The First Tycoon

by T. J. Stiles

  His next step would be a firsthand inspection of the canal and transit route. At three o'clock in the afternoon on December 13, 1849, he boarded the steamship Crescent City at Pier No. 2 on Manhattan's North River waterfront, accompanied by his brother Jacob and David White. It was a brisk winter day, yet thousands of spectators crowded onto the docks, even clambered aboard schooners and brigs moored in the slips. They came to witness the “singular sight,” as the New York Herald called it, of four steamships departing at the same time. Three of these enormous vessels—the Crescent City, the Ohio, and the Cherokee—were headed for Chagres, Panama, carrying hundreds of California-bound passengers. The Vanderbilts and White had to fight a crowd on the gangway and the deck that loomed high above the pier, and push through “a large number of female friends of the passengers,” as the Herald observed, “promenading the decks, viewing the cabins, sitting around the stoves, or taking a last fond farewell, with a merry, ringing laugh, or with streaming eyes, according to the disposition of each.”56

  Many women remained aboard as passengers when the crew let slip the hawsers that held the Crescent City to the pier. “Going to California has ceased to be regarded as the formidable undertaking it once was,” the reporter noted. On shore, fewer watchers waved hats and cheered as the multistory paddlewheels churned against the Hudson, smoke surging out of the great stacks that rose amidships between supplementary masts and rigging. To a businessman such as Vanderbilt, all this was telling. The very ordinariness of the event, the abundance of female passengers, and the fact that three steamships could be packed full of California passengers on the same day confirmed the size and endurance of the gold rush. It would not end soon.

  Those steamships also revealed the fact that New York was the primary point of departure for voyages to San Francisco. Though far up the Atlantic coast from Panama, it was the most important city in the United States, easily reached by rail or steamboat from elsewhere in the Northeast. As one historian notes, New York had a “unique position as the national city-system's hub.” Travelers to California came from across the settled states to New York to make their departure.57

  It was inevitable that Vanderbilt should go to survey the route for himself. In nineteenth-century terms, he was a “practical” businessman who attended to technical details to organize and direct the operation. As the Crescent City sailed south, he would observe weather, currents, and other aspects that could add or subtract days from each voyage. But he had a specific task at hand: to fetch the newly purchased Orus, a river steamer now in Panama, tow it to Greytown, and pilot it up the San Juan River. More intriguing than his task was his choice of company. Along with his brother and David White, he rode with the man who owned the Crescent City, one Charles Morgan.

  At fifty-four, Morgan was a year younger than Vanderbilt, though with his thinning hair, wrinkled jowl, and bulbous nose that hung like a ripe pear between two large, cautious eyes, he made a decidedly poor contrast with his tall, athletic guest. In 1809, at the age of fourteen, Morgan had moved to New York from Long Island and had gone to work as a clerk. Ten years later, he had accumulated enough money to buy a share in a sailing ship; he eventually bought stakes in eighteen packet ships on ten lines, as well as some fifteen merchant vessels that plied European and Caribbean ports. He had moved into coastal steamers through James P. Allaire, Vanderbilt's own tutor in steamboats, and established a line on the Gulf of Mexico upon the annexation of Texas. He purchased Theodosius F. Secor's machine works in New York, built his own steamships, and now competed in the California traffic, making him a potential rival.58

  But Morgan's position also made him a potential ally and investor. Indeed, his biographer believes he was one of the original partners in the canal company—unlikely, but possible, since he could have disguised his share. In the small world of New York's steamboat entrepreneurs, he and Vanderbilt surely knew each other well. Unfortunately for their planned visit to Nicaragua, four days out of New York the cross rail supporting the engine of the Crescent City snapped. Powerless, the ship drifted on the ocean swells until a brig, the Roscoe, happened by. The Roscoe took on board Morgan and the Vanderbilt party and carried them to Havana. On December 30, Morgan took a sailing ship to New Orleans, and the Vanderbilt brothers boarded the Ohio to return to New York, abandoning their journey to Nicaragua. White took passage to Chagres to fetch the Orus.59

  If Vanderbilt failed at one task, he succeeded in another. In his search for investors in the canal, he appears to have aroused Morgan's interest. Certainly the two respected each other as businessmen. Morgan shared Vanderbilt's instinctive understanding of when to take a risk, as well as his discipline and caution. (Like Daniel Drew, Morgan was highly reticent about his business, and committed little to paper that would survive his lifetime.)60 The would-be rival was becoming a friend. If only Vanderbilt knew how costly that friend's ultimate betrayal would prove to be.

