Welcome back to the Deep Dive. Today we are opening
the file on a figure who is, well, he is monumental.
And I mean that in every sense of the word. Oh,
absolutely. You literally cannot walk through
the streets of New York City without seeing his
fingerprints on the architecture. And you definitely
can't look at the history of the American economy
without running headfirst into him. It is hard
to overstate his impact. We are talking about
Cornelius Vanderbilt. The Commodore. The Commodore
himself. To most people, he is just a name on
a university or a statue outside a train station.
But if we really dig into the records, the biographies,
the business ledgers, the court transcripts,
we find a man who fundamentally reshaped the
geography of the United States. And the corporate
economy. He basically invented a certain kind
of American capitalism. He really did. For better
or for worse. I want to start with the scale
of the wealth because I think it really sets
the stakes for everything else. When he died
in 1877, his estate was valued at $105 million.
Right. And that number can be deceptive. It can.
Because in today's world of tech billionaires
and trillion -dollar market caps, you might hear
$105 million and think, OK, that's rich, but...
Is it that rich? But you can't just run it through
a standard inflation calculator. That doesn't
capture the reality of it. So how do we wrap
our heads around it? The best way is to look
at it as a share of the nation's gross domestic
product, the GDP. If you take the percentage
of the entire U .S. economy that he controlled
in 1877 and you apply that same proportion to
today's economy. Well, the numbers get staggering.
What are we talking about? Some economists estimate
his fortune would be worth roughly $143 billion.
Other calculations, depending on the metric you
use, suggest it could be even higher. So on par
with the biggest names today. easily. But even
that doesn't quite get it. At one point, it's
believed he controlled one out of every $20 in
circulation in the entire United States. Wait,
say that again. One out of every $20? One out
of 20. Think about that. The sheer liquidity,
the power that gives you, it's almost unimaginable.
That is absolutely wild. And the mission for
us today is to figure out how he pulled that
off. Because he didn't start with a trust fund.
He wasn't born into some East Coast aristocracy.
Not even close. So we're going to look at how
an uneducated boy from Staten Island became a
steamship tycoon, then a railroad tycoon, and
along the way earned this. This dual reputation.
And that is the central tension of his life,
isn't it? It's what we need to explore deeply.
Was he a captain of industry who built the essential
infrastructure of the country? A visionary? Or
was he a robber baron who bled the economy dry,
who crushed his competitors without a shred of
mercy? And the answer seems to be. Yes, he was
both, often on the same day. Precisely. And what
makes it so fascinating, to me at least, is the
contradiction in his career arc. Here is a man
who spent the first half of his career fighting
monopolies. Literally fighting them. In court,
on the water. Right. Battling against government
-sanctioned exclusivity to break open markets
for everyone. And then he spends the second half
of his career trying to build one of the largest,
most powerful monopolies the world had ever seen.
So he was the rebel until he won. And then he
became the empire. In a nutshell, yes. He was
the insurgent who became the incumbent. It's
an incredible story. OK, let's unpack this. Let's
go back to the very beginning. Section one, the
ferryman's hustle. Where does the Vanderbilt
story actually start? Because Vanderbilt sounds
so grand and aristocratic now. But it didn't
start that way. No, not at all. It's very humble.
It starts on Staten Island, New York in 1794.
Cornelius was born to a family with deep Dutch
roots. Right. The name itself is Dutch. It is.
His ancestor, Jan Artsen, came from a little
village in the Netherlands called De Bilt. So
Vanderbilt literally means from the built. And
over time, that just smushes together into the
Americanized Vanderbilt. Correct. Now, his father,
also named Cornelius, was a ferryman and a farmer.
The historical record suggests the father was
a hard worker, but not particularly ambitious.
He was content. Which is not a word you would
ever use for a Cornelius. Never. The younger
Cornelius was wired completely differently. He
wasn't interested in farming. He certainly wasn't
interested in schooling. He actually quit school
at age 11. 11 years old. That is young. I mean,
even for the late 18th century, that feels significant.
It was. He had almost no formal education. He
was barely literate for much of his young life.
His spelling was atrocious, effectively phonetic.
You look at his letters and you can almost hear
him sounding out the words. So he couldn't read
a classic novel. But he could read other things.
Oh, he could read the things that mattered for
his business. He could read the tides, the currents
and the winds of New York Harbor better than
anyone else. He went straight to work on his
father's ferry. And this is where we see that
drive, that relentless energy appearing almost
immediately. And this is where we get the famous
story, which feels almost like a myth at this
point about how he got his start as an owner.
