The ancient idea that war is the normal condition of the human race has been put away only so far as the relations of states and nations are concerned. These indeed are content, in this latter day, to maintain an attitude of armed peace which is itself an exceedingly costly warfare, consuming vast armies in fortified camps without sending them into actual battle. In other departments of human activity there is perpetual conflict. Business men of all occupations still speak of the season before them as “the campaign.” In it they expect to meet with competition, and with the chances and changes of production, consumption, and finance, as with enemies in the field. The gathering and use of varied forces, the strategies of attack and defence employed, are often in striking correspondence with processes involved in the movements of armies. The larger and the more carefully studied may be the operations, the stronger appears the military likeness. At the close of each campaign, moreover; with its consequences of victory or defeat, there is apt to be a military illustration of the related doctrine of “the survival of the fittest.”
During many years, a period which might be measured by one long business life, there was a little group of men in New York City whose membership attracted the eyes of the nation somewhat as did its statesmen and its generals. It was generally understood that they were constantly engaged in a warlike rivalry which frequently brought them into collisions, into trials of strength and skill, in the results of which large numbers of their fellow-citizens, if not all, had at least an indirect pecuniary interest. Whatever might be said of any of them, as speculators, financiers, money-kings, or the like, they and their ways were so discussed from day to day that other men became familiar with them, with even their faces and their dress and their habits of speech, almost as if they were personal acquaintances.
Towering among them, like Saul above his brethren, the most dramatic figure of them all, but without knowing it, was one tall, broad-shouldered, muscular form, which remained upon the field of battle after most of the others had passed away. In fact, it still remains, and cannot even yet pass out of the minds of men; for Cornelius Vanderbilt was in many respects the most remarkable man of business yet developed in the long, stormy fermentations of American business affairs.
He was born near Stapleton, Staten Island, N. Y., May 27, 1794, and was descended from Jan Aertsen Van der Bilt, a Dutch immigrant who came over from Holland about the year 1650, and settled upon a farm near Brooklyn.
Something- like sixty-five years later, or in 1715, his grandson, the great-grandfather of Cornelius Vanderbilt, went over to Staten Island and became the owner of a farm near New Dorp. Here he became converted to the doctrines of the Moravians, which continued to influence the religious ideas of the family during several generations.
The type of character introduced by the early Dutch colonists and developed under American conditions has presented marked differences from its near neighbor and rival, or fellow-citizen, the New England Puritan stock. It has, however, in equal degree, the enterprise, the love of adventure, the fearlessness, the sturdy personal independence ; for these were inherited from the heroic people who made the great history of the Dutch Republic.
The father of Cornelius was a farmer in moderate circumstances, but might have given his son something like an early, common-school education, if he would have taken it. He learned to read and write, whether he would or not, but that was the end of his consent to have anything to do with books. Arithmetic, in all its practical applications, came to him naturally; and as for geography, any map he cared to examine was transferred to his memory as if it belonged to the ins and outs of New York Bay or the Sound. He was hardly more than a child when he began his searching acquaintanceship with all of those coast-lines that he could get an opportunity of visiting.
It was, after all, a wholesome life for a boy to lead, with its boating and fishing adventures and its increasing knowledge of land and sea. The Staten Island farmers and their neighbors, like all islanders, were necessarily a semi-maritime people. Among them and those who from time to time drifted ashore, were old seafaring men, full of strange yarns and also full of varied funds of nautical information. It was a preparatory school, after all, for a boy who was yet to have so much to do with ships and shipping. His next lesson in life was one which at once gave him his bent and introduced him to the career in which his distinguishing work was to be performed. He was a handsome boy, tall and strong beyond his years, of a steady and resolute, but sometimes pugnacious temper, and with keen, restless dark eyes, which seemed to miss nothing between them and the horizon.
