Fortune's Children

by Arthur T. Vanderbilt

  There are a few trifling items which we in kindness submit to you as being unworthy of your generally enlarged views and most liberal, humane intentions toward those under your care and protection. For instance, all the meats set before us at our meals were so tainted as to be positively offensive to the smell, and, of course, unfit as food for any civilized creature….Our eyes were never feasted by the appearance of a clean cloth on the table, nor did we, on the voyage…luxuriate upon a clean sheet or pillow case. Not a bathroom on the ship, and a spittoon is not an article of furniture to be found in the establishment. We regret, sir, to mention these little inconveniences as having a tendency toward complaint—yes, even instilling in the minds of passengers a thorough disgust and most perfect contempt toward you, as the controller of the magnificent institution composing this company. In conclusion, our very dear friend, we promise you that we will never burden again your superior steamer Champion with our presence on board; and in preference to another such voyage, we would each get a wheel barrow, carry our provisions on it, and thus plod across the plains back to our homes on the Pacific—and there we will teach our children to revere your name as the most successful, most penurious and most heartless millionaire that ever disgraced our country.51

  Those willing to endure these conditions reached California several days ahead of their less stalwart brethren, and for less money. Vanderbilt cut his first-class fare from $500 to $300, eventually reducing the cost of a trip from New York to San Francisco to $50. The line was profitable from the start. His operation carried two thousand passengers a month for nine years, and he made a profit of more than $1 million a year from it.

  With the success of his Nicaraguan venture, the Commodore had stashed away a great fortune, and now was just about as rich as anyone, as rich as A. T. Stewart, the department store owner; the Lorillards, who had made their money in tobacco; the Goelets, who owned valuable Manhattan real estate. He was almost as rich as the heirs of John Jacob Astor, the New York City real-estate tycoon. “I have got $11,000,000 better invested than any $11,000,000 in the United States,” he told his good friend Jacob J. Van Pelt in 1853 when he was almost sixty. “It is worth 25 per cent a year and there is no risk on it.” His children would be well provided for if something happened to him. “I have a large family and none of them were brought up to do anything,” he told Van Pelt. “If they have it as I have left it to them they can live on the interest and they will all have plenty as long as they live.”52

  Sixty years old. His affairs in order. His children provided for. The Commodore decided to do something he had never tried before. He would take some time off to relax. He left his California route in charge of two trusted directors of his company, Charles Morgan, who had operated a steamship business in the Gulf of Mexico, and Cornelius Garrison, who had established a banking house in Panama during the gold rush, and commissioned a Long Island shipyard to build for $500,000 a 270-foot steam yacht.

  The ship was thirty-eight feet amidships, equipped with paddle wheels with a diameter of thirty-four feet, four coal-fed boilers, and two masts for auxiliary sails to help steady it in rough seas. The North Star he called her, the first oceangoing yacht ever built for a private citizen, and in her he would tour the capitals of Europe. As his expedition took shape, the Commodore came to see himself, as did the American press, as something of a diplomat, an example for the European aristocracy of what American businessmen had achieved. “The real character of our people has been misunderstood,” wrote the New York Herald in April 1853, several weeks before the North Star sailed. “What can the Czar of Russia know of our social life—of the general prosperity which prevails throughout the country—of the intelligence and comfortable condition of our industrial classes, and the refinement of those whose enterprise, industry and genius have placed them at the head of the social scale? It is only by personal observation that he and the other crowned heads can obtain a true knowledge of these facts; and though he may not visit us to obtain the required information, yet he will, in a very few months, have the opportunity of seeing one of our most distinguished and wealthy citizens in his own capital….Although it is solely a personal matter, it partakes somewhat of a national character.”53

  As befit the yacht of a colossus of capitalism, the North Star was royally outfitted. It had a satinwood-lined grand saloon, rosewood furniture carved in the style of Louis XV and covered with green velvet plush, positioned around a circular crimson-plush sofa that could seat twenty. The walls of the dining saloon were of highly polished marble that glistened like a mirror. Its white ceiling was covered with scrollwork of purple, light green, and gold surrounding medallion paintings of famous Americans: Webster, Clay, Calhoun, Washington, and Franklin. Each of the ten staterooms sported a different color scheme and was furnished with a large French armoire and lace curtains.

