V. Cornelius Vanderbilt: The Rail King

CHAPTER V

Cornelius Vanderbilt

THE RAIL KING

A SMALL CATBOAT scudding the waters of the bay from Stapleton to Battery Pier; at the tiller a big hulk of a youth, large-faced, broad-chested, blue-eyed, bursting with health and blood and self-assurance. This is the sixteen-year-old ferryman of Staten Island—Cornelius Vanderbilt—who has just plunged into business for himself.

Down from a line of Dutch farmers who settled in Staten Island in 1650, this young Corneel has been working with his father, ferrying passengers and freight in a small boat since he was ten. That huge engine of muscle and gristle and nerves and blood in this lump of a Dutch boy has come from this loutish and thriftless father. But the motive power in the engine, the energy, the drive, the arrogance, the egotism and self-assurance have come from Phoebe Hand, his English-descended mother, who looked with a tolerant pride upon this self-willed and truculent son. As for him, perhaps the only person he ever really cared a tinker’s damn about was this resolute woman who was his mother. Illiterate, boisterous, quarrelsome, cocksure, selfish, he was the perfect candidate for a marshal’s baton in the age of brigandage that was about to open in American business.

He was born May 27, 1794, while Washington was still President. School irked him. At ten he began to help his father, for whose financial adolescence he soon developed a lusty scorn. At sixteen he borrowed a hundred dollars from the elder Cornelius and bought his own small boat.

Brown Brothers

CORNELIUS VANDERBILT

What happened there in the bay is the story of what happened in every town in America. A group of men driving buggies or stages or boats; one of them with an eye on the future buying the hack of another and presently owning three or five and then a livery stable or a general store; then, little by little, as the village grows into a town, getting a finger in every pie—in the bank, the creamery, the streetcar line, the gas company, ending as the town mogul and despot.

Thus it was with this sixteen-year-old boy, who would buy another boat and another. And presently the boats would be no longer small piraguas but schooners plying the Sound—blunt-bowed Dutch boats going up the Hudson to Albany.

In 1813 he married Sophia Johnson, daughter of his father’s sister—a strange, unhappy alliance, touched with tragedy that flowed directly out of the ruthless, imperious nature of that loveless husband. He was not the man to tie his heartstrings around anyone or anything—wife, children, or country. When he tired of this woman he put her in a lunatic asylum. As for his country, he lived to be eighty-two and in all that time he voted but twice. His religion was a simple creed of his own forging in which the deity was Cornelius Vanderbilt.

In 1817, at the age of twenty-three, he had amassed a tiny fortune of nine thousand dollars and three good schooners. At the end of that year he decided to sell the boats and make a new start.

In the early months of 1818 a small steamboat—the Mouse of the Mountain—was putting in regularly at Battery Pier. Her skipper was Captain Cornelius Vanderbilt. He had gone up in the world—and down. Now he commanded a steamboat instead of a mere sailing vessel. But it was another man’s, not his own. He was getting a thousand dollars a year salary instead of the three or four thousand he had made as his own master. But the important point to young Captain Vanderbilt was that now he was moving under steam power.

Robert Fulton had sailed his Clermont up the Hudson in 1807. Vanderbilt had watched with contempt the steamboats that plied the river. A man without vision, a know-it-all, he knew with the certainty of ignorance that steam would never supplant sails. But by 1817, facts—existing facts as distinguished from dream stuff and visions—were under his very nose. If he could not dream he could act. So he abandoned canvas for the steamboiler, even though it was impossible for an independent to go into the steamboat business—impossible because Fulton and Livingston had a monopoly of it.

Robert Fulton and Robert Livingston owned Fulton’s steamboat invention. They were not content with this, however. Livingston was Chancellor of New York State and a political power. He had got from the legislature a monopoly for the firm for the operation of steam vessels in the waters of New York State.

Aaron Ogden was Governor of New Jersey. He got the franchise from the monopoly to operate steamboats between New York and Philadelphia, including New Jersey ports.

Thomas Gibbons, of Elizabethtown, operated several small steamers between New Brunswick and a point connecting with Ogden’s line. The monopoly declared that because Gibbons fed Ogden’s line, he must pay royalties to the monopoly, even though he operated wholly within New Jersey. Gibbons refused. Instead he launched with one of his vessels a line between New Brunswick and Battery Pier, New York City. Thus he challenged directly the monopoly. Ogden, backed by the monopoly, went to court and sought an injunction against Gibbons. The eminent Chancellor Kent granted it. It was this Gibbons boat—the Mouse of the Mountain—that young Cornelius Vanderbilt was commanding in 1817.

Vanderbilt had decided to go in for steam navigation. But it is characteristic of monopoly that newcomers cannot enter the trade it rules. And though newcomers are essential to the capitalist economy, its defenders for decade after decade have made it more and more difficult for newcomers to arrive, until in this year of grace in which I write it is all but impossible.

Vanderbilt had to look for a job with someone who had a boat. He picked Gibbons. He swapped the role of proprietor for that of employee in order to learn about steam. Thus he found himself jammed in the very center of the first great monopoly battle in America—and against monopoly. Vanderbilt, of all men, born monopolist! He was the very man for Gibbons. He had a reputation on the water front as its boldest, most warlike and formidable battler. He united the untamed truculence of the ruffian with those more terrifying qualities—an eye that blazed with resoluteness and wrath, a Jovian countenance, and a huge, loose-jointed body and ready fists. He was the sort of man who might have stood on the quarter-deck of a pirate ship and quelled a mutinous crew with his commanding anger. He had whipped every blackguard on the river front. He loved a fight. Gibbons was in a fight. Vanderbilt needed an education in steam navigation. And the deck of the Mouse of the Mountain was the school for him. But it must have irked the man who called his first schooner the Dread to be commanding a vessel called the Mouse. Vanderbilt induced Gibbons to rehabilitate the slattern craft and rechristen her the Bellona.

Vanderbilt’s reputation as a manager rose rapidly. The conditions in which he operated the Bellona were difficult. The captain and his craft were pursued by process servers and sheriffs for months, while the litigation lasted. But he managed to evade them, keeping the Bellona in service despite the Chancellor’s injunction. Meantime Gibbons had taken his case to the Supreme Court of the United States. And there he won it. The case of Gibbons vs. Ogden is one of the great landmarks of constitutional history. Chief Justice Marshall held that the United States government alone had the right to regulate traffic in the navigable waters of the nation. If, said Marshall, the Federal government did not have the power to regulate so essential a function then the Constitution would become “a magnificent structure, indeed, but wholly unfit for use.”

The way thus cleared, Vanderbilt, year after year, extended Gibbons’ line. He added boat after boat. If he did not have vision for perceiving the shape of things to come, he displayed magnificent talents as a manager of things as they were. He was now manager of the Union Line, as Gibbons’ enterprise was called. He had an office at 457 Washington Street. And there, in an atmosphere of violence and blue profanity that made even the sailors wince, he roared orders at his employees and abuse at his rivals. He revealed here that quality which marked the brigand money getters of his day, an utter incapacity to envisage any reason against doing what he wanted to do. If men objected he brushed them aside. If they fought back he knocked them down. If laws intervened, why, they were damn-fool laws and not fit to be noticed. If officials blocked the way, why, buy them. If judges issued decrees, why, see that the decrees were on his side. Those who disagreed with him were blockheads. Those who resisted him were—why, Goddamn them!—they were hypocrites and blackguards and public enemies. This was the code with which he operated to expand the nine thousand dollars he had amassed as a ferryman to a hundred million before he died.

