Chapter Eighteen


First pride, then the fall. More than a proverb, this formula seems to be a natural law. Readers of fiction, political pundits, and students of the business cycle all know that what goes up eventually reverses course—usually soon after a sense of invulnerability has set in. But there are different kinds of pride, and not all lead to destruction.

A circle of extremely proud men sat atop the railroad industry at the start of 1872: J. Edgar Thomson and Thomas A. Scott of the Pennsylvania, John W. Garrett of the Baltimore & Ohio, Jay Gould of the Erie, James F. Joy of the Michigan Central, Horace F. Clark of the Lake Shore, and, proudest of all, Cornelius Vanderbilt. When the time for a fall arrived, Vanderbilt alone would stand unbent and unbroken—though not uninjured. The key to his survival would be the nature of his pride. It never became complacency, and, great as he was, he paid heed to the world around him.

On January 12, 1872, for example, the Commodore received a delegation of the residents of Fourth Avenue, come to complain about the Harlem Railroad's new Grand Central Depot—or, rather, the increase in rail traffic down the surface of the avenue upon Grand Central's completion. More than a dozen trains a day ran in each direction, leading to fatal accidents. The noise, smoke, and danger of the trains had long been a grievance of uptown residents. Now the New York Times had turned their cause into a crusade. Backed by the Times's daily editorials, they wanted the tracks buried in a tunnel and the train shed of the depot itself sunk below the surface of the avenue.1

A reporter for the New York Herald observed that the Commodore listened “attentively,” and replied that “the great question was as to the best method of carrying out this proposed object.… It would certainly cost a heap of money.” He named $5 million as the likely figure, and stated flatly that the railroad could not afford the entire cost. The owners of the real estate along the avenue shared an economic interest in this matter, he noted; sinking the tracks would increase the value of their lands. “When we get a piece of property, and we want to improve that piece of property, why, let each of us pay our proportion.” (The fall of Tweed, he remarked elsewhere, made such a step possible, for the ring had blocked any such plan without a large payoff.)2

Two weeks later, Vanderbilt presided over a conference with the Citizens' Eastside Association in the offices of Grand Central and presented a plan that he had ordered from J. C. Buckhout, the railroad's chief engineer. It would leave the expensive car house exactly where it was, but sink the tracks below the surface of the avenue, starting at Forty-eighth Street, in an open cut, with overpasses at each intersection “so arranged that horses could not see approaching trains.” At Ninety-seventh Street, where the terrain dropped into the Harlem Flats, a viaduct would run above the streets. Buckhout put the cost at $4 million (not far from Vanderbilt's original guess). The Harlem's directors, Vanderbilt said, “were not wedded to any particular plan, but were ready to adopt that which would be the most feasible, and best adapted to the interests of the community.”

The conferences revealed the Commodore to be as mentally sharp as ever, not to mention politic. Though some on the committee grumbled about not getting everything they wanted, most agreed that the plan he presented was a reasonable compromise.3

Reasonable is a word that historians have rarely linked to the Commodore's name, but it defined his behavior as a railroad leader. He was especially reasonable in his attempts to cooperate with his fellow corporate titans. There was nothing new about that, of course. Adam Smith himself observed in The Wealth of Nations, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public.” As we have seen, formal and informal devices to control competition arose simultaneously with competition itself in American history. Among the railroad trunk lines, these efforts were particularly pronounced, leading to repeated attempts to erect highly structured cartels. Once constructed, railroads were there to stay, even if they went bankrupt. The fights between them could only be settled through takeovers or cooperation—and even the Commodore could not buy up every rival line. Nor did he want to. The companies most likely to slash prices were those in the most desperate condition.4

Vanderbilt, then, naturally grasped an opportunity to cooperate with the Pennsylvania in order to control one of the most lucrative kinds of freight. But the scheme that now unfolded spoke to something larger than the tension between competition and cooperation; it reflected the increasing concentration of power in the American economy. Four companies came together in this plot: the Central, the Pennsylvania, the Erie, and John D. Rockefeller's Standard Oil. Each was a giant in its industry, and Standard Oil was still growing rapidly, gobbling up its rivals. The symbolism of their conspiracy, far more than its actual impact on business, would turn it into one of the most notorious incidents in the rise of corporate capitalism in America.