His father sent the produce of his farm, with some from other farms, to New York City, in a sail-boat of his own. It was a stout craft, built for safety rather than speed, for the waves of the Bay were sometimes rough sailing, but before long Cornelius proved himself so good a sailor that he was trusted to go and come by himself. He was the captain and often the entire crew of a vessel which carried freight, but was also willing to convey passengers. The produce carried was generally to be delivered for sale to market consignees, but there were exceptions, and occasions for the exercise of judgment. It was a business with “ points ” of its own to be studied and perceived, and the Staten Island boy shortly obtained a thorough comprehension of his market, with its ups and downs, its over-sales, its scarcities, and its artificial “ corners.” He made ventures of his own, before long, and his operations were conducted so well that at the age of sixteen he became a ship-owner, that is, he bought and owned a better sail-boat than his father's. It carried freight as well, but it had more room for passengers, and these were increasing in number as the years went by. There was money in the business, and he prospered, growing taller and stronger while he did so. At eighteen, he not only owned two good boats, handled for him by hired crews, but was captain of a third and larger boat, commodore of a little line that made quite a figure in the trade and transportation of Staten Island. Here he kept his office and headquarters at the old farm-house, during one year more, but he was studying more extended enterprises. At nineteen, he married his cousin, Sophia Johnson, and moved to New York City, where he transacted business and made and kept his contracts with small reference to the fact that he was not yet of age.
Immediately the strong, deep mark of his business genius manifested itself. It seemed as if every line of water transit between New York and other ports, small or great, was already held, and some were apparently more than supplied, but young Vanderbilt had noted deficiencies. He began to plan for both traffic and freight between the city and several towns along the Hudson River and Long Island Sound. The days of steam were at hand, but had not arrived, and he planned and had built, according to his several requirements, boats, sloops, and schooners, upon the best and latest models for speed, capacity, and comfort. He met with both encouraging successes and speculative losses. Nothing like wealth seemed to promise as yet, and before long there were greater and greater encroachments made by steam vessels upon the old time craft and their business. That, too, was a change for which he was getting ready, and he was only twentythree years of age when he became captain of a steamer running as a freight and passenger ferryboat between New York and New Brunswick, N. J. During the twelve years that followed he was nominally at work upon a salary, but was all the while getting ahead, mentally and pecuniarily. He was able, therefore, in 1827, at the age of thirty-three, to lease on his own account the ferry between New York and Elizabeth, N. J. It was a promising line, but he at once made its promise of greater value by building new and improved boats for it. So well was his forecast verified by cash results that two years later, in 1829, he was ready to contract for new and larger craft with which to compete for the rich transport harvest of the Hudson River. There was but one road to victory, for his competitors were wide-awake men. It was necessary to offer the public something better than others gave them, and he did so, zealously hunting out every discoverable improvement in hulls, machinery, or outfit. Moreover, he was personally acquainted with the entire boating community, and knew how to select men for their work. The very principle upon which he was managing led him to make continual improvements in the human force in charge of his fleet. He was remorseless in dispensing with defective subordinates, continually, as if they were so many boats, replacing those who were unsatisfactory with something better adapted to the business in hand.
There were few millionaires in the United States in the year 1836. It was a time, too, of widespread financial distress, and businessmen generally were losing money, rather than making any. All the more prominence, therefore, was given to a man who had acquired the fleet captain's title of Commodore, and was loosely estimated to be worth $500,000. This was probably much too high an estimate, and nearly the whole sum, larger or smaller, was invested in property which required constant activity to maintain its value. It was not large enough to enable its owner to maintain a war, campaign after campaign, over too broad a field, in opposition to powerful and capable antagonists. The Hudson River interest was therefore parted with to Robert L. Stevens, the Commodore restricting himself, for a time, to Long Island Sound and its growing requirements. The commerce of this great water-way had not yet been materially interfered with by railway competition, but anything like a mastery of it called for a further application of the fundamental principle of improvement, the best boats handled by the best men. If again and again weaker rivals were crushed by a persistent system of lower rates and better accommodations, the methods of the campaigns in which they were beaten were not injurious to the public interest.
The Commodore was now in a kind of general partnership with important concerns engaged in ship-building. Acting independently, of course, they understood and were prepared to meet his increasing requirements. When, therefore, in 1849, the California gold excitement broke out, with its sudden flood of feverish migration, he was better ready than other men to seize the opportunity. He promptly placed steamers upon the Nicaragua route to San Francisco, and began to gather a golden harvest before any large amounts had returned from the placers. Four years later, in 1853, he sold out this part of his undertakings, upon what seemed peculiarly advantageous terms. He had toiled long, had accumulated wealth, and had determined upon enjoying a vacation. For this he had planned in a manner that was altogether his own. There were steam yachts, although not many, both in America and Europe, but he had built for himself, upon general designs of his own making, a vessel which he named the North Star. In her construction, tonnage, and appointments, she surpassed any other steam yacht then in existence, and he sailed in her to the Old World, with his family and a chosen party of friends. It was a long pleasure cruise, during which he touched at many ports, and everywhere attracted and received marked attention. There were great ship-owning houses and corporations, the world over, but no other individual was “Commodore” of so large a fleet, owned and directed by himself. He was a kind of prince in the realm of sea-going transportation, and he was treated accordingly.