  To witness his world conquests, the Commodore invited Sophia and his children to accompany him on the grand cruise (Corneel did not receive an invitation; the Commodore did not want to be embarrassed by one of his son’s epileptic seizures) along with six sons-in-law, one daughter-in-law, and one granddaughter, as well as his personal physician, Dr. Jared Linsly, and chaplain, John Choules.

  The North Star pulled away from the wharf in the East River at 10:30 on the morning of May 19, 1853. As it passed the shores of Staten Island and the cottage of eighty-six-year-old Phebe Vanderbilt, the Commodore ordered a military salute to his mother, who had made this all possible by loaning him $100 for a periauger years before.54

  Burning forty-two tons of coal each day, averaging thirteen knots, the North Star plowed across the Atlantic. Within several days, a routine had established itself. “There was discipline on board that ship, sir,” the Reverend Choules noted. “Each man attended to his own business. The Commodore did the swearing, and I did the praying. So we never disagreed.”55

  As would be expected, while everyone attended to his or her own business, the Commodore attended to everyone else’s business. One evening after dinner, he walked up to his thirty-three-year-old son Billy, who was enjoying a cigar on the deck.

  “Billy, I wish you would quit that smoking habit of yours. Γ11 give you ten thousand dollars if you do.”

  “You need not give me money, father. Your wish is sufficient.” And with that, Billy threw his cigar into the sea.56

  The Commodore then reached into his side pocket and pulled out a large Havana cigar. Slowly he fondled it and finally lit it, blowing the fine, rich smoke into his obedient son’s face.

  Ten days after leaving the East River, the North Star arrived at Southampton, England, greeted by a cheering crowd. England’s aristocracy was curious about this American rustic, but reluctant to get too close. All declined with regret the kind invitation to the banquet to be given in honor of the Commodore on June 13 by Southampton’s merchants and tradesmen. Prime Minister Lord Palmerston remarked diplomatically to a friend that it was unfortunate that a man of the Commodore’s talents had not had more of an education. “You can tell Lord Palmerston from me,” the Commodore responded when this was reported to him, “that if I had learned education I would not have had time to learn anything else!”57

  “Trouble is anticipated upon the return of Commodore Vanderbilt,” the New York Herald predicted that summer as the North Star was steaming on from St. Petersburg to Marseilles to Genoa to Constantinople. “It appears that when he agreed to put boats upon the route, the Transit Company contracted to pay him twenty percent of the gross receipts of the Transit across Nicaragua. This payment was made regularly to Mr. Vanderbilt up to the time he left in his yacht for Europe. Since, the Company has refused to make payments to Vanderbilt’s agent, and there is very little doubt but that upon the Commodore’s return, summary measures will be taken to collect his demand.”58 This was a safe prediction.

  It did not take the Commodore very long upon reaching New York in September to learn that his agents, Charles Morgan and Cornelius Garrison, had double-crossed him. He
penned them a succinct letter, which he published in the papers:

  GENTLEMEN

  You have undertaken to cheat me. I won’t sue you, for the law is too slow. I’ll ruin you.

  C. Vanderbilt59

  He organized a new line to California by way of Panama, the People’s Independent Line, and, as usual, initiated a rate war, charging only thirty-five dollars for steerage passage from New York to San Francisco. (“Tor a very small sum passengers will be guaranteed to arrive in San Francisco ahead of the Nicaraguan line,” he promised in his advertisements.60) By September 1854, a year later, Morgan and Garrison had capitulated and paid the Commodore what he demanded, and purchased his ships, including his steam yacht, the North Star, all at the exorbitant prices he set. Within the year, when the price of the stock of Accessory Transit Company dropped due to political unrest in Central America, Vanderbilt bought a controlling interest in the company, got his route back, got his ships back, and threw out Morgan and Garrison. The next year, every other line through Panama agreed to pay the Commodore a total of $40,000 a month not to operate his Nicaraguan line. He was only too glad to enter into this oral agreement to be paid for keeping his ships tied up at the wharf. Shortly thereafter, he came to believe that his withdrawal was worth $56,000 a month to the opposition lines. They quickly saw the wisdom of his reasoning and increased their payments.

