Did U Know – Cornelius Vanderbilt?

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cornelius-vanderbilt-billionaire

Cornelius Vanderbilt (May 27, 1794 – January 4, 1877), also known informally as “Commodore Vanderbilt”, was an American business magnate and philanthropist who built his wealth in railroads and shipping.[2][3] Born poor and having only a mediocre education, Vanderbilt used perseverance, intelligence and luck to work into leadership positions in the inland water trade, and invest in the rapidly growing railroad industry. He is known for owning the New York Central Railroad.

As one of the richest Americans in history and wealthiest figures overall, Vanderbilt was the patriarch of a wealthy, influential family. He provided the initial gift to found Vanderbilt University in Nashville, Tennessee. According to historian H. Roger Grant:

Contemporaries, too, often hated or feared Vanderbilt or at least considered him an unmannered brute. While Vanderbilt could be a rascal, combative and cunning, he was much more a builder than a wrecker. … being honorable, shrewd, and hard-working.[4]

Early years

Cornelius Vanderbilt was born in Staten Island, New York on May 27, 1794 to Cornelius van Derbilt and Phebe Hand.[2] He began working on his father’s ferry in New York Harbor as a boy, quitting school at the age of 11. At the age of 16, Vanderbilt decided to start his own ferry service. According to one version of events, he borrowed $100 from his mother to purchase a periauger (a shallow draft, two-masted sailing vessel), which he christened the Swiftsure.[6] However, according to the first account of his life, published in 1853, the periauger belonged to his father and the younger Vanderbilt received half the profit. He began his business by ferrying freight and passengers on a ferry between Staten Island and Manhattan. Such was his energy and eagerness in his trade that other captains nearby took to calling him The Commodore in jest – a nickname that stuck with him all his life.[6]

While many Vanderbilt family members had joined the Episcopal Church,[7] Cornelius Vanderbilt remained a member of the Moravian Church to his death.[8][9] Along with other members of the Vanderbilt family, he helped erect a local Moravian parish church in his city.[10]

On December 19, 1813, at age 19 Vanderbilt married his first cousin, Sophia Johnson, daughter of Nathaniel Johnson and Elizabeth Hand. They moved into a boarding house on Broad Street in Manhattan.

In addition to running his ferry, Vanderbilt bought his brother-in-law John De Forest’s schooner Charlotte and traded in food and merchandise in partnership with his father and others. But on November 24, 1817, a ferry entrepreneur named Thomas Gibbons asked Vanderbilt to captain his steamboat between New Jersey and New York. Although Vanderbilt kept his own businesses running, he became Gibbons’s business manager.[11]:31–35

When Vanderbilt entered his new position, Gibbons was fighting against a steamboat monopoly in New York waters, which had been granted by the New York State Legislature to the politically influential patrician Robert Livingston and Robert Fulton, who had designed the steamboat. Though both Livingston and Fulton had died by the time Vanderbilt started working for Gibbons, the monopoly was held by Livingston’s heirs. They had granted a license to Aaron Ogden to run a ferry between New York and New Jersey. Gibbons launched his steamboat venture because of a personal dispute with Ogden, whom he hoped to drive into bankruptcy. To accomplish this, he undercut prices and also brought a landmark legal case – Gibbons v. Ogden – to the United States Supreme Court to overturn the monopoly.[11]:37–48

Working for Gibbons, Vanderbilt learned to operate a large and complicated business. He moved with his family to New Brunswick, New Jersey, a stop on Gibbons’ line between New York and Philadelphia. There his wife Sophia operated a very profitable inn, using the proceeds to feed, clothe and educate their children. Vanderbilt also proved a quick study in legal matters, representing Gibbons in meetings with lawyers. He also went to Washington, D.C., to hire Daniel Webster to argue the case before the Supreme Court. Vanderbilt appealed his own case against the monopoly to the Supreme Court, which was next on the docket after Gibbons v. Ogden. The Court never heard Vanderbilt’s case, because on March 2, 1824, it ruled in Gibbons’ favor, saying that states had no power to interfere with interstate commerce. The case is still considered a landmark ruling. The protection of competitive interstate commerce is considered the basis for much of the prosperity which the United States has generated.[11]:47–67

