Appletons' Cyclopædia of American Biography/Vanderbilt, Cornelius

VANDERBILT, Cornelius, financier, b. near Stapleton, Staten island, N. Y., 27 May, 1794; d. in New York city, 4 Jan., 1877. He was descended from Jan Aertsen Van der Bilt, a Dutch farmer, who settled near Brooklyn, N. Y., about 1650. Cornelius's great-grandfather, a son of the emigrant ancestor, removed about 1715 to New Dorp, Staten island, where the family was converted to Moravian doctrines by religious exiles from Bohemia. His father was a farmer in moderate circumstances, who conveyed his produce to market in a sailboat, which the son early learned to manage. The boy, who was hardy and resolute, early became schooled in practical affairs and the direction of men, but neglected every opportunity for education. When sixteen years of age he purchased a boat, in which he ferried passengers and goods between New York city and Staten island, and at the age of eighteen he was the owner of two boats and captain of a third. A year later he married a cousin, Sophia Johnson, and removed to New York city. He extended his interests in boats, sloops, and schooners, engaged in traffic as well as transportation along the shores of New York bay and Hudson river, and built new craft on the latest and most approved models. In 1817 he engaged as captain of a steamboat that made trips between New York city and New Brunswick, N. J., and for twelve years worked for a salary. In 1827 he leased the ferry between New York city and Elizabeth, and, by putting on new boats, made it very profitable. Returning to New York city in 1829, he began to build steamboats of improved construction and fittings, and to compete in prices and service with the wealthy capitalists who owned the existing lines on Hudson river and Long Island sound. His success as a steamboat builder and manager caused the title of “Commodore” to be popularly attached to his name. Before he was forty years old his wealth was estimated at $500,000. He withdrew his steamboats from the Hudson river by arrangement with Robert L. Stevens, but maintained lines connecting New York city with Bridgeport, Norwalk, Derby, New Haven, Hartford, and New London, Conn., Providence and Newport, R. I., and Boston, Mass. When the emigration of gold-seekers to California began, he established a passenger line, by way of Lake Nicaragua, gaining large profits. Selling this in 1853, he visited Europe in the “North Star,” which was constructed after his own designs, and surpassed all steam yachts that had before been built. The company to which he had transferred the Nicaragua short line evaded payment, and on his return Vanderbilt again engaged in the California traffic, threatening to force his dishonest competitors into bankruptcy. This he accomplished, and in the course of eleven years he accumulated $10,000.000 in this business. He engaged in ocean transportation while British ships were withdrawn during the Crimean war, building three of the finest and fastest steamers, and establishing a line between New York and Havre. His offer to carry the mails for nothing impelled the government to withhold the subsidy that it had paid to the Collins line and caused the cessation of its operations. A few years later Vanderbilt, who had begun to invest largely in the stock of the New York and New Haven railroad as early as 1844, retired from the transatlantic trade on account of the sharp competition of Europeans, and gradually transferred his capital from shipping to railroad enterprises. When the “Merrimac” attacked the National vessels in Hampton Roads, he had his finest steamship, the “Vanderbilt,” fitted up for naval purposes and sent to James river, intending to run down the Confederate ram. He gave the vessel to the government, and, at the conclusion of the war, congress voted him a gold medal in recognition of his gift. His first important railroad venture was in 1863, when he purchased a large part of the stock of the New York and Harlem railroad, and obtained a charter for a connecting street railroad through New York city, causing the stock to rise from ten dollars a share to par. Daniel Drew and other heavy speculators, with foreknowledge of the intention of the city council to cancel the franchise for a horse-car line through Broadway, sold stock for future delivery, causing it to decline heavily. Vanderbilt bought what was offered, till it was all in his hands, and the sellers could only make their deliveries by paying him double the prices that he had contracted to pay them. He began in the same year to purchase the shares of the Hudson River railroad, a competing line, and, when he had obtained the control, procured the introduction of a bill for the consolidation of this and the Harlem road. Members of the legislature entered into a combination with stock-jobbers to defeat the measure, after promising their support, and in this way to cause Harlem stock, which had risen from $75 to $150 a share in anticipation of the consolidation, to fall below the former price, enabling them to make profits by selling while it declined. With the aid of financial allies, Vanderbilt was able to take all bids of stock, effecting a “corner” of much greater dimensions than the former one. The speculators for a fall had agreed to deliver 27,000 more shares than the entire stock of the road, and, when the time for settlement came, the Vanderbilt “pool” could make the price what they chose, but did not venture to raise it above $285 for fear of precipitating a general panic. After this stroke, by which he gained many millions, he purchased large amounts of New York Central railroad