Every tycoon seems to have a borrowed -a -dollar
story. It's a classic piece of American folklore,
this one. The story goes that at age 16, he wanted
to buy his own boat, a perry auger. A perry auger.
Okay, you have to tell me what that is. It sounds
very exotic. It's not as fancy as it sounds.
It's a flat -bottomed, two -masted sailing vessel.
They were all over the harbor at the time because
they were stable and could carry a lot of cargo
or passengers. Not glamorous, but very practical.
Got it. So he wants his own Periager. Though
legend says he borrowed $100 from his mother,
Phoebe Hand, to buy a boat he named the Swiftshire.
And the deal was she'd give him a loan, but he
had to clear, plow, and seed an eight -acre rocky
field on his own. A supposedly impossible task.
But the sources suggest it might not be quite
that simple, right? Right. The first published
account of his life, which came out way back
in 1853, during his lifetime, suggests the boat
actually belonged to his father. And they split
the profits. It's a bit more of a family business
arrangement. Which makes sense. But the other
story is better. The other story is much better,
but I think the key insight isn't the accounting,
you know, whether it was a loan or a partnership,
it's the attitude. He was working so hard, pushing
so fast, undercutting his rivals' prices, that
other captains in the harbor started calling
him the Commodore. And it wasn't a compliment.
It was a joke. They were mocking him. Yes, initially.
Imagine a rough, barely literate 16 -year -old
kid barking orders, taking his boat out in storms
that grounded the older sailors, acting like
he was commanding a naval fleet. They called
him Commodore to tease him. Look at the little
Commodore over there. Exactly. But the nickname
stuck. And eventually, it wasn't a joke anymore.
It became a title of respect and, frankly, a
title of fear. I love that. He basically rebranded
himself through sheer force of will. He owned
the insult until it became a title. He did. And
he moved just as fast in his personal life. He
didn't wait around to start a family either.
No. At age 19, he marries his first cousin, Sophia
Johnson. Which, again, was much more common at
the time. Different times for sure. But Sophia
is a crucial and I think often overlooked part
of this early success story. She's not just a
footnote. She is absolutely essential. While
Cornelius was out on the water obsessively reinvesting
every penny of profit into more boats and business
ventures, Sophia was running the domestic and
economic engine at home. And they had a huge
family. A massive family. Thirteen children in
total, twelve of whom lived to adulthood. That
is a small army to support. And that costs money.
Serious money. It does. And the sources say that
when they moved to New Brunswick, New Jersey
for one of his business ventures, Sophia operated
a very profitable inn called Bologna Hall. It
was known for its food, its cleanliness, and
the proceeds from that inn were used to feed,
clothe, and educate those 12 children. So wait
a minute. She was covering the overhead of the
entire family with her own business. That's the
crucial part. This is a huge strategic advantage
for him. Because Sophia was covering the family's
living expenses, Cornelius didn't have to draw
a salary from his boat business to buy groceries
or shoes for the kids. He could take every single
cent of profit. Every cent. And plow it right
back into buying more boats, expanding his routes.
It was like having an angel investor living in
your house, funding your life so you could fund
your business. That puts a whole new spin on
the self -made man narrative. He had a partner
who was... Effectively subsidizing his capital
expenditure from day one. Precisely. And that
capital accumulation, that ability to reinvest
everything, allowed him to make his first really
big pivot. In 1817, he made a move that confused
a lot of people. He stopped working for himself
and went to work for a man named Thomas Gibbons.
This is section two, the monopoly breaker. And
it starts with this strange move. Why would a
guy with an ego like the Commodore go work for
a boss? Because he saw the future. And the future
was steam. Vanderbilt had been a sailing man.
He was an expert with wind and tide. But Thomas
Gibbons offered him a chance to captain a steamboat.
This was the new technology. It was dangerous,
boilers could explode, but it was powerful. And
it wasn't just about the technology, was it?
Gibbons was in a fight. Gibbons was in a war.
At the time, the waters of New York were completely
locked down by a monopoly held by the heirs of
Robert Fulton, the inventor of the steamboat.
and a powerful politician named Robert Livingston.
So Robert Fulton invents the steamboat, and the
state basically gives him and his partner the
exclusive right to use it. Effectively, yes.
The New York legislature granted them the exclusive
right to operate steamboats in all New York waters
for a term of years. They had licensed a man
named Aaron Ogden to run the lucrative ferry
route between New York and New Jersey. And Thomas
Gibbons wanted it. Gibbons wanted to break that
monopoly mostly because he had a personal vendetta
against Ogden. It was a long, bitter rivalry.
