Cornelius Vanderbilt: How Did The First Business Tycoon Control Sea & Land
Cornelius Vanderbilt is known to be the first tycoon in the American Industrial revolution. Born in 1794 the shipping and railroad tycoon controlled what came in and went out of the state. By the time of his death in 1877, his net worth was estimated to be $100 million. (In today’s dollars, that would be approximately $2.3 billion). This is the life of Cornelius Vanderbilt.
Born on May 27, 1794, in the Port Richmond area of Staten Island, New York. His father Cornelius and his mother Phebe Hand Vanderbilt were both an influence on his life. Back then New York had a population of 33,000. His parents were farmers and his father made money by ferrying produce and merchandise between Staten Island and Manhattan.
At 11 Vanderbilt quits school to work with his father at the ferrying transporting cargo and passengers. At 16 he borrowed $100 from his parents and started a business of his own. Moving passengers between Staten Island and New York City. Vanderbilt was charging 18 cents per trip. He managed to pay back the $100 loan within one year. Vanderbilt managed to earn more than $1,000 in his first year.
In 1812 the United States went to war with England. With Vanderbilt’s ruthless approach of getting things done, he was given a contract by the U.S. government to deliver supplies to various forts that protected New York City from attack. By the end of the war, he had managed to get a small fleet of boats and a working capital of $10,000 moving passengers and freight from Boston to Delaware Bay. By 1818 his business began dropping off as bigger more powerful steamship started cutting into his territory.
He looked into designing a steam engine for his boats and went from sail to steam engine. He started to run his boat on a strict schedule and put in longer hours than anyone else, wasting no time to put his competitors out of business. This helped him build the biggest shipping empire in the world.
He soon became a dominant force in the industry by engaging in fierce fare wars with his competitors. In the early 1850s, during the California Gold Rush, Vanderbilt launched a steamship service, with the new route he earned more than $1 million a year.
He then shifted his operations to the Hudson River, going head to head against then. Back then Hudson River Steamboat Association was a cartel that operated passenger steamboats on the Hudson River. Vanderbilt capitalizing on the populist language of President Andrew Jackson, named his service the “People’s Line,” offering cheap fares for all. Soon people started to use his service. The Hudson River Association saw that he could be a threat and bought him out for $100,000.
In 1853 some of Vanderbilt’s associates learned just how hard it was to beat Vanderbilt. While he was on vacation, one of the companies took over his most profitable shipping routes, Vanderbilt wrote them a now-famous letter, “Gentlemen you have undertaken to cheat me I will not sue you for the law takes too long I will ruin you” and he did Vanderbilt regained his roots and within a year his rivals were out of business. Vanderbilt was now the most powerful steamship operator in the country. The year 1861 was approaching, Vanderbilt sold his steamship company and invested all his money in a new mode of transportation railroads. The innovation of the steam engine, first on the water than on land was a revolution, he used the same engine in railroads.
The year was 1861 the beginning of the Civil war, from experience he knew that the country will need a system for transportation. He invested heavily in railroads, under the Hudson River Railroad he was transporting goods from one end of the country to the other. The War lasted 4 years sadly killing 620,000, including Vanderbilt's son, Geroge. Geroge was someone who Vanderbilt though could take over his business. Losing his son had an emotional effect on him, affecting his business, he was 72, passing the life expectancy at the time.
His competitor, New York Central Railroad, saw this as a weakness and took Vadebuilt lightly by negotiating contracts in bad faith. At the time Vanderbilt owned the only rail bridge, in and out of New York City, the Hudson River Bridge, the gateway to the country’s largest port. The bridge was connecting railroads from the east to the west, Vanderbilt cuts off the bridge to rival railroad traffic, blocking millions of dollars of cargo from entering the city. New York Central Railroad started to sell their stocks before they become worthless when Wall Street realized that there was a massive sell-off, the prices came down. Vanderbilt seals this opportunity and buys New York Central stocks for pennies. In just days, he creates the largest single railroad company in America, merging the two companies together to form the New York Central and Hudson River Railroad.
Railroads soon connect America from one end to the other, He took the small rail road’s line that was designed before the civil war and started to connect them, making them into a large network. Providing over 180,000 jobs.
He owned 40% of the nation’s rail lines and in 1869 he builds the main hub in the center of the city, connecting his three new lines, the Harlem, the Hudson and the NY Central. Work begins on the biggest train stain in the country, taking close to 2 years to complete. The station is called the Grand Central Depot, known today as Grand Central Station in New York.
By 1870 Vanderbilt railroad Empire was not only the most powerful railroad in this country it was the largest railroad in the world. With the massive structure of his trains and the new station, Vanderbilt could no longer only rely on the passengers and minor goods to fill his trains, to keep the trains operating, he looks towards Kerosene. Before Kerosene an average American did not have access to light at night. If Vanderbilt could get Kerosene on his train he can use what he had built effectively. With that in mind, he started to look for a supplier to fill his cargo. Which he found on the land that was shitting on oil, Cleveland. He found a refinery near the railroads in Cleveland, operated by none other than John D Rockefeller. Rockefeller at 27, met Vanderbilt in New York and made a deal. Rockefeller's oil started to fill Vanderbilt trains.
Towards the end of his life in 1873. His wife, Frank, introduced him to the Reverend Holland Nimmons McTyeire, who asked Vanderbilt to help him fund a Methodist University in Tennessee. Discussions went on for several years and by the time of his death, Vanderbilt had promised a gift approaching $1 million for what would become Vanderbilt University.
Vanderbilt passed away at age 82 on January 4, 1877, at his Manhattan home, and was buried in, Staten Island. He left the most of his fortune, estimated at more than $100 million, to his son William Henry Vanderbilt, who worked with him at Hudson River Railroad. He also left $7.5 million to William’s four sons. His wife and daughters received amounts ranging anywhere from $200,000 to $500,000, stock and property.
Today, it is estimated that Cornelius Vanderbilt would have been worth more than $180 Billion. He would be remembered as the man who controlled transportation in the sea and the land, who paved the way for entrepreneurs to come after him, who in some way did bigger things than him.