When Vanderbilt took his job with Gibbons he moved his family to New Brunswick. There his wife took over an old inn, renamed it Bellona Hall, and ran a tourists’ tavern. Like himself she was illiterate; unlike him she was without ambition. She was an efficient drudge whose objective did not extend beyond making a go of Bellona Hall. But that she did. She scrimped and saved and slaved and bore to her husband with amazing regularity a flock of children until there were twelve. Vanderbilt saw little of them, thought less of them, indeed scarcely knew them. His home was on the bounding waves and in the little office in Washington Street where he too slaved sleeplessly. He looked upon his wife and her brats as hopelessly inferior to the expanding and altogether admirable figure into which he saw himself growing.

The Union Line was making $40,000 a year for Gibbons. Vanderbilt was not the man to go on making $40,000 a year for another man when he could do it for himself. The nine-thousand-dollar capital had by 1829, what with his earnings and those of Bellona Hall, swelled to thirty thousand. In that year Vanderbilt—thirty-five years old—went to Gibbons and, to that gentleman’s horror, informed him he was quitting. He shut up Bellona Hall amid his wife’s tears, moved his family to a small tenement in Stone Street in Manhattan, and once again went into business for himself.

Vanderbilt bought such boats as he could. He got some from Gibbons. He plunged into his enterprise with all his boundless vitality. He succeeded from the first. He succeeded because he was a manager of the highest ability. He grew rich fast. In the first five years he made thirty thousand dollars a year. The sixth year he made sixty thousand. He never made so little again. He built up a network of steamboat lines that covered all the ports of Long Island Sound and New York Harbor and extended to Bridgeport, Newport, New Haven, Providence, and Boston. Before he ended this episode of steamboating he owned a hundred vessels and was worth millions.

He was a ruthless competitor. He had two principal weapons—superior service and rate cutting. He drove weak competitors from the water. He threw his strength with abandon against the strongest.

He put a boat on the Hudson River. And here he first met that sinister man who was to be his foe in every business he attempted. You have to go to the pages of a novelist like Dickens for such a character as Daniel Drew. He was a compound of coarseness, illiteracy, vulgarity, meanness, dishonesty, and hypocrisy. He had risen through the levels of canvasman, animal trainer, clown in a circus, drover, keeper of the Bull’s Head Tavern on the Boston Post Road and Twenty-sixth Street, to steamboating, speculating, banking, and railroading, battling Vanderbilt on every stage of this long ascent. He looked upon cards, the bottle, the theater, and dancing as things of the devil. But lying, duplicity, thievery, and greed were the passions of his life. Somewhere in the dark corners of his soul he worshiped some strange version of the Christian God, but there was no form of perfidy to which this vulgar old Goth could not descend with a pious ejaculation upon his tobacco-stained lips.

Vanderbilt started a rate war on the Hudson with Drew and drove him from the river. He tackled a much more formidable combination—the Hudson River Association—backed by the power of the Van Buren machine and led by Dean Richmond, with whom also he was to cross swords upon other battlefields. He could not drive them from the river. But with a rate war he could inflict heavy losses on them. They offered him terms, and for a consideration he agreed to quit the Hudson River route.

Soon Daniel Drew was back on the Hudson with a sensational vessel, the Isaac Newton, first of the great floating palaces, 300 feet long and with berths for 500. Vanderbilt promptly returned with an even more luxurious boat, the Cornelius Vanderbilt. “Liveoak” George Law, another lifelong antagonist of Vanderbilt, entered the lists with the Oregon. Which was the faster—the Oregon or the Cornelius Vanderbilt? That was a river bet until Captain Vanderbilt and “Liveoak” George agreed to fight it out. They ran a race as famous then as the great race between the Robert E. Lee and the Natchez years later. And Law’s Oregon beat the Cornelius Vanderbilt, to the great disgust of the Captain. These two men were to meet many times again in more deadly struggles.

During these years Cornelius Vanderbilt had been expanding personally. By 1849 he was forty-five years old. Yet he had scarcely begun his career. He had moved his family, of course, from the Stone Street tenement to a larger house on Madison Avenue and then to a still more commodious one at 173 Broadway and then, at the insistence of his wife, to a stately home and farm on Staten Island. And by 1845 he built a splendid residence, at No. 10 Washington Square, in keeping with his stature in the community.

He had been promoted. It was a time when many a commanding figure was found in Broadway. Men made up for their parts, with their whiskers and frock coats, their cloaks and high hats. But there was no more commanding figure there than this frock-coated, high-hatted, side-whiskered Jove, tall, erect, alive, past forty but moving with the stride of a younger man. It was ridiculous to go on calling this imperious person merely Cap’n. So men began to call him Commodore—and Commodore he remained. Time had softened very little the bucolic curves of his accent or the illiterate forms of his grammar. He was not a man to look himself over for defects. He remained to the end a thoroughly ignorant man—ignorant of everything save his business.

During these years there were terrible divisions in his family which would have destroyed a more sensitive man, save that they could not have happened to a sensitive man. He cared little or nothing for his children. One of them had to be committed to an insane asylum. His son William H. married, but was forced to retire to a New Dorp farm to regain his health. Nothing could have seemed to the virile Commodore surer evidence of weakness in a man’s character than a loss of health, and so he looked with contempt upon this febrile son.

Most serious was the dark gulf that widened between himself and his wife. He was a heartless man. She was a weak woman. She wept and seemed forever dissatisfied. Her health broke down. She declined into fits of melancholy, due partly, beyond doubt, to her physical infirmities but also in part to certain escapades of the full-blooded Commodore that preyed on her mind. She whimpered against moving back to Manhattan to the stately home being built on Washington Square. They quarreled. The quarrels split the family. And in the end Vanderbilt said she must be crazy. To suspect it was to conclude it, and, against the protests of her daughters, he put her into a Flushing insane asylum. Members of his own family charged that he did it to make way for some other woman. It is a dark chapter in his life. It opens a crack in his shell through which we may have a peep at the ruthless soul within. The unfortunate woman remained in the asylum for two years, after which, under pressure of his family, he permitted her to come home. This was in 1847. Two years later he made up his mind that he was done with steamboats. He turned his mind to other fields.

In 1849 gold was discovered in California. Thousands flocked to the coast. They went by covered wagon, and by clipper ships around the Horn. Vanderbilt’s old Hudson River foe, “Liveoak” George Law, along with Albert G. Sloo, Marshall O. Roberts, and others, organized the United States Mail, while Harris and others formed the Pacific Mail Steamship Company. The first was called the Sloo Line; the second the Harris Line. The Sloo ran from New York to what is now Colón. Its passengers were sent across the Isthmus of Panama, where the Harris Line took them to San Francisco. The trip cost $600 first class and $125 in the steerage. It was expensive but it was the quickest and most comfortable route to the Land of Gold. The ships received juicy mail subsidies and the companies were getting rich. Vanderbilt decided to enter this trade. He planned to send passengers to Nicaragua by steamship instead of to Panama, across Nicaragua by canal, and then by ship to San Francisco. It would be shorter and he knew he could manage ships better than Sloo and Law. He went to England to get financial aid and met with refusal. But he was not daunted. He established the ship line from New York to Nicaragua and from Nicaragua to Panama. He sent his passengers across the narrow isthmus by steamboat on the San Juan River into Lake Nicaragua to Virgin Bay. Then they went over the twelve miles to San Juan del Sur, on the Pacific, by stage. He operated eight ocean-going ships in the Atlantic and Pacific and ran twenty-five handsome blue and white coaches over the isthmus connection. He could beat the Harris and Sloo lines by two days. And, in spite of their subsidies, he could carry passengers for $300 instead of $600 and make money. Steerage passage he cut from $125 to $35. He took two thousand passengers a month to California from New York and New Orleans, transported much of the gold, and made a million dollars a year. By 1853 he boasted to a friend that he was worth eleven million dollars.