He wanted to drive Ogden into bankruptcy. I love
that so much of this history is driven by spite.
It's not just business. It's deeply personal.
So where does Vanderbilt fit into this? Is he
just driving the boat? He starts as the captain
of Gibbons's boat, the Bologna, but he very quickly
becomes the business manager, the general on
the ground. And he attacks this job with this
aggressive creativity. He was running at sort
of guerrilla warfare on the water. What do you
mean by that? Well, because what they were doing
was technically illegal in New York, Vanderbilt
had to dodge process servers from Ogden's company
who were trying to arrest him and impound the
boat. So he's basically a blockade runner in
his own harbor. He is. He devised secret hiding
spots on the boat, a hidden locker he could slip
into. He would drop passengers off at nonstandard
docks to avoid the authorities. He flew a flag
that said New Jersey must be free. It was this
constant cat and mouse game. He was clearly thriving
on the conflict. Absolutely. But while Vanderbilt
was the muscle on the water, the real fight escalated
all the way to the Supreme Court. This becomes
the famous case. Gibbons V. Ogden. Vanderbilt
wasn't the lawyer, obviously. No, but he was
deeply involved in the strategy. He actually
went down to Washington, D .C. himself. He helped
hire Daniel Webster, who was the most famous
order and lawyer of the day, to argue the case.
Vanderbilt knew they needed the heavy artillery.
And what was the legal argument? The argument
was simple but profound. Does a state like New
York have the right to grant a monopoly on commerce
that crosses state lines? Or does that power
belong to the federal government under the Commerce
Clause of the Constitution? And what was the
verdict? In 1824, the Supreme Court, led by Chief
Justice John Marshall, ruled decisively in Gibbons'
favor. They said that states had no power to
interfere with interstate commerce. Only the
federal government could regulate that. Now,
this sounds like a dry legal rolling, but this
is a massive deal for the American economy, right?
It's arguably the legal bedrock of the modern
American economy. It meant that you could do
business across state lines without getting blocked
by local monopolies or protectionist laws. It
turned the United States... from a collection
of separate state markets into one giant, unified
free market. And Vanderbilt, by fighting this
very personal, spite -fueled battle, helped create
that precedent. He was there at the creation.
He helped unlock the competitive interstate commerce
that would drive American prosperity for the
next century. So the Commodore helps break the
monopoly. Gibbons eventually dies. What does
Vanderbilt do next? Does he stick with the company?
He runs it for Gibbons' son for a bit. But by
1829, he's ready. He strikes out entirely on
his own. He takes his knowledge of steam, his
accumulated capital, and his ferocious reputation,
and he starts his own lines. And here is where
we see his signature tactic really develop. The
Price War. This is where the... robber baron
versus captain of industry debate gets really
interesting it really does in 1834 he decides
to go after the hudson river steamboat association
this was a new monopoly a cartel really running
the route between new york city and albany they
thought they had the route locked down and then
vanderbilt shows up and vanderbilt shows up he
launches a rival service called the people's
line the people's line i mean the marketing is
just brilliant so populous it was very intentional
he's channeling the spirit of andrew jackson
framing him himself as the champion of the common
man against the greedy elites, the monopolists.
And his weapon was price. The association was
charging $3 for a ticket. Which was a decent
amount of money back then. A fair bit. So Vanderbilt
comes in and drops the price to $1. The association
matches him. Vanderbilt drops it to 10 cents.
10 cents. How do you even make money on 10 cents
a ticket? Eventually he dropped it to zero. Free
passage. Okay, now you're losing me. How is a
business sustainable if the product is literally
free? There has to be a catch. It's the original
concession stand model. He packed the boat with
people who were thrilled to ride for free, but
he charged them for the food and drinks sold
on board. Oh, that's clever. He made a profit
on the huge volume of food sales, while the competition
who had high overhead, fewer passengers, and
no real food strategy was just bleeding cash
on every trip. That is genius and absolutely
brutal. It destroyed the association's margins.
They couldn't compete. Eventually, the monopoly
gave up. They came to him and paid him a large
lump sum and an annual stipend just to stop competing
on their river. Wait, so they paid him to go
away. They bribed their competitor. Yes. This
is a tactic that would later be called greenmail.
He proved he could destroy their profits, so
it was cheaper for them to just buy him out.