  By 1862, in the midst of the Civil War, after he had sold the last of his steamships to the Union, the Commodore had accumulated $40 million.61 What was the secret of his success? he was asked. “Secret? There is no secret about it. All you have to do is to attend to your business and go ahead. The secret of my success is this: I never tell what I am going to do till I have done it.”62

  Surely that was part of it. The other part was, as the Commodore was the first to admit, that the accumulation of money had been a mania with him when he was seventeen and that he had never gotten over it. “I have been insane on the subject of moneymaking all my life.”63 He was never interested in spending his money. His mansion on Staten Island had cost $27,000, and his townhouse on Washington Square $55,000, significant sums in the mid-nineteenth century to be sure, but not for a multimillionaire. He had spent $500,000 on his steam yacht, the North Star, but had sold it at a profit the following year. No, it was not what he could do with his money that interested the Commodore. It was the money itself. The money. It was money madness, greed. The money was the basis of his self-esteem, it was his tally of his wins, of his success, of his self-worth, and there would never be enough to satisfy him.

  The stories of his avariciousness were legendary. On one occasion he gave a servant three cents to buy matches. A visitor thought about it, and realized that if he had been as rich, he would have had more than three cents’ worth of matches purchased at a time. The mother of a schoolteacher had saved $4,000 and, concerned about the money, had her daughter bring it to Commodore Vanderbilt, with whom she was acquainted, asking him to invest it safely for her. He declined to invest it, but said he would take it and pay her 7 percent interest each year. He paid her 7 percent the first year, but then only 4 percent the second and third years, and refused to give her an accounting.64

  In an “Open Letter to Commodore Vanderbilt” published in Packard’s Monthly, Mark Twain, sick and tired of seeing Vanderbilt extolled in the press as the self-made man as hero and compared with Franklin, Jackson, and Lincoln, got a few things off his chest:

  How my heart goes out in sympathy to you! How I do pity you, Commodore Vanderbilt! Most men have at least a few friends, whose devotion is a comfort and solace to them, but you seem to be the idol of only a crawling swarm of small souls, who love to glorify your most flagrant unworthiness in print; or praise your vast possessions worshippingly; or sing of your unimportant private habits and sayings and doings, as if your millions gave them dignity; friends who applaud your superhuman stinginess with the same gusto that they do your most magnificent displays of commercial genius and daring, and likewise your most lawless violation of commercial honor—for these infatuated worshippers of dollars not their own seem to make no distinctions, but swing their hats and shout hallelujah every time you do anything, no matter what it is. I do pity you.

  All I wish to urge upon you now is, that you crush out your native instincts and go and do something worthy of praise—go and do something you need not blush to see in print—do something that may rouse one solitary good example to the thousands of young men who emulate your energy and your industry; shine as one solitary grain of pure gold upon the heaped rubbish of your life. Do this, I beseech you, else through your example we shall shortly have in our midst five hundred Vanderbilts, which God forbid. Go, oh please go, and do one worthy act. Go, boldly, grandly, nobly, and give four dollars to some great public charity. It will break your heart, no doubt; but no matter, you have but a little while to live, and it is better to die suddenly and nobly than to live a century longer the same Vanderbilt you are now.65

  5.

  The Commodore would indeed do something worthy with the remaining years of his life. He intended to do what he did best and what he had to do: make more money. Hale, hearty, the Commodore at sixty-eight was erect and vigorous, with ruddy cheeks and bright blue eyes, snow-white hair and bushy white sideburns. Seeing him dressed in his old-fashioned black suit with white choker, some thought he looked like a bishop. At an age when most men were winding down their affairs, the Commodore was plunging into a new business.