  EVEN AS JOSEPH L. WHITE told lies to Sir Henry Lytton Bulwer, Vanderbilt searched out the truth for Governor Hamilton Fish. On his return to New York from Havana, he had traveled to Albany on mysterious business—though most of what he did was mysterious, for secrecy was one of the highest business virtues. But secrecy was quite a different thing from falsehood. Vanderbilt continued to cultivate his reputation as a man of his word, even if his words were few. This aspect of his character helps explain why New York's social elite continued to work with him, even seek him out, though they would never invite him to their houses for dinner. Austere and offensive Vanderbilt may have been—benevolent and polished he was not—but Fish knew that he was honest. And so, when the Commodore entered Fish's office on that mysterious errand, the governor brought up another, rather delicate, matter.

  Fish boasted a head of thick, dark hair, along with an elaborate swell of cheek whiskers and a wide, heavy-lipped mouth that made him look rather like a grouper. He also laid claim to leadership of one of the first families of New York. His father had been a Federalist and a close friend of Alexander Hamilton, his namesake; he himself had served in the U.S. House of Representatives as a Whig, and had won the gubernatorial election in 1848. His problem now was that someone had told him that Addison G. Jerome, a prominent Wall Street figure, had spoken ill of him. The reported insult forced Fish to rethink some of his business or political plans. But was the story true?

  Vanderbilt promised to look into it. “Upon investigation of the conduct of Mr. Jerome,” he wrote, “I have come to the conclusion that your mind has been abused. I am satisfied that every charge made against him relative to his conduct towards you is false.” The rumor's substance remains unknown, but Vanderbilt was unforgiving toward such intrigues. “It is extremely hard,” he added, “that an upright, honourable man should be put down by the base fabrications of foul and designing men.”61

  He already may have grown uncomfortable with the highly designing Joseph White. On February 21, Vanderbilt stayed away from a formal dinner given by the canal company in honor of Eduardo Carcache, the Nicaraguan minister to the United States. White made the keynote toast; glib as ever, he boasted of his intimacy with Bulwer and insinuatingly alluded to matters of state that he could not discuss “without violating confidences.” It was the sort of self-important performance that Vanderbilt despised.62

  As events swept forward in 1850, White's personality began to create problems for Vanderbilt's company. True, the year began well enough: on February 24, under headlines that announced Daniel Webster's intent to forge a compromise to settle the disputes between North and South, the New York Herald declared that Bulwer and Clayton had reached a settlement, to be ratified later as the Clayton-Bulwer Treaty It guaranteed the neutrality of the canal and barred Greytown's authorities from interfering with the company, though the British officials and fleet remained. The next good news came on March 9, when Nicaragua incorporated the American Atlantic & Pacific Ship Canal Company. But then some of White's letters fell into the hands of Nicaragua's leaders.63

  “The
letters from Mr. Joseph L. White,” Squier wrote to Clayton from Nicaragua, “were past all precedent egotistical, and calculated to leave the impression that the individual above named was charged with the entire business of arranging affairs with Sir Henry Bulwer.… ‘I stipulated this,’ and ‘I did that’ are the burthen of every sentence. Mr. White,” he added, “is unquestionably what the Yankees term a ‘smart’ man, but a most inveterate, indiscriminating, and indiscreet talker.… The General-in-Chief of the State, and other leading men, have openly expressed to me their disgust.”64 It was only a hint of the trouble White would cause.