He took their money, agreed to leave the Hudson
River route, and promptly moved all his operations
to the Long Island Sound. And I'm guessing he
did the same thing there. He did the exact same
thing there. By the 1840s, he dominated the Sound
and started taking over the connecting railroads,
too. He was building an integrated transportation
network. So if you're a regular person, a passenger,
you love Vanderbilt. He's making travel affordable
for the first time. You love him. He's driving
down prices. He's making it possible for people
to move around the country cheaply. That's the
core of the captain of industry argument. But
if you're his competitor, he's a monster. He's
a predator who exists to destroy your business
and then get paid off. Exactly. He democratized
travel through ruthless aggression. He created
value for the consumer by destroying the value
of his rivals. It's a complex legacy. And all
this time, he's just building a massive pile
of cash. And then 1849 hits, the gold rush. This
changes everything. This is the next major chapter,
and it takes him onto the world stage. Gold is
discovered at Sutter's Mill in California. Suddenly,
the entire East Coast wants to get to the West
Coast. And there's no easy way to do it. No.
There's no cross -country railroad yet. That's
decades away. You have two terrible options.
You can go overland by wagon, which is incredibly
dangerous and takes months, or you go by ship.
Most people went to Panama, crossed the disease
-ridden isthmus on mules through the jungle,
and then took another ship up to San Francisco.
But Vanderbilt looks at a map. and sees something
else. He sees Nicaragua. He notices that it's
significantly closer to the U .S. than Panama.
And he has a bold idea. He thinks he can build
a canal there. A canal? Long before the Panama
Canal was even a serious proposal. Yes. He actually
got a charter from the Nicaraguan government
to build one. But the engineering challenges
were immense. And more importantly, the funding
wasn't there yet. The investors were too scared.
So he pivots. He pivots brilliantly. He launches
a company called the Accessory Transit Company.
He used ocean steamships to get passengers to
the Caribbean side of Nicaragua. Then they would
take smaller, custom -built steamboats up the
San Juan River and across the vast Lake Nicaragua.
Then a short 12 -mile carriage ride on a road
he built to the Pacific Ocean and another one
of his ships up to San Francisco. Was it faster
than the Panama Route? It cut two days off the
journey and was significantly cheaper. He absolutely
cornered the market on gold rush travel. The
sources say he was personally making over a million
dollars a year in 1850s money just from this
one route. A million a year. That's an astronomical
sum. It made him one of the richest men in America.
And this is where we get into some serious international
intrigue. Because while Vanderbilt is making
this fortune, he decides to take a victory lap.
A big one. He does. In 1853, he built a massive
steamship yacht called the North Star. It was
270 feet long, larger than many Navy vessels.
He packed up his entire family, and even his
pastor, and took them on a grand tour of Europe.
It was this unprecedented display of American
wealth. He was showing off to the monarchies
of Europe. But while the cat's away... The mice
will play. His partners in the accessory transit
company men he trusted, Charles Morgan and Cornelius
Garrison, conspired against him while he was
gone. They manipulated the stock, they forged
board meeting minutes, and they denied him the
payments he was owed from the company. They basically
stole it from him while he was meeting with the
Tsar in Russia. Oh, that is a big mistake. You
do not steal from the Commodore. No, you do not.
When Vanderbilt returned and found out what had
happened, his response was just legendary. He
didn't scream or shout. He wrote a letter to
him. them it's one of the most famous letters
in american business history what did it say
it was short and to the point it read gentlemen
you have undertaken to cheat me i won't sue you
for the law is too slow i'll ruin you yours truly
cornelius vanderbilt that gives me chills the
law is too slow i'll ruin you And did he? He
absolutely did. He didn't sue. He launched a
rival steamship line to California via Panama
this time. He slashed prices again, bleeding
their profits until their stock was worthless.
But the conflict in Nicaragua got even messier.
And this is where a guy named William Walker
enters the picture. Yes, this is the part of
the story that just sounds like a crazy action
movie. Who is William Walker? William Walker
was an American filibuster. Now, in the 19th
century, that word didn't mean talking for a
long time in the Senate. It meant a private military
adventurer, a mercenary leader. Okay. Walker
took a small mercenary army to Nicaragua, got
involved in a civil war, and essentially took
over the government. He declared himself president
of Nicaragua. You just took over a country, an
American citizen. Briefly, yes. It was part of
this whole manifest destiny ideology. And Vanderbilt's
old rivals, Morgan and Garrison, they saw an
opportunity. They bribed Walker. They gave him
cash and logistical support. In exchange, Walker
annulled Vanderbilt's original charter and seized
all of his boats and properties in Nicaragua.
