One of the first and most studied tycoons in the U.S. was Cornelius Vanderbilt. An entrepreneur before the word came into vogue, Vanderbilt never attended college; in fact he dropped out of school at the age of 11 to begin working for his father.
Vanderbilt was a descendant of Dutch settlers who came to the United States in the mid-1600s. He was born on Staten Island into humble circumstances on May 27, 1794. His parents were farmers; his father also ferried produce and merchandise between Staten Island and Manhattan in a periauger (a two-masted sailing vessel). As a boy, the younger Vanderbilt worked with his father on the water. When Vanderbilt was a teen he transported cargo around New York harbor in his own periauger. Eventually, he acquired a fleet of small boats and learned about ship design.
Vanderbilt began work in 1817 as a ferry captain for Thomas Gibbons, a wealthy businessman. Gibbons owned a commercial steamboat service between New Jersey and New York. Vanderbilt used the position to learn about the burgeoning steamship industry. In 1829 he went into business for himself, building steamships and operating ferry lines around the New York region. This was only 22 years after Robert Fulton began the first commercial steamboat service, from New York City northward to the state capital of Albany.
His steamboat business earned Vanderbilt the nickname “Commodore,” and he became well-known as a no-nonsense businessman. Aggressive and shrewd, he became a dominant force in the relatively new industry by conducting fierce fare wars with his rivals. In some cases, his competitors paid him not to compete with them. Because of his business sense and tactics, Vanderbilt became one of the country’s largest steamship operators.
Vanderbilt also seized opportunities when they arose. The California Gold Rush began in 1849 when gold was discovered at Sutter’s Mill. In the early 1850s, some 15 years or more before the transcontinental railroad was built, Vanderbilt began steamship service that transported gold-hungry prospectors from New York to San Francisco via a route across Nicaragua. Vanderbilt’s route was faster than another route across Panama, and much faster than the other alternative, in which ships sailed around Cape Horn at the southern tip of South America. That route took months. Vanderbilt’s new route was a huge success, earning more than $1 million annually (about $26 million today).
During the Civil War, the U.S. Navy purchased one of Vanderbilt’s steamships and it was renamed the USS Vanderbilt. It had been a 3,360-ton passenger steamship, the Navy converted it and used it as a cruiser. It was capable of traveling at 14 knots (a high speed at that time) and was fitted with a large battery of heavy guns. It was sent to sea in a futile search for Confederate raiders that were doing serious damage to Union commercial shipping. It later served as one of the ships in the Union blockade of Confederate ports. After the war, the ship was honored by transporting the Queen of Hawaii from San Francisco to Hawaii.
Vanderbilt’s success in one area of transportation gave him an opportunity to expand into another. In 1863, during the Civil War, he took control of the New York & Harlem Railroad (NY&H). He managed the railroad well, and oversaw the line’s significant growth and its future foundations as a world-class carrier.
Vanderbilt built another empire and also helped make railroad transportation more efficient. He changed his railroad’s name to the New York Central & Hudson River when he merged the original New York Central Railroad with his own Hudson River Railroad. He continued stringing together properties, including the Lake Shore & Michigan Southern Railroad, until his rail lines reached Chicago.
Vanderbilt was also involved in the Erie Railroad War of 1868, seeking financial control of the Erie Railroad and battling Wall Street traders Jim Fisk and Jay Gould. At that time the Erie Railroad was controlled by Daniel Drew; he and Vanderbilt conspired to buy the majority of the Erie’s shares. This led Gould and Fisk to issue additional, watered-down shares, which Vanderbilt continued to buy. As the “war” continued, newspapers made big news of the fight between the robber barons. Gould and Fisk ultimately gained control of the Erie Railroad. The outcome caused Drew to retire after paying back Vanderbilt for his watered-down stocks.
Despite losing the “war,” Vanderbilt took on other projects. He was the primary force behind the construction of Manhattan’s Grand Central Depot, which opened in 1871. The station lasted until 1913, when it was replaced by the present-day Grand Central Terminal.
Unlike Gilded Age titans like steel magnate Andrew Carnegie and Standard Oil founder John D. Rockefeller, Vanderbilt did not own magnificent homes; nor did he give much of his vast wealth to charitable causes. The only major philanthropic donation he made was in 1873, when he gave $1 million to build and endow Vanderbilt University in Nashville, Tennessee. (Sports teams at Vanderbilt are the Commodores.)
Vanderbilt died at 82 on January 4, 1877, at his Manhattan home. The bulk of his fortune, estimated at more than $100 million (over $2.6 billion today), went to his son William, who only lived less than eight few years after his father’s death.
During his lifetime, Cornelius Vanderbilt became one of the wealthiest Americans of the 19th century. He was a self-made millionaire, and one of the first because of his transportation businesses.