This line to California he called the Accessory Transit Company. He sold stock in it, keeping merely enough to control it, less than a majority. In 1853, when all was running well, he went to Europe on an extended vacation with his family. He confided the operation of the Transit Company to the banking firm of Garrison, Morgan, Rolston, and Fretz. While he was away Morgan and Garrison quietly bought up enough stock to get control. When the old buccaneer returned he found that he had been boarded and scuttled. In a towering rage he wrote Morgan and Garrison a letter that is a model for brevity and meaning:

GENTLEMEN: You have undertaken to cheat me. I will not sue you because the law takes too long. I will ruin you. Sincerely yours.

He did not ruin them. But he did go quietly about buying up enough stock to regain control of the line. Then he threw them out.

He was to find the road to quick millions strewn with enemies. Hardly had he settled with Morgan and Garrison when he was confronted with a revolution in Nicaragua. A dashing young American filibuster, William Walker, overthrew the government and seized and revoked the Transit Company’s charter. Such a crisis called forth Vanderbilt’s natural ability as a general. He stopped all his vessels en route to Nicaragua and thus cut William Walker off from communication with America, whence he was getting men and supplies. Walker got himself elected President. Instantly the neighboring Central American “republics” were outraged. Vanderbilt armed and financed Costa Rica, Honduras, Guatemala. They poured hostile troops into Walker’s new empire. He organized a filibuster under two notorious adventurers. He received aid from Buchanan. He drove Walker into a corner until he surrendered to a United States gunboat.

He got his Transit Company back. But by this time he was ready to quit Central America for other fields that looked greener and less troublesome.

His natural sense of justice based on its relation to the interests of Commodore Vanderbilt had been profoundly disturbed by the immense subsidies Harris and Sloo and Law were getting from the government—$900,000 a year since 1848. He thirsted for that money and had a vision of the means to get most of it. Having slashed the rates on his rivals, he had devoured most of their profits. He went to them and proposed that he would withdraw—but they must make it worth his while. He had done the same thing before to Dean Richmond when he fought the Hudson River Association. He forced Harris and Sloo to buy his boats at a good price and to pay him $40,000 a month as long as he kept out of that trade. A little later, by a threat to return, he compelled them to raise the price to $56,000 a month—$672,000 a year. He got all his investment back and drew $672,000 a year, most of the subsidy, without lifting a finger. He drained most of the subsidy away from Law and his colleagues and let them do all the work and supply all of the capital.

Then he built two magnificent vessels—the Vanderbilt and the Ariel—and entered the Atlantic trade, running his ships to Southampton, Bremen, and Havre in competition with E. K. Collins. He has been accused of being in a conspiracy with Collins to extort subsidies from the government. But there is no proof of this. He found there was no profit in this business. With all his capacity as a manager and his willingness to work men for the lowest wages, he discovered he could not compete with the Cunard Line which paid still lower wages and enjoyed large subsidies from the British government. And so the old Commodore, a multimillionaire, second in wealth only to John Jacob Astor, sixty-six years of age, bade good-by to the sea, but not to retire. He sold his ships to Allen and Garrison for $3,000,000—all but the North Star. And that calls for a word.

In 1854 Vanderbilt built a magnificent vessel that he named the North Star. Whether this was primarily an ocean liner or a private yacht is not quite clear. It was certainly fitted out at first as a private yacht. But it was a ship of 2500 tons and almost as large as the largest transatlantic liners then in service.

In the early summer of 1854 Vanderbilt astonished New York by putting the elegantly appointed North Star into service as a private yacht. Into this Ark de luxe the skipper loaded his wife and his twelve children, a famous captain, and a fashionable chaplain. The chaplain wrote a book about this pretentious expedition, called The Cruise of the Steam Yacht North Star: A Narrative of the Excursion of Mr. Vanderbilt’s Party to England, Russia, Denmark, France, Spain, Italy, Malta, Madeira, etc., by the Rev. John Overton Coules, D.D. The old Commodore literally knocked London’s eye out. He was feted by the Lord Mayor. He and his wife rode around St. Petersburg in the Czar’s carriage.

This was the vessel he reserved when he sold all his others to Allen and Garrison. It happened in 1859. The next year the South seceded and Vanderbilt, in a gust of patriotism, offered the North Star to the government. He intended it as a loan. The government went him one better and accepted the gift. Hell and damnation! Gift! He had made no gift. But this painful error put him in an embarrassing position and so he had to absorb the loss with the best face possible. But the mistake was to stand him in good stead later. When a country goes to war or is ravaged by a plague, there are always men whose first question is: what can I make out of this? The whole prewar era was one of vulgar dishonesty. It was not surprising, therefore, that men who had materials to sell or who understood the delicate mechanism of speculation should have sunk their hooks deeply into the public treasury while the rest of the country fought and suffered. It is a dark and sordid story. Vanderbilt managed to get himself smeared with some of this scandal.

The government planned in great secrecy an expedition to New Orleans under General Banks. It needed vessels to transport horses and men. Secretary Stanton asked Vanderbilt to look after the purchase of the needed vessels. Later an ugly scandal broke out about these purchases, which led to a Congressional investigation and an acrimonious debate in the Senate. The main charges were fully substantiated. Men who had vessels to sell were compelled to pay from five to ten per cent commission to Vanderbilt’s agent, T. J. Southard. Old, outmoded, and even rotting ships were unloaded on the government at extortionate prices. Vessels utterly unfit for ocean service were rented at rates shockingly in excess of prices paid for the same boats in similar expeditions.

A resolution censuring Vanderbilt, his agent T. J. Southard, and Commodore Van Brunt of the navy was introduced in the Senate. The question was—did Vanderbilt know that Southard was taking this money? Was he personally aware of the nature of the vessels purchased?

It is fair to say, notwithstanding some of the bitter excoriations of Vanderbilt, that no evidence was produced to prove that he knew that Southard was grafting, although the latter’s guilt was established—he even offered to return the money. What Vanderbilt was guilty of, however, beyond doubt, was shameful negligence and incompetence. He did approve the buying of boats at prices which he knew better than anyone else were indefensible. He most certainly bought and hired craft without reasonable inspection. His excuse was that they were adequately insured, to which Senator Tombs of Georgia replied that surely insurance could not cover the lives of the men committed to some of these rotten hulls. He did know that Southard had bought for the government some of his own boats at even higher prices than those paid for any others. The whole transaction smelled of fraud. And had Vanderbilt been a man with a finer sense of public service it could not possibly have happened.

His name was expunged from the censuring resolution and it has been charged that he used political influence to effect this. But certainly that left-handed “gift” of the $800,000 North Star went a long way to save him from the branding iron of the Senate.

When Vanderbilt sold his ships it was not to retire. He abandoned the sea for railroads. He was no pioneer. He was in no sense a man of vision. Other men dreamed. He went into action after their dreams had materialized. When he operated his schooners, he sneered at the steamboats that Fulton and Livingston and other men of vision were running. When he adopted steam he laughed with scorn at the little iron horses that puffed along the Hudson. He went into the Isthmian-California traffic after Sloo and Law and others had shown the way and the profits. In 1860 railroads were no longer experiments. He had no time for experiments. But he could see that they were potential money-makers and that the men who were running them were doing a bad job of operation.