So now Vanderbilt has lost his company to a military
dictator who is being bankrolled by his business
enemies. Exactly. Most businessmen would just
write off the loss at this point. It's a foreign
country. There's been a military coup. What can
you do? But this is Cornelius Vanderbilt. So
he declares his own private war. He tried to
get the US and British governments to intervene,
but they were hesitant to get involved. So Vanderbilt
went rogue. What did he do? He partnered with
the government of Costa Rica, which was already
fighting Walker's regime. Vanderbilt then sent
a secret agent. A tough, resourceful guy named
Sylvanus Spencer to lead a raid. A raid, like
a special forces operation. Very much so. Spencer
knew the river. He knew exactly where the steamboats
were docked. He led a small unit of Costa Rican
commandos up the San Juan River. They moved by
night, and they captured the steamboats one by
one, often without firing a shot. Why capture
the boats? Why not just attack Walker's army
directly? Logistics. It's always about logistics
with Vanderbilt. He knew that Walker's army relied
on a steady stream of fresh recruits and... supplies
coming from the U .S. Those recruits traveled
on those very steamboats. Ah, so by capturing
the boats. He cut off Walker's supply line completely.
No more recruits, no more ammunition, no more
food. He strangled the regime from the river.
He didn't attack the army. He attacked its supply
chain. He did. Walker was isolated and eventually
his government collapsed. He was driven out of
Nicaragua. Vanderbilt, a private American citizen,
effectively defeated a foreign government using
logistics and business strategy. That is unbelievable.
It really highlights that for Vanderbilt, transportation
wasn't just about moving people from A to B.
It was about power. If you control the bottleneck,
you control the outcome. Exactly right. And in
a final ironic twist, even after winning, he
decided the Nicaraguan route was too politically
unstable. So ever the pragmatist, he switched
his focus, took over the Panama monopoly, and
forced the existing Panama lines to pay him a
massive monthly non -compete fee just to stay
out of the market. So he was getting paid not
to work. The ultimate passive income. A masterstroke.
Okay, so this brings us into the 1860s. The Civil
War breaks out. Vanderbilt is getting older now.
He's in his late 60s. How does the war affect
him and his empire? It was a period that brought
out a strange mix of patriotism and ultimately
profound personal tragedy for him. In 1861, at
the start of the war, the Union Navy was scrambling
for ships to blockade the South. Vanderbilt owned
the largest and fastest steamship in the country,
the Vanderbilt. He tried to donate it to the
Union, maybe. A very generous gift. You would
think. But initially, the Secretary of the Navy,
Gideon Wells, actually rejected it. He thought
the ship was too large, too luxurious, and would
be too expensive to maintain and operate with
coal. He basically said, no thanks, we don't
want your giant white elephant. That had to sting
the Commodore's ego. Oh, it did. It was a huge
public embarrassment. Until, that is, the Confederates
changed the game. They launched the CSS Virginia,
the ship more famously known as the Merrimack.
It was an iron... clad warship and it caused
panic absolute panic it sailed out and started
destroying the union's wooden ships like they
were toys the north was terrified the ship was
seemingly invincible and suddenly a giant fast
steamship looked pretty good to the Navy. All
of a sudden, Abraham Lincoln and the War Department
were personally appealing to Vanderbilt for help.
He took the Vanderbilt, had its bow reinforced
with iron to turn it into a massive battering
ram, and filled the boilers with high -grade
fuel. He even hand -picked the officers. The
ship was sent to hunt the ironclad. Did it ever
fight the Merrimack? They never had a direct
confrontation, but its presence helped bottle
up the Confederate ironclad, preventing it from
terrorizing the rest of the coast. Later in the
war, the Vanderbilt was sent on a long chase
to hunt the very successful Confederate raider
Alabama. For his contribution, Congress awarded
him the Congressional Gold Medal. The highest
civilian honor. It was. So he goes from being
scorned by the Navy to being celebrated as a
national hero. But you mentioned tragedy. This
wasn't a triumphant time for him personally.
No, it was devastating. While he was managing
all this, his personal life completely collapsed.
His youngest and favorite son was George Washington
Vanderbilt II. And why was he the favorite? George
was everything the Commodore valued. He was a
West Point graduate. He was strong, disciplined,
athletic. The Commodore saw himself in George,
or at least the idealized version of himself
that he wanted to see. He saw George as the heir
apparent, the one with the strength and fortitude
to carry on the empire. But George gets sick.
He contracts an illness, probably tuberculosis,
and dies during the war without ever seeing a
day of combat. That must have just crushed him.
