The First Tycoon

by T. J. Stiles

  In Panama, Garrison had served as agent of Morgan's short-lived steamship line, which had led to his lucrative position as agent of Accessory Transit in San Francisco, where he had arrived on March 23, 1853. Over the course of three years, he would handle well over $3 million in revenues, and speculated in land, coal, and flour. A reporter for R. G. Dun & Co. would conclude almost two decades later that Garrison would “take an interest in almost any apparent successful venture… but is not consd. reliable. Antecedents not in his favor, and all transactions [with him] should be clearly defined.” Or, as one writer put it, it took “twenty men to watch him.” That made him an ideal leader for San Francisco, which elected him mayor six months after his arrival.57

  At the end of 1855, Garrison did not know about Vanderbilt's campaign to buy control of Accessory Transit, which was just beginning to unfold on the far side of the continent. But he did know about Walker's victory. So he paid close attention when Edmund Randolph, one of Walker's closest friends, walked into his office on the southeastern corner of Sacramento and Leidesdorff streets in San Francisco. The thirty-five-year-old scion of one of Virginia's first families and an early California lawmaker, Randolph would become the link between Garrison, Morgan, and Walker—the man who would threaten Vanderbilt with financial disaster and throw into chaos one of the primary lines of communication with California. And he would do it all out of greed.

  Randolph explained to Garrison, quite candidly, that he intended to profit from his friend Walker's conquest of Nicaragua. “I told him that it seemed to me inevitable that the Accessory Transit Company would be abolished,” Randolph recalled; inevitable, that is, after Randolph spoke to Walker about the matter. But Walker would need a replacement company to bring arms and men from the United States. Randolph would later testify that he told Garrison, “I believed that I could obtain General Walker's influence with the new government to grant me the [new] charter in preference to anybody else.” If Garrison threw his support behind the filibuster movement, then Randolph promised to sell the transit rights to him, as a private individual. In essence, Randolph aspired to be Nicaragua's own “dummy,” in the proud tradition of the California steamship business.58

  Garrison indignantly declined, but Randolph's insouciance gave him pause. “If things should take that twine,” Randolph recalled him musing, “he did not wish to be involved in the ruin.… He would do nothing whatever against the company, but if they fell wanted to save himself.” Garrison believed that Morgan remained in charge of the company, and he worried that Morgan would think that he had betrayed him if he gave in to Randolph's plot. But the wily Garrison was up to the challenge. When Randolph sailed for Nicaragua on December 5, Garrison sent along two agents (one of them his son, William R.). If Walker approved Randolph's plan, they were to buy the transit rights, and William was to go to New York to bring Morgan into the new line.59

  Less than two weeks later, Walker welcomed his friend with joy. “The friendship between Randolph… and Walker,” the filibuster wrote, “was of a character not to be expressed by words; but the existence of such a sentiment… is essential for an understanding of the perfect confidence which marked their acts in reference to the Transit.”60 Walker listened closely as Randolph outlined a case for revoking Accessory Transit's corporate charter. It existed to aid the original canal company, he argued, but the canal had been abandoned. It had failed to pay the state its $10,000 in dues for 1855. And it never had paid the 10 percent of its profits. Walker accepted the indictment without question.

  There were solid arguments against these charges. Accessory Transit was a separate entity from the canal company (which had until 1861 to build a canal). It still had time to pay its 1855 dues; more than that, it had cause to withhold the money, since the legitimacy of the new government remained in question, and the United States refused to recognize it. Furthermore, the company was then negotiating with representatives of the old government over the unpaid 10 percent. Finally, Nicaragua previously had assigned all payments to Thomas Manning, a British merchant who had lent the state a great deal of money. Randolph, however, was not adjudicating—he was prosecuting. He freely admitted that he wanted “a grant for myself of a charter of a similar nature” so he could sell it to Garrison.61

  By coincidence, Walker was looking for a legal justification for killing the company. He had just learned that White previously had sent a small armed force to aid the Conservatives against a completely different filibuster. Curiously, this short-lived body of some fifty mercenaries would be overlooked in all the press coverage of this episode. In Walker's mind, it was decisive. Accessory Transit had taken up arms on the side of his enemies; even before Randolph's arrival, he had concluded to destroy it.62