On December 14, 1871, Vanderbilt was approached by Peter H. Watson, an executive of the Ashtabula & Franklin, a Lake Shore subsidiary that ran to the Pennsylvania oil fields. Watson invited the Commodore into a plan to divide the rail traffic in petroleum. They would do so through a shell corporation, the South Improvement Company (SIC). By far the largest refiner in the SIC would be Standard Oil. The plan had the following components: First, the SIC would provide the cars, pumps, tanks, and other equipment for shipping oil and kerosene. Second, the SIC would receive special rebates (as high as 50 percent) on freight charges. Third, the SIC would receive drawbacks from shipments made by other refiners—that is, a percentage of the money paid by outsiders would go to the SIC. Finally, the SIC's shipments would be split three ways, with 45 percent going to the Pennsylvania and 27.5 percent each to the Erie and the New York Central & Hudson River.5

The Pennsylvania's ingenious vice president, Thomas A. Scott, appears to have concocted the SIC, but it offered Vanderbilt multiple advantages. The provision of tanker cars, for example, would save the Central a great deal of money. Since tanker cars could be used for no other product, they rolled back to Cleveland or the oil region empty, a frustrating expense. The traffic division locked in the Pennsylvania's existing two-to-one advantage, but it also guaranteed the Central's share in the face of Scott's aggressive attempts to control oil shipments. Finally, it would add predictability and stability to the business produced by this rapidly growing and changing industry.

Watson, Rockefeller wrote to his wife on December 15, “saw Com. Vanderbilt last night & succeeded admirably, so that now we count surely on Clark, him, & W. H. Vanderbilt.” This letter is telling: the Commodore conducted the talks without his son's involvement. William later testified that he had had nothing to do with the SIC negotiations, saying, “The contract was made and handed to me to sign.” William had little affection for Rockefeller, who demanded special treatment by the railroads; in 1872, William would complain of the rising titan, “These oil men are sharp fellows & would like us to carry the oil for nothing.” Seven years later, he would be heard to say that he “was disgusted with oil companies and oil men long ago.” Historical caricatures notwithstanding, William struck many businessmen as less diplomatic than his famously imperious father (at this point in the Commodore's career, that is). “He has worked against me in petty ways,” one man had complained of William in 1868, and behaved in a “dirty, contemptible manner.” The superintendent of the Michigan Central would write in 1874, “He is ambitious, headstrong, and our experience shows to some extent unreliable & unfair.” The Central's partners found the Commodore to be much more reasonable.6

The Pennsylvania legislature obediently chartered the SIC, as instructed by Scott. The forty-eight-year-old possessed one of the most brilliant minds of his times. With a head of thick, graying hair and writhing sideburns rather like those of the Commodore, he had a handsome face and large, engaging eyes—and served as mentor to Andrew Carnegie. Contemporaries called this witty, dapper man “Colonel Scott,” in tribute to his service as assistant secretary of war early in the Civil War. The Pennsylvania's president, J. Edgar Thomson, relied heavily on him to craft the railroad's strategy.7

The cooperation between Vanderbilt and Scott was something of a paradox, for they represented contrary models of corporate executive. Vanderbilt exemplified the owner as manager—the amateur, the financier who purchased a majority of the stock and then took charge. By contrast, Scott and Thomson were professional executives who had risen through the ranks on their managerial merits. They owned relatively little stock, and ran the Pennsylvania on behalf of largely passive shareholders. As manager, not owner, Scott pioneered the art of operating through shell companies. With his skillful manipulation of the compliant state legislature, he created corporations for special purposes that were financed by the Pennsylvania but controlled by himself and Thomson. The Central's fast-freight lines were cooperative ventures with connecting lines, for instance, nothing more than management devices for efficient handling of through freight. The Pennsylvania's were distinct corporations, created by Scott, controlled by Scott, and paying dividends to Scott, with some left over for the railroad. Blandly dubbed “transportation” or “improvement” companies, Scott's shell corporations sometimes created managerial efficiencies, but always allowed him to personally control (and siphon money from) vast properties beyond the grasp of any individual stockholder.8