It broke him. It fundamentally changed his view
of his own legacy and his succession plans. Because
up until this point, he had always viewed his
eldest son, William, known as Billy, as a total
disappointment. Which is funny because Billy
ends up being a business titan in his own right.
He does. But early on, Billy was quiet. He was
anxious. He wasn't this larger -than -life figure.
Vanderbilt called him a blockhead and a blatherskite.
A blatherskite. Yeah. I love these old insults.
He famously exiled Billy to a farm on Staten
Island and basically told him to make a living
digging in the dirt because he wasn't fit for
real business. Go farm, Billy. You're no good
at capitalism. Essentially. But what the Commodore
didn't realize or didn't want to see was that
Billy had turned that farm into a massively profitable
enterprise. He was a meticulous accountant and
a great manager. With George gone, the Commodore
had no choice but to pivot his legacy to Billy.
He started bringing Billy into the inner circle.
And speaking of pivots, this leads us to the
most surprising business move of his entire life.
The Great Pivot. I love that term for it. The
year is 1864. Vanderbilt is 70 years old. Most
men are dead or have been retired for decades.
And Vanderbilt decides to sell his ships, all
of them, his entire steamship empire. He's the
undisputed king of steamships. Why would he sell?
He saw the future again. And the future was rail.
He realized that while ships were profitable,
the railroads were the essential arteries of
the coming industrial economy. They could run
year round. They were faster. They could go places
ships couldn't. So he started buying railroads.
At 70 years old. That's like a tech billionaire
today deciding at age 70 to switch from software
to, I don't know, asteroid mining. It's a completely
different industry with different rules. It was
a massive, massive risk. And he started with
a railroad that Wall Street considered absolute
garbage. The New York and Harlem Railroad. Why
was it considered garbage? It didn't go anywhere
important, really. It didn't connect to a major
city like Chicago or Albany. It just went north
from Manhattan into the countryside. It was seen
as a little commuter line for farmers. Worthless.
But Vanderbilt saw something nobody else valued
enough. He saw one thing. The Charter. What was
so special about the Charter? It was the only
steam railroad that had the legal right to enter
the center of Manhattan. Its tracks ran down
4th Avenue, which is now Park Avenue, all the
way to 42nd Street and even further south at
the time. Location, location, location. Precisely.
As the city grew and became more dense, the government
banned noisy, dirty steam locomotives in the
lower parts of the city. But the Harlem line
had this grandfathered in right of way. It was
the only driveway into the biggest house on the
block. So if any other railroad wanted to get
their passengers or freight into the heart of
the city, they had to connect to his tracks and
pay him for the privilege. He leveraged this
position brilliantly. He forced a merger with
the Hudson River Railroad. Then he went after
the mighty New York Central. which ran all the
way to Buffalo and the Great Lakes. By 1870,
he merged them all into the New York Central
and Hudson River Railroad. It was one of the
first giant corporations in U .S. history. A
behemoth. But it wasn't all smooth sailing on
the rails. We have to talk about the Erie War.
This is a legendary story in the history of finance.
Oh, the Erie War is fantastic. It's a clash of
titans. It was Vanderbilt versus three of the
most notorious speculators of the era, Daniel
Drew, Jay Gould, and James Fisk. And what was
the conflict over? Vanderbilt wanted to control
the Erie Railway to complete his monopoly on
all rail traffic into New York City. So he started
doing what he did best, buying up all the stock
to corner the market. Can you explain a corner
for those of us who aren't day trading 19th century
stocks? A corner is when you buy up so many of
the available shares of a company that anyone
who has shorted the stock that is. bet that its
price would go down, is forced to buy the shares
back from you at whatever exorbitant price you
decide to set. Vanderbilt was trying to buy everything.
So his plan was just to buy the majority of shares.
Seems simple enough. It should have been. But
Gold and Fisk were on the board of the Erie,
and they played dirty. unbelievably dirty. They
utilized a loophole in the corporate bylaws and
they literally set up a printing press in the
basement of the Erie railway offices. A printing
press? Why? To print new stock certificates.
Thousands and thousands of them. As fast as Vanderbilt
was buying shares on Wall Street, Gould and Fisk
were printing new unauthorized shares and secretly
dumping them into the market for Vanderbilt's
brokers to buy. This is what's called watering
the stock. Exactly. The term comes from the old
ranchers trick of forcing cows to drink tons
of water right before weighing them for sale.
So they seemed heavier and more valuable. Gould
was diluting the value of the company. Vanderbilt
was pouring millions of dollars into buying what
he thought was a limited supply of stock. But
the supply was effectively infinite. So he's
pouring millions into a bucket with a giant hole
in the bottom. A hole that's getting bigger every
minute. He eventually realized what was happening.
