The First Tycoon

by T. J. Stiles

  At first, the consolidation of the South Shore lines had looked like the end of Vanderbilt's troubles. Instead, that critical route seemed to slip out of his hands before he could even grasp it. “The absorption of the line by the Erie will be the eventual result,” the Herald wrote. “But the Commodore is fertile in resources.”44

  ON AUGUST 20, VANDERBILT SUDDENLY disappeared from Saratoga. He had been a fixture there, as usual, spending almost all of his time with Morrissey until he vanished. He turned up later that day in Canada, when a locomotive pulling his private car chuffed into London, Ontario. The Commodore debarked and hurried into the Tecumseh Hotel, followed by a small party. He did not even stop to sign the register, but left that matter to Augustus Schell. He refused all calls and inquiries from the press. In his rooms, Schell produced a legal document, which Vanderbilt signed. Then a young woman signed as well. Her name was Frank Armstrong Crawford, and the document was a prenuptial agreement. She relinquished all claim on the Commodore's estate; when he died, she would receive $500,000 in first-mortgage bonds of the New York & Harlem Railroad. Except in comparison to Vanderbilt's estate, it was a vast sum for 1869; but comparisons to Vanderbilt's estate would be inevitable.45

  At seven o'clock the next morning, a Saturday, Vanderbilt dressed in a plain black suit, the only sign of his wealth being the brilliant diamond studs in his shirt. The Canadians found him impressive. “He is a noble-looking gentleman, erect in figure, active in movement, intelligent in expression, and almost courtly in bearing,” wrote a local reporter. “He is so well preserved, even amid all the cares and responsibilities of his position, that he looks to be not more than 61 or 62 years old.” Vanderbilt entered a private parlor, where he saw Frank in a simple traveling dress, “wearing always a singularly happy expression of face.”

  A Methodist minister presided over the brief marriage ceremony. The handful of witnesses included Frank's mother, Martha, and brother Robert and his wife; Schell; James Tillinghast (superintendent of the New York Central); and only two others: Thomas Bragg, former Confederate attorney general, and his brother Braxton Bragg, one of the Confederate army's most senior generals. Frank had introduced Vanderbilt to the latter. Intelligent, impatient, and ridden with ulcers, Bragg had won a reputation during the Civil War for shooting privates until they obeyed his commands. A true believer in the rebel cause (he had peppered his orders with denunciations of “the Abolition tyrant”), he had shown some talent as a strategist, but his domineering personality had driven his subordinate generals into open revolt. Vanderbilt liked him. Perhaps he admired Bragg's technical competence as an engineer, or his full-bearded face, with his large, dark eyes under heavy brows. What he probably liked most about the general was the fact that so few others liked him, especially in the North. The Commodore mused openly about bringing Bragg into his railroads.46

  The wedding over—and the American press and fashionable gossips safely avoided—Mr. and Mrs. Vanderbilt dashed back to their private railroad car for the journey east, accompanied by Schell, Tillinghast, and Frank's black maid, Nellie. The Bragg brothers and the Crawfords returned to the South separately. “I was completely overcome after leaving you all & poor Nellie tried to cheer me, but immediately burst into tears herself,” Frank wrote to her “Ma” two days later. “I could not be sad long with such devoted attention as the Com showed me.” The luxuries of the life of the Commodore—always “Com” to Frank—astonished her. “About 2 o'cl'k, the table was spread in our car, with the purest white cloths & silverware, & a delightful little dinner was brought in from the refreshment car—broiled chicken & chops, & everything so clean & nice” she wrote. “Mr. Schell & Tillinghast were so kind & attentive, & I begin to feel Schell belongs in part to me.”