Scott and Vanderbilt forged divergent paths toward the future of the large enterprise in the American economy. Scott, along with Thomson, crafted the seemingly more sophisticated model, erecting holding companies to lease or purchase connecting lines far beyond the borders of Pennsylvania. Under his guidance, the Pennsylvania created a massive self-contained system that sprawled from the Mississippi River to the Atlantic seaboard, from the Great Lakes to the Gulf Coast. But the Commodore moved more cautiously. He pursued cooperation with his connections, and refrained from interfering in his son-in-law Clark's management of the Lake Shore. If Vanderbilt's decentralized strategy seems less advanced, it reflected his ever-astute calculations. He did not wish to alienate important partners, such as the Michigan Central. And he did not want to burden himself or the Central with financially unstable properties. As Scott aggressively acquired line after line, he found it more and more difficult to make them all pay; by contrast, Vanderbilt insulated the Central from the weaknesses of its connections—even from the Lake Shore, which he largely owned.9

Scott possessed great powers of mind, but he suffered from overconfidence. More and more, he began to overreach. Acting on his own account, he joined with his protégé Carnegie in 1871 to seize the Union Pacific in a complex operation, taking over as president. Already overworked, he gave little attention to his new duties. Carnegie quickly sold their shares at a profit, and the stockholders concluded to overthrow their absentee chief. In 1872, Scott began to promote the Texas & Pacific, a planned transcontinental road that increasingly weighed him down with debt and worry10

As for the SIC, it soon collapsed under the weight of public outrage once the terms of its contracts were revealed. At a closed meeting on March 25 with angry refiners, officers of the participating railroads (including Scott and William H. Vanderbilt) abandoned it. The railroad men refused even to let Rockefeller into the room. But Rockefeller would go on with his conquest of the oil industry, and would press the railroads for further privileges and rebates, much to William's annoyance. And the Commodore would continue to look for cooperation with his competitors.

In the ensuing year, observers might wonder how he could harmonize the warring railroads when he could not even control his own house.11

EVERYBODY DIES—just not always in the right order. By all logic, Cornelius Vanderbilt should have gone before any of his many familiars who died in 1872. He turned seventy-eight that year, decades past life expectancy. He had survived fistfights, boiler explosions, a train wreck, heart trouble, Nicaraguan rapids, exposure to tropical diseases, Atlantic storms, and wagon smashes. Yet he endured as those younger than himself passed away. On February 24, LeGrand Lockwood fell dead at fifty-two, still in debt to the Lake Shore. Before that, on January 6, the “porcine carcass” of the thirty-eight-year-old Jim Fisk tumbled down the steps of the Grand Central Hotel, shot by Edward S. Stokes, and died soon after. “I cannot sufficiently give expression to the extent I suffer over the catastrophe,” Jay Gould told the New York Herald. It was, perhaps, more than a coincidence that Gould lost control of the Erie Railway in just two months to an assault led by financier James McHenry. (Two years later, McHenry would recall that he offered control of the Erie to Commodore Vanderbilt, who declined, suggesting Peter H. Watson instead.) Lock-wood and Fisk probably drew little of Vanderbilt's sympathy. In December, he would coldly testify at Stokes's trial, “I had a very bad opinion of Mr. Fisk since I first knew him.”12

But death took friends and family as well as foes. On March 25, Ellen Vanderbilt died of pneumonia in West Hartford.13 The loss of this self-sacrificing young woman struck Vanderbilt to the core. He received the news as he sat in his office at 25 West Fourth Street, talking with J. C. Smith, a railroad contractor. When he first had learned of his son's engagement to Ellen, he told Smith, he had gone to Hartford to meet her. He had taken her out in a carriage and recounted Corneil's many misdeeds. She had replied, “Commodore, isn't some of it your fault? Have you always treated him as you should?” At that, Vanderbilt related, he had looked around and said, “What a beautiful city”—because “he knew the thing was up.”

