by T. J. Stiles
On November 13, Vanderbilt strode into McNeill's rooms in New York, where the sick engineer was confined to his bed. A daguerreotype of Vanderbilt from this time calls to mind a description of a typical wealthy New Yorker by Francis Grund in 1839:
His stature was straight and erect; his neck… was, by the aid of a black cravat, reduced to a still narrower compass; and his hat was sunk down his neck so as to expose half his forehead. His frock-coat… was buttoned up to the chin, and yet of such diminutive dimensions as scarcely to cover any one part of his body. His trowsers were of the same tight fit as his coat, and the heels of his boots added at least an inch and a half to his natural height.
But Vanderbilt was no dandy A viscerally physical presence, he was worth as much—and probably far more—than the entire Transportation Company (capitalized at $500,000). Even as he took control of the Richmond Turnpike Company, he had bought out the New Haven Steamboat Company and added the powerful C. Vanderbilt to his Southern coastal line. McNeill spoke bluntly to him, and made the only contemporary verbatim record of a conversation from the first fifty years of Vanderbilt's life.32
“Captain Vanderbilt,” he began, “my usage and preference is, in a matter like the present, to be explicit and unreserved. You are aware of our present connection [with the Transportation Company] and the reasons its continuance is to be preferred.… They have suitable boats… and although it would be a loss to them, yet if not employed by us they as probably be run in opposition to us.… You know them?”
“Yes.”
“We are in negotiation now and we await their terms. You have read my report?”
“Yes.”
“Then you know my views,” McNeill concluded. “What are yours?”
More than ten years earlier, Frances Trollope had observed the shrewdness of the Yankee businessman in conversation—his gift for indirection, his ability to avoid giving away any useful information—and Vanderbilt now displayed his talent at that fine art. After praising the railroad, he haltingly remarked, “To be candid with you, as you've been with me—I—couldn't—be in anything—with Mr. Palmer for president.”
“Well, suppose you had it all your own way—whom you please for president and directors—O. Mauran? Or anyone else?”
“Anybody else and what board you please—anybody but him.” Vanderbilt had nothing but contempt for the spineless, technically ignorant Palmer.
“Well,” answered McNeill, with rising frustration, “suppose that settled—your terms?”
“Why—if the route were open I wouldn't ask a better business than one-half,” Vanderbilt replied, meaning half the through fare between New York and Boston.
“That is my idea—but the route is not open,” McNeill said, referring to the Stonington's ties to the Transportation Company. But he wanted to know if Vanderbilt planned on launching a rate-cutting war on the route. “By the bye,” he asked, “do you think of coming on it anyhow?”
“Have not made up my mind.”
Blunted in this probe, McNeill took another tack. “Would you propose to throw in your boats for stock—we have the privilege of owning boats under a very advantageous charter.” In other words, would Vanderbilt consider selling the railroad some steamboats in return for shares in the Stonington, and a post as a director?
“I've heard of that, and think it might be made to answer.” Vanderbilt warmed to the topic, pondering aloud how the railroad might run if he joined its management. “It might take one—or two—years to do any opposition up,” he mused, using the slang “do up” for destroy. “Steamboats would both lose.”
“Yes, and we pay expenses only.”
“You'd do more than that,” Vanderbilt snorted. A master of economy, he had a reputation for making a profit even in a rate war. “And—after two years—would have it all our own way. I shouldn't care to make money in that time. I know the route—there's nothing like it.”
“Well—we agree in that—but as you can understand me—I should be glad at your convenience to know what you will do,” McNeill stated.
The conversation displayed Vanderbilt's peculiar combination of wiliness and directness, of intense personal dislikes (in this case for Palmer) and sly concealment of his intentions. It also included one revealing exchange that McNeill mistakenly dismissed as mere bravado. Frustrated with Vanderbilt's refusal to commit himself, he asked at one point, “What do you think would be to your interest to offer?”
“If I owned the road,” Vanderbilt answered, “I'd know how to make it profitable.”
“Oh!” McNeill exclaimed sarcastically. “I suppose you'd own the boats too.”
