The First Tycoon

by T. J. Stiles

  Yet the Whigs were coming to terms with competition. In 1838, they won control of New York's state government under the leadership of a triumvirate composed of Governor William H. Seward, newspaper editor Horace Greeley, and Albany party boss Thurlow Weed, who sought to wed active government with equality of opportunity. In an Independence Day address in 1839, Seward attacked special privileges, saying it was the Whigs' mission to “break the control of the few over the many, extend the largest liberty to the greatest number.” In other words, government would aid the enterprising but not protect the elite. Even the Whiggish Niles' Register admitted, rather reluctantly, that competition “has its advantages. Community is generally benefitted—monopoly is suppressed, and the utmost perfection and economy is insured.”14

  Cornelius Vanderbilt, on the other hand, took a step in the other direction. He heard of the disastrous ramming of the Wave almost immediately, for he maintained close ties to Staten Island, where his mother still lived and where he had many friends and business associates. He learned that Mauran's fellow stockholders—principally Dr. John S. Westervelt, a son-in-law of Daniel Tompkins—wanted out. Oliver's opposition and the terrible publicity had destroyed the value of their shares. Vanderbilt snapped them up, fully half of the total, “upon the express condition that he should have the sole control and management,” according to Oliver.

  Sole control. It would be a recurring theme in Vanderbilt's life. Always dominating, he increasingly lost interest in investment unless he had power over what was done with his money. Sole control. Oliver differentiated it from “management,” and for good reason. Cornelius wanted independence, not only from Mauran and the other directors, but from legal obligations and political authorities. The Richmond Turnpike Company's special charter was a relic of mercantilism, requiring it to provide ferry service at uneconomical times—a requirement Oliver, as an independent competitor, did not have to meet. Cornelius chose to ignore the mandate. “Cornelius Vanderbilt has frequently given out that he intends running the boats upon said ferry with the sole view of profit,” Oliver complained, “and without regard to the rights or convenience of passengers.”

  And what was more convenient for passengers than competition? Oliver had cut the fare in half and doubled service. Cornelius got a bargain on the stock because of that competition, which he now meant to snuff out. On July 2, 1839, he filed suit against his cousin. The Richmond Turnpike Company owned the Staten Island property where Oliver kept his dock, he argued, and had exclusive rights to the “bridge, ferry house, and bulkhead” on Whitehall Slip that he also used. The company had “accepted and took the said lease [at Whitehall] with full confidence that no person was to be allowed to interfere with their right, immunities, & privileges.” In short, “the greatest practical anti-monopolist in the country” claimed a legal monopoly15

  WHEN VANDERBILT STRODE through the portico, he passed between six fluted columns into the interior of his new mansion. Workmen crisscrossed the floor carrying mantels of Egyptian marble and balustrades of solid mahogany on their shoulders. A special crew of craftsmen from England hammered away at a grand spiral staircase recessed into an oval well, spinning upward forty feet to the top floor. The hustle resembled the bustle around Bellona Hall fifteen years earlier, but this grand house was a world away from that humble inn, even if it was just on the other side of Staten Island from the Raritan River. Here was French plate glass, rosewood parlor doors with silver knobs, and a stained-glass skylight at the top of the stairwell. Another English artisan placed a sheet of glass, painted with the steamboat Cleopatra, over the front door. The captain was building a home fit for a commodore.

  He had been a very young man when he purchased the property from his father. “Cornele's lot,” the locals had called it. His mother lived just a three-minute walk south of here. When he looked out the door of the house, he gazed out atop a hill that gave him a commanding view of the bay, over the terraced landscape and ferry dock below him.16 “It is not possible to conceive a more extended or beautiful prospect,” wrote Philip Hone that summer of 1839, after visiting Vanderbilt's neighbors, the Anthons. “Situated on the summit of the hill back of the Quarantine ground [the state hospital for sick immigrants], it commands a view of the ocean and bay, with all that enters or leaves the port, Long Island, the city North River, the Jersey shore, the Kills, Newark, and Elizabeth.” The island was becoming a fashionable summer destination, and even Hone toyed with the “plan of having a seat on Staten Island.”17