What a rare burst of reflection, even self-criticism, the death of this young woman induced. It speaks to both the tenderness he felt for his daughter-in-law and the conflicting emotions that his tortured and torturing son aroused in him. On an evening soon after Ellen's death, Vanderbilt told Rev. Syndey A. Corey how he had approached her father, Oliver Williams, before the wedding and pestered him about her possessions. Williams naturally (and indignantly) had asked the reason for such questions. The Commodore had replied, “If your girl has silver and jewelry, and silk and satins, and fine shawls, and my son marries her, he will steal them away from her, pawn them, and gamble away the proceeds.” Williams had said that Vanderbilt was giving his son a bad reputation. “I feel that it is due to your daughter,” Vanderbilt had said. “It can't be as painful to you to hear as it is for me to say it.”14

Corneil had been loosely moored at best since the death of his mother. The loss of his devoted wife set him almost literally adrift. He took up with George Terry, an unmarried hotel keeper whom Corneil considered “my dearest friend.” The intensity of their relationship raises the question of precisely how intimate they were. Corneil once addressed a letter to “my darling George.” On another occasion, he wrote, “Oh! George I cannot give you up. You must not desert me now, but must be brave & patient, and give me encouragement and hope for the future.” In the full context of Corneil's prolific and effusive correspondence, however, such declarations turn out to be less than definitive evidence that their relationship was physical or romantic. It was an era when platonic male friends commonly wrote of their “affection” or “love” for one another—and Corneil was particularly affectionate when he was asking Terry for money. Ellen had known Terry well, and had struggled together with him to save Corneil from his gambling addiction.15

But Terry and Corneil's relationship was certainly intimate. Both men later testified that, after Ellen's death, they became “almost constant companions, sleeping and eating and reading together almost all the time.” In the spring, they departed for the West on a journey that would eventually take them to Japan. On June 25, Corneil wrote to Horace Greeley from Denver. “Having constantly employed myself roaming about the Colorado Country, I find myself much improved in health & my nerves more quiet and composed,” he wrote. “I have just received quite an affectionate letter from the Commodore. He appears to take a deep interest in me just at present & begs me to do everything to regain my health. I have never known him quite so affectionate.”16

This stubborn inconsistency by the Commodore was all too comprehensible. Ever a man who did not suffer fools, Vanderbilt felt impatience and scorn for Corneil's weaknesses; yet he unquestionably loved his son, and never quite gave up hope for him. Better parents than he have suffered contradictory emotions over their children.

It was, perhaps, for his son's sake that he assigned Chauncey M. Depew, the Harlem's attorney, to assist Corneil's patron that year. In one of history's ironies, Greeley ran for president as the nominee of the Liberal Republican Party a breakaway formation of Republicans led by the “best men” who criticized Vanderbilt so fiercely. Depew, like so many who knew Vanderbilt well, recalled that he “took no interest in politics,” but had great fondness for Greeley. “Mr. Greeley has been to see me and is very anxious for you to assist him,” he told Depew. “If you can aid him in any way I wish you would.” Depew obeyed. He helped organize the party in New York and ran for lieutenant governor. It was another point of divergence between the Commodore and William, who very publicly supported Grant in his bid for reelection.17

Vanderbilt's detachment from politics may have been a matter of personal taste, or it may have been a deliberate policy. His interests were constantly in play whenever the state legislature met in Albany, and every positive outcome (from Vanderbilt's perspective) was blamed on the Commodore's corruption. In the spring yet another pro-rata bill appeared, threatening to bar the Central from competitive pricing on through freight (condemned as “discrimination” by those who had to pay local rates). The bill went down to defeat because many believed, probably correctly that it would divert commerce away from New York and into other seaports. Yet accusations of bribery by Vanderbilt as the cause of its demise proliferated.18 Newspapers made the same charges regarding passage of the act that authorized the sinking of the Fourth Avenue tracks (a project known as the “Fourth Avenue Improvement”), because it required the city to pay half the cost. In fact, a serious theory stood behind this provision: the municipality would receive increased property taxes as real estate values rose, and the city as a whole would benefit from the new infrastructure.19