One fable linked with the Vanderbilt saga is that he took a great number of little jerkwater roads and forged them into the great New York Central trunk line. The legend is overwrought. By 1860 the New York Central was an integrated line running from Albany to Buffalo. The work of consolidation had been nearly completed. Originally the traveler from Albany bound for Buffalo had to start on the Albany & Schenectady to Schenectady. There he changed to another road—the Schenectady & Utica—for Utica. At Utica he boarded another road for Syracuse. At Syracuse he scampered out again for another stretch on another road to Auburn. There he boarded the Auburn & Rochester for the latter city. And then, with a sigh of relief, he got a ticket on the Rochester, Lockport & Niagara Falls for Buffalo. In 1852 all these small roads, plus some more enjoying unused franchises, were consolidated into a single line called the New York Central. Then the management boasted that a man—after a sleepless night from Albany to Utica—might eat his breakfast in Utica, dine in Rochester, and sup with a friend on the shores of Lake Erie. As for the beginning of it all, the man who dreamed the dream was an aristocratic old gentleman named George W. Featherstonhaugh, who made the start with the first road from Albany to Schenectady when Vanderbilt was haw-hawing at the stupid fellows who thought they could make those dern things work. Most of the consolidating occurred when he decided to transfer his talents to steam.

He began, however, not with the Central but with two roads running out of New York to Albany—the New York & Harlem, and the New York & Hudson River. First he bought a controlling interest in the Harlem road. Its downtown terminus was at Tyron Square back of City Hall. Its cars were hauled by horses to Twenty-sixth Street where the locomotive was hooked on. Then it proceeded to Chatham where it connected with the Boston & Albany for the capital city. Like most early roads, it was mismanaged. In twenty-nine years it had averaged less than half of one per cent a year profit. Its road and equipment were badly run down. Vanderbilt bought control at nine dollars a share.

The Commodore’s next step was to get for the Harlem road from the Common Council a perpetual franchise to extend its right of way down to the Battery. Out of this incident grew an unlovely comedy of duplicity, treachery, and fraud scarcely duplicated in our turgid business history.

While Vanderbilt sought his franchise from the Council, George Law—he of the Hudson River Line and the Panama episode—sought a similar one from the legislature. Vanderbilt bribed the corrupt Council known as the Forty Thieves. Law bribed the equally corrupt legislature’s dominating group known as the Black Horse Cavalry. Vanderbilt got his franchise, Law got his, but Tweed’s governor vetoed it at Vanderbilt’s urging, doubtless implemented by cash. The stock of the Harlem shot up in price.

But Daniel Drew, who is entitled to a high place in American business’ Hall of Infamy, entered into a conspiracy with the Council. Drew showed them how they could make a lot of money by betraying the old Commodore whose cash they had taken to give him the franchise. The members were equal to any infamy. The North American Review about this time described this august body as being made up of “pickpockets, prize fighters, immigrant-runners, pimps and the lowest of liquor dealers” to the “absolute exclusion of honest men.” Under Drew’s leadership they formed a pool to sell the Harlem stock short. That is, as the stock rose in price they would sell—stock they didn’t have, of course—for future delivery. Then if the courts held the franchise to be unlawful, which was more than probable, the stock would promptly go down in value. If the courts did not hold it illegal the Council could revoke the franchise they had voted to Vanderbilt for bribe money. When the shares sank in price, Drew could buy cheaply all the shares he needed to make delivery to those who had bought at high prices.

The stock went to 100. Drew sold heavily as planned. But somehow the stock did not sink in price. Drew continued to sell in order to hammer the price down. But instead the price went up—to 120, to 150, to 170. Here is what happened. Vanderbilt got word of this conspiracy. Therefore, as fast as Drew sold Vanderbilt bought. It was, indeed, Vanderbilt who was buying all the stock Drew was selling. Presently Vanderbilt owned practically all of the 110,000 shares of the Harlem and the thousands of fictitious shares Drew had sold. Then he called upon Drew to make delivery of those shares. This meant Drew had to go out in the market and buy. But there was none for sale. Vanderbilt had it all. Drew had to buy from Vanderbilt. He went to his old enemy and begged for mercy. Vanderbilt turned the screw and compelled him to buy thousands of shares at $179. It cost Drew and his aldermen colleagues a million dollars in losses. It was nearly enough to make up for what Vanderbilt had paid for his control of the road. But he had lost the franchise.

Next he bought control of the New York & Hudson River, the river route to Albany and much the better line. Then he asked the legislature to authorize the consolidation of the Harlem and Hudson River roads. The Black Horse Cavalry had to be bought again. Here again the legislative leaders attempted to carry off a short-selling coup like that tried by Drew and the Council. They planned to defeat the act at the last minute and cover as the Hudson price sank down. But once again Vanderbilt duplicated his offensive against Drew. He found himself in possession of 27,000 shares more than existed. He compelled the legislative gamblers to settle at $285 a share and boasted with glee that he “had busted the whole legislature.” He got his act, merged the two roads, and then turned to getting the New York Central.

In the Harlem and Hudson operation he did not so much join two roads as he did put one of them out of business. He began to build up the Hudson River route, double-tracking it, erecting new stations, and providing new equipment including the new sleeping cars. Everywhere the effects of new and capable management were visible.

Getting the Central was not easy. It was in the hands of tough-fibered men, with plenty of money—John Jacob Astor, John Stewart, and others, led by Dean Richmond, who had fought Vanderbilt with the Hudson River Association when Vanderbilt made him pay him to quit the Hudson for a while. Moreover, the Central had been shamefully overcapitalized. Its various component roads had cost $11,000,000 to build. But the capitalization was raised to $23,000,000 and at the consolidation to $35,000,000—sixty per cent water.

But Vanderbilt was a general of formidable talents in such a fight. He had driven old Drew from the field in a swift tactical maneuver and repeated it later against the corrupt leaders of the legislature, with that kind of swift decision with which he countered Walker’s filibuster seizure of the Transit Company in Nicaragua and that sort of shrewd strategy with which he managed to make the Sloo and Harris lines fork over to him most of their rich subsidies from the government.

The Central had one weakness. It could get its passengers from Buffalo to Albany, but had no means of sending them to New York save over the Hudson River road in the winter and by the Hudson River steamers in the warm months. Vanderbilt had begun to buy stock in the Central, but when he found he could not get control he took swift and sudden advantage of this weakness. When the fall months ended and ice filled the river, the Central ordered the shift of its New York passengers and freight to the Hudson River line. But when the passengers got out of the Central trains, there were no Hudson River trains to receive them. Vanderbilt had ordered that the Hudson trains should not only not cross the river to meet the Central but should stop a mile away from their usual station. The Central passengers had to troop in the snow to their New York connection. The freight had to be hauled by drays, adding immensely to the cost.

The Central managers denounced him. The public joined the protest. The legislature ordered an investigation. It summoned Vanderbilt and asked him why he had failed to send his trains across the river. He bowled them over by producing a state law prohibiting his company from sending trains across the river. That settled that. But why had he stopped his trains a mile away on his own side of the river? He didn’t know. He didn’t give the order. “I was home,” he said blandly. “I was playing a rubber of whist. And ye know, gentlemen, I never allow anything to interfere with me when I’m playing cards. Ye got to keep your attention fixed on the game.”

Backed by the law, he held his ground. It was a costly strike against the Central. And in 1857 the stockholders compelled Richmond, Astor, and Stewart to surrender. They called Vanderbilt in and made him President. He began extensive improvements on this road too, and in two years asked the legislature to permit the joining of the Hudson River and the Central. This was his only merger of roads in that continuous trunk line that he called the New York Central & Hudson River road. He increased the stock from $44,000,000 to $86,000,000. Each holder of a $100 share got a share in the new company for $180. The eighty dollars was pure water. As for Vanderbilt himself, he got for himself and his services six million dollars in cash and $20,000,000 in shares, in addition to the water he got on his own shares. Thus he embarked upon that vicious and socially disastrous practice that was to be the curse of American business to this day, of inflating the capitalization of railroads, utilities, and corporate enterprises of all sorts.

There is a curious notion that enjoys much popular support in this country. It might be called the brigand theory of progress. A certain kind of lusty scoundrel, audacious, adventurous, taking bold chances, not putting too nice a point upon questions of right and wrong when it is a question of getting things done, is supposed to be essential to business progress.

