Cornelius Vanderbilt, who is also widely remembered by his nickname as the Commodore because of his early successes in the marine/ship trade, is the first of the great railroad tycoons. Vanderbilt is perhaps the best definition of the term entrepreneur, as he built a massive fortune on sheer determination, will, and belief (doing so with little education). However, due to his ruthless business nature, to an extent early railroad executives like Vanderbilt built the public perception that railroad barons were heartless profiteers caring for little more than expanding their own portfolios (and it was true that Vanderbilt loved to make money). Interestingly, while the Commodore is forever remembered by the railroad empire he created this career did not begin for him until very late in life, as for years he had worked in the steamboat business. Today, much of the New York Central System which he created remains an important transportation artery.
Cornelius Vanderbilt was born in 1794 to a rather poor family who lived at Port Richmond on New York's Staten Island. Perhaps most interesting, in comparison to his amazing success as a businessman later on life was the fact that he only had formal schooling through the age of 11. At that point he quit school and began helping his father who worked in the boating trade where Vanderbilt first learned about the business he would make a career for more than 50 years. At the age of 16 Vanderbilt began his own ferry service between Staten Island and New York City, with the help of a $100 loan from his mother. Understanding that offering cheap, affordable prices in the service industry could gain a lot of customers Vanderbilt's little ferry operation earned quite a tidy sum, as he quickly repaid his mother the loan along with an additional $1,000! Two years later during the War of 1812 Vanderbilt was able to secure a government contract to move supplies to military forts based in New York.
This enabled Vanderbilt to truly enter the maritime industry as he now had enough funds to build a few of his own ships, in particular schooners. It was at this time that he earned the title of Commodore due to the fact that he operated the largest schooner on the Hudson River. Around the age of 24 he left the ferry business and began working for Thomas Gibbons in the steamboat trade. Through virtually everything Vanderbilt attempted he was quite successful and the steamboat business was no different. In 1829 he went out on his own operating a service between New York City and Peekskill.
As usual he looked to cut rates as low as possible, often putting his competitors out of business or winning in court when they claimed he held an unfair competitive advantage (such as in the Supreme Court case of Robert Fulton and Robert Livingston in 1824, Gibbons vs. Ogden). He was worth a half-million dollars by 1834 and during the rush for gold in California in 1849 Vanderbilt made even more money in the steamboat business by offering a trip that traveled through Nicaragua, saved hundreds of miles, and cost far less. He later briefly tapped into the transatlantic steamship market but this venture was rather unsuccessful and gave up the idea around the start of the Civil War.
Around this same time Vanderbilt's legacy in the railroad industry began in 1863, near the age of 70, when he took control of the New York & Harlem Railroad in 1863, much to the chagrin of Daniel Drew. By the time Vanderbilt took over the railroad it operated between New York City and Chatham Four Corners (what is now Chatham). Overall the NY&H was a rather rundown operation although it did provide service directly to downtown Manhattan, a point not lost on the Commodore. A year later he took control of the Hudson River Railroad in 1864, which operated parallel to the NY&H between Albany and New York City.
Vanderbilt, of course, had already established himself as a no-nonsense businessman who could be ruthless in getting what he wanted. He oversaw significant growth of the NY&H and laid its future foundations as a world-class carrier. He immediately changed the railroad's name to the New York Central & Hudson River Railroad when he merged the original New York Central Railroad with the Hudson River Railroad. Later including the New York & Harlem as well, the NYC&HR held a commanding presence in New York City and after gaining control of the Lake Shore & Michigan Southern it reached Chicago on a northern route that was virtually flat (late known as the Water Level Route), in comparison to PRR's main line through the Alleghenies. The NYC&HR would go on to become the legendary New York Central System.
The NYC&HR was again renamed as the New York Central Railroad when it merged with the LS&MS in 1914. Throughout the early 20th century the New York Central System continued to expand reaching Boston; Pittsburgh, PA; Wheeling, WV; the coalfields of southern West Virginia via the Toledo & Ohio Central; Columbus, OH; Cincinnati, Cleveland, and St. Louis via the Big Four Route (the Cincinnati, Cleveland, Chicago & St. Louis Railroad), Columbus, OH; Detroit (and virtually the rest of Michigan via the Michigan Central); and even Montreal, Quebec and Ontario, Canada. Through the years the railroad gained control of notable railroads to reach these markets including the Pittsburgh & Lake Erie, Indiana Harbor Belt, and the aforementioned Big Four.
In 1867 he sparked the "Erie War" with Jim (James) Fisk, Jay Gould, and Daniel Drew when he attempted to gain control of the Erie Railroad to include with his NYC&HR system. This would be the only time Gould ever bested Vanderbilt. During this time the Erie Railroad was one of the most successful systems in the country and what essentially started as an argument between the two turned into a battle of wills as Vanderbilt attempted to corner Erie's stock. In response, Gould and his associates attempted to artificially inflate the Erie's stock value (also known as "watered stock"), which is fraud and against the law. However, Gould only defeated Vanderbilt by bribing the New York state legislature, which allowed the stock to be legalized.
Over the years Cornelius Vanderbilt had come into dispute with
many in the business world such as Drew, Fisk, and others. However,
nearly all of these associates he became friends with later on in life,
except Gould who often tried to smear Vanderbilt in the public after the
Erie incident. The Commodore passed away
January of 1877 at the age of 82 amassing a fortune of nearly $100
million, which would be worth more than $143 billion in today's dollars
making him one of the richest Americans in history. In his will
Vanderbilt left $95 million of his fortune directly to his son William
with his eight daughters receiving between $250,000 and $500,000 each.
Unlike James Hill and a number of the other famed railroad tycoons
Vanderbilt was not much of a philanthropist, endowing only $1 million of
his fortune to the greater good, which went to the Central University
in Nashville, Tennessee that became Vanderbilt University.
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