The First Tycoon

by T. J. Stiles

  How alarming it must have been for Sophia to move from a country village on a broad green island to this crowded street. Cornelius expected her to raise their infant girl in a house shared with three other families, emptying the chamberpots in a backyard privy, dodging horses and wagons and grunting pigs on muddy streets to fetch water or bring home food from crowded open-air markets. Her transition calls to mind the observations of Frances Trollope, mother of novelist Anthony Trollope, who visited America a decade later. “The women are doggedly steadfast in their will,” she wrote, describing a crowd jostling for seats in a boat, “and till matters are settled, look like hedgehogs, with every quill raised, and firmly set, as if to forbid the approach of any one who might wish to rub them down. In circumstances where an English woman would look proud, and a French woman nonchalante, an American lady looks grim; even the youngest and the prettiest can set their lips, and knit their brows, and look as hard and unsocial as their grandmothers.”51 Lovely and industrious Sophia may have been; now she had to learn to be hard as well.

  She and her husband occupied a distinctly subordinate rank in a society shaped by eighteenth-century notions of social status. The craftsmen they lived with on Broad Street—the carpenters, coopers, and cabinetmakers, the gunsmiths, grocers, and fellow boatmen—were “middling sorts” who made a living with strength and skill. Such fellows affected “a sort of rough independence, which appeared to me manly,” one genteel New Yorker wrote. “They… filled their parts in society with reputation and respectability.” But even artisans who owned shops and employed assistants were men of labor. “The culture of rank,” notes historian Stuart Blumin, “degraded those independent businessmen who worked with their hands.”

  Cornelius and Sophia lived only steps away from lower Broadway, where luxurious private houses were “occupied by the principal merchants and gentry of New York,” as John Lambert observed. Lambert's travelogue frequently referred to this class, noting that their “style of living in New York is fashionable and splendid.” They looked down on “the inferior orders” with contempt. In 1811, a memoirist wrote of how he and his friends had aspired “to be merchants, as to be mechanics was too humiliating.”52

  Vanderbilt could have remained on Staten Island, enjoying the fresh sea air at a fraction of the cost of living. But he and his fellow middling sorts were looking to rise. With the oceangoing ships of the “principal merchants” locked up in port, with wartime shortages rampant, craftsmen became entrepreneurs, breaking down longstanding methods to increase productivity. Vanderbilt's move to New York was itself an entrepreneurial act. It was in the city that information moved most quickly, through word of mouth or the many newspapers that published prices of important goods, news of ship arrivals and departures, and prices of stocks and commodities. It was in the city where the exchanges were located, where auctions of goods were held, where informal, curbside trades of bonds and shares went on each day. It was in the city where one acquired a reputation—and reputation was the axle of this informal, personal economy.

  Vanderbilt could hardly avoid noticing that, despite the innovations and energy of his fellow artisans, most of New York's wealthiest citizens were general merchants. Even banks and securities markets largely remained merchant clubs. When the federal government needed to sell millions of dollars' worth of bonds to fund the war, for example, it turned to two ship-owning, international merchants, Stephen Girard of Philadelphia and John Jacob Astor of New York, who brokered the sale and took bonds for themselves. Vanderbilt would never forget that the richest men traded in cargoes.53

  But for all of his success during the war years, his wealth could only grow so much as long as British ships-of-the-line shadowed Sandy Hook, the president embargoed trade, and the citizens of New York dug trenches that everyone hoped would never be needed.

  SNOW FELL ON THE EVENING of February 11, 1815. The New York waterfront sat silent, the thousands who depended on the port lingering at home, many of them desperate. Chunks of ice descended the North River into the bay—ordinarily a problem for schooners and square-riggers, now a concern only for the few boatmen at work. Shortly before eight o'clock, a small craft steered up to Manhattan's slips. It was a swift pilot boat, one of those that used to race to meet incoming merchantmen from Europe and the Caribbean. As its hull scraped the dock, two men leaped out and raced across South Street to the offices of the city's newspapers. They burst in and gasped, “There is peace.”