Such men do wicked things by the code of the casuist. They engage in enterprises that involve fractures of many commandments. They enforce losses upon smaller men. They are cruel. We need not condone all this. But we are told that we must recognize that these are blemishes among many greater qualities. Indeed, these very vices are but the by-products of the exuberant energy which is essential to pushing forward great projects. They are driven by a passion for doing things. And in a world of timid souls and doubters, of human obstacles of every sort, of stupid laws and venal officials and selfish interests balking progress, men of tough fiber are needed to cut through all the physical and human fortresses that block them. Some people suffer, some lose as a result of their methods, but out of their efforts emerge great works and great institutions.

This precious gem of social philosophy is worth assaying. But at least this we may observe: at the period of which we are writing there appeared as fine a collection of rascals materializing railroads and other works through the processes of the brigand theory of progress as ever were to be found on the Spanish Main itself. Whether or not they were driven by a passion for getting things done, certainly they were driven by a consuming passion for getting other people’s money. Whether the passion for achieving great works was stronger than the appetite for money, we may judge from the manner in which Commodore Vanderbilt ditched his Panama project in favor of a scheme under which he could wring $56,000 a month out of his opponents without all the trouble of operating a project.

Jay Cooke, banker, planned to build the Northern Pacific with money furnished by bond buyers while he and his colleagues took the stock and the ownership and control without putting up any cash (or only a trifling sum) and then got the government to give them an empire in land grants—44 million acres. Cooke ruined himself and his investors, plunged the nation into a panic, and doubtless delayed the building of the road for years. Then another group reorganized it, took 49 million shares of stock for themselves for which they paid nothing. In later years, when the road needed $11,000,000 in additional capital, another great banking firm supplied it from its clients and in return loaded the company with $58,000,000 in securities.

The Union Pacific was marked by a similar trail of failures, delays, corruption, and theft, including the infamous Crédit Mobilier, which bribed members of Congress and its Speaker, governors, editors, judges, and a candidate for the presidency. To build a railroad? No, to build the crooked capital structure by which they could exploit it. They made a contract between themselves and the roads to do the construction work and put in the way of the great project that most terrible of obstacles—prohibitive costs due to their own extortionate charges.

That other precious quartet of railroad titans—Charles Crocker, Collis P. Huntington, Leland Stanford, and Mark Hopkins—who built the Central Pacific, issued to themselves $33,000,000 in bonds and $49,000,000 in stocks in return for practically no investment and as representatives of the roalroad made a contract with themselves as builders to construct the road and charged the company three times the $27,000,000 it cost to build.

The proceedings of Messrs. Vanderbilt, Drew, Law, and others in the Harlem and Hudson River franchise and corners offer an excellent instance of the skulduggery to which these gentlemen resorted, not to build railroads, but to grab roads already built. The railroads, like the utilities, are a gift to us from countless devoted scientists who created the instrumentalities that make up a railroad, and of countless industrious operating engineers who dreamed them, built them, and later managed them all for very meager rewards, while the work of driving forward railroad development was actually hampered by the scoundrels who used the financial necessities of the roads to exploit them, rob their stockholders and bondholders, debauch their communities, and, in the end, ruin the roads themselves.

Indeed this whole matter of brigandage is a bit elusive. It is not always easy to know where the outlaw ends and the baron begins. One cannot detect with accuracy the moral boundaries that divide the pirate from the privateer and both from the racketeer and the promoter.

There is the outlaw—the man on the horse or sailing under the Jolly Roger, who defies society, denies its laws, and makes war on it—like Captain Kidd.

There is the racketeer who remains in society, scoffs at its laws, but assumes control of some of its operations and functions—like Al Capone.

There is the financial promoter who uses neither horse nor galleon, who does not defy laws but rather shapes them to his ends, does not make war upon society but corrupts its officials, adopts and exploits its machinery—like Jay Gould.

But all have the same objective—plunder. And all exist, where they do exist, because of a tolerance of them that persists as a strange anachronism in civilized society. It must not be forgotten that Henry Morgan was knighted not before he went astray as the most ruthless buccaneer of his time, but after. In a life of crime under the license of a privateer he assaulted and sacked one island after another, ending with his savage attack on Panama, where he burned the castle and the town and marched away with 175 mules and cattle loaded with treasure worth over a million and a half and 600 prisoners who were held for ransom. He defrauded his men and returned to England where he was knighted and appointed governor of Jamaica by Charles II.

We have conferred doctorates, positions of honor, built monuments, named streets and institutions after some of our own freebooters who were scarcely better than Sir Henry Morgan. I can explain it upon no other theory than that we are as yet but very imperfectly civilized. Our people as a whole have only a very rudimentary perception of the more subtle social virtues. They can understand and applaud only a few very rudimentary human virtues. They understand strength, courage, loyalty, generosity. Therefore, they can admire the political district leader who will fight at the drop of a hat, who always overcomes his enemies, who distributes largess to the poor and sticks to his friends. That he may rob the city, betray his official trust, accept bribes from the predatory enemies of the poor, mismanage and bankrupt the community is of no importance since these performances involve the exercise of social virtues and vices that they perceive but dimly.

How thin this line between the freebooter and the magnate may be, one may see in the following account of one of the most amazing episodes in American business history.

The Erie Railroad runs from New York to Buffalo and on to Chicago. It competed in 1866—and still does—with Vanderbilt’s New York Central. The poor old Erie had a long history of corruption and mismanagement. One group of directors after another had looted it. The road was organized in 1832 with a capital of $4,000,000. The state of New York put up $3,000,000; private investors the other million. The state got bonds; the private investors got stock. The state never received a penny of interest or principal on its bonds, and after ten years these were canceled. Another issue of $3,000,000 in bonds and $3,000,000 in stock was put out, and the Erie began another decade of mismanagement. By 1857 it was again in the hospital. At this point Daniel Drew, then a banker and broker in Wall Street, entered the picture. He loaned the road $3,480,000. It couldn’t meet the loan so Drew took it over. For eight years thereafter it almost ceased to be a railroad and became a mere tool in the Wall Street kit of Drew, who ran its stock up and down at will and made millions out of gullible speculators.

Vanderbilt saw the possibilities of the Erie. Moreover, it competed with the Central. He determined to add it to his possessions. He began buying shares secretly. He accumulated 20,000. This was not enough. But John S. Eldridge of Boston controlled a large block of stock. A Boston group that he represented wanted to bring about a consolidation of the Erie with their Boston, Hartford & Erie. Vanderbilt induced Eldridge to unite with him, pool their shares, and seize control of the road. Eldridge agreed but exacted as a condition that old Daniel Drew should be ousted.

At the stockholders’ meeting Vanderbilt’s directorate was elected. Drew was left out, but two new men, Jay Gould and James Fisk, Jr., were named. Eldridge did not know it that day but he discovered very quickly that Vanderbilt had doublecrossed him. The old Commodore, then seventy-two years old, made one of the most astonishing blunders of his long career. When Drew learned that Vanderbilt had the votes to win he went to Vanderbilt’s Washington Square home. He was in tears. He begged Vanderbilt not to throw him out. He suggested that he be taken in as an ally with his large stockholdings and that the two men work together. No one knew Drew better than Vanderbilt. He knew him to be a scoundrel. Drew had tried to ruin him in the Harlem corner. He knew that Drew was merely a plunderer of every property and partner he dealt with. Why the Commodore listened to this oily old rascal pleading with tears in the name of their old “friendship” it is impossible to conjecture.