“Yes,” Vanderbilt replied, and said nothing more about it. McNeill paid no attention. He could not take seriously the idea of one man buying control of a railroad. The Stonington was some fifty miles long, worth millions in fixed capital. It was also “embarrassed” by debt, as he put it, and in the hands of its creditors, the Philadelphia banks. Vanderbilt as master of his railroad? The idea was ridiculous.33
Chapter Six
MAN OF HONOR
Marx says somewhere that men make their own history, but they do not make it just as they please; they do not make it under circumstances chosen by themselves.1 He forgot to add that great plans often come about by accident. How many times had Vanderbilt embarked on important enterprises only because of chance? His start in steamboats under Gibbons, his Dispatch Line to Philadelphia, his lower Hudson route, his People's Line to Albany, all originated in the unexpected. He was quick to turn trouble to his advantage, and to prey on the weak and vulnerable.
In the 1840s, the strategic balance in the transportation network of Long Island Sound destabilized as new railways were constructed alongside the Boston & Providence and the Stonington. The decade began with the completion of both the Hartford & New Haven and, more important, the Norwich, a line that descended from Worcester, Massachusetts, to the Connecticut seaport that gave it its name. And the Long Island Railroad advanced eastward by the hour. Though it would one day become a commuter line, it was designed to connect New York and Boston by way of a steamboat ferry from its eastern terminus to New England's railways.
Even among these competitors, the Stonington should have throbbed with traffic and profits, for it was still the fastest route between New York and Boston. Instead it writhed in bankruptcy—mercilessly exploited by the Navigation Company (formerly the Transportation Company) and tormented by a feud between its angry stockholders and the Philadelphia bankers who held its bonds.2
Vanderbilt entered the 1840s with no particular plan to take advantage of the Stonington's weakness, despite his conference with McNeill. His enemies, on the other hand, embarked on a game of deep subterfuge and indirect pressure. It began in May 1841 with the appearance of Curtis Peck, the captain who had purchased the Citizen from Vanderbilt exactly a decade earlier. Peck advertised discounted fares from New York to Providence with the steamer Belle. This was now called the “outside” route; the Stonington and the Norwich were “inside” lines, since they cut inside Point Judith. Though the outside route was slower and rougher, passengers readily switched to it when fares went low enough. “Knowing the Yankee character, & how highly they value the sixpence,” Palmer, president of the Stonington, worried that the railroad's passengers would start to take the Belle—as indeed they did.3
Vanderbilt followed this gambit with intense suspicion. It was not like Peck to run on the outside route; he operated short lines from New York to Flushing, Long Island, and Norwalk, Connecticut. But Peck was something of a mercenary. In 1834, for example, he had sailed the Citizen to Sing Sing, New York, in opposition to Vanderbilt, at the behest of the Hudson River monopoly. Was he acting now as a front for someone else?
As Vanderbilt hunted out intelligence on the stinking docks and in gaslit offices, he had a very short list of suspects. There were three major forces controlling Long Island Sound's steamboat business: first was the Navigation Company, which dominated the outside ro
ute to Providence and the inside to Stonington; second was Vanderbilt himself, who ran to the Connecticut River and New Haven, where he connected with the Hartford & New Haven Railroad; and third was Menemon Sanford, who connected to the Norwich Railroad with his Charter Oak, along with W. W. Coit, who commanded the Worcester.
Clearly the Navigation Company was not backing Peck, since it suffered badly from this maneuver. Comstock, its outspoken agent, denounced Peck's attack as “the most outrageous and unprovoked on record.” The culprit, then, was most likely Sanford. Vanderbilt had long been a deadly enemy of Sanford's, and had recently driven him off the Connecticut River route to Hartford; he could easily believe that his old foe was to blame. Comstock came to the same conclusion. “I believe Sanford has an understanding with Peck,” he wrote to the Navigation Company president, Charles Handy. “I have been suspicious of Sanford since last winter.” But what could Sanford possibly gain from a fare war on the outside route—one that pulled traffic away from his own Norwich line?