  They spent that night at a hotel in Syracuse—the Vanderbilt, of course—hiding in ostentatiously appointed rooms from the crowds outside. “The Commodore was very lively indeed, and quite graceful and courteous in his attentions to his wife,” the local press observed. Frank agreed. “Com. is so good,” she wrote to her mother. “Says he loves me too much, it amounts to worship. He is up & down—can't stay away long.”47

  The next day they went to Saratoga Springs. At the hotel, the women in Vanderbilt's wide circle of friends swarmed around the rather overwhelmed Frank. “Mrs. Decker rushed in & such kissing & hugging us both,” she wrote, “Mrs. Work, Harker, &c. I feel really gratified at the cordial warm reception given me.” Most gratifying of all was the welcome from the Vanderbilt family. William and Maria, along with some of William's siblings, came straight in “and kissed me so cordially. They are glad their father married.” One of them told her that the family “all thought favorably about the marriage.” The musical Nicholas B. La Bau, a “nice little fellow,” congratulated her as well—but his wife, the Commodore's daughter Mary, did not. This devoted spiritualist comes across in the scant written record as prickly and defensive. She later remarked that she first met Frank and her mother a full year after the wedding. Other daughters proved equally cold. Emily Thorn recalled meeting Frank after the couple returned to the city but could not recollect how much later, as she “did not feel interested enough to remember.”48

  Frank, unlike Vanderbilt, was uncomfortable at being the center of public attention. She did not want to leave their flower-stuffed rooms (“almost stifling with the perfume of tuberoses & heliotrope”). She knew she was a spectacle, and her clothes “old timey” and unfashionable. But the women insisted. “They all made me go down to dinner & tea & such staring & pulling on glasses & taking different & good views was most trying to stand,” Frank wrote to her mother. Vanderbilt took her out for spins around the track in their double-top buggy, behind a fast new horse named Myron Perry. They drove out one day to the races to watch Mountain Boy defeat Lady Thorn, strolling onto the stand through curious onlookers. Vanderbilt's brother Jake strode up to them and exclaimed, “I must kiss the bride,” much to Frank's embarrassment. “I was that day closely scrutinized by thousands of people. Mrs. Work says she could not help gazing too, seeing everybody else doing so, tho' she had seen me so often.”

  Frank's letters to her mother reveal many reasons why the Commodore fell in love with her. She was modest, scoffing at praise for her beauty by a toadying innkeeper. She admitted to being out of keeping with fashion, but she was also attentive to it. She exhibited grace, sociability, and a sense of fun (she thrilled to their fast drives and Mountain Boy's victory). She demonstrated a keen but unpretentious intelligence; as she was finishing one letter, William strode into the room, and the Commodore proudly insisted that Frank read her correspondence aloud to him. He even loved her masculine name, which she herself loathed.

  But Frank also resonated with a contrarian aspect of Vanderbilt's personality. She was an unrepentant Confederate. “Com. is proud of my being a rebel,” she wrote. “Takes pains to tell it.” At one point the seventy-two-year-old Alexander T. Stewart (Vanderbilt's primary rival for the title of richest man in America) sat down with Frank and argued with her about the virtues of General (now President) Grant. She debated “pleasantly of course—but I meant what I said.” She found Stewart to be kind and talkative, as she did General Gordon Granger. Granger had led the Union forces that captured Mobile during the war. When he called on the newly-weds, he warmly remarked that he remembered when he had first met Frank. It seems that he had shown particular courtesy to the Crawfords during the occupation, and it proved to be a source of lasting gratitude from the Commodore.49

  Vanderbilt's pride in his rebel wife speaks to his peculiar relationship with fashionable New York society He had now grown so wealthy, so powerful, that the social aristocrats could hardly shut him out. As one observer wrote in 1870, “Even Vanderbilt & others are not ignored by gentlemen.” Displaying a courtly bearing that belied his historical reputation as a vulgarian, he now dined with the Astors and mingled with the leaders of fashion at Saratoga, the Manhattan Club, or Jerome Park. Though he had always taken pride in being a ma
n of honor, he may indeed have grown into the dignity generated by his tens of millions; where credit reporters had once derided him, they would soon record that he was considered “honorable & high toned.” At the same time, he indulged in a proud independence of character as he levitated above the social strictures of the elite (later fictionalized by Edith Wharton, then a seven-year-old girl known as Pussy Jones). Amid Reconstruction's turmoil, he flouted gossips with his divorced Southern bride.50

  But Frank's Southernness had another important attraction for Vanderbilt. He remained as patriotic now as when he had given his million-dollar steamship to the Union navy. That patriotism extended to the entire country after Appomattox. He demonstrated a growing interest in healing the wounds of the war. His friends and associates reinforced this impulse. Horace Greeley Horace Clark, Augustus Schell, and Charles O'Conor all resisted what they saw as a harsh peace imposed on the South. Of course, when they thought about the South, they meant the white South; as elite members of wealthy New York society they identified with the former planters who had gone bankrupt when the slaves went free. Regardless, Vanderbilt's desire to bring North and South together was sincere. It would be the ultimate consolidation.