  Francis Grund, a wry observer of New York's social elite, took the ferry that same season. “A fine brass band was stationed on deck,” he wrote, “and the company consisted of a great number of pretty women with their attendant swains, who thus early escaped from the heat of the city in order to return to it at shopping-time.” These visitors went to the Brighton Pavilion, which “offers really a fine and healthy retreat from the noise and dirt of New York,” thought Grund. “The busy bar-keeper was preparing ice-punch, mint-juleps, port and madeira sangarie, apple-toddy, gin-sling, &c. with a celerity of motion of which I had heretofore scarcely seen an example. This man evidently understood the value of time, and was fast rising into respectability; for he was making money more quickly than the ‘smartest’ broker in Wall street.”18

  Grund's sly joke applied to the captain overseeing construction of his mansion farther down Staten Island, only in his case it wasn't funny. In the midst of economic hardship, when Hone found “money uncome-at-able, and confidence at an end,” the uneducated Vanderbilt rapidly rose in wealth, and so too in social stature, if more slowly. When Charles Dickens visited the United States in 1842, he marveled at the American “love of ‘smart’ dealing, which gilds over many a swindle and gross breach of trust.” He often pointed out a man who was getting rich “by the most infamous and odious means,” yet was “tolerated and abetted” by the public. He always asked, “In the name of wonder, then, what is his merit?” Back came the invariable reply: “Well, sir, he is a smart man.”19

  Vanderbilt, however, won respect for more than simply being smart. Americans, and Democrats in particular, distinguished between “stockjobbing” speculators, whom they saw as little more than gamblers or tricksters, and “enterprising” men, who built businesses and created wealth. In 1842, editor Moses Beach added Vanderbilt to his annual list of “the Wealthy Citizens of New York City” alongside Philip Hone, Oroondates Mauran, Daniel Drew, and John Jacob Astor. Beach curtly described Drew as “a shrewd, money making man,” but he lavished praise on Vanderbilt as a productive entrepreneur. “Cornelius has evinced more energy and ‘go aheaditiveness’ in building and driving steamboats, and other projects, than ever one single Dutchman possessed,” he exclaimed. “Put on the coals and steam and flare up for Stonington!”20

  When the mansion was completed in 1840, Vanderbilt moved his large family there, onto his ancestral lands, close to his mother, hard by the dock served by the ferry he now controlled. He now enjoyed spacious comfort commensurate with his wealth. But the newly fashionable status of a country seat on Staten Island certainly appealed to him as well, as he began to mingle with the rich and influential. “Vanderbilt… is now at Saratoga,” wrote Courtlandt Palmer one August around this time; by habituating the little resort town of Saratoga Springs, just north of Albany Vanderbilt moved in society's loftiest circles. “All the world is here,” wrote Hone in Saratoga, referring to perhaps two thousand of the nation's elite, “politicians and dandies; cabinet ministers and ministers of the gospel; officeholders and officeseekers; humbuggers and humbugged; fortune-hunters and hunters of woodcock; anxious mothers and lovely daughters.”21

  On his Staten Island estate, the self-made, would-be dynast gathered his family about him rather like a royal court. He built a three-story Tudor house just south of this property for Ethelinda and her husband.22 Vanderbilt's primary attorney was William K. Thorn, newly married to his daughter Emily. And his nephew, Jeremiah Simonson, worked for him as well.

  A
nd then there was Vanderbilt's younger brother (and neighbor) Jacob, who maintained a powerful bond with Cornelius even as he pursued his own business interests. After the Transportation Company purchased the Lexington, for example, Jacob continued to serve as its captain, faithfully carrying out repairs and reconstruction under the orders of Captain Comstock. Though he labored in his older brother's shadow, Jacob won renown on Long Island Sound. In December 1837, a New Englander wrote (using phrenological jargon) that Jacob, “as it is pretty well understood, has the ‘go ahead’ bump pretty strongly developed.” That month he brought the Lexington safely through a ferocious storm that snapped the rope controlling the rudder.23 He became famous for his “unsurpassed energy and decision of character, wonderful quickness, and reach of judgment,” as the monthly Ladies' Companion declared, “and imperturbable calmness and resolution in the moment of danger.” Had he not taken ill on January 13, 1840, the editors reflected, “many lives might have been saved.”