If this was to be regarded as the celebration of a business triumph, he returned to America to find a new war upon his hands, and he entered into it with vigor. The parties to whom he had sold the Nicaragua line were disputing the conditions of their bargain and were trying to evade its payments. It is possible that in the courts, or if he had been less of a fighting man, or with weaker resources, they might have succeeded. They might, at least, have obtained compromises. As it was, they found him at once re-entering the field as their competitor, and with a vastly better mastery of all the elements of that species of campaign. After a sharp, pitiless struggle, they were forced into bankruptcy and the victor retained possession of the field of battle. It was a prize worth contending for. During the eleven years that followed, his profits amounted to $1 1,000,000. He was not the richest man in America, but he stood among the foremost half dozen.
During a part of this period, a large share of the Commodore's energetic work was turned in another direction. England was then, although to a less extent than now, the mistress of the ocean-carrying business. The United States stood very near her—next in rank—but mainly with wooden sailing vessels. Only one important line of American steamers, the Collins, ran upon the Atlantic ferry. There had been signs of an approaching collision between England and Russia, and it was plainly to be foreseen that such an event would offer an American opportunity by a partial crippling of the English merchant marine. That France also was involved increased the probable opening, and the Commodore prepared to take advantage of it. His idea was a long campaign for the carrying trade between Europe and America, and he began it with the outbreak of the Crimean War, in 1853. Using whatever other ships he owned or could obtain, he built three new ones, the best and the swiftest, and established them as a line between New York and Havre. The Crimean War was ended in 1856, and before that time the English ship interest had more than recovered from its temporary disability. It was once more exceedingly difficult for any American line to maintain what was, for many reasons, an unequal contest. A mistake of generalship on the part of the Commodore himself, made it impossible. All great leaders make mistakes, and even the Commodore hastily overlooked the fact that to weaken any American line or the general resources of such lines, was to strengthen the common enemy. The great English steamship interest was well known to be aided by Government subsidies, in one form or another, in addition to their many other advantages. The Collins line was maintained against them, narrowly, by its United States mail contracts. It was a fatal blow when the Vanderbilt ships proposed to carry the mails for nothing. The payment ceased; the Collins steamers shortly were withdrawn; the Commodore was left alone in the field. If he had won an apparent victory over an American rival, however, he had enabled his European opponents to concentrate against him, and they forced him to give up the fight.
Long before this, however, Mr. Vanderbilt's genius for transportation had led him to the careful study of another of the most obvious signs of the times. His own account books, and the reports of other steamboat men, told him how the railways were taking away the carrying business of the Hudson and the Sound. The latter was of less importance, but the rails parallel with the river reached on, westward, as far as the future of the country might build tracks for them, or provide freight and passengers. Nevertheless, these lines of transportation had been so managed that their record had been largely one of losses, and the prices of their stocks ruled low. As early as 1844, Mr. Vanderbilt began to buy shares of the New York and New Haven, then at a low figure, but he did so quietly, without attracting attention. It was not until the close of the Crimean War, in 1856, that he was known to be drawing out from the steamboat lines on the Sound. In very nearly the same manner, if not quite so early, he acquired and steadily increased an interest in the New York and Harlem road, the shares of which were almost despised and neglected on the Exchange. He was biding his time and setting his capital free; but too much of it was yet invested in ships and steamers, and their management could not be neglected without disastrous losses.