  The pilot boat had met the British sloop-of-war Favourite, carrying an American and a British diplomat coming to announce the seven-week-old Treaty of Ghent. Within an hour the city burst into celebration. In every house residents put candles and lamps in the windows. Trinity Church rang its bells, over and over, as the batteries on the harbor fired off cannons. Men and women packed the freezing streets in impromptu torchlight parades, cheering “Huzza!” and “A Peace!” until midnight.54 The next morning, crews began to scour the docks to prepare ships to sail again. They shoveled out salt that had been thrown into bottoms to preserve timbers, removed the tar barrels (nicknamed “Mr. Madison's night caps”) thrown over mastheads, and prepared new sails and lines. On March 1 the first ship cleared the harbor—the Diamond, bound for Havana.

  The incoming ships may have mattered more. British merchants, themselves suffering from the years of war, selected New York as their favored port for dumping their large inventories of manufactured goods. In 1811, New York had run behind Massachusetts in imports, and only slightly ahead of Pennsylvania; in the year ending September 30, 1815, it took in more than both combined. The resurgence of trade lifted New York's imports from $2.4 million in 1811 to $14.6 million in 1815.

  It was merely the first act in a startling revival of the long-closed port over the next few years. On October 24, 1817, came the formation of the first transatlantic packet line (a regularly scheduled service, as opposed to the old custom of ships sailing when they were full), a major contribution to New York's growing dominance over other American ports. Also in 1817, the state passed new legislation that fostered auctions and made the city the most favorable place for merchants from across the republic to buy foreign goods, helping to seal New York's lead as the nation's import center. It began to emerge as the premier distribution hub for the entire country, and as a financial center as well, as money clattered in and credit poured out.55 The result was a revolution in New York's trade, not only with the interior, but with the Atlantic seaboard. Its long-suppressed coasting trade burst out again as merchants made contact with isolated communities. Much of the nation was, in essence, a new market—a vast, untamed economic frontier.

  After the long stagnation of embargo and war, the air on South Street vibrated with opportunity, with the concussion of hogsheads on ship decks and the snap of canvas filling with wind. A race began to be the first to reach new customers and find new suppliers. In this frenzied atmosphere, Vanderbilt's actions spoke both to his unending hunger for wealth and his close reading of the world around him. For one thing, he was bold: just twenty years old when peace arrived, he now reached far beyond the familiar New York Harbor to distant ports and landings along the Atlantic coast. For another, he was shrewd, as he looked for partners with expertise and financial resources greater than his own. His brother-in-law and fellow Staten Islander John De Forest joined with him first. A highly regarded mariner, De Forest was the master of a fast schooner, the Charlotte (named for Cornelius's sister and De Forest's wife), which he had run to Virginia and beyond before the war. In 1815, Vanderbilt purchased a share in the ship. The partners used it to haul goods from New York to Charleston and other Southern ports, where they filled the hold with fish and produce for the return voyage. Before long, Vanderbilt bought full ownership of the schooner. Slowly and steadily, he was making himself into a general merchant. Nothing better illustrated his careful study of the riches that poured into New York.

  He also took on his father as a partner. Cornelius the elder put up some of the money for larg
e new periaugers, big enough for open water. So too did James Day of Norwich, Connecticut, a shipwright who constructed or rebuilt Vanderbilt's vessels, all two-masted boats ranging from twenty-two to thirty-two tons*2 and costing around $750 each (at a time when a succesful artisan in New York earned about $3,200 a year). Though patterned after the harbor-bound boats of New York Bay Vanderbilt had them built for longer voyages, and registered them for the coastal trade with the New York Custom House. The first was the twenty-seven-ton Dread, registered on January 24, 1816. It measured forty-nine feet by fourteen and a half, with little more than a four-foot draft.