  From the day in October 1833 when he had taken his first train ride, traveling to Philadelphia aboard the Camden and Amboy Railroad, the Commodore had had nothing but contempt for “them things that go on land.”66 The train he was riding that day had run off its tracks near Hightstown, New Jersey, tumbling into a ravine and instantly killing most of the passengers. His ribs had been driven into his lungs, his head and face severely bruised, the skin ripped from much of his body. He was carried to a nearby cottage where he remained for a month, and then was taken to his home where he was confined to his bed until the spring. Railroads? No! “I’m a steamboat man, a competitor of these steam contrivances that you tell us will run on dry land. Go ahead. I wish you well, but I never shall have anything to do with “em.”67

  As his steamboat operations became more sophisticated, he began to appreciate how the rails that served as feeders to steamboat lines would someday become competitors to the steamboats themselves. In the winter of 1862-1863, he became fascinated by the potential he saw in the New York and Harlem Railroad, a short, unprofitable line of just 131 miles (at a time when the total railroad track mileage in the United States was over 36,000), but which did have the distinction of being the only railroad line that entered New York City. He began buying up the Harlem at eight dollars a share and, when he had control, began making improvements to the line. “I’ve got a few millions lying idle, and the Harlem is going up to par, if we give it time. If I don’t get the benefit of it, my children will.”68 His friends shook their heads. His competitors laughed. An old man starting a new venture about which he knew nothing! He was about to lose the fortune it had taken him half a century to accumulate.

  Gradually, however, the Harlem’s stock rose to 30, and then slowly to 50. On April 23, 1863, at his behest, the aldermen of the common council of the city of New York authorized the Harlem to construct a line along Broadway to the Battery. The day after the granting of this franchise, which would make the Harlem not only the one railroad entering New York City but also the only line running the length of Manhattan Island, the stock jumped from 50 to 75, moving within days to 100.

  Now one of the Harlem’s directors, Daniel Drew, the Commodore’s old steamboat rival, sun-beaten gospel-quoting Daniel Drew, as tightfisted and shrewd as the Commodore (“I had been wonderfully blessed in money-making,” he once commented; “I got to be a millionaire afore I know’d it, hardly”69), now Drew had a little talk with the aldermen of the common council. Look how the Harlem’s stock has risen! If that franchise
were, perchance, to be rescinded, think how fast the stock would drop! If the aldermen were to sell the Harlem short—if they were to speculate on an anticipated drop in the stock’s price by borrowing shares they did not own, selling them, and then buying them back at a much lower price to replace the borrowed shares—think how much money there was to be made as the stock plummeted! What he said made eminent sense to the honorable aldermen. Led by Drew, they each borrowed as much money as possible and began shorting the Harlem’s stock, selling, selling, always selling. Learning of the scheme, the Commodore began buying.

  When the council repealed the ordinance on June 25 and the court of common pleas issued an injunction to prohibit construction of the new Harlem line along Broadway to the Battery, the aldermen gleefully sat back and waited for the stock to dive. As it fell from 110 to 72, they cheered. Their glee, however, turned to terror the next day when, inexorably, inexplicably, horribly, the stock began rising. The Commodore had cornered the market—had bought every outstanding share of the Harlem. By June 26, the stock was at 97lA. The next day it rose again, up to 106. In a panic, the august aldermen repealed their repeal of the franchise to placate the Commodore. That didn’t help. The stock continued to rise. All the while, they begged the Commodore to stop, to allow them to buy the stock back from him to cover their short positions. No, the Commodore said. It was important for them to learn their lesson. The stock continued to rise: to 150, to 170, to 179. There was no limit to their losses. The higher the stock rose, the more money they were losing. The only way to stop these terrible losses was to buy back stock to replace their borrowed shares, but there was not a single share available.