  By the end of December, William Garrison finalized negotiations for a new transit company. Walker would grant Randolph the exclusive right to carry passengers and freight across Nicaragua. Randolph would sell that right to Cornelius Garrison for an undetermined sum. Garrison would bring Morgan into the new line, and transport reinforcements to Nicaragua for free. Walker would seize Accessory Transit's steamboats, steam ships, and other property, and give them to Garrison and Morgan. William left for New York to inform Morgan, and his fellow agent returned to San Francisco to secure Garrison's approval. Walker held off on the revocation of the charter until everything was in place.63 News of a coup of this scale would be explosive; they had to time the announcement very carefully to deny the Accessory Transit officials any hope of stopping them.

  The chief Accessory Transit official would soon be Vanderbilt, who purchased shares and drew up plans for a monopoly in happy ignorance of the looming disaster. As 1855 drew to a close, his world had suddenly become a very different place. He had grown accustomed to ruling his own fate, with money, guile, and force of will. Now his future was being driven by a quiet, fanatical man and his scheming friend, who wielded the one thing he lacked: armed force. To survive the impending conflagration, he would need armed force of his own.

  Chapter Eleven

  VANDERBILT

  “To see a vessel handsomely launched, gives one a feeling akin to the enjoyment of a new poem,” wrote a correspondent for the New York Times. “To stand close enough to feel the wind as she rushes past, especially if she is a magnificently large and beautiful boat, is like hearing the Odyssey from the mouth of an expert reader—only at the launch all the thrill and the enthusiasm and enjoyment are compressed into a single brief minute.” New York was a great shipbuilding center, so its residents knew that experience well; but they had never seen a launch like the one the reporter described.

  As nine o'clock in the morning on December 10, 1855, thousands crowded the waterfront near the Simonson shipyard (which had relocated across the East River to Greenpoint early in the year). Some had come great distances to see the spectacle that was about to unfold; even the Brooklyn ferry paused on its crossing to afford its passengers a view. They cheered in the cold winter air as an immense hull slid down the enormous wooden stocks into the dark waters.

  It was the largest steamship ever constructed. A “gigantic steamer,” the Brooklyn Eagle called it; a “monster,” said the Times; a “leviathan of the deep,” declared Scientific American. “Four tolerable sized tugs—two on each side—appeared beside her, like dog-fish beside a whale,” and towed it to the dock where its hull would be coppered. Its statistics staggered the writers who reported them: with a length of 335 feet, a capacity of well over five thousand tons, and sidewheels of forty-two feet, it carried sixty tons of bolts and ninety-four of wrought-iron straps to bolster its massive wooden beams. Other Atlantic steamers had three decks, but this one had five, looming over every ship in the harbor. It was so enormous, so powerful, so threatening to its competitors, that its owner and builder named it after himself: he christened it the Vanderbilt.1

  Of all of the Vanderbilt's eye-rubbing figures, perhaps the most telling was its cost. The Commodore had spent some $700,000 on its hull, and by the tim
e he installed the plush sofas, carved rosewood, and titanic twin engines, he would pay out more than $900,000. This sum suggests that the Mercantile Agency sorely underestimated his wealth when it guessed that he was worth $5 million—for not even the risk-taking Commodore would have devoted almost 20 percent of his entire fortune to just one ship.2 But the great cost of the Vanderbilt does reveal his confidence. He constructed this ship to compete on the Atlantic; he was staking a huge sum on his ability to defeat the heavily subsidized Collins and Cunard lines. Then again, no one in the steamship business could calculate the costs, the risks, the profits as accurately as Vanderbilt.

  As 1855 drew to a close, his calculations had grown intricate and vast, as he plotted to take control of America's steamship traffic to Europe and California. Soon he would launch a fresh lobbying campaign in Washington to strip Collins of his mail contract and subsidy. In the California business, he polished his arrangements with Marshall Roberts and William Aspinwall to create a consolidated monopoly that encompassed Panama and Nicaragua. Vanderbilt went to Washington to meet with Secretary of State Marcy who endorsed their proposal to transfer the California mail contract on the Atlantic side to Accessory Transit after Vanderbilt took control and had consolidated it with the U.S. Mail Steamship Company.

