARLEM CORNER
was perhaps the most spectacular sign of the vast quantities of wealth now being handled by the men of Wall Street. Vanderbilt kept his profits secret, but they surely ran into the hundreds of thousands of dollars. It was a harvest that reflected an increasingly stark polarization of society. When the income tax assessors drew up their lists that year, they found that the top 1 percent, a group of 1,600 families, earned 61 percent of the
taxable
income of Manhattan's more than 800,000 souls. Were dividends (which were taxed at the source) included, that percentage would prove far larger. Department-store magnate Alexander T. Stewart earned $1,843,637 in 1863; when one of his clerks was promoted that year, he received a salary of only $500, and many clerks received as little as $300. Wartime inflation punished the city's poor. Retail prices had risen 43 percent since 1860, and rents had climbed as much as 20 percent, but wages had increased only 12 percent. The resentment felt in such slums as Corlears Hook and Five Points began to boil.
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On Saturday, July 11, a typically suffocating New York summer day, the lottery for the draft began, as mandated by the Conscription Act, passed by a Congress desperate for men to fight the increasingly costly war. At the corner of Third Avenue and Forty-seventh Street, “an area of vacant lots and isolated buildings,” as two historians of the city write, “the provost marshal read off names drawn from a large barrel.” Some of the 1,236 men drafted belonged to Black Joke Engine Company No. 33. Largely Irish and working-class, the firemen had always enjoyed an exemption from the state militia; being called up for federal service enraged them. On Monday, when the lottery was scheduled to resume, the Black Joke men sparked a citywide inferno known as the Draft Riots. Mobs stormed buildings and battled police; arsonists started fires from river to river, from Fiftieth Street to the Battery. The violence took a savagely racist turn. Rioters attacked black-owned homes and businesses, lynched black men and women, and ransacked the Colored Orphan Asylum on Fifth Avenue and Forty-second Street, shouting “Burn the niggers' nest!” Troops rushed back from Gettysburg; they charged barricades and battled lines of armed and organized civilians. By Thursday night, six thousand soldiers patrolled the smoldering city. On Friday, the omnibuses rolled once again.

A man could avoid the draft by paying a $300 fee, a provision that inflamed class tensions—indeed, that drove much of the riot's fury. “There goes a $300 man!” the rioters bellowed when they spotted (and attacked) a prosperous-looking fellow on the streets. “Down with the rich men!” they cried, as they looted fine houses on Gramercy Park.
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But the Commodore did not feel their wrath, nor did he have any feeling for it.

The city's response was typically divided. The Republican mayor Opdyke had appealed for troops. Democrats came up with a more sympathetic and expedient solution. With Tweed's guidance, the county board of supervisors created a committee to pay for exemptions and substitutes for the poor. Governor Seymour, a Democrat, also convinced Lincoln to reduce New York's quota.

Somewhere amid this crisis moved Horace Clark and Augustus Schell. Along with August Belmont, they led the “silk-stocking sachems” of Tammany Hall, a faction of wealthy Democrats who eyed Tweed warily as his influence grew in the wake of the riot. The time would come when Clark and Schell moved openly against Tweed, whom they considered a dangerous demagogue; but for the moment, they devoted themselves to the service of the Commodore as he worked to reform the Harlem Railroad. They would rebel against him one day as well, with disastrous consequences for all.
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ON AUGUST 20, 1863
, a small, slender, reserved young man with a great black sack of a beard composed a letter on the stationery of the Rutland & Washington Railroad, addressed to Erastus Corning, president of the New York Central. “I was informed to day,” he wrote, “that a party in intent with the Hudson River [Railroad] clique had been made up for the purpose of purchasing controll [sic] of the NY. Central.” An “informant” in the office of the ring's leader, Leonard W. Jerome, had overheard a conversation among its members, “[and] I thought it proper to advise you.”
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Curiously, the writer of the letter shared a birthday with Cornelius Vanderbilt, though he was born in 1836, making him only twenty-seven. A former surveyor and local historian from the heart of the Catskill Mountains, he had set up as a leather merchant in Manhattan, where he was not very popular. Recently he had purchased a large quantity of the securities of the little Rutland & Washington at a steep discount and had gone into railroading, albeit on a very small scale. His name was Jay Gould.
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Less than five years later, Gould would emerge as the most dangerous enemy of Vanderbilt's long life, but the plot that Gould now uncovered would bring them onto the same side. For Vanderbilt—only weeks into his presidency of the Harlem Railroad—Jerome's scheme posed a test: How would he conduct himself on the treacherous battlefield of New York's railways? The answer would prove surprising, given his reputation, but it would be characteristic of his career as a railroad executive. More than that, his handling of this plot spoke to the strategic geography of the nation's railways, a reality that would define the rest of his life.