  ON SEPTEMBER 2, VANDERBILT RETURNED to face the crisis. Over the summer, LeGrand Lockwood, confident in his understanding with Gould, had purchased on credit $1.25 million worth of new Lake Shore stock, issued as part of the consolidation. Vanderbilt had bided his time. He had had personal matters to attend to, but the perfect time for his revenge would be the autumn, when the moving of the crops would squeeze the money market. Now he quietly issued contracts for sale of his own Lake Shore stock, along with the thousand shares held by the New York Central. Starting on Monday, September 13, cash began to grow scarce in New York. Vanderbilt struck.

  “The whole course and tendency of prices have been reversed with magic-like power,” the New York Herald reported on Saturday, September 19. It explained the next day, “The veteran Commodore indignantly tossed all his Lake Shore stock on the market and brought about a break in the stock which threatened the credit of his enemies and certainly entailed great losses upon them.” Vanderbilt delivered all his stock on three successive days, collapsing Lake Shore from 107 to 75. This erased its value as collateral for the heavily leveraged Lockwood, leaving him “thoroughly frightened,” as the Herald wrote. He begged for mercy. Vanderbilt gave none. Lockwood & Co., long one of the Wall Street's great houses, declared bankruptcy on October 1. “The veteran Commodore,” the Herald noted, was “an unrelenting enemy”51

  The waters in which he drowned Lockwood proved nearly fatal to himself. In striking down Lake Shore he inadvertently contributed to Black Friday, one of the greatest panics in American financial history. The immediate catalyst for the disaster lay in a breathtaking financial scheme crafted by Jay Gould. Well aware that the Gold Room served as a currency exchange, Gould wanted to drive down the price of greenbacks to make American exports cheaper overseas. The result would be a bounty for the railroads as more crops were shipped to the seaports in the fall. He brought Fisk into the plan, and the two of them lobbied President Grant to limit sales of government gold from customs duties collected in New York. The plot promised personal profit as well, provided Gould could properly time the sale of the massive amounts of gold he purchased in August and September.52

  Gould and Fisk's attempt to corner the gold market played out in a field beyond Vanderbilt's immediate affairs, as they colluded with the president's brother-in-law, bribed the federal subtreasurer in New York, and even opened a gold account for First Lady Julia Grant. Their campaign did not go unopposed. Brokers who were bears in gold fought back mightily. Then Vanderbilt hammered the weak money market with his attack on Lake Shore stock. Gould and Fisk even accused the Commodore of carrying out a lock-up to make credit tight.53 Fisk responded by flamboyantly bidding the gold premium up to heights not seen since the Civil War. The financial frenzy seemed to threaten the economy's stability, and rumors of Grant's involvement did not go unnoticed in the White House. Finally Grant decided to intervene. He ordered Treasury Secretary George Boutwell to sell a few million in gold. The signal this action sent mattered as much as the enormous quantity of greenbacks it sucked out of the market.

  On September 24, the price of gold collapsed amid the worst panic since 1857. The radical rise and plunge in prices trapped many brokers; no less than fourteen Wall Street houses failed (not including those that were strictly gold dealers). In Fisk's oft-quoted phrase, “It was each man drag out his own corpse”—literally in the case of a broker who shot himself to death. The problem for Vanderbilt was that the crashing market destroyed credit generally carrying down stock prices across the board.54

  On Friday evening he rushed home from a Central board meeting in Albany where he had presided over the signing of the final consolidation agreement with the Hudson River Railroad. In the face of this crisis—a crisis he had helped make—he had to fight to protect his grip on his emerging giant, what soon would be called the New York Central & Hudson River Railroad. Most likely he lacked a clear majority of the stock without the support of friends and allies, including Augustus Schell and John Morrissey At his urging, they had purchased large quantities; as the price fell, one of them was called “as terrified as a man can be.” In a rare move, Vanderbilt put up a reported $2.5 million to meet their margin calls. Still more remarkably, he went in person to Wall Street to soothe the markets and sustain the price of Central.55

  “I knew it, I knew it,” an old broker said on the floor of the stock exchange, “the old rat (Vanderbilt) never forgets his friends.” The Commodore very visibly set himself up at the Bank of New York at the corner of Wall and William streets, where his lieutenant James Banker provided him with “comfortable offices, upholstered as a Fifth Avenue drawing room,” according to the New York Sun. From his nicely cushioned throne he issued orders to buy, and buy, and buy. A reporter asked Vanderbilt what he was up to; he replied, “Well, now really, sonny, I really cannot tell you anything. I don't care about forming opinions. All we want is to protect ourselves.”