  Returning to New York, Vanderbilt continued to buy Transit shares, alongside Aspinwall and Roberts, until they controlled forty thousand—a majority of the total of 78,000. Charles Morgan could see his doom more clearly than anyone. On December 21, he resigned as director. Vanderbilt took his seat on the board, and planned to take over as agent after the new year. It seemed like he had accounted for everything.3

  CHRISTMAS EVE GAVE VANDERBILT a rare gift: Joseph White on his figurative knees. At half past two in the afternoon, White burst into Vanderbilt's office (now at 5 Bowling Green) and begged for help. Not for the first time, the lawyer's mouth had gotten him into trouble. He had struck a deal with Parker H. French, William Walker's representative, to carry filibuster recruits to Nicaragua—as peaceful emigrants rather than armed soldiers, to avoid an infraction of the neutrality act, which barred private citizens from fighting against countries with which the nation was at peace. Each “emigrant” would count toward the company's debt to Nicaragua at a rate of $20 each.4 On this point, it is difficult to find fault, even with the slippery White, for Walker literally held the transit route hostage. Little did White—or even French—realize that Walker had decided to destroy the company instead.

  White's dealings with the federal government were less defensible. Because of the Crampton affair—an attempt by the British minister to recruit American citizens to fight in the Crimean War—the administration now enforced the neutrality act to the fullest. Despite sympathy in the cabinet for Walker, President Pierce refused to recognize Walker's government, or French as the Nicaraguan minister, and issued orders to block the departure of filibuster reinforcements.5 U.S. Attorney John McKeon had written to White, asking him to prevent one hundred or so men whom French had recruited from boarding the Accessory Transit ship Northern Light. White had rebuffed him with words that stunned the cabinet. “The Transit Company is a corporate body, created by the law of Nicaragua,” he had written. “We owe allegiance to the Government of Nicaragua.” McKeon had then presented Pierce's order to hold the Northern Light in port. Arrogant as ever, White had snapped that he didn't “care a damn for the President of the United States, or his dispatches.” In that case, McKeon had said, he would impound the ship.

  And that brought White into Vanderbilt's office. Just two days before, the Commodore had returned to the Accessory Transit board of directors; though he had not yet assumed any management role, he clearly was taking control. In a state of panic, White presented his dilemma. If he was forced to stop the ship, he fretted, he would strand hundreds of paying passengers and damage the line's reputation. “No, you must not do any such thing,” Vanderbilt replied. “Go down and ascertain the nature of the process exactly, and if I can assist you, I will.”6

  Mayhem reigned at the dock. A mob swarmed the ship and the pier—a mob of men who flocked to join Walker's forces in Nicaragua, a mob of desperate denizens of Five Points. Largely Irish and entirely poor, they reflected sweeping changes in the city over the past ten years, as it had filled with refugees from the potato famine. They came to New York because it had become the primary transportation hub of North America, thanks to geography, economic history, and the diligent efforts of Vanderbilt and other steamboat, steamship, and railroad entrepreneurs. Long gone was the Manhattan of unspecialized countinghouses and striving artisans that Vanderbilt had settled in during the War of 1812; in its place was rising a polarized island of the aristocratic and the laboring poor, who struggled to earn enough for tenement rent and to remit a few shillings back to Europe. French's promise of land, livestock, and wages in Nicaragua had brought them by the score to the Northern Light. When McKeon went on deck to search for arms, a riot erupted; at one point, the ship set sail only to be intercepted by a revenue cutter and forced back. In the end, Vanderbilt dispatched Horace Clark to post a $100,000 bond for the steamer, and it was allowed to depart.7