By the end of July, Vanderbilt believed he had the answer. Under the financial pressure of Peck's opposition, the Stonington and the Navigation Company agreed to a proposal by Sanford and the Norwich to pool all their revenue from the through travel between New York and Boston, and divide it according to a fixed formula. Ordinarily it would have been a foolish move for the Stonington, as it usually garnered the greatest share of traffic. But its executives concluded, as chief engineer McNeill wrote, that “it is better even to waive a portion of our advantages over the Norwich route… than continue to lose money.” A few days after they sealed the deal, Peck took the Belle off the outside route—and ran it instead to New Haven, in opposition to Vanderbilt.4
Vanderbilt was incensed. Using Peck as a decoy, Sanford had played the Stonington and the Navigation Company for fools, arranging to skim their profits and build a united front that excluded Vanderbilt. Then Sanford pitted Peck against Vanderbilt's own line. It was a masterful piece of indirection that demanded retaliation.
Too late, Comstock realized that his corporation had been duped. “Sanford, etc., have cheated you into the Norwich contract by false means,” he told Handy. But he seethed with fury at Vanderbilt's response—to run a small steamboat, the aptly named Gladiator, to Providence at a very low fare. This struck Comstock as a flagrant violation of the verbal noncompetition agreement made when the Lexington changed hands. “I… expected it from Vanderbilt as he has avowed it more than once,” he remarked bitterly.
Vanderbilt received a message from Courtlandt Palmer, asking him to come and explain his move. Vanderbilt only had to stalk a few blocks from his office through the crowded, narrow streets of the Wall Street district to reach the Stonington's door. As he sat down in Palmer's office, the tall, powerful Vanderbilt could hardly have concealed his contempt for the officious weakling who ran the Stonington. He explained what had really happened that summer, how Sanford had tricked them and thrown Peck against Vanderbilt's own New Haven line. “To punish Sanford for this he runs the Gladiator, charging $2 fare to Providence and $3½ to Boston to draw the long travel from the Norwich route, where (with us) they charge $5,” Palmer wrote to the banker Lewis. “He states that the opposition is to the Norwich line, not ours.”
Within the Navigation Company and the Stonington, this logic was angrily dismissed. “Vanderbilt's excuse is a miserable one indeed,” Comstock thought. Palmer called the explanation “a mere pretext. He puts his boats on to make money, and a more outrageous violation of his pledged faith to us… could not be made.” Vanderbilt, of course, had a different view—and, as usual, he was sure he was right. “Vanderbilt says he recognizes all his pledges to us,” Palmer continued, “but says we have, in our arrangements with the Norwich Company, absolved him from them, and to satisfy us, he proposes to refer it to arbitration whether he shall pay us damages or we, him.”5
As Palmer and Comstock dipped pens in inkwells and scratched out letters to their respective masters, their outrage soaked through the paper. They each took particular aim at Vanderbilt's reputation as a man of his word. Comstock sarcastically referred to him as “the Honourable Capt. C. Vanderbilt.” Soon he simply abbreviated his views. “As to CV—you know my opinion of his word and honour,” he told Handy. The humorless Palmer was more ornate: “I think Vanderbilt ought to be exposed to the public for the violation of his pledges to us, as nothing was ever more gross or unprovoked. This exposure would annoy him more than anything we could do, as he is very desirous of being considered a man of honor and integrity, and would be severely mortified to have his baseness trumpeted forth to the world.”