If one word could describe the railroad system, it would
be fragmented
. By 1860, a total of 30,626 miles of track draped the American landscape; hundreds of companies made up that network, which had as many as seven different gauges (widths between tracks), from 4 feet 8½ inches (standard in New England, New York, and Pennsylvania) to 6 feet (used on the Erie Railway and some thirteen smaller lines). This confusion dated back to the origins of the system in the 1830s and ′40s. Rather like the old turnpike companies, railroad corporations had been created by the merchants of various cities and towns to funnel trade toward themselves. Local communities fiercely resisted the integration of the network for fear that business would roll right past them; they wanted breaks between railroads, despite the inefficiencies imposed on long-distance commerce. The original charter of the Erie actually prohibited it from linking to railroads that led into neighboring states. By the start of the Civil War, such legal restrictions largely had been eliminated, but the profusion of incompatible gauges and the fragmentation into scores of companies persisted, with consequent costs from “breaking bulk” (loading freight from one car into another) and outbreaks of hostilities between connecting lines.
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In the 1850s, four giant railroads rose to dominance over these mismatched pieces. As early as 1854 they were dubbed the “trunk lines”—defined as the primary routes between the eastern seaboard and the West, reaching from the main Atlantic ports to the heads of river and lake navigation across the Appalachians. They were the Baltimore & Ohio, the Pennsylvania (often called the Pennsylvania Central), the Erie, and the New York Central.
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The latter two were New York lines, though the Erie now terminated in Jersey City The New York Central had emerged in 1853 from the consolidation of ten railways that paralleled the Erie Canal from Buffalo to Albany; it and the Erie were far larger, in capitalization and length, than any other line in the state.
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It was the New York Central that overshadowed the smaller lines run by Gould and Vanderbilt. The Erie ran through barren mountains, but the Central connected a chain of agricultural and manufacturing centers from Buffalo to Rochester to Syracuse to Albany. From its terminus in the latter city it had a choice of three paths into Manhattan: Daniel Drew's People's Line steamboats, the Hudson River Railroad, or (through a short link) the Harlem. The Central's long-standing policy was to pit the three against each other to keep down costs. It routinely gave most of its New York-bound freight to the steamboats, except when ice closed the river during the winter; then it delivered to the Hudson River line. Very little ever went over the Harlem.
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Vanderbilt sorely wanted the long-distance passengers and through freight that came from the West via the Central, no matter how little revenue he received. Unlike a steamboat and steamship line, a railroad suffered from high fixed costs. It was an immovable piece of infrastructure. Whether trains ran or not, the tracks, bridges, buildings, locomotives, and cars had to be maintained; conductors, engineers, firemen, and laborers had to be paid. At least two-thirds of a railroad's expenses remained constant no matter how much or how little traffic it carried. If the Commodore could get additional business, even at losing rates, it would improve the Harlem's outlook.
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To gain access to that rich flow of freight from the West, Vanderbilt decided to pursue diplomacy with the Central. He made this choice as a matter of policy, but he liked and respected the Central's president, Erastus Corning, whom he hailed as “a man of business and a gentleman.” Corning, who was only a few months younger than the Commodore, also had risen to wealth through his wits. At thirteen, he had moved from Connecticut to upstate New York and set up as a merchant in Albany. Though he had served as the Central's president from its creation, he remained alert to his own interests, and ordered the railroad to buy its ironware from a foundry he owned. Corning was also a political power broker—a former congressman and leader of the state's Democratic Party (along with the Central's vice president, Dean Richmond of Buffalo). Corning had thin gray hair, a prominent lower lip, and large, dark, deep-set eyes. Clark and Schell knew him well; indeed, Vanderbilt took Clark with him when he opened talks with Corning in late summer. On September 16, Vanderbilt called on Corning again, and dispatched to him James Banker, who was emerging as a favorite subordinate.
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Unfortunately for Vanderbilt, Corning believed the Harlem offered the Central few advantages. But then came Leonard Jerome's plot to oust Corning from the Central's presidency, offering the Commodore an unexpected opportunity for leverage.

Jerome, the younger brother of Wall Street giant Addison G. Jerome, exemplified the flowering of wealth on wartime Wall Street and the resulting flourish of conspicuous consumption. Strong derided as “a sign of the times” Jerome's “grand eighty-thousand-dollar stable, with the private theatre for a second story.” Social observer Matthew Hale Smith observed that Jerome became “the leader of fashions.”
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According to William Fowler, Jerome was “a tall man, fashionably but somewhat carelessly attired, having a slight stoop, a clear olive complexion, a tigerish moustache, and a cerulean eye.”
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Jerome's belligerence, like Vanderbilt's diplomacy, was a response to the fragmentation of the railroad system. He had come onto the Hudson River board only recently, and he and his fellow directors resented the Central's custom of delivering its freight to Drew's steamboats. To solve this conflict, he organized “a large combination… to control NY Central RR affairs at the next election” in December, as banker Watts Sherman warned Corning, with the aim of “forcing the immense eastward traffic over the road of the [Hudson River],” according to Gould. The game began on October 20 when the Hudson River directors voted to loan Jerome $400,000 for his operation.
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Vanderbilt had personal ties to both Corning and the Jerome brothers, but he calculated his strategic interests clearly and coldly. A takeover of the great trunk line by his rival, the Hudson River Railroad, would permanently deny the Harlem any through freight and passengers from the West. Furthermore, if Vanderbilt helped Corning he would put the Central's president in his debt. On November 11, Vanderbilt scratched a note to Corning in his own hand, a significant fact for a man who loathed writing. “Is their any feair of their success,” he asked, referring to Jerome and his allies. “I feal a little anxious, if I can be of any servis say so.” He wrote that he just had purchased a thousand shares, and had had a total of 5,250 transferred under his name. He offered to obtain “proxys” for many more. “If J. H. Banker ask you for information you can giv it to him he is true & will not deceive us this is certain,” he concluded—revealing how heavily he relied on the honey-smooth vice president of the Bank of New York. (As Watts Sherman told Corning, Banker was well known as Vanderbilt's personal agent. “He holds a position here of great influence in many quarters & is class in all respects.”)
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On Vanderbilt's orders, Banker ferreted out information about Jerome's plot at brokers' offices and gentlemen's clubs. “They are making great exertions,” he wrote to Corning. “I believe they have gone to the extent of sending to Geo. Peabody & Co. to influence foreign proxies,” referring to the American banking house in London where many shares of key railroads, including the New York Central, were held by British investors. The fight for proxies (the right to the votes of those shares) often was more important than stock purchases, especially in a big corporation in which it was prohibitively expensive to buy majority control.
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And the fight was fierce. The
New York Herald
wrote on November 19, “The excitement has now reached a pretty high point, and hard words are resorted to on both sides, instead of argument.”
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