Rise and Fall of the Vanderbilt Empire

Cornelius Vanderbilt, at one time the richest man in the U.S.
Cornelius Vanderbilt, at one time the richest man in the U.S.

by Ray Setterfield


January 4, 1877Cornelius Vanderbilt, the first of the “robber barons” and at one time the richest man in America, died on this day. He left $100 million – equivalent to $2.5 billion today – to his son William, who went on to become the richest man in the world.

Cornelius was a descendant of Dutch settlers and was born on Staten Island, New York, in 1794, in what can best be described as humble circumstances. His father was a farmer who made extra money by ferrying produce between Staten Island and Manhattan.

Cornelius, who went to school only occasionally, helped his father on the water, and by the time he was a teenager he was transporting cargo around New York harbour in his own boat, which he had bought with a $100 loan.

In 1817, aged 23, he got a job operating a steamboat but after his employer died, Vanderbilt began his own steamboat operations, buying up competitors and entering untapped markets.

Fiercely aggressive, he undercut the fares of his rivals, forcing some out of business. He was reported to have remarked, “there is no friendship in trade”, but in his 2009 Pulitzer Prize-winning biography, The First Tycoon: The Epic Life of Cornelius Vanderbilt, T.J. Stiles goes further. He describes his subject as “a tough guy, getting into scraps with other men, beating the hell out of them and knocking them unconscious.”

By the mid 1840s Vanderbilt was running more than 100 steamboats, and in 1855 he began a transatlantic steamship business.

This was the Gilded Age, named after the novel of that title written by Mark Twain in 1873, which tells of greedy industrialists and corrupt politicians. The real-life Gilded Age was presided over by entrepreneurs known as “captains of industry” or “robber barons” according to different viewpoints.

What is not disputed is that they grew extremely rich through the monopolies they created in the steel, petroleum, transportation and banking industries. Apart from Vanderbilt, the best known included John D. Rockefeller, Andrew Carnegie, Leland Stanford and J.P. Morgan.

Vanderbilt, having earned the nickname “Commodore”, created the largest shipping empire in the world. But the Civil War was looming and in the 1860s he decided to invest in railways, believing they were the key to uniting America.

It proved to be a shrewd move and by the end of the war Vanderbilt had become the richest man in America with a net worth of over $65 million {nearly $75 billion today).

He purchased railroads in New York, improved the services, cut fares, and reportedly made $25 million. He was the driving force behind Manhattan’s Grand Central Depot, which opened in 1871. The station was replaced by present-day Grand Central Station in 1913.

Before Vanderbilt, a traveller from New York to Chicago had to change trains 17 times. Then the Commodore forced the small operators out of business, built his own lines and consolidated a route between the Atlantic Ocean and the Great Lakes. He carried seven million passengers each year.

At the time of his death in 1877, Vanderbilt’s fortune was valued at $100 million (equal to nearly $2.5 billion today). That was said to be more money than the U.S. Treasury held at the time.

His eldest son William "Billy" Vanderbilt inherited most of it. The Commodore is said to have told him: "Any fool can make a fortune; it takes a man of brains to hold onto it." Billy did more than that. With strong business acumen he doubled his inheritance to nearly $200 million, making him the richest man in the world by 1883.

Billy had no competition when it came to the inheritance. In his 1989 book, Fortune's Children: The Fall of the House of Vanderbilt, descendant Arthur T. Vanderbilt II says: “Despite the Commodore's great success as a businessman and investor, the man was notoriously harsh and rarely trusted his family with his business and money.

“His eight married daughters were ignored since they no longer bore the family name, but, of course, that was just one factor that barred his daughters from taking over the business.

“One time, after a daughter sold her house and asked him to invest the money for her, the Commodore doubled it and then refused to return her money. ‘Women are not fit to have money anyway,’ he said.”

Despite massive wealth, the Commodore always occupied a relatively modest home. Some of his descendants, however, spent the Vanderbilt money lavishly, building grand mansions on Fifth Avenue in New York City, including three massive townhouses called the "Triple Palaces."

They also built luxurious "summer cottages" in Newport, Rhode Island; the palatial Biltmore House in Asheville, North Carolina; and other opulent homes.

The Breakers, built by the Commodore’s grandson Cornelius, as a “summer home” in Newport, is a 70-room mansion completed in 1895. The building became a National Historic Landmark in 1994 and now attracts thousands of visitors every year.

Biltmore, finished in 1895, is a 30,000-acre estate with a 250-room French Renaissance castle. It all took six years to build at a cost of nearly $6 million (about $1.6 billion today). Now a tourist attraction, it is the largest privately owned home in the United States and is still run by Vanderbilt descendants.

Arthur T. Vanderbilt II confessed to “absolute amazement” when he was researching his book and realised just how much money had been earned in two generations of the family – and how quickly much of it was spent by the next two generations.

Within 30 years of the Commodore’s death, he said, the Vanderbilts had fallen off the list of the wealthiest families in the United States, and less than a century later, in 1973, when 120 members of the family came together for a reunion, there wasn't a single millionaire among them.

Published: April 21, 2021


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