  At two o'clock on the afternoon of January 15, wrote Philip Hone, “the city was thrown into an awful state of consternation and alarm.” Chester Hilliard of Norwich had arrived with terrible news: the Lexington had been destroyed in a horrific fire two nights before on its way from New York to Stonington. Cotton bales piled around the smokestack had caught fire; the crew had fumbled its attempts to fight the blaze, and had swamped the lifeboats by lowering them while the steamer was still at full speed. Hilliard and another man climbed onto a floating cotton bale; Hilliard strapped himself to it, but his companion did not. After a night adrift in the freezing seas, only Hilliard remained on the bale. Just four of some 125 men, women, and children survived. At least $20,000 in gold and silver disappeared into the Sound. It was, as the newspapers put it, an “appalling calamity.”

  Perversely, the horrific accident may have enhanced Cornelius Vanderbilt's stature. The press reprinted the testimony at the coroner's inquest, held a week after the tragedy. The public read of how Vanderbilt had personally designed the boat, how it had been built with the best materials, how even his enemies had admired its strength and speed. Charles O. Handy, the new president of the Transportation Company (now incorporated as the New Jersey Steam Navigation Company), and Captain Com-stock hinted that Vanderbilt had coerced the company into buying it.24

  Fear and admiration, admiration and fear—always they arose in pairs, a spiral helix of emotion, when other businessmen spoke of him. “I have seen Vanderbilt today,” wrote R. M. Whitney of the Stonington on November 12, 1840. “I had much rather have the opposition of the Trans. Co. to contend with than his.… He and Mauran are determined, persevering men who will carry through all they undertake.” (Whitney obviously believed, perhaps correctly, that Vanderbilt's partnership with Mauran went beyond the Richmond Turnpike Company.) Courtlandt Palmer reflected, “He is so powerful (worth at least half a million of dollars) that we do not wish to war with him if we can possibly avoid it.” The railroad's chief engineer, William Gibbs McNeill, echoed these sentiments in an emphatic assessment he wrote after a lengthy interview with Vanderbilt: “Capt. V. has risen by his merits—a very enterprising, indefatigable, intelligent (of his business) man. His frequent practice—to build boats—run opposition—make money despite of opposition—then sell at a premium to leave the route. Possible that he may (in the count of not being connected with us) serve us the same way.”

  McNeill was a graduate of the two great schools of America's early railway engineers, West Point and the Baltimore & Ohio Railroad, and was hardly a soft touch. Yet his respect for Vanderbilt verged on awe. He concluded, “I confess if we are to be opposed I'd sooner have him with us, than against us.”25

  Vanderbilt was a man defined by enterprise, but he had handed his son over to Daniel Drew, the furtive master of speculation and subterfuge. As one of Drew's clerks, Billy entered the eternal dusk of Wall Street, where the dim light perfectly suited his boss. In New York's early, unregulated stock market, insider trading was the norm. Courtlandt Palmer and William D. Lewis, for example, often wrote about plans for an “operation in our stock,” as they tried to profit through their access to inside information, or attempted to manipulate the share price up or down.