  The Commodore was being disingenuous. His presence on Wall Street had one purpose only, and that was to form opinions. Behind the scenes his situation grew desperate, as William revealed by paying a visit to Judge Barnard, who was considering various injunctions in the Erie's lawsuit against the Commodore. William pleaded with him to aid the Central. Barnard refused, saying “that his father and his gang had treated him badly,” according to Barnard's friend, John M. Davidson. (It did not help the Vanderbilts' case that Barnard had sold all of his Central stock before the panic, and had no stake in the matter.) William replied that “his father was strong enough to take care of himself,” Davidson wrote. “The Judge said all right, but he differed with him. Vanderbilt has struggled to save Central from falling.”56

  The Commodore, ever cool amid others' panic, projected pure strength. He strolled through the exchange to make his presence felt. “Central's coming up, Commodore,” a young broker shouted. “Top o' the heap still, my boy,” he replied. Soon the reason for his confidence leaked out: he had taken a large short-term loan from Baring Brothers in London, putting up as collateral an equal amount, at par, of New York Central stock. He bought back his Lake Shore shares (at radically reduced prices, of course), along with Lockwood's stake. And he very visibly purchased Central. He failed to keep the price above 200, where it had been before Black Friday, but he arrested its fall at 175, and brought it back to 184 in short order. On October 2, the New York World commented on his impact:

  The best men on the street all assert that had it not been for the Commodore coming to the rescue and sustaining his stocks, the panic on Tuesday and Wednesday of this week would have been a hundred fold greater than it was, and that nearly the whole street would have been ruined, and several of the banks have been obliged to succumb by the great decline that would have taken place in securities; that this decline would not have stopped wit
h stocks, but have extended to government, State, and city stocks [i.e., bonds], and been universal and disastrous. To the prevention of this disaster, the brokers generally give the credit to Commodore Vanderbilt.57

  In the drama of Black Friday—a morality play of Gould's greed, government corruption, and new economic intricacies that easily fell prey to manipulation—Vanderbilt appeared in the role of a hero: the man who saved the stock market, who prevented a panic from igniting a depression. Closer inspection reveals that a blood-chilling ruthlessness infused all his actions. To avenge himself upon Lockwood, and to bring the Lake Shore Railway into the Central's orbit, he had gambled with the economic health of the national economy. Well aware of the frailty of the financial market in the autumn (and of Gould and Fisk's gold-cornering scheme), he had pumped in still more pressure, taking the risk that Wall Street's boiler would explode. Along the way, he also endangered the fortunes of his friends and his own grip on his flagship corporation. He gambled all this on his confidence in his ability to singlehandedly sustain the market. The only thing more remarkable than his recklessness was his success. After contributing to one of history's great panics, he took his revenge, captured the Lake Shore, and rescued Wall Street.

  To the American public, Black Friday suddenly illuminated, like a flash of lightning on a midnight floodplain, the way in which the new corporate and financial reality inundated the national landscape. The bankers and brokers of New York were no longer an oddity—an isolated batch of men who seemingly produced nothing but merely juggled bewilderingly abstract securities. Now, because of the railroads, corporations began to overshadow farmers, artisans, and merchants. Now, because of the increasing financial integration of the country, the fears and hopes of a few hundred men on Wall Street could shake the nation. More than any other man, the Commodore frightened or excited those few hundred, driving them as he willed. With the wave of one hand he created tens of millions in new wealth; with a wave of the other, he crushed his enemies; with cold-eyed calculation, he gambled with the lives of millions. The American people were fortunate that he gambled so well, but they had no say in how he placed his bets. Black Friday posed a great question: What was the place of a railroad king in a democracy of equals?