It looked as if these had come to him, as to other American ship-owners, with the outbreak of the Civil War, in 1861. The commercial marine of the United States was indeed soon swept from the sea, and the carrying trade of the world passed into other hands altogether. At once, however, there was a war demand for such craft as could be fitted up as light cruisers, or could serve as transports for troops and army supplies. It does not appear that the Commodore at once availed himself of this market for vessels to any extent, but the spring of 1862 brought him an exceptional opportunity. The Monitor and the Merrimac fought their historic battle, in Hamp ton Roads, changing in a day the navies and naval warfare of the world. With the first news of the appearance of the Merrimac, however, and of the destruction of the United States wooden war-vessels, the patriotism of the Commodore took fire. His best steamship was the Vanderbilt, the swiftest, strongest, best appointed ship afloat, as he believed. She could, at least, run down the Merrimac, armored or unarmored, even if both ships went to the bottom together. The experiment was never to be tried, although thenceforth the “ ram” recovered its old Roman place in naval combats; but the Vanderbilt was made a present to the United States and performed other services of vast value. At the close of the war, in 1866, the patriotic giver received from Congress a vote of thanks and a gold medal, in cordial recognition of his timely gift. It had indeed stimulated all other support of the national cause, and had strengthened the Government in its hour of need. There was afterward no expression of jealousy when it became generally understood that subsequent disposal of all his other available craft, by sale or charter, to the Government, had enabled Mr. Vanderbilt to permanently withdraw his capital from the water, with large profits, that he might reinvest it in rails and rolling stock. Only a year later, in 1863, he had upon his hands his first important railway and Stock Exchange campaign, and he fought it out, through what seemed inevitable defeat, to a victory which opened the way to a long series of brilliant successes.
Owing to long-continued mismanagement and other causes, the stock of the Harlem Railroad was selling, in 1863, at only $10 a share. It was therefore easy for a man with millions of released capital to buy a controlling interest, but there were those who wondered what he could do with it, even as a Wall-Street shuttlecock. His lifelong policy, or principle, of development and improvement was not understood by mere speculators. Neither were they aware how silently and rapidly he was buying shares of the Hudson River road, in the neighborhood of $75 per share. His first movement was to obtain a charter for a system of New York City street railways, connecting with the road, including a line traversing Broadway. Up went the stock to par, and for a little while the enterprise looked well; but daring and skilful foes were preparing something very much resembling a night attack. Prominent WallStreet operators entered into combination with controlling politicians and sold the stock short, or for future delivery, while the city government prepared to rescind the Broadway part of the new franchise, considered its greatest value.
The stock went down, down again. The franchise was reduced to narrower limits, and still the operators sold and sold, to push their supposed victim lower. What they did not know was the fact that the opposing general was quite willing to risk his resources and was buying all they offered. He went on until the entire stock of the road was in his hands, and men who had contracts out for its delivery must buy of him. That their settlements were made, as it was said, “at two prices,” was a matter of course, but the plans of the victor included a permanent increase of actual value as well as of selling price. His purchases had now given him control of the Hudson River road also, and he at once sent into the State Legislature a bill providing for the union of the two franchises. Here he was again confronted by the financial political clique of stock operators, led by some of the most acute and able men on the Street or at Albany. The stock had risen to one hundred and fifty when they began to “bear”it. Down it went, and they seemed to be making money and beating their too venturesome adversary all the way, until its price was lower than that at which he at the first began to purchase. He and his friends, however, were obligingly accepting all offers, until the outstanding short contracts covered twenty-seven thousand more shares than had ever been issued. There was a hot day on the Street when this fact came to light. It was even necessary for the Commodore, in order to avert a general panic, to settle with the associated “ shorts ” at an average price of $285 per share. His profits were enormous. The two roads were made one, and instantly began a searching reformation in every part and department of their management. Mr. Vanderbilt assumed the presidency of the new corporation, with a nominal board of directors, who directed very much as if they had been the mates and crew of one of his old-time coasting vessels. Perhaps no other feature occasioned more surprise, from time to time, than did the minuteness of his knowledge of all the items of a railway construction account, and his determination to use only the very best appliances, of every kind. Allied to this was his rigid demand for discipline, fidelity, and efficiency in all the human part of his transportation service. In so doing he was rendering a vast and permanent public service, for it was a revolution which rapidly extended to all other American railways. Mr. Vanderbilt's first purchases of New York Central stock had attracted no special attention, but his successive graspings of the river lines sent a spasm of alarm through the circle of financiers then in control of the railroads from Albany to Buffalo. They had held that important interest long, believed themselves firmly seated, but they dreaded the swift advances of this new railway king. He was a dangerous enemy to other kings, and they made the serious mistake of beginning a war upon him. They were not overwise, for they overlooked the ice-bound condition of the Hudson during all the winter months, when they made their arrangements to send down their heavy freights and as many as possiole of their passengers to New York by water instead of by rail. It was a war in which both shippers and travellers profited, and the roads did not, but it only lasted a year or so. The Commodore's new movement was ready with the winter of 1865. His friends and agents on the street were heavily short of New York Central stock, and the river was closed with ice, when he suddenly transferred the Albany terminus of the river roads across to the eastern shore, and refused to receive freight from the Central. Down went the market price of its shares, and the Vanderbilt interest not only profitably covered its shorts, but took also all the stock that was offered by the surprised and all but panicky holders. At the end of this campaign there was an assurance of peace in the future, for the winner controlled the rails from New York to Buffalo, and was arranging for another consolidation. In 1869 he was elected President of the New York Central & Hudson River Railroad Co. He had already been President oi the Central since 1867, however, and there had really been but one road and one head, with a drastic process of reorganization, reform, reconstruction, and deeply searching improvement going on from hour to hour.