But he did yield. And he paid dearly for his folly. It was agreed that Drew would not be elected to the board. But as soon as the board took office, a dummy elected for the purpose was to resign and Drew was to be named in his place and made treasurer. Worse than this, Vanderbilt agreed to name two associates of Drew, two of the most unconscionable rogues ever thrown up by American business, which has been peculiarly fruitful of them. This was that incompatible and ill-assorted pair, Jay Gould and James Fisk, Jr. Never had two more unscrupulous rascals a sponsor worthier of their talents than Gould and Fisk found in Drew.

After a brief career in Pennsylvania where he operated a tannery and wrote a history of Delaware County, Gould appeared in New York with a patent rattrap he had invented. He gravitated to Wall Street where for the rest of his life his inventive genius was applied to bear, bull, and lamb traps from which he made uncounted millions. He was a small, frail, dark-bearded but pasty-faced man; sickly, gloomy, coldly cruel. Before he ended his career he had gathered under his power a web of railroads, steamships, the Western Union, the New York World, the New York elevated roads, comparable to that complicated and diverse empire that the Van Sweringen brothers assembled later.

Jim Fisk was the son of a Vermont peddler and in his early life traveled the Connecticut Valley in wagons brilliantly painted like circus carts, selling cloth, silks, tin, and baubles. Like Drew, he had enjoyed a brief career in a small animal circus. He got his start selling blankets to the army during the war at extortionate prices. He fell in with Drew for whom he negotiated the sale of his Stonington steamboats. The hard, dry, sanctimonious Drew was attracted by the gaudy, extravagantly dressed dandy, glittering with rings and other jewelry, his blond hair and mustache elaborately pomaded and dressed. Drew aided him to set up in Wall Street as a broker, where he met Jay Gould. What was the attraction between Gould and Fisk it is impossible to say, save that each supplied the qualities for adventure that the other lacked. Gould was a man of powerful intellectual equipment, simple in his tastes, meticulous in his personal morals, scornful of the world and those in it with whom he dealt, resourceful and merciless. Fisk was noisy, ostentatious, vulgar in his tastes and morals, audacious, with the mental equipment of a New England horse trader, but an able field general in a stock operation.

Gould and Fisk had a special object in establishing connections with the Erie road. In 1866 they bought a small road—the Bradford & Pittsburgh Railroad. They paid $250,000 for it and promptly issued $2,000,000 in bonds. They wanted to lease this line to the Erie, forcing that already distressed corporation to assume the new bonds. They did sell the road to the Erie and received for the $250,000 investment $2,000,000 of Erie bonds convertible into stock.

As soon as these three freebooters—Drew, Gould, and Fisk—found themselves inside the Erie compound, with Drew as treasurer and the three of them on the executive committee, with Drew representing Vanderbilt’s interests, they proceeded to rob Vanderbilt. What they did to this wise, suspicious, and formidable old warrior is a classic in duplicity and helps us form some idea of what can be and is done to the less knowing and helpless investor.

First they undermined the Commodore with their fellow directors. They intimated that the objectives of the Commodore were completely selfish, a disclosure that must have come as a great shock to that choice collection of selfless souls. Vanderbilt was tagged as an exploiter who wanted a monopoly of transportation. He would make the Erie play second fiddle to the Central. Hitherto it had been a mere jimmy in the tool bag of a safecracker. Having gained the confidence of the new directors, Drew, Gould, and Fisk induced that body of shocked altruists to issue ten million dollars in bonds. These were almost all turned over to the three saviors of the Erie in payment of various spurious claims. The Commodore, hearing of this, realized that they were bent on treason. He uttered a roar of wrath and hurried his lawyers off to Judge Barnard for an order commanding the looters to quit issuing bonds.

Meantime Vanderbilt redoubled his efforts to buy Erie stock to ensure control. His brokers bought right and left. But the supply seemed inexhaustible. In fact, it was—at least as long as the printing press of Gould, Fisk, and Drew kept running. For the ten million in bonds they had grabbed were convertible; that is, they could be turned into stocks on demand. The Unholy Three had their printer turn these bonds into stocks. And they dumped 50,000 shares on the market to be followed quickly by another 50,000. It was these Vanderbilt was buying, the millions he was paying flowing into the pockets of the conspirators. And Jim Fisk said with glee: “We’ll give the old hog all he can hold if this printing press holds out.”

When this perfidy dawned upon Vanderbilt he fell into a Jovian rage. Once again he rushed to his judge and got an order for the arrest of the villains for contempt. The judge who issued these orders must not pass unnoticed. He fitted into the comedy of the times as Harlequin in the pantomime. He was the Honorable George C. Barnard, a kind of human blackjack in the arsenal of Boss Tweed. Yale, maker-of-men, gave him to the world. He went to California and became a stool pigeon in a gambling joint. Later he was a blackface comedian. He returned to New York, where Tweed made him a magistrate and then a Superior Court judge in his kennel of justice. Tall, handsome, eccentric, boisterous, dressed in the loud and extravagant livery of a side-show barker, he sat on his judicial throne, whittling little strips of wood that his clerk kept piled on the desk for his amusement, spewing a stream of foul-mouthed impudence and abuse upon attorneys and litigants alike. Vanderbilt had bought him as he would an expensive horse. It was this gentleman who now ordered the arrest of Drew, Gould, and Fisk.

Getting wind of this, the three marauders hurriedly packed the records, account books, securities, and cash of the Erie Railroad, amounting to six million dollars, and like the hard-pressed ministers of a Balkan government fled in hacks for the border—for the Hudson River ferry and across to Jersey City, out of the jurisdiction of Judge Barnard.

They now enacted one of the most fantastic burlesques in the whole history of American business. They took over the Taylor Hotel. They made it into a fortress. They recruited a small army of thugs and armed them with rifles and small cannon, to repel what they believed was a threatened invasion of Jersey by the roaring and blaspheming Commodore. They called their citadel Fort Taylor. Fisk, as colorful a rogue as ever sailed the Spanish Main, assembled a fleet of vessels which he armed and of which he assumed personal command to check the invader before he reached the shore. Thus, the pirates with their army and navy awaited the assault of Vanderbilt. The whole town was aroused. The militia was mobilized to deal with the expected crisis.

But Vanderbilt had no intention of using force. The marauders were actually in a desperate plight and he knew it. At this point the command fell from the hands of the frightened Drew. Gould took it over. With $500,000 in cash he slipped quietly into Albany, where the legislature was in session. Somehow he got the ear of Tweed who up to this point was the ally of Vanderbilt. Gould gave Tweed $180,000 of Erie stock. He distributed large sums of cash among the members of the Black Horse Cavalry. A bill was introduced in the legislature to legalize the ten-million-dollar stock and bond issue. Barnard called it a bill to validate counterfeit money. Vanderbilt fought them with money and threats. Albany assumed the appearance of prosperity. The smell of money was in the air. All legislative business was suspended while the lawmakers gathered in groups and discussed the current quotations on votes. Rates fluctuated between two and three thousand dollars. The courts were drawn in. Gould and Fisk got a counterinjunction from Judge Cardoza. Thus, two Tweed justices—Cardoza and Barnard—squared off in a duel of injunctions. Vanderbilt lost at Albany. The law legalizing the security issue was passed.

But Barnard still threatened the fugitives with jail for contempt if they appeared in his jurisdiction. And so, despite their victory, Gould and Fisk and Drew dared not enter New York. Vanderbilt, outwitted and beaten, had this advantage—his enemies were refugees from the haunts that were essential to their lives and plans.

