by T. J. Stiles
Nothing could have been more predictable than the rush to the “diggings,” as they were called. Gold was not simply worth money—it was money. Anyone could take refined gold (and refining was a relatively simple process) to the United States Mint and have it poured into coin. The earth was spitting up cash. Who wouldn't have gone?
In late June, Lieutenant Sherman convinced Colonel Mason that they must visit the diggings in order to report on the find. With four soldiers, Mason's black servant, “and a good outfit of horses and pack-mules,” they journeyed up to the mines. “I recall the scene as perfectly today as though it were yesterday,” Sherman wrote decades later. “In the midst of a broken country, all parched and dried by the hot sun of July, sparsely wooded with live-oaks and straggling pines, lay the valley of the American River, with its bold mountain stream coming out of the snowy mountains to the east.” Along a gravel floodplain adjacent to the river, “men were digging, and filling buckets with the finer earth and gravel,” which they poured into roughly made sifters. Sherman estimated that about four men worked each sifter, and each man earned an average of an ounce of gold—$16—per day, though they often pulled in twice as much. “The sun blazed down on the heads of the miners with tropical heat, the water was bitter cold, and all hands were either standing in the water or had their clothes wet all the time; yet there were no complaints of rheumatism or cold.”
When Mason and Sherman returned to Monterey, they learned that the Mexican War had ended, and California would remain American territory. The troops began to desert by the company, riding to the mountains to take raw money out of the water and the dirt. “Nearly all business ceased,” Sherman wrote, “except that connected with gold.”18
It soon became clear just how much business could be connected with gold. Well before the end of the year, men began trickling back to San Francisco to start businesses to serve the thousands who poured off ships that sailed in growing numbers through the Golden Gate. California was one of the most remote parts of the new American empire—as much as six months' voyage from the Atlantic coast around Cape Horn—yet already its residents could see that something enormous had started there, something that would have repercussions far beyond the mountains and the bay.
IN MARCH 1847, Merchant's Magazine had published a survey of the commercial potential of the recently conquered territory of Upper California. “The Indians,” the writer added, “have always said there were mines, but refused to give their locality”19
Cornelius Vanderbilt, like most New York businessmen, paid little attention to reports of secret Indian gold. He had other concerns. In 1848, he took over the presidency of the Elizabethport Ferry Company, now paying a 20 percent dividend (that is, $20 per share).*1 That same year, Oroondates Mauran died. On March 1, Vanderbilt bought Mauran's shares of their joint enterprises from his estate, buying full control of the Staten Island Ferry for $80,000, along with various parcels of real estate.20
Before the end of the year, Vanderbilt developed his own health problems. He began to suffer heart palpitations. His heart started beating faster and faster, until “it was impossible to count its pulsations,” Dr. Linsly recalled. “At first these attacks lasted a few hours only. They increased at last to twenty-four hours' duration, and in 1848 Dr. Edward Johnson and I were with him sometimes all night and he was a great sufferer.” Given the state of medical knowledge, Linsly and Johnson likely made things worse. George Templeton Strong for one seriously considered homeopathy as an alternative to conventional medicine, “with emetics and cathartics and blistering and bleeding and all the horrors, the anticipation of which makes the doctor's entry give me such a sinking of spirit.”21
Vanderbilt survived his beating heart, blistered skin, and bleeding veins, only to learn that something strange was going on in the world. Rumors circulated of gold in California—real gold, not a figment of Indian legends. The rumors quickly found their way to the stock exchange, where brokers sucked in all commercial information, good or bad. With his ear to the Street, or at least to Nelson Robinson's lips, Vanderbilt would have heard the stories early on. On December 5, 1848, President Polk formally announced the discovery in his annual written message to Congress. “The accounts of the abundance of gold in that country are of such an extraordinary character as would scarcely command belief,” he reported, “were they not corroborated by the authentic reports of officers in the public service.” Horace Greeley proclaimed in the New York Tribune, “We are on the brink of the Age of Gold.”22
Many wealthy New Yorkers feared an age of inflation. “This California business worries me sadly,” Strong wrote on January 25, 1849. “Suppose… the circulating medium of the world should suddenly be increased by a third or a quarter? Where should I be then? Of course, without any loss whatever, one-third or one-fourth poorer.” On January 22, the venerable merchant James G. King voiced the same concerns to Baring Brothers, the esteemed London bankers. “The news from California… cannot fail to have much effect here upon prices, inducing speculation, &c.,” he wrote from New York. “Meanwhile, there is quite an emigration from this country to that region, although the journey is long and perilous.”