  Still, the treaty had been completed, allowing the canal to go forward. If White was, in Squier's judgment, “fitted for little beyond talking,” at least his talk had accomplished what Vanderbilt had required of him. As the company's counsel, his verbal dexterity soon would be needed for one more essential task: to open the bank accounts of those British investors who Bulwer had promised were eager to invest.

  In the meantime, Vanderbilt moved the work of the company forward. He called a meeting of the board on April 24, and directed the incorporating partners to pay the first installment on the stock they had taken, to pay for the Orus and the riverboats now under construction. When the first new boat, the Director, was completed on July 1, he had it sent down to Nicaragua with a corps of engineers who would survey the canal route. He hired Orville Childs, the former chief engineer of New York State, to lead this team. Newspaper editors began to puff up the project, listing its advantages in distance, speed of crossing, and climate over the Panama route.65

  Vanderbilt kept his hand in numerous other enterprises, of course, from the real estate he owned on Coenties Slip and Warren Street, to the Staten Island Ferry, to his post as a director of the Hartford & New Haven Railroad, now paying 10 percent annual dividends (with an extra 5 percent in the fall). But he let go of his last link to the Stonington, resigning the seat on the board he had held after stepping down as president.66

  Another event occurred that year that had far more obvious repercussions. On Independence Day, President Taylor fell ill after a ceremony in extremely hot weather at the Washington Monument. Less than a week later, he was dead. A victorious general in Mexico, the popular Taylor had been an implacable nationalist who had refused to bend to pressure from his native South during the still-unresolved California admission crisis. “He was a good and upright man, such as is uncommon in high office,” George Templeton Strong wrote in his diary, “[and] everybody North and South had a vague sort of implicit confidence in him, which would have enabled him to guide us through our present complications.” He left the White House to Millard Fillmore, an unknown quantity in the midst of the ongoing crisis.67

  At the end of September, the Prometheus slid down the rails at Simon-son's (that is, Vanderbilt's) shipyard, splashing into the East River. It was Vanderbilt's first oceangoing steamship, and perhaps his finest vessel to date. “V has superintended her construction himself,” the New York Tribune wrote on October 1, “and the builder has made her a first-class vessel.” Measured at more than 1,200 tons and 230 feet, with clean lines and enormous sidewheels, it promised to be the swiftest ship in the California trade.68

  Everything seemed to be in place. Nicaragua had signed the contracts and issued the corporate charter; the United States and Great Britain had come to terms; riverboats were on the scene or on their way; and now Vanderbilt had launched the first ship for the Nicaragua transit line. Only one thing was lacking: money. And there was only one place where it would be found. No sooner had the hull of the Prometheus been towed to the Allaire machine works for the installation of its boilers and pistons than Vanderbilt and Joseph White boarded a different steamship, bound for London.

  IF ANYONE DOUBTED that progress could serve to obscure the world, a carriage ride through London might have been proof enough. Here were all the wonders of civilization, from the cupolas of St. Paul's Cathedral to the crowded docks, where laborers swarmed over ships to unload goods from around the globe. Unfortunately, those wonders often were invisible, thanks to innumerable hearths of burning coal. When White and Vanderbilt rode in a coach through the crooked lanes of the great metropolis in October 1850, they, like characters in Charles Dickens's Bleak House, might well have asked “whether there was a great fire anywhere? For the streets were so full of dense brown smoke that scarcely anything was to be seen.”

  For Vanderbilt, on a personal level, the impact and implications of this transatlantic journey remain as obscure as London itself. We can only guess. For one thing, the sheer size of the imperial capital must have been a revelation. Millions milled through “the dirtiest and darkest streets that ever were seen in the world” (in Dickens's words), down lanes lined with ancient monuments and architectural marvels unknown in the United States. This transatlantic voyage was Vanderbilt's first; for him, as for so many other Americans who crossed the ocean, to discover London was to discover the world.