Vanderbilt knew that Drew dreaded jail. He got word over to Jersey that Drew’s time to talk business had come. Drew took the hint. He slipped one Sunday morning over to Vanderbilt’s Washington Square home. Vanderbilt let him know that he would not relent until the hundred thousand shares he had bought were taken off his hands at what he had paid for them. Drew was willing to settle and proposed another meeting. Some days later he slipped again across the river to the home of Vanderbilt’s lawyer, Judge Pierrepont. While he and Vanderbilt were in conference Gould and Fisk walked in. They had had old Daniel Drew shadowed and they followed to surprise him. There, with all the combatants present, Vanderbilt laid down his terms.

He did not get all he asked. But, all things considered, he did very well at the hands of these cutthroats. They agreed to take back 50,000 shares at 55, paying $2,500,000 in cash and $1,250,000 in securities. They agreed to pay a million dollars for the right to redeem the other 50,000 shares at 70 within six months. Thus, Vanderbilt recovered $4,750,000. He insisted this left him with a loss of $2,000,000.

But Gould and Fisk were not done with him. They began to beat the price of Erie stock down with heavy short selling. When it reached 35 they bought back in sufficient quantity to get control of the road while making another killing. And they found Vanderbilt glad to sell his remaining 50,000 shares at 40 instead of 70. They returned to New York, bringing with them the Erie headquarters, which they established in an elaborate white marble building at Eighth Avenue and Twenty-third Street. It contained a theater, which the incredible Fisk operated, finding thus an instrument for his exhibitionism and a recruiting station for his harem.

Vanderbilt had wanted control of the Erie. He wanted a monopoly of transportation in the territory served by the Erie and the Central. He got that control through his purchase of the shares the criminal trio had fed to him in the stock market. But having got it, he changed his mind. At the moment he was probably more interested in ruining his enemies. By forcing them to pay him $4,750,000 and leaving them with the rotting hulk of the looted railroad on their hands, he felt he was wreaking vengeance on Drew, Gould, and Fisk. But he reckoned without the satanic ingenuity of Gould.

Gould and Fisk thrust the aging and traitorous Drew aside. They made a prompt alliance with Tammany, put Bosses Tweed and Sweeney on the board of the Erie, and acquired the corrupt Judge Barnard as one of their own assets. They used him relentlessly, Fisk getting him to sign an injunction on one occasion at night in the boudoir of his mistress. The new headquarters of the railroad, with its opera house and a private passage between Fisk’s private box and his offices, was called Castle Erie.

In the Castle, Fisk called himself the “Prince of Erie.” Strutting aboard the flagship of his Albany fleet in an elaborate uniform, he called himself “Admiral.” Marching at the head of a militia regiment that he commanded, he was styled “Colonel.” He occasionally exhibited himself in a gaudy equipage drawn by six horses, three black on one side, three white on the other, embowered amidst a bevy of his strumpets. Yet this preposterous and malignant clown possessed an audacious cunning that when united with the acute and sinister genius of Gould made them a menace to investors, speculators, banks, and industry until Fisk was shot down by a jealous lover and Gould vanished from the scene, consumed in the fires of his own restless nature. They were to harass Vanderbilt almost to the end of his days. They carried on a traffic war, playing the Erie against the New York Central. When the old Commodore cut rates, Fisk went West, bought up vast herds of sheep—the most undesirable and unprofitable freight—and filled Vanderbilt’s cars with them at destructive charges.

The Commodore was to encounter these bold raiders upon another scene. Gould’s peculiar genius found its highest expression in plot and conspiracy for swift raiding adventures. In 1870 he perceived that the supplies of gold in the nation were quite limited. The government had a large gold reserve locked up in the Treasury vaults. And Gould saw that if he could manage to keep that locked up it would be possible to corner the floating supply. He managed to meet President Grant during a visit of the latter to New York. He then pointed out to the President that, as the movement of the crops was near, he was in a position to bring a great benefit to the farmers if he steadfastly refused under any circumstances to permit any of the government’s gold reserve to be released. If the President did that it would tend to raise the price of gold on the gold market and this would depreciate the dollar in terms of gold. Foreign buyers of wheat must buy American dollars to pay for wheat. If gold were high these buyers could buy more dollars with their gold. Thus, wheat would be made cheaper for foreign buyers, which would stimulate buying of wheat here. This was essentially the same theory that the late Professor Warren sold to President Roosevelt in 1933 and that President Roosevelt naïvely swallowed with the same insouciance as Grant.

Gould exploited his conquest of the gullible Grant by exhibiting the President in Fisk’s private box at the opera house in Castle Erie and aboard one of Fisk’s Albany liners, entertained publicly by Fisk in his admiral’s regalia. Then Gould bought seven million dollars worth of gold, sending the price up from 132 to 140. Thereafter he and Fisk, with certified checks issued from a bank they controlled, bought forty millions of the dwindling metal until they had driven the price up to 150. Gold became so scarce that business and banking were deranged. Speculators were ruined. Brokerage houses suspended. It was the greatest panic in history on the Exchange. Then Gould got advance word that Grant, disillusioned, was going to release government gold to ease the panic. He secretly betrayed his partners in the conspiracy and began to sell while they were still buying. Friday morning, pandemonium broke loose in Wall Street and the Gold Room. Fisk was buying frantically, pushing the price up to 162 ½, while his pal was selling. When the government gold flooded into Wall Street, the price of gold slipped back to 135. The whole market fell into the worst panic it had ever known. Fisk and all the coconspirators, including Gould, were caught in the decline. They had to force a closing of the Gold Room through an order of their friend Judge Barnard, to save themselves from ruin.

Once again the aging Commodore Vanderbilt was called in to help the market with his wealth. He made loans of a million dollars on that Black Friday to support the market. But it is not true that his part in this crisis amounted to anything more or that it played any major part in the crisis. After this, his battles with the spider Gould and the peacock Fisk came to an end. Fisk himself some years later, arrayed in velvet and glittering with diamonds, was killed coming down the grand staircase of a New York hotel to enter his ornate coach. His murderer was a rival profligate named Stokes, suitor for the affections of Fisk’s public strumpet, Josie Mansfield. Old Daniel Drew, started on the road to ruin by his two honor pupils in a bear raid on Erie which Drew attempted only to be caught and squeezed out of a million by his pals, was driven from Wall Street ultimately and died in poverty.

As for Vanderbilt, he became a legendary figure. He was easily the first among the great money captains of the country. Greatest among the industrial giants were the railway kings, and he was the greatest railway king of all. He could not be compared in intellectual gifts with Gould, who was, perhaps, one of the most powerful minds among all our money barons. But Gould was essentially a crook. His mind worked in crooked ways. He could achieve only as a conspirator, a wrecker, a public enemy, meditating and carrying out sorties and raids upon the public and private purse.

Vanderbilt was the richest man in America, worth a hundred million dollars. He remained more in seclusion. His very name was one to conjure with. He occupied such a position as only the elder Morgan attained a generation later.

Almost to the end Vanderbilt continued to give a general supervision to his vast interests. His son, William H. Vanderbilt—he of the long flowing Dundreary whiskers—assumed immediate charge of his railroad empire. But the foul-mouthed, blasphemous, and terrifying old barbarian held fast to the virility that had driven him forward. Men stood in awe of him. His son William never ceased to fidget uneasily in his presence. But he had more time to survey the infinite now, and his explorations brought him to the sanctum of Mrs. Tufts in Staten Island. The Fox sisters were still exciting the curiosity and wonder of the world since their discovery of the spirits thirty years before. And Mrs. Tufts was a practitioner of the dark art of communication between the Earth and the Beyond. The spectacle of this rowdy old pragmatist softened down to an evening at home with the shades of old Phoebe Hand and his departed son George titilated the risibilities of the hard-boiled gentlemen of Wall Street. But, after all, why snicker at Vanderbilt? For while he was fraternizing with the ghost of his grim and masterful old mother was not the far more astute and incredulous Sir William Crookes walking arm in arm with the spirit of a lovely female in his laboratories?