  At one point the refined Lewis built a steamer, the Eureka, for the Stonington line. In a Vanderbiltesque maneuver, its captain tried to extort money from the Hudson River monopoly by threatening to run it to Albany. “Under the circumstances,” Palmer advised Lewis, “perhaps it would be judicious for you to [put] the stock you have bought in the name of someone else, that you are not to be known as an owner of the Eureka.” Unfortunately for them, the leading figure in the monopoly was now Drew, who saw through the deceit and sent a stark warning to the Stonington men. Soon Palmer glumly reported that the Eureka's captain had been “tampered with” by Drew and his partners, adding, “he has been in their pay”26

  “All visible objects, man, are but as pasteboard masks,” Captain Ahab declares in Moby-Dick. “Some unknown but still reasoning thing puts forth the mouldings of its features from behind the unreasoning mask.” Herman Melville's sense of the world as untrustworthy, as a shroud over a deeper reality captured something essential about this time and place. For such was the world that swallowed Billy Vanderbilt: a netherworld populated by those artificial persons called corporations that masked the real persons behind them; by paper money, that masked real gold and silver; by whispered rumors, that masked the manipulations of self-serving men. Paper currency, the North American Review piously intoned, was “a consequence of the increased confidence of man in his fellow man;” but it could also be seen as a demand for confidence that raised suspicions all the higher. Melville's later novel The Confidence-Man consists largely of eloquent appeals for trust in others, appeals made by the trickster of the title in the service of fraud. Legitimate banknotes were rarely accepted at face value, for fear that they could not be redeemed for the full amount of specie promised, and thousands of counterfeit varieties circulated. In The Confidence-Man, a hapless fellow tries to use a counterfeit detector (a list of identifying marks on legitimate bills) that itself is counterfeit. By the 1840s, it seemed that these mysterious abstractions, these false fronts, these outright lies, had layered over the direct, natural economy of people and things that Americans had always known. It is telling that Melville's talisman for the white whale, the ultimate, unreachable reality is a gold coin.27

  “Delicate” was the word that later popped up whenever Billy's youth was mentioned—but life in Wall Street's shadow world required iron nerve. It would be said that he worked hard, too hard, as he married Maria Kissam, daughter of a prominent Brooklyn minister, and settled into an East Broadway house (most likely rented from his own father). But the daily risks, the tensions, the double-dealing weighed on him.28

  Then came the Indiana bonds. Like many states (including New York), Indiana embarked on a “Mammoth System” of public works during these years of depression. It issued millions of dollars' worth of bonds to finance canals, roads, railroads, and other “internal improvements.” Many of these securities were entrusted to Commissioner Milton Stapp to sell in London. Unfortunately, the printing of the bonds did not meet the standards of the London market; new bonds were issued, and Stapp was directed to cancel the old ones. Instead, he met with Drew and Robinson in late 1840. Drew's firm sold both the old and the new bonds in New York in January 1841, bringing a windfall of $134,000. A new commissioner, sent to investigate, stormed into the office and demanded an accounting. Robinson flatly refused to provide one, and Indiana filed suit. For the state government, it was part of a financial catastrophe. For the nation, it was part of a growing disgust with public works that failed to produce public benefits—a disgust that would open the way for Drew, Vanderbilt, and others to build fortunes in railroads. And for Billy, it was a shocking education in the underhanded ways of Wall Street.29

  Billy suddenly quit Drew's firm. “He was a delicate young man,” the New York Times would say, “and the hard
work he had done proved too much for his constitution.” More likely, he could not bear the stress of risky, even illegal maneuvers. Cornelius grudgingly purchased a farm for his broken son and his new wife near the village of New Dorp on Staten Island, not far from his own palatial estate. “Billy is good for nothing but to stay on the farm,” he told Hosea Birdsall, one of his employees. As Birdsall recalled, “He said he would try to make a good farmer of him.”30

  Meanwhile, Vanderbilt returned to the war for control of Long Island Sound.

  “THE STONINGTON IS THE key,” wrote William Gibbs McNeill on November 13, 1840. The line's chief engineer never wavered in his belief that the railroad must become the primary artery of transportation between New York and Boston. But it faced a grave problem. “The company being embarrassed—involved in debt—with an impaired credit,” he wrote in an official report, “could not procure steamboats of their own, and of course were dependent on those who did own them. To their terms we were compelled to submit, and we did submit.” The Transportation Company had the upper hand. To change that, McNeill wanted to forge an alliance with Vanderbilt.31