As King observed, greed, rather than fear, seized most Americans. One by one, Strong counted friends who organized partnerships of a dozen or more men to buy supplies, outfit a ship, and sail around Cape Horn for the Golden Gate. “The frenzy continues to increase every day,” he observed on January 29. “It seems as if the Atlantic Coast was to be depopulated, such swarms of people are leaving it for the new El Dorado. It is the most remarkable emigration on record in the history of man since the days of the Crusades.” In the twelve months following President Polk's announcement, no less than 762 vessels departed North American ports for California; by April 19, 1849, 226 would sail from New York alone, carrying nearly twenty thousand people.23
The calculation in Vanderbilt's set was much too cold for either fear or frenzy. Clearly this extraordinary development offered new opportunities. Daniel Allen seems to have concocted the group's first gold-rush scheme. On February 2, he convened a meeting of twenty-one men, including himself, to organize the California Navigation Company of New York. Vanderbilt attended, as did nearly his entire circle, including Drew, Jacob Vanderbilt, shipbuilder Jeremiah Simonson, steam-engine manufacturer Theodosius F. Secor, Staten Islander Daniel Van Duzer, Allen's brother William, and Vanderbilt's son Billy. They paid in a total capital of $21,630, divided into twenty-one shares. With this sum they purchased a schooner, the James L. Day, and built a seventy-foot steamboat named Sacramento. The completed steamer was cut into three pieces and placed on the schooner; they planned to have it reassembled in San Francisco, in order to steam between that port and the Sacramento River landings that served the diggings.
It was an ingenious plan, though it followed the model of many small emigration companies. For example, the agreement obliged each of the shareholders to serve as a crewman on the schooner and steamboat or provide a substitute. Vanderbilt had no intention of going, but he thought the expedition offered a suitable start in life for his disappointing son, Cornelius Jeremiah, now eighteen years old. On March 4, 1849, Corneil (as he was called) shipped out under the billowing canvas of the James L. Day as it sailed out of New York Harbor, on a voyage that would change him forever.24
Did Vanderbilt stand on the dock and wave good-bye to his son? He gave little sign to his associates of sentimentality and his daughter Mary would recall his “ill-treatment” of Corneil at this time.25 Yet the day would come when he would quietly confess his concern, even his compassion, for the boy.
In business, his mind was occupied by larger matters than his single share in the California Navigation Company. At each stage of his career, he had seized control of the most important channel of transportation in the young country's growing economy. Now tens of thousands proved desperate to travel to San Francisco, an enormous journey that commanded equally enormous fares. If he were to enter this market, he faced fierce
competition from both familiar and unfamiliar rivals.
Two men—two utterly contradictory men—stood in his way, thanks to a confluence of forces so unusual as to verge on the bizarre. Long before anyone had heard of Sutter's mill, George Law, the canal contractor, and William H. Aspinwall, a merchant at the pinnacle of New York society had joined with the federal government and a pair of political fixers to establish steamship lines to the Pacific coast. Purely by coincidence, they put their first ships in place just as the gold rush began.
The project originated, in a sense, with a slogan: “Fifty-four forty or fight,” battle cry of expansionist James K. Polk in the presidential election of 1844. He came into office determined to annex Oregon, a task he completed in 1846. The next question was how to establish mail service to this distant territory, separated from the organized states by thousands of miles of wilderness. A glance at the map suggested the sea, with a land crossing at the narrowest point in Central America, across the Isthmus of Panama.