  To Vanderbilt, the sailing of the Northern Light was a sign not of trouble, but of his ability to settle Accessory Transit's many difficulties. Starting on New Year's Day of 1856, he ticked through a number of steps to set everything right. He convinced his estranged son-in-law, Daniel Allen, to compromise his lawsuit, and advanced $70,000 to the company to meet a cash shortfall. On January 3, he took direct command as general agent. Two days later he finalized his monopoly-making agreement with Roberts and Aspinwall. Amid a howling blizzard that piled up snow in horse-high drifts in the streets, Vanderbilt left for Washington to press for the transfer of the mail contract to Accessory Transit. On his return to New York, he continued to buy shares. “The Commodore does not hesitate to predict that the stock will go as high, if not higher, than it was when he left it, say 32, and that it is worth much more,” the New York Tribune reported. Morgan had been short-selling it, but Vanderbilt's bull campaign now forced him to cover his sales contracts at a loss.8

  An intense cold followed the snowstorm. Horse-drawn omnibuses (their wheels replaced by sleigh runners) slid through the streets almost empty of passengers as temperatures plunged to two degrees below zero. But Vanderbilt thrived. On January 30, he assumed the company's presidency. He promptly sent a letter to U.S. Attorney McKeon, promising to prevent filibusters from going to Nicaragua. (He was sincere; though he inherited the agreement to carry “emigrants” at $20 each, the best-informed supporters of Walker believed him to be an intractable foe of the filibusters from the beginning.) And he renewed his appeal to Congress for the California mail contract.9

  What Vanderbilt did not know was that William Garrison had arrived from Nicaragua in the middle of the month; that he had informed Morgan of the deal with Randolph and Walker; and that Morgan had agreed to join in a new line. Vanderbilt did not know either that, on February 18, President Rivas obediently revoked the Accessory Transit charter and granted the rights to Randolph; and that a copy of the decree was rushed to Morgan by a private messenger, who reached New York a little over a week later. Vanderbilt had walked into a gigantic trap.10

  STARTING IN FEBRUARY, Charles Morgan began to act very strangely. He was never a man to repeat a failed strategy, yet again he began to short-sell Accessory Transit stock. He sold it for as little as 21, on terms that gave him up to four months to make delivery. Vanderbilt took every share that Morgan offered. The financial columns of the press found Morgan's strategy mystifying. “As the length of the Commodore's purse is proverbial,” wrote the New York Tribune, “the result of such a contest can scarcely be doubted.” Vanderbilt carried the share price back up over 23, but Morgan redoubled his campaign, selling ten thousand shares short on March 4 alone. He seemed to have gone insane. Vanderbilt's ring reportedly controlled 68,000 out of a total of 78,000 shares. Morgan, it seemed, had cornered himself.11
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  Early on the morning of Thursday, March 13, news reached New York that Walker had revoked Accessory Transit's corporate charter, seized its property within Nicaragua, and granted the transit rights to Randolph. It was rumored that a new line would be established by Garrison and Morgan. “The telegraphic despatches from New Orleans fell upon Wall Street like a bombshell,” the New York Herald reported. Walker's “coup d'état,” the New York Times observed, “has created a greater excitement in Wall Street, among stock jobbers, than any event of the past ten years.” Everyone rushed to sell, instantly knocking the share price down by a third. At the head of the swarm that scurried off the ship was Joseph White. He had received a private telegram with the news that same morning, and had rushed out to find his broker. “White sold out about $100,000 of his Transit stock the instant he received news,” the Times reported.12

  Vanderbilt faced the gravest crisis of his life to date. No catastrophe—not the great fires of 1835 or 1845, not the Panic of 1837, not the Schuyler fraud—had been so sudden, so deliberate, so thoroughly beyond his control. And yet, he did not sell out. What distinguished him in the moment of crisis was his self-command; characteristically, he prepared a counterattack on multiple fronts. He began with a trip to Washington. He met with Secretary of State Marcy and urged the administration to intervene in Nicaragua to “sustain the rights of American citizens.” He wrote a letter to Marcy for public consumption, refuting Walker's pretext, taken from Randolph, for annulling the Accessory Transit charter. He sent a similar letter to Senator John M. Clayton, the former secretary of state, who took to the Senate floor to denounce Walker and his high-handed acts.13