He supposedly said if this printing. press keeps
going i'll be broke he finally stopped buying
but he had lost a fortune millions and millions
of dollars that sounds completely illegal it
was murky it was definitely unethical vanderbilt
sued of course but jay gold wasn't done he took
a suitcase filled with 500 000 in cash An insane
amount of money up to Albany. He bribed the key
members of the New York state legislature to
pass a law that retrospectively legalized the
stock they had illegally issued. Wow. He didn't
just break the law. He bought a new one. He did.
It was the robber baron era in its most naked
form. Vanderbilt eventually recovered some of
his money through settlements, but he never conquered
the Uri. It was the one time he really got outmaneuvered
by rogues who were even more ruthless than he
was. But he still had his New York central empire.
And he left a huge physical mark on the city
from that. A massive mark. In 1871, he opened
the Grand Central Depot on 42nd Street. It was
the predecessor to the Grand Central Terminal
we know today. But here is the key infrastructure
move. To make it all work, he decided to sink
the tracks on 4th Avenue. Sink them. As in, put
them underground? Yes. He put them in a massive
trench and then covered them up, creating the
Park Avenue Tunnel. If you've ever been to New
York, the reason Park Avenue is so wide and grand
and valuable today is because Cornelius Vanderbilt
buried the noisy, smoky trains underground. He
literally created the geography of modern midtown
Manhattan. It's incredible how one person's business
decision can shape a city for 150 years. So let's
look at the man himself in these later years.
He's unbelievably rich. Does he live like a king?
You know, it's surprising, but no. He lived at
10 Washington Place in Greenwich Village. It
was a large, nice townhouse, but it was modest
compared to the insane palaces his grandchildren
would build a few years later. He wasn't into
high society. Not at all. He didn't go to the
opera. He didn't collect fine art. He thought
it was all a waste of time. He cared about his
business and he cared about racehorses. Horses.
He loved strutting horses. That was his passion.
In his late 70s, he would take his carriage out
to Harlem Lane, which is now St. Nicholas Avenue,
and he would race against other drivers. This
old man, this billionaire, tearing down the road,
whipping his horses, challenging anyone to a
drag race. That is a great image. The billionaire
drag racer. And he had a... new wife by this
point, didn't he? Yes. His first wife, Sophia,
died in 1868 after a long illness. The Commodore
was heartbroken for a bit, but in 1869, he married
Frank Armstrong Crawford. Frank was a woman's
name. It was in this case. She was a much younger
cousin from Alabama. She was in her 30s while
he was in his late 70s. And the sources say she
had a pretty big influence on him in his final
years. A huge influence. She was very religious
and socially conscious. She really worked to
soften his rough edges. And she, along with a
connection to... a Methodist bishop named Holland
McTier convinced Vanderbilt to make the only
major philanthropic gift of his entire life.
This would be Vanderbilt University. Correct.
He gave an initial gift of $1 million to found
a university in Nashville, Tennessee. The idea
was that it would help heal the sectional wounds
of the Civil War. A northern tycoon funding a
major southern university. It was meant as a
gesture of reconciliation. That's a nice part
of his legacy. But we have to talk about the
family drama. Because when you have 13 kids and
$100 million, things get complicated. We mentioned
Billy, who he finally came to see as capable.
What about the others? Well, there was his other
surviving son, Cornelius Jeremiah Vanderbilt.
The Commodore considered him a complete wastrel.
A wastrel? Another great 19th century insult?
What was his issue? Cornelius Jeremiah was a
compulsive gambler. He was also epileptic, which
in those days carried a terrible stigma. He was
constantly borrowing money, using the famous
family name to run up huge debts all over town.
He would write bad checks. The Commodore had
a very difficult, cold relationship with him.
He basically kept him on a tiny allowance just
to keep him out of jail and stop him from embarrassing
the family. And his nine daughters. He provided
for them. He bought them all nice houses. But
he was very much a man of his time. He did not
view women as potential managers of his empire.
He had this core belief that the fortune had
to be kept intact in one piece to remain powerful.
It couldn't be split up. And this becomes the
crux of the final battle of his life. The will.
The biggest battle of all. Okay. Take us to the
end. It's January 4th, 1877. The Commodore dies.
He dies at age 82, basically of exhaustion and
chronic disorders he'd had for years. The estate
is valued at $105 million. The entire country,
the newspapers, they're all waiting breathlessly
to see where this unprecedented fortune goes.
And when the will is read, it's a bombshell.