But who would pay for such a line? Who would operate it? This was the golden age of laissez-faire Democrats who believed in competitive private enterprise rather than government rewards for a favored few. In 1846, for example, President Polk vetoed a bill to improve harbors and river navigation, calling it an inappropriate and extravagant use of federal money. Unfortunately, businessmen saw no profit in sailing thousands of miles to carry a handful of letters for a few thousand settlers; maintaining a strong link to the Pacific was a matter of national, not private, interest. But there was no public institution capable of carrying out the massive operation. With the extremely important exception of the Post Office, the federal government boasted only a few hundred civilian employees, and played a less active role in the economy than many states. Jacksonian Democrats faced a conflict between their laissez-faire dogma and their territorial expansionism. Expansionism won. Polk's Democratic administration embraced Whig notions as Washington embarked on a scheme to subsidize private enterprise on an unprecedented scale.26
Congress and the State Department prepared the way. In 1846, the South American republic of New Granada (later called Colombia) agreed to a treaty that guaranteed Americans free and safe passage across its province of Panama. Congress passed legislation that offered public funds for private carriers to establish a line to the Pacific coast. In 1847, it directed that the contract for the Atlantic passage (between New York, New Orleans, Havana, and the Panamanian port of Chagres) be given to “Colonel” Albert G. Sloo; the contract for the Pacific (from Panama to points in California and Oregon) went to Arnold Harris.27
These were curious choices. Harris was a resident of Nashville and Sloo of Cincinnati—cities not generally thought of as ocean ports. Rather, the two men represented a new creature in American life, at least at the federal level: they were “dummies.” In some cases, dummies served as front men for other parties; more often, they were political connivers who used their contacts to obtain government privileges which they had no means—or intention—of using themselves, but promptly sold to real entrepreneurs. On August 17, Sloo essentially sold his contract to a group headed by George Law (including Marshall O. Roberts, Prosper M. Wet-more, Robert C. Wetmore, and Edwin Croswell). The federal government would pay these gentlemen $290,000 a year in return for two steamship voyages per month to Chagres. From there the mail would be carried by canoe and mule over the isthmus to the city of Panama, where it would be taken by steamships constructed by William H. Aspinwall, the merchant who bought the Pacific contract from Harris on November 19, 1847, three days after he had received it. Aspinwall would be paid $14,510 per voyage, or $348,250 per year, for his services. In some respects, these deals validated the Jacksonian critique of government largesse, offering a foreshadowing of the corruption that would creep into government in the aftermath of the Mexican War.28
Law's role in this contract-flipping subsidy speculation did not exactly shock political insiders. With his large, blunt head, his thick, wavy hair piled above overhanging brows, hard eyes, and a long, heavy nose, he resembled nothing so much as a prizefighter—and he spoke like one, too. “I ain't a-going to give you the money today,” he snapped on one occasion, with regard to a disputed bill. “I have nothing to do with that 'ere account. It belongs to the company to pay.” The Mercantile Agency, that mouthpiece of establishment opinion, later observed, “He is reported to be sharp & over-reaching in his transactions & dealt with accordingly.… Knows how to take care of his money but [has] little regard for the feelings or interests of others.”29
Law, of course, had defeated Vanderbilt in the famed steamboat race of 1847; but it was conniving rather than racing that defined his career. As a contractor on the Croton aqueduct and other projects, Law had learned the craft of lobbying—or simply bribing—public officeholders. He also knew how to arrange deals. With such talents, he easily gathered more highly esteemed businessmen—notably Marshall Roberts and the Wetmores—to form the United States Mail Steamship Company to build and run the five steamships demanded by his contract with the federal government.30