In the summer of 1868 Mrs. Vanderbilt died. The aged and bewildered former hostess of Bellona Hall received a state funeral worthy of a Chicago gangster. Horace Greeley and other notables attended, along with the thirty grandchildren of Sophia and the masterful mate she had never learned to stand up to.

About this time Vanderbilt’s interest in spiritualism led him into an affair with as odd a pair as ever set the gossips cackling in that Age of Innocence. They were Woodhull and Clafin, brokers and bankers, 44 Broad Street, actually Victoria Woodhull and Tennie C. Clafin, two sisters who bore the names of husbands who belonged to other chapters in their checkered lives. After various shady adventures in other pastures they turned up, about the time of the Erie wars, in Wall Street, where, despite their complete ignorance of securities and money, they opened offices as bankers and brokers. What is more, they made a howling success—$750,000 in profit the very first winter.

In the stodgy Manhattan of the ’sixties, when women still simpered and fainted and obeyed their lords, these two handsome and peppery ladies were feminists, suffragists, champions of the single standard and of birth control, stockbrokers professing a mild brand of socialism, and bankers functioning as leaders of labor. They were vanguard persons. In the World of Yesterday they became advance guards for the World of Tomorrow. Victoria announced herself a candidate for the presidency and even wore bobbed hair. Tennie C. was a section leader of the International Workers’ Party and colonel of the Sixty-first Regiment, which she equipped at her own expense and drilled. The sisters published Woodhull & Clafin’s Magazine, a weekly devoted to sex, isms, and scandal. It got them into the toils of the law more than once. But they were also spiritualists, and Victoria was a medium. Since her third year she had specialized in visits from the angels.

And, the old Commodore being a spiritualist and a perfect reservoir of tips on the market, it would have been strange if he had not made his appearance in the role of an angel in the drawing room of the weird sisters in Great Jones Street. Indeed, he became a constant visitor to both Great Jones Street and 44 Broad. The huge earnings of these innocent girls were generally connected with the Commodore’s market clairvoyance. He was an intimate of Tennie C., and rumor had it that no sooner was poor Sophia cold in her splendid tomb than the amorous septuagenarian began making passes at Tennie. How far he got with that exploit must remain a subject of speculation. But he soon abandoned that chase and disappeared one day from his accustomed haunts. When he returned some days later it was to bring to No. 10 Washington Street, as its mistress, the young lady with whom he had eloped to Ottawa. She was Miss Frank C. Crawford, a tall, good-looking, and dignified Southern girl, about the age of his older grandchildren. It was a jolting blow to his family. But not one of them ever dared to lift so much as an eye in reproach to this imperious old householder on this or any other point. As for Victoria and Tennie C., they shook the dust of New York from their heels soon after. Well supplied with funds they went to England where, as might be supposed, they married men of wealth, Tennie C., now known as Tennessee, becoming Lady Cooke and Marchioness of Montserrat.

Commodore Vanderbilt died at No. 10 Washington Square on January 4, 1877, a little short of his eighty-third year. The great engine, subjected to excessive mileage, ran down. The deathbed scenario might have served for the passing of a bishop. The children and their spouses, the preacher, the doctors, and the new wife and grandchildren stood around and sang about old Daniel Drew’s Lord. The Commodore’s last words, so an admiring world was told, were: “I’ll never let go my trust in Jesus.”

During the later years of his life he had been profoundly concerned about one form of immortality—the immortality of the great name of Vanderbilt. He had erected a terminal station in lower Greenwich Village and adorned its façade with a $250,000 entablature—a bronze monstrosity of which the central figure was a statue of himself. He meditated deeply about his dynasty, and the empire of which the Central was the mother state. He was worth $105,000,000. He determined that this majestic pile of wealth should not be dissipated by his descendants whom the Commodore never rated very highly. William H. Vanderbilt, his son, who was managing his railroad properties, had won the old man’s respect. He therefore left to him property valued at $90,000,000, while among all the others he divided the remaining $15,000,000. To Cornelius, his wayward son, he left only the interest on a $200,000 trust fund.

William H. Vanderbilt expanded this empire to a point where, before his death, he confided to a friend that he was worth $194,000,000. He, in his turn, but less severely than his father, left half of that to two sons, William K. and Cornelius, and the balance partly directly and partly tied up in a trust to his other six children. The scions of William K. and Cornelius were numerous, but the chief heir was Alfred, who died in 1928, leaving a hundred million. The combined wealth of all the Vanderbilts today is probably as large as it ever was. But its domination of business is far less. Numerous progeny have divided it. And the modern technique of managing vast fortunes has tended toward diversification and diminution of control over any particular enterprise. The Vanderbilt stock in the New York Central does not amount to more than three per cent of the whole. Dynasties have hard going against the erosion of progeny, laws, fate, and the times. And in the Vanderbilt clan itself has arisen no one remotely resembling that remarkable mixture of blood and nerve and gristle and guts and audacity and intolerance, irreverence and greed, who founded the fortune.

His was the golden era of capitalism. It began to wane a decade before Vanderbilt died. What has followed since has been a capitalist machine very highly complicated by speed mechanisms and governors and brakes that hamper and foul it. Then there was the free economic society—no government regulation, no self-rule in business, no Sherman laws and ICC’s and utility commissions, on the one hand, and no trade-association dominance and cartels, on the other. Competition reigned supreme. The age of machinery had developed far, but manufacturing and farming and commerce were still operated by comparatively small units. There was an abundant mortality list and an equally abundant birth rate in industry yearly. In farming, manufacture, and distribution, the production of wealth and utilities was carried on wholly by independent proprietors. The corporation, the chain store, the holding company, and the vast technological fermentations of the last fifty years had not yet been developed. A man got rich by producing goods and exacting for himself as large a share as he could by making laborers work as long as he could, paying wages as low as possible, and charging as high a price as the traffic would bear, usually powerfully limited by competition. His yield was pure profit, the difference between cost and price. The machine had enabled him to share in the product of a far larger number of men than during the simple handicraft age. But the wealth that individual men accumulated was moderate by present-day standards.

In railroading, the corporation had made its appearance, and there men like Vanderbilt and Gould and Fisk and Scott and, even before them, Daniel Drew were perfecting the mechanism of exploitation of properties through stock manipulations. This was a process that enabled the exploiter to make vast gains that did not come out of the property at all. It did not consist in making railroad profits and lopping off an unreasonable share. The object of the game came to be to lay hold of the savings of other men rather than their expenditures for goods and services, to entice them into stock buying, and by manipulation of the stocks to swindle them out of their savings. This was the technique John Law showed to the world and which came to be the characteristic of wealth getting in the age about to dawn. Daniel Drew did not calculate, as he would say, to grab the profits of the Erie. He was not concerned about the Erie making profits. And it made none. But he made millions just the same, not out of the people who bought passenger and freight service from the road, but out of the investors who tried to buy into its ownership through stocks.

This was a wholly new method of money-making. And when it was finally understood it became possible for men like William H. Vanderbilt, with little or no skill as a capitalist, to make fifty million dollars in a single operation or for Henry H. Rogers and William Rockefeller to make $39,000,000 in a few days in one flyer in Amalgamated Copper.

If there is anything in capitalism worth saving and if there were any who wished to save it, the time to have done so was in those early days when Drew and Gould and Vanderbilt began their experiments in corporate manipulation. From that time on the history of the system has been the invention of one device after another by exploiters to control it for the purpose of exploiting it, the struggle of one group after another to protect themselves from exploitation by further control devices, and the long battle of the government by still other controls to prevent or circumvent the controls of the private groups. The end is the encasement of the system in a framework and tether of constricting chains that are slowly destroying it and that have almost finished their job.

Brown Brothers

HETTY GREEN