The reorganization of the financial structure of the consolidated roads involved an important feature which was then and afterward the subject of severe criticism. Mr. Vanderbilt declared that the existing stock did not fairly represent the property. Additional stock was therefore issued to holders, at the rate of one hundred and seven per cent, nominal shares to outstanding shares of Central, and eighty-nine per cent, to shares of the Hudson River. In spite of this watering process the price arose to two hundred, so great was the general confidence in the new management, and so thoroughly was any existing “ bear ” interest defeated.
While the improvement in the roads under Mr. Vanderbilt's control was altogether phenominal; while tracks, bridges, depots, cars, and lateral connections changed their character as if by magic, the Commander-in-Chief, now, rather than the Commodore, was leading his financial forces westward. By obtaining control of the Lake Shore, Canada Southern, and Michigan Central, he completed his relations with the commerce of the great lakes and reached Chicago. From this centre of freight and trade he pushed on, over road after road, into the west and northwest country, and formed connections across the continent to the Pacific. Almost every successive step involved a contest, more or less severe, but he met with no more perplexing adversaries than those with whom he contended, at the very outset, in a campaign aimed against the then competing management of the Erie, or “ New York, Lake Erie & Western” Railway. The leaders upon the opposite side were Daniel Drew, Jay Gould, James Fiske, and other well-known powers of the Street, and the contest passed through a swift succession of exciting, dramatic, often grotesque and even repulsive phases. Never before or since has it been equalled in the annals of American “stock operations,” and its details were by no means pleasant reading, for courts of law were made to figure as mere chessmen in the hands of skilful players. If all things are fair in war, upon that and no other ground could much that was done be justified. If, however, the Commodore was at one time beaten, with a loss of $7,000,000, by means of a fraudulent over-issue of Erie shares, he afterward justly recovered nearly $5,000,000 of it, after a contest in the courts. His real success, however, consisted in the final result that his own great railway system was left without an important rival nearer than the more southerly east-and-west trunk lines. With these it was afterward to enter into a number of brief, spasmodic competitions for the business of the West, but there was to be no campaign worthy of record as throwing further light upon his own genius.
It has been said of him that he was not and could not have been a pioneer; that he never projected or opened a new line or channel. If this should be accepted as measurably true, it should be read in connection with his leading characteristic as a business man, that of perceiving at a glance whatever could be done to develop any existing channel to its utmost capacity, with reference to all the future effects or consequences of that development. The roads that he perfected and the rates of carrying as he reduced them, may be said to have made some of our new States possible. The rapidity of their settlement and prosperity could not otherwise have been attained.
The long warfare of Mr. Vanderbilt's business life grew somewhat less active toward the close, but it could not altogether cease until the very end. This came, in New York City, January 4, 1877. His estate was estimated at about one hundred millions of dollars. With the exception of a million previously given to Vanderbilt University, at Nashville, Tenn., and $50,000 to the Church of the Strangers in New York, it went to his children, the larger part going to his son, William H. Vanderbilt, into whose hands the business management had already passed.
A much greater inheritance remained, divided among all men, in the work he had performed for the transportation business of the United States. He went into it in its very infancy, grew with it, and its present advanced condition owes more to him than to any other man. He builded well through all the sharp campaigns of his warlike business life. He left behind him a broadly written record upon the face of the land, in stone and steel and iron. No other American business man can be given a higher rank as one of the builders of the prosperity of the commonwealth.