stock. Fearing that the road would pass into his hands, the managers in 1864 made secret arrangements to have freight and passengers forwarded to New York city by river steamers, instead of by the Hudson river railroad. In retaliation, in the second winter after the discriminations began, Vanderbilt changed the terminus of the Hudson river railroad at Albany to the eastern side of the river, and ordered the employés to receive no freight from the Central railroad. The stock of the New York Central railroad fell in the market, and Vanderbilt and his associates gradually increased their holdings. In 1867 Vanderbilt was elected president of the company. The Harlem and Hudson river railroads had improved greatly in efficiency and economy under Vanderbilt's administration. He now applied the same methods of reform to the New York Central road, increasing the rolling-stock, improving the tracks, systematizing the service, and increasing the connections. In order to put an end to unprofitable competition in rates, he next sought to obtain control of the New York, Lake Erie, and Western railroad (then called the Erie), and bought freely, while Daniel Drew, Jay Gould, and James Fisk sold “short” for a fall, winning the contest by flooding the market with new shares, illegally issued. They obtained from Vanderbilt about $7,000,000, but, after a legal controversy over the fraudulent issue, were willing to repay nearly $5,000,000. In 1869 he procured an act for the consolidation of the New York Central and Hudson River companies, and in the same year divided new shares among the stock-holders, adding 107 per cent, to the nominal capital of the New York Central and 80 per cent. to that of the Hudson River road. Notwithstanding the doubling of the stock, the market value of the shares, which in 1867 had ranged from $75 to $120, reached $200 in 1869. By purchasing a controlling interest in the Lake Shore, the Canada Southern, and the Michigan Central railroads, he extended his system to Chicago, making it a trunk-line for western traffic. He erected the Grand Central station in New York city, with viaducts and tunnelled approaches, for building which the city paid half of the cost. Four tracks were laid on the New York Central line. Of the capital stock of the railroads that composed the trunk-line, amounting to $150,000,000, Vanderbilt owned one half. Although he had never contributed to benevolent enterprises, toward the close of his life he gave $50,000 to Rev. Charles F. Deems to purchase the Church of the Strangers, and $1,000,000 to found Vanderbilt university at Nashville, Tenn. He had a fortune generally estimated at $100,000,000, all of which he left to his eldest son, William Henry, except $11,000,000 bequeathed to the latter's four sons, and $4,000,000 to his own daughters. His voyage to England and along the coasts of Europe from Russia to Turkey was recounted by Rev. Dr. John O. Choules in “The Cruise of the Steam Yacht ‘North Star’ ” (Boston, 1854). Mr. Vanderbilt was an extremely handsome man, with a beautiful complexion. He was tall and graceful, and to the last retained an erect figure and an elastic step. —

His son, William Henry, financier, b. in New Brunswick, N. J., 8 May, 1821; d. in New York city, 8 Dec., 1885, was educated at Columbia grammar-school. Leaving school at the age of seventeen, he engaged in business as a ship-chandler, and a year later became a clerk in the banking-house of which Daniel Drew was the senior partner. He married in his twentieth year, and, his health failing, settled in 1842 on a small farm in New Dorp, Staten island, that his father gave him. This he cultivated profitably, enlarging and improving it with but slight aid from his father, who at that time had a poor opinion of his financial ability. This estimate was altered when the son managed with great success the Staten Island railroad, of which he was made receiver. When “Commodore” Vanderbilt engaged in railroad financiering at the age of seventy, he intrusted the business management of the railroads that came into his control to William H., who was chosen vice-president of the Harlem and Hudson River corporations in 1864, and afterward of the New York Central. To these great establishments he applied the same watchful attention and frugal economies which had restored to prosperity the bankrupt Staten Island road, and with the same success. While participating no more in the speculative plans of his father than he formerly had in his steamship enterprises, he aided materially toward their success by his efficient management. When he succeeded to the control of the railroad property he averted the consequences of a protracted war of rates and of a threatened strike of laborers by conciliation and compromise. With equal prudence he avoided a contest over his father's will with his brother, Cornelius Jeremiah, and two of his sisters, by agreeing to pay the brother the income from $1,000,000, which was five times as much as the will awarded him, and increasing by $500,000 the legacy of each of his sisters. Under his administration was completed the acquisition of the Canada Southern railroad, which was effected by a guarantee of its bonds, and that of the Michigan Central by purchases in the open market. Between 1877 and 1880 he gained control of the Chicago and Northwestern line, comprising with its tributaries 4,000 miles of road. He obtained connection with St. Louis by means of the Cleveland, Columbus, Cincinnati, and Indianapolis railroad. In November, 1879, in order to obviate financial rivalries by interesting other capitalists in the New York Central road and to put his own