  In his small fleet of the small and fleet, Vanderbilt swept down on coastal and riverside communities around New York, seeking out new customers and cargoes. Soon after the war ended, he raced ahead of a cluster of rival schooners to the Virginia oyster grounds to fill his hull with New York's favorite food. He began to sail the Dread around Cape May and up the Delaware River, where he bought shad by the slippery thousands, then sailed up New Jersey's Raritan River, where he learned to hire horsemen to spread the word that he had fish to sell. In New York Harbor, he paid boatmen to sail out to meet incoming ships to peddle food or liquor, while he haggled on South Street over the Charlotte's cargo of fish, produce, and goods.56

  As he struggled into the lowest tier of merchants, he conducted his business with an elbows-out aggressiveness. On October 2, 1816, he had one Daniel Morgan arrested for failing to pay De Forest and himself for a cargo, claiming $200 for goods delivered. The Mayor's Court, located in the city hall, ruled in Vanderbilt's favor, but decided that he had overstated the bill by $100. A few days later his lawyer John Wallis argued in the same court that merchants Phineas Carman and Cornelius P. Wyckoff owed Vanderbilt and his father the substantial sum of $900 for “divers quantities of fish and goods, wares, and merchandize before that time sold and delivered.” Three merchant referees examined the books. In April 1817, they reported that the true debt was only $189.57

  Americans had long been comfortable with the commercial marketplace, but for centuries many had lived in rural isolation or labored under British commercial restrictions. Now they encountered a new world, with the promise of new, better, more—as well as changes that no one could predict. The war had planted the seeds of manufacturing across the North, as workshops were established to produce things no longer available from Europe. New commercial institutions and mercantile houses opened for business. In 1815 alone, the number of American banks rose from 208 to 246, and the value of their circulating notes from $46 million to $68 million. That year marked the start of Vanderbilt's rise as well, as he both rode and added to this rising tide. As a decidedly minor, boat-owning merchant, he could not share in the lucrative transoceanic trade. His very limitations, then, forced him to seek out opportunities on the domestic frontier—to tie together distant marketplaces and introduce trade in places that had been wilderness when it came to commerce.58

  Commerce, of course, consisted of the physical movement of people and goods; it only flowed as smoothly as transportation technology and infrastructure would allow. And transportation was a problem that deeply troubled merchants and lawmakers alike. The nation's road network could best be described as barely in existence. In 1816, a Senate committee found that it was as expensive to move a ton of goods thirty miles overland as it was to bring the same ton across the Atlantic from Europe. John Lambert described how in upstate New York goods were carried in narrow, four-wheeled wagons, each drawn by a team of two horses. “It is a very rough method of riding,” he complained, “for the waggon has no springs, and a traveller ought to have excellent nerves to endure the shaking and jolting of such a vehicle over bad roads.” A movement emerged, a rush to build turnpikes—solidly engineered roads, financed by tolls. Turnpikes, Lambert observed, “have tended greatly to improve the country; for as soon as a [turnpike] is opened through the woods… the country which was before a trackless forest becomes settled.”

  Even the best turnpike was suited only for short distances, and it was cheaper to move goods by water under any circumstances. But shipping had its own limitations. The coastwise trade traveled mostly in sloops and schooners, small vessels with limited capacity And a journey upriver against the current was sometimes impossible under sail. The 150-mile, straight-line voyage from New York to Albany could take several days. In New Orleans, boats that arrived with goods from upstream were simply broken up for lumber in many cases.59

  The speed of transportation largely determined the speed of information, which set limits on long-range commerce—the emergence of financial markets, the efficient movement of capital, the transactions between distant regions. News traveled only as fast as people, whether by messenger, the mail, or the shipment of newspapers. When George Washington died on December 14, 1799, for example, the news took seven days to travel the 240 miles from northern Virginia to New York. Under these conditions, few institutions straddled state lines or operated across long distances—even as Americans began to cross the Appalachians by the thousands.60

  Americans naturally looked for a revolution in transportation. In 1817, New York State began to construct an enormous canal, 363 miles long, between Albany and Buffalo, a village on Lake Erie. Equally important, a dramatic technological breakthrough had appeared on the North River: a vessel that provided its own motive power, independent of wind and muscle and current. They called it the steamboat.61

  It can never be known how much thought Vanderbilt gave to these changes and challenges. He was a rough, ambitious young man, striving in his undersize schooners to match the international traders who strutted past in the stiff top hats, swallowtail coats, and trousers that had replaced the eighteenth century's powdered hair and knee breeches.62 It probably never occurred to him that, in aspiring to their position, he was moving backward. He had started out as a specialist—one in transportation, no less, the field where a revolution was sorely wanted, where businessmen and legislators were looking to invest millions. But at this moment he surveyed the world as it was, saw that the general merchant reigned, and methodically became one himself.