Wisely, the railroad did no such thing. As Vanderbilt surely knew, the public hardly would be upset because he ended an agreement that protected the Stonington and the Navigation Company (“that vast and overshadowing monopoly,” in the words of the Brooklyn Eagle). What is curious is that Palmer did not see that; it showed the persistence of an older elitism and Whiggish disdain for economic anarchy. McNeill, on the other hand, understood their precarious public position. “In our political climate,” he sarcastically explained, “corporations must subsist on a very spare diet & practice very fascinating manners, or the Sovereign People will crawl them all over.”6
In this conflict, both Vanderbilt's power and his self-righteousness would prevail. He forced Sanford and Coit to pay him one-third of their steamboat profits for as long as Peck competed with him. The dispute went to arbitration, and the panel (which included William Gibbons, at Vanderbilt's request) ruled against the Stonington and the Navigation Company, and awarded Vanderbilt $1,733.33 in damages. With the judgment of his peers to justify his aggression, Vanderbilt laid siege to the two corporations. Under the name “Vanderbilt's Independent Line,” he sent his New Haven to Providence in December 1841. “That Vanderbilt,” the prim Palmer exclaimed to Lewis, “is a great ______ (you must fill in the blank)”7
Now committed to full-scale warfare, Vanderbilt battered his opponents with his grasp of both tactics and strategy. His main strength was, in a word, everything; the attack was nothing less than an all-enveloping onslaught, omitting no possible competitive advantage. He was better capitalized than his opponents, which enabled him to absorb losses. But he also could make money even in a fare war, thanks to his ability to control costs. In part, this was a technical advantage: the Lexington's engine and hull design had saved an estimated 50 percent in fuel expenses, by far the largest operating cost, and all his later boats followed its plan. He kept personnel expenses down by shifting them to his customers; passengers began to complain that they were expected to tip for almost everything. And Comstock's letters to Handy bemoaned the way that Vanderbilt outmatched them in everything from pricing to renting office space to distributing handbills. “Vanderbilt has several agents in Boston making great efforts to obtain freight and passengers,” he wrote. “The New Haven's passengers and freight increases daily,” he noted on another occasion. “We are losing some of our regular freight customers.”8
Vanderbilt reached an agreement with the Boston & Providence Railroad—the erstwhile ally of the Navigation Company—that gave him a 25 percent rebate on freight charges. He put the Cleopatra on the line, which became very popular. (“She proves to be very fast,” Comstock admitted.) He even hired a lobbyist to petition Rhode Island's legislature to stop the Navigation Company from having exclusive rights to its dock. “V is determined to put us to as much trouble and expense as possible,” Comstock said. “There is a great disposition here [in Providence] to assist him.”
On the strategic plane, Vanderbilt shifted the Sound's travel patterns as he drew thousands of passengers away from the Norwich and Stonington railroads. Palmer was utterly flummoxed. “To the astonishment of everybody he has not lost money & it is supposed that he has made,” he wrote to Lewis. “We have made every effort in our power during the winter to induce Vanderbilt to withdraw from the line but to this day have been entirely unsuccessful.… He is a very hard & troublesome
customer.”
As the spring of 1842 came and went, Palmer verged on a breakdown under the pressure. “His great wealth & tact in the management of steamboats renders him the most formidable opponent that could come in opposition,” he moaned on March 6. A few weeks later he whimpered, “Vanderbilt's boat (the New Haven) lessens our receipts nearly one half. We are barely paying expenses.” In June, he wailed, “Vanderbilt is pushing his opposition against us with great vigor, & as you must have perceived by our weekly returns is ruining our business.” McNeill put it more graphically. Vanderbilt, he warned, “is gnawing at our very vitals.”9
WHATEVER HUGH MCLAUGHLIN SAID OR DID, Cornelius Vanderbilt didn't like it. On Staten Island on December 1, 1843, Vanderbilt flared in rage at McLaughlin, and bashed him with his knuckles until he reduced him to a bleeding wreck. What's remarkable about the story is not the beating, but McLaughlin's nerve in then suing him for $1,000. Vanderbilt's reputation usually terrified people.10
On January 27, 1842, for instance, a committee from the Elizabethport & New York Ferry Company met him to discuss his proposal to sell them some waterfront land in Port Richmond, Staten Island. Coming from Vanderbilt, the most innocuous offer sounded like a threat. If they bought the land, they asked, would he sign an agreement to not compete with their ferry? “Capt. Vanderbilt would not agree to bind himself by any written agreement,” the committee reported, “but said his word was better than his bond & that he has no intention of running an opposition to us any more than he should think of running a boat to Quebec.” The delegation didn't believe him, but finalized the deal just the same, “believing that he will not interfere with us, if we make the purchase,” as the committee put it. It was an offer they couldn't refuse.11