  His very presence on this mission speaks of a particular, perhaps growing, confidence. Three more years would pass before the Mercantile Agency pronounced him “boorish” and “offensive,” suggesting that he retained the crude manners of a Staten Island mariner. Yet no longer would he let White serve as sole interlocutor for the canal company. He conferred with Lord Palmerston himself during this visit—though it is unknown whether Vanderbilt kept his ever-present cigar clamped between his teeth, or spoke in curses and double negatives, as had been his wont.69

  Vanderbilt and White journeyed from their hotel through the streets of the City the heart of the metropolis and the financial capital of the globe, to a building around the corner from the Bank of England, at 8 Bishopsgate Street: the grand offices of Baring Brothers & Co. The firm was perhaps the foremost merchant bank in the world, rivaling the combined wealth of the international Rothschild clan. After ninety years in business, Baring Brothers carried such weight in world affairs that a common saying counted the company as one of the great powers of Europe, alongside Britain, France, and Russia.

  Vanderbilt and White were ushered in and conducted past “a hollow square,” as one historian described the central office, wherein worked a “corps of bookkeepers, clerks, copyists, and accountants, almost all perched on high stools facing the grillwork topping the high, continuous desk.” They passed from this chamber into a conference room, perhaps, or into the office of Thomas Baring or one of the other managing partners.70 In those private quarters, Vanderbilt and White explained the Nicaraguan grant, the treaty, and Bulwer's promise that English capitalists would invest. They offered Baring Brothers an equal stake in the canal company—a 50 percent share.

  In this office, as at Rothschild & Sons, as with Sir J. H. Pelly, as elsewhere, Vanderbilt and White met with raised eyebrows. A Baring Brothers partner wrote that the hastiness of the proposal surprised them: “There appeared no information that could be used as to the profitability of making a canal or of the cost of constructing it.”

  The Americans went back to their hotel as the various merchant bankers they had approached put together a joint position on the canal, which they communicated in a letter on October 14. “If, after organisation, surveys, & estimates, it shall appear that a canal can be made at a cost that would offer a fair return for the capital needed,” they declared, “we will endeavor to get English capital to join in completing it.” As one of the financiers summarized their response, “The matter is not ripe for the present.”71

  The next day, the Baring partners read with surprise a gross distortion of their position in the financial columns of the London Times. “The junction of the Atlantic and Pacific may almost be regarded as a work commenced,” the story began. White's hyperbole and insinuations echoed throughout the piece. “It is the grandest physical work the world can witness.… A promise was given to Sir Henry Bulwer that an equal participation in the enterprise should be offered to this country on reasonable terms. To fulfil that pledge two commissioners from the company, Messrs.
White and Vanderbilt, arrived in London… and after a short period of negotiation a satisfactory arrangement was completed this afternoon.” It was a planted story—White's own London fog.72

  “C. Vanderbilt & Joseph L. White of New York have been here in regard to the Nicaragua Ship Canal,” Baring Brothers wrote to Thomas W. Ward, the firm's agent in Boston. “We see in the Times and [London] Globe that they would make more of [what was agreed] than [was] said here.… We don't think anyone knows at present whether the canal is practicable or not, therefore these newspaper puffs are all absurd.”73

  Who were these Americans, with their grand plans, empty estimates, and deceitful boasts to the newspapers? The English financiers were hardly ignorant of the United States; the Rothschilds, for example, employed as their agent August Belmont, who since his arrival in New York in 1837 had inserted himself into the center of that city's politics and society. Days before Vanderbilt's visit, Baring Brothers and two other London houses each had agreed to purchase $25,000 in stock in the Panama Railroad, because the project was backed by William H. Aspinwall, whom they knew and respected as an aristocratic merchant. They perceived that Vanderbilt and his associates had connections to the U.S. government, but they knew little else about them. On October 15, one of the Baring partners penned a letter to James G. King of New York. “I should be glad if you can give us any information respecting the partners forming the Pacific Canal co.,” he wrote, “and about support it is likely to meet with on your side.”74