As Vanderbilt had written to Governor E. D. Morgan years before, he wished to avoid entangling his name with anything political, knowing what abuse would ensue. Yet he frequently mingled with political figures who were an integral part of New York's legal and business environment. One of them was Democratic lawyer Samuel J. Tilden, who had played a leading part in Tweed's downfall and would be elected governor in 1874. “I should like to have a little conversation with you,” the Commodore wrote to him on May 20, 1872. “If you will do me the favor to stop at my office at your convenience—or at my house in the evening of any day that may suit you.” The topic was the lease agreement that the Central and New York & New Haven would sign for the use of Grand Central, but the tone of the letter was light and familiar. He concluded, “I am sure the ladies would be pleased to see the light of your countenance once more” (italics in original), revealing that Tilden was a frequent guest at 10 Washington Place. (Tilden reviewed the lease, and sent his corrections to Vanderbilt personally)20

On June 3, Vanderbilt stopped by the Murray Hill home of Horace Clark and encountered Grenville M. Dodge, the former Union general, congressman, and railroad engineer. The Commodore brought up the Central's ongoing dispute with the Internal Revenue Bureau over the tax on the scrip dividend of 1868, discussing it in detail. “He thinks the goverment [sic] has treated him badly” Dodge wrote to President Grant. “He feels the matter keenly.” More interesting was Vanderbilt's attitude toward Grant. Dodge called Vanderbilt

a warm friend of yours.… Says if he should go to you about it at this time it would be misconstrued and he prefers to pay—that he should not do anythg [sic] that could hurt you in the campaign.… My only reason for saying a word is the kindly feeling exhibited towards you by Vanderbilt and Clark and the very evident anxiety of former in the case—and his evident disappointment and surprise at the presnt [sic] action of Government.

This warm regard for Grant and Greeley alike reflected Vanderbilt's striking lack of partisanship—his attention to people, not ideology.21

Dodge mentioned one other telling aspect of this meeting: he met the Commodore at Clark's house by accident. Dodge had come to discuss with Clark an affair of their own—Clark's rise to the presidency of the Union Pacific, in which Dodge was a leading figure. It marked the full emergence of a starkly independent course for Clark—one that would push Vanderbilt to the brink of disaster.22

VANDERBILT'S FAMILY FLOURISHED financially under the arms of the patriarch, and as his offspring and sons-in-law gained strength, they struck out on their own. In 1871, Daniel Torrance had assumed the presidency of the Ohio & Mississippi as a personal project. William involved himself in the management of the Western Union Telegraph Company—perhaps in his father's interest, perhaps in his own.23 In June 1872, grandson Vanderbilt Allen returned from Egypt. He had gone there (in defiance of the Commodore's wishes) to enroll in the army of the Khedive, the Turkish ruler of that principate. He came back to New York as a Commander of the Order of the Mejidie, a recognition of his valor on the Nile, and soon formed a new Wall Street firm with his cousin Samuel Barton. Vanderbilt agreed to give Barton & Allen some of his business, provided they operated strictly on commission, and did not carry stocks or otherwise expose themselves to financial reverses. They agreed.24

Then they reneged. Instead, they followed the call of Augustus Schell, James Banker, and Horace Clark. In 1872, this trio abandoned all caution as they forged ahead with stock market speculations and railroad acquisitions on their own behalf. In February, they launched a bull campaign in Union Pacific stock. On March 6, Clark assumed the railroad's presidency, and brought Banker and Schell onto the board. Aha! the press collectively exclaimed—the rise of Clark shows that the Commodore now has control of the transcontinental railroad, and will divert its traffic onto the Central.25 But no evidence points to Vanderbilt's involvement in the Union Pacific, as some contemporaries observed. “His friends assert that he is not engaged in the many plans set on foot by his ambitious son-in-law,” remarked the New York Herald on March 7. Clark, Schell, and Banker all loaned money to the Union Pacific, but Vanderbilt did not—an important sign, considering how deeply he enmeshed his personal finances with the railroads he controlled. Railroad Gazette pointed out that control of the transcontinental line—a deeply troubled company, far from the classic target of a Vanderbilt takeover—would bring very little benefit to the Commodore's railroads. “The traffic, not large at best, must be pretty well divided before it reaches Chicago even, and a connection a hundred miles long in a State east of Chicago might easily give a more profitable traffic to the Lake Shore or the New York Central than the entire thousand miles of the Union Pacific.”26