  AN OFT-REPEATED BUT APOCRYPHAL TALE portrays a thoughtful Cornelius in December 1817, tallying his wealth. Just twenty-three years old, he was now supposedly worth $15,000, including $9,000 in cash. But the Vanderbilt of legend was always one step ahead of everyone else. He shrewdly concluded that the economy was about to change, and so he abandoned his enterprises to ride the incoming wave.

  In reality, he saw nothing special about the end of this particular year. To all appearances he planned to carry on as before, adding the General Wolcott to his tiny fleet in July63 He had established a solid reputation as a skilled sailor and merchant—albeit a small one, a shopkeeper of the sea. When men approached him on the docks, they now spoke to him not as Cornele, but as Mr. Vanderbilt, or even Captain Vanderbilt.

  On November 24, 1817, he turned at the sound of those words and saw a well-dressed sixty-year-old man looking at him with sharp, hard eyes. The fellow's dark hair was combed forward in the style of the classical Romans, and when he spoke his puffy double chin wobbled. He introduced himself as Thomas Gibbons. He was a staggeringly rich rice planter from Georgia, now of Elizabethtown, New Jersey; recently he had started a ferry to New York from there. Emphatic and direct, Gibbons said that Ebenezer Lester, captain of his ferryboat Stoudinger, “has suddenly left my employ.” Given “my present embarrassment,” he said, he needed someone to take charge of the boat “on this day, and, I expect, for a few days to come.” Would Vanderbilt do it?

  As a past master of all things related to the port, young Vanderbilt knew the Stoudinger well. It was secondhand and small (smaller, at forty-seven feet, than the Dread). It was so tiny in fact, that it went by the nickname Mouse of the Mountain, or simply Mouse. But Vanderbilt also knew the critical difference between the Mouse and all his own vessels—or, for that matter, almost every craft on the surface of the earth: it ran on steam. And that made it the focus
of a legal and business war that was the talk of the waterfront. Perhaps he grasped, in a flash of insight, that his future would pivot on the fate of Gibbons's little boat. In any case, he agreed to take command of the Mouse. After all, it was only for a few days.64

  *1 The eighth-dollar coin (also known as a “bit”) was so pervasive that stock prices were given in dollars and eighths, a custom that lasted until the end of the twentieth century.

  *2 Tonnage represented not the vessel's weight (except in the case of warships), but its carrying capacity.

  Chapter Two

  THE DUELIST

  The twenty-three-year-old Cornelius Vanderbilt who took command of the Mouse on November 24, 1817, had no way of knowing he was making the most important decision of his life. Then again, not even Thomas Gibbons, who saw a good deal, could foresee how far-reaching their collaboration would prove to be—how it would help unlock the potential of the steam engine, recast the Constitution, and contribute to the remaking of American society. Gibbons had his hard eye fixed on his enemies, unaware that his struggle would inexorably link his own name to Vanderbilt's for the rest of time.

  Even as an impulse, Vanderbilt's snap decision to take orders from Gibbons must have mystified his friends and associates, for the brusque sailor was nothing if not commanding. Vanderbilt was proud, of course, and filled with “the desire of riches” that Rochefoucauld-Liancourt had identified as the essential American trait. His sense of physical power, too, should not be underestimated. He was a big man who lived by his strength, straining daily against the wind and current. His combative manner had been hardened in a fringe of society marked by “rough independence,” where confrontation was the stuff of daily life. He sneered with that contempt for weakness that comes naturally to a man who has beaten and cowed other men.