It's a shockwave. 95 % of the entire wealth went
to one son, Billy, and by extension to Billy's
four sons. 95%. Yeah. To one son out of all those
children. Yes. The nine daughters received comparatively
small amounts, around $250 ,000 to $500 ,000
each, which was a lot of money in 1877. You could
live like a king on that, but it was a pittance
compared to the total. Cornelius Jeremiah, the
wastrel, got the income from a small trust fund,
but no capital. Billy got the keys to the entire
kingdom. I can't imagine the siblings took this
well. Not at all. They sued. And this trial was
an absolute spectacle. It was the OJ Simpson
trial of the 1870s front page news every single
day. They sued on the grounds that the Commodore
was of unsound mind when he wrote the will. And
their main argument was. Interesting. It was
wild. They argued he was under the influence
of spiritualists. Spiritualists, you mean? Yeah.
Mediums and ghosts. Yes. In his later years after
Sophia died, Vanderbilt had become very interested
in mediums and seances. It was a popular craze
at the time. The lawsuit alleged that Billy had
conspired with and bribed a spiritualist named
Mr. Stoddard. What was the claim? The claim was
that during a seance, a spirit claiming to be
the Commodore's deceased wife, Sophia, appeared
and told him that Billy was the only trustworthy
one, the only son capable of handling the great
fortune. So the argument was that Billy used
a fake ghost to manipulate his senile father
into giving him all the money. Exactly. The siblings'
lawyers painted this picture of a senile man
terrified of death, taking financial advice from
ghosts that were being paid off by his son. That
is just incredible. The ghost told me to leave
all the money to Billy. Did the court buy it?
It never got to a final verdict. The trial dragged
on for over a year, and it was deeply humiliating
for the family. It was airing all their dirty
laundry in public, the Commodore's affairs, his
volcanic temper, his eccentric health beliefs.
And Billy just wanted it to end. Billy, being
the pragmatist, knew this was destroying the
family's reputation, so he settled out of court.
He gave the siblings a bit more cash, an extra
$200 ,000 here, a bigger trust fund there, to
make them all go away. But he kept the bulk of
the fortune. The empire remained intact, just
as his father had wished. So in the end, Billy
wins. The Commodore's gone. What is the final
legacy here, when we step back and look at the
whole picture? It is so complicated. On one hand,
you have the pure robber baron narrative. He
crushed his competitors without remorse. He manipulated
markets. He operated with a ruthlessness that
would be highly illegal today. He bought laws
from legislatures when he needed them. But on
the other hand, the captain of industry argument.
He drove the cost of transportation down for
everybody. He made travel and shipping cheaper
and faster for millions of people. He consolidated
a chaotic patchwork of inefficient small railroads
into a unified, powerful system that really powered
America's industrial growth after the Civil War.
The historian T .J. Stiles, his best biographer,
argues that he vastly improved and expanded the
nation's transportation infrastructure. And that's
undeniable. It's the classic tradeoff, isn't
it? We got this incredible, efficient infrastructure.
But we got it through monopoly, brute force and
political manipulation. And we still see his
physical legacy everywhere. There's the statue
of him at Grand Central Terminal. He stands there
looking down the length of Park Avenue, the very
avenue he created. And of course, there's the
Gilded Age mansions. Right. The money didn't
stay in the business for long. Not all of it.
His grandson, another George Washington Vanderbilt,
built the Biltmore Estate in North Carolina.
It's still the largest private home in the United
States that was built with the Commodores Railroad
money. And you have famous descendants like Gloria
Vanderbilt and Anderson Cooper. Yes, though by
Anderson Cooper's time, the vast fortune had
mostly been dissipated or donated away. The famous
Vanderbilt balls and the dozens of mansions,
they ate through the Capitol pretty quickly.
But the name still feels like American royalty.
So here is the final provocative thought for
you listening. We look back at Vanderbilt as
this historical figure, almost like that statue
in the train station. But think about the power
he actually wielded. He was a private citizen
who could effectively declare war on a country.
who could hold the entire U .S. economy in the
palm of his hand. In today's world of tech giants
and global billionaires, are we seeing a return
to the age of the Commodore? Do our modern tycoons
have that same kind of geopolitical power? It
is a question worth asking, I think. The technology
changes. It goes from steam to silicon. But the
fundamental dynamics of power, wealth, and influence,
those might be timeless. Something to mull over
next time you're walking through Grand Central.
Look up at that statue and ask yourself, who
is really running the show? Thanks for listening
to The Deep Dive. We will catch you next time.