Steamboat entrepreneur

After Thomas Gibbons died in 1826, Vanderbilt worked for Gibbons’ son William until 1829. Though he had always run his own businesses on the side, he now worked entirely for himself. Step by step, he started lines between New York and the surrounding region. First he took over Gibbons’ ferry to New Jersey, then switched to western Long Island Sound. In 1831, he took over his brother Jacob’s line to Peekskill, New York, on the lower Hudson River. That year he faced opposition by a steamboat operated by Daniel Drew, who forced Vanderbilt to buy him out. Impressed, Vanderbilt became a secret partner with Drew for the next thirty years, so that the two men would have an incentive to avoid competing with each other.[11]:72, 84–87

On November 8, 1833, Vanderbilt was nearly killed in the Hightstown rail accident on the Camden and Amboy Railroad in New Jersey. Also on the train was former president John Quincy Adams.[11]:90–91

In 1834, Vanderbilt competed on the Hudson River against the Hudson River Steamboat Association, a steamboat monopoly between New York City and Albany. Using the name “The People’s Line,” he used the populist language associated with Democratic president Andrew Jackson to get popular support for his business. At the end of the year, the monopoly paid him a large amount to stop competing, and he switched his operations to Long Island Sound.[11]:99–104

During the 1830s, textile mills were built in large numbers in New England as the United States developed its manufacturing base. They processed cotton from the Deep South, so were directly tied to the slave societies. Some of the first railroads in the United States were built from Boston to Long Island Sound, to connect with steamboats that ran to New York. By the end of the decade, Vanderbilt dominated the steamboat business on the Sound, and began to take over management of the connecting railroads. In the 1840s, he launched a campaign to take over the most attractive of these lines, the New York, Providence and Boston Railroad, popularly known as the Stonington. By cutting fares on competing lines, Vanderbilt drove down the Stonington stock price, and took over the presidency of the company in 1847. It was the first of the many railroads he would head.[11]:119–46

During these years, Vanderbilt also operated many other businesses. He bought large amounts of real estate in Manhattan and Staten Island, and took over the Staten Island Ferryin 1838. It was in the 1830s when he was first referred to as “commodore,” then the highest rank in the United States Navy. A common nickname for important steamboat entrepreneurs, by the end of the 1840s, only Vanderbilt was referred to by this nickname.[11]:124–27

Railroad Empire

New York and Harlem Railroad

Train
Photo credit: Haiku Deck

Though Vanderbilt had relinquished his presidency of the Stonington Railroad during the California gold rush, he took an interest in several railroads during the 1850s, serving on the boards of directors of the Erie Railway, the Central Railroad of New Jersey, the Hartford and New Haven, and the New York and Harlem (popularly known as the Harlem). In 1863, Vanderbilt took control of the Harlem in a famous stockmarket corner, and was elected its president. He later explained that he wanted to show that he could take this railroad, which was generally considered worthless, and make it valuable. It had a key advantage: it was the only steam railroad to enter the center of Manhattan, running down 4th Avenue (later Park Avenue) to a station on 26th Street, where it connected with a horse-drawn streetcar line. From Manhattan it ran up to Chatham Four Corners, New York, where it had a connection to the railroads running east and west.[11]:365–386

Vanderbilt brought his eldest son Billy in as vice-president of the Harlem. Billy had had a nervous breakdown early in life, and his father had sent him to a farm on Staten Island. But he proved himself a good businessman, and eventually became the head of the Staten Island Railway. Though the Commodore had once scorned Billy, he was impressed by his son’s success. Eventually he promoted him to operational manager of all his railroad lines. In 1864, the Commodore sold his last ships, in order to concentrate on the railroads.[11]:387–90

Death

Cornelius Vanderbilt died on January 4, 1877, at his residence, No. 10 Washington Place, after having been confined to his rooms for about eight months. The immediate cause of his death was exhaustion, brought on by long suffering from a complication of chronic disorders.[2] At the time of his death, aged 82, Vanderbilt had a fortune estimated at $100 million. In his will, he left 95% of his $100 million estate to his son William (Billy) and to William’s four sons ($5 million to Cornelius, and $2 million apiece to WilliamFrederick, and George). The Commodore said that he believed William was the only heir capable of maintaining the business empire.

quote-never-be-a-minion-always-be-an-owner-cornelius-vanderbilt-71-59-05
Photo credit: AZ Quotes

Railroads controlled by Vanderbilt

 

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