Aspinwall's role, on the other hand, surprised many. Born in 1807 into a family of prominent New York merchants, he rose to become senior partner of the esteemed firm of Howland & Aspinwall. Unlike Law or Vanderbilt, he received countless callers each New Year's Day at his richly appointed house. “Made a very satisfactory call there,” recorded the snooty Strong on January 1, 1846. “His arrangements, by the by, house and furniture both, are really magnificent.” Aspinwall was, Strong later wrote, “a merchant prince and one of our first citizens.”31
Aspinwall's overseas mercantile business revealed possibilities that his Manhattan-bound peers did not see. In 1847, with the federal subsidy in hand, he created the Pacific Mail Steamship Company to operate his half of the mail route. His corporation outpaced Law's U.S. Mail, building larger ships faster, and positioned its first vessels on the Pacific just as the torrent to California began to gush. When the scope of the rush became clear, Aspinwall helped organize the Panama Railroad to span the isthmus. Ticket buyers besieged the office of Pacific Mail as it continued to bank its huge federal subsidy. It is worth noting that, despite the romantic image of the gold-rush wagon train and dust-covered stagecoach, the steamship lines provided the primary means of travel and commerce between California and the East. They immediately became a very big business, one that would continue for two decades.32
To seize that business for himself, Cornelius Vanderbilt conceived perhaps the boldest plan of his entire career. It would require the help of his old associates, his family, the mercantile establishment, and still others. It would require his own political fixer—not as a dummy, but as an insider who could negotiate as an equal with officeholders at home and abroad. He planned to divert that golden torrent from Panama to a channel of his own making: a canal across the republic of Nicaragua.
Vanderbilt never revealed where his idea originated. Others had proposed much the same plan before. Louis Napoléon Bonaparte (Emperor Napoléon I's nephew) had championed a canal a few years earlier, though escape from imprisonment, the tumult of a revolution, and winning election to the French presidency had left him otherwise occupied. In the waning days of the Mexican War, even before gold had been discovered in California, American newspapers and magazines had frequently reported on a possible canal and transit route across Nicaragua.33 As was often pointed out, there seemed to be an obvious route, following natural waterways: up the San Juan River, which ran some 120 miles from the Atlantic up to Lake Nicaragua; across the lake's 110-mile width; then down a short twelve-mile land excavation to the Pacific, or a channel northwest through Lake Managua.34
But perhaps something deeper than maps and magazine articles drove his thinking. Vanderbilt had yet to hit upon a grand work he believed he was meant to build; no line of steamboats, not even the Stonington Railroad, loomed large enough. But an interoceanic canal—that would be a monument to enshrine his name in glory forever.
VA
NDERBILT'S SON CORNEIL first saw the Golden Gate from sea. The name (which predated the gold rush) appeared obvious to anyone sailing the rugged coast to where it suddenly broke open to reveal the great bay—“the glory of the western world,” as one man called it. Sailing through the Gate, the thin and sickly eighteen-year-old passed between mountains that rose straight up from the water, “the little stream tumbling from the rocks among the green wood,” in the words of a traveler, “and the wild game standing out from the cliffs or frolicking among the brush, and the seal barking in the water.”35 It was a fittingly grand entrance to the greatest treasure trove in history.
For five months, Corneil had blistered his hands as a crewman on the James L. Day, sailing down tropical coasts, crashing through the titanic storms of Cape Horn, sailing up the Chilean shore. Two of the twenty-one aboard had died. Finally, on August 5, 1849, Captain John Van Pelt gave the order to drop anchor at San Francisco. Where once had been a sleepy village, Corneil now saw bedlam. Workmen milled about the shore, leveling the countless sand hills, dumping the dust and dirt into the bay, pounding in pilings and planking down piers. Tents pimpled the flats all about the town, tents of all descriptions—canvas, blankets, and branches stripped from trees. Some served as homes and some as shops, with bags of coffee, barrels of foodstuffs, and stacks of bricks and lumber on display. Men, mules, horses, and carts lumbered up and down ungraded dirt streets, fighting through clouds of dust—or, after heavy rains, through quicksand that sucked horses down to their ears, along with the drays they pulled.