property into a more manageable shape, he sold 250,000 shares of the stock to an English and American syndicate, investing the $30,000,000 that he obtained in U. S. government bonds, of which a year later he held $53,000,000. In 1880 he sold his interests in the Western Union telegraph company. In 1881 he lowered rates in competition with the New York, Western, Lake Erie, and other trunk lines, primarily in order to discourage the construction of the “Nickel Plate” railroad. On 4 May, 1883, he formally resigned the office of president of the New York Central and Hudson River, Lake Shore and Michigan Southern, and Michigan Central companies, and sailed for Europe. At the same time the companies were reorganized by the election of his son Cornelius as chairman of the board of directors of the New York Central, and Michigan Central companies, and of his son William Kissam as chairman of the Lake Shore road. The Nickel Plate road, when completed, was acquired and added to the New York Central system, while the West Shore road was forced into bankruptcy by a reduction of rates. Mr. Vanderbilt built a fine mansion, which, with two other family residences, is shown in the illustration, in New York city, which he filled with modern paintings, chiefly of the French school, and with other works of art. Five houses were built for his sons and daughters in Fifth avenue near his own. He was fond of driving, as his father had been, and purchased Maud S. and other famous trotting-horses. He added $200,000 to the endowment of Vanderbilt university, and gave $100,000 for a theological school and $10,000 for a library in connection with the university. In 1884 he gave $500,000 for new buildings to the College of physicians and surgeons, and a year afterward his daughter, Emily, wife of William D. Sloane, built and endowed in connection with it a maternity hospital at a cost of $250,000, and his four sons have erected and equipped a building for clinical instruction in connection with the college as a memorial of their father. He distributed $100,000 among the train-men and laborers of the New York Central railroad when they refrained from striking in 1877, gave $50,000 to the Church of St. Bartholomew, and paid $103,000 for the removal of the obelisk that the Khedive Ismail gave to the United States and for its erection in Central park, New York city. Gen. Ulysses S. Grant, two days before the failure of Grant and Ward, borrowed from Mr. Vanderbilt, on an exchange check, $150,000, which went to protest. The general then sent to Mr. Vanderbilt, as security for this loan, deeds to certain real estate, and his swords, medals, works of art, and the gifts made him by foreign governments. Mr. Vanderbilt proposed to return all this property to Gen. Grant, but found that impossible, as it was liable to be seized by creditors of the firm of Grant and Ward. He then offered to give them to Mrs. Grant; but she declined to receive them. He then proposed to transfer all the property to the Union trust company, in trust for Mrs. Grant and her heirs. Mrs. Grant and the general refused this, on the ground that the original debt was a debt of honor. Mr. Vanderbilt then proposed that the presents should be transferred to Mrs. Grant during her life, and at her death be placed in the archives of the National government at Washington. This proposition was accepted, and Mrs. Grant immediately transferred the articles to the government. By his will he left $10,000,000 to each of his eight children, one half of each bequest to be held in trust; to his eldest son $2,000,000 more; $1,000,000 to the eldest son of the latter: and the residuary estate in equal parts to his two eldest sons, subject to the payment of an annuity of $200,000 to the widow, to whom he left his house and the artistic objects that it contained. He bequeathed $1,000,000 for benevolent purposes, including gifts to Vanderbilt university, the Metropolitan museum of art, the Young men's Christian association, the missions of the Protestant Episcopal church, and St. Luke's hospital. He also provided for building and maintaining a Moravian church and a family mausoleum at New Dorp, Staten island. The bulk of the family fortune, including the railroad securities, has, by agreement among the heirs, been left to the management of the two principal heirs, Cornelius and William Kissam. — The eldest son of William H., Cornelius, financier, b. on Staten island, N. Y., 27 Nov., 1843, was educated at private schools and trained to business. He was treasurer of the New York and Harlem railroad from 1867 till 1877, then vice-president till 1886, and since that date has been its president. In addition to his connection with the roads previously mentioned, in 1883 he became president of the Canada Southern company. He is a director in thirty-four different railroad companies, and is a trustee of many of the charitable, religious, and educational institutions of New York city. Among Mr. Vanderbilt's benefactions are the gift of a building in New York city for the use of railroad employes, a contribution of $100,000 for the Protestant Episcopal cathedral, and a collection of drawings by the old masters and the painting of the “Horse Fair,” by Rosa Bonheur, to the Metropolitan museum of art. — The third son, Frederick William, is secretary and treasurer of the New York, Chicago, and St. Louis railway company, and is a director in most of the roads comprising the Vanderbilt system. — The youngest son, George Washington, has established a free circulating library in New York city, which was opened in July, 1888, and has maintained a manual training-school.