Vanderbilt, though, did engage in enterprises outside of his core railroad empire. In 1872, amid a general clamor for rapid transit through Manhattan, he proposed an underground railroad to run from city hall to Grand Central. He secured a charter for the New York City Rapid Transit Company, ordered a survey, prepared estimates of the cost, and finally concluded that it would not be profitable. Before letting the matter drop, he tried to sell the company to the Harlem Railroad. He recused himself from the vote, and the board declined. New York would have to wait for its subway27

His role in this project had been entirely open, casting more doubt on any secret part in so big an affair as the Union Pacific. But Clark benefited from rumors that Vanderbilt was a member of the “Vanderbilt party” as the press called Clark, Schell, and Banker. The trio likely took advantage of their inside knowledge of Vanderbilt's moves on the stock market, for the Commodore often sent Banker handwritten instructions regarding his securities. On February 10, 1872, he wrote, “Wardell will hand you 1,000,000 of dollars worth of [New York Central] scrip. I wish you would have it exchanged in to stock in one certificate of 10,000 shairs in your name & sign it & give it [to] Wardell for me. I will tell you when I sea you the purpose. Let this be confidential.”28

Vanderbilt increasingly expressed concern, perhaps even distress, as Clark struck out on his own. A banker later reported a discussion with Vanderbilt in 1872, in which he mentioned that he needed to see Clark. “Horace isn't up yet—he never gets up till about noon. But, if you want to see him very much, we'll go to his house and get the boy out of bed,” Vanderbilt said. They drove to Murray Hill and, sure enough, Clark had worked late into the night and was still in bed. He hurried downstairs and began to consume an enormous breakfast as the callers watched. Vanderbilt said brusquely, “Horace, you eat too much. You keep bad hours, too. You can't stand it, my boy, strong and healthy as you are. If you don't stop this thing it will certainly kill you. I'd have been dead fifty years ago if I'd lived like you.”29

When summer arrived, William set sail for Europe with his family, but Clark and Augustus Schell followed Vanderbilt to Saratoga, where the Commodore was seen each day on the Congress Hall veranda. “He wears light colored breeches, and a black coat, and a standing collar,” a reporter observed. “He is tall and straight, and white whiskered.” Vanderbilt drove Frank out to watch a medieval tournament, a recent fad. His daughter Ethelinda Allen wrote a warm letter from Newport to Frank, asking about “father's programme for the future.” Would it be a trip to Niagara Falls, “or is he too comfortable to move?” Her question points to how deeply he rooted himself in Saratoga. Each evening he played cards for $5 to $25 a hand. One morning he came down from his room chuckling. He had gone to bed late, he explained to Edwin D. Worcester, and had seen the light on in Clark's room; going in, he found Clark, Schell, and two others playing cards. “What are you playing for?” he asked. “For fun,” Clark answered. “The idea,” Vanderbilt laughed, “of four grown-up men playing cards together at that time of night for fun!”30

Vanderbilt had serious problems that year. While he was at Saratoga, Frank's brother Robert L. Crawford was indicted for attempted murder. On the night of May 24, the police had banged on the door of 10 Washington Place, demanding access to Vanderbilt's stables. His coachman, James Ames, described by the New York Times as a “powerful, stalwart negro,” had reportedly taken (or dragged, according to the Times) a drunk seamstress named Carrie Love into his bedroom in the stables. Vanderbilt himself let the police in, and a wild brawl ensued between Ames and the officers, who finally knocked out Ames and dragged him off. Bizarrely Frank's brother Robert appeared at the police station. Crawford, who was on a visit from Alabama, acted as if Ames were the slave of a Southern planter before the war. “You dare not lock up Commodore Vanderbilt's coachman,” he bellowed. The police finally tossed Crawford into the street, where he lurked until a detective emerged. Crawford produced a revolver and shouted his intention of killing the man. In a confused scuffle, he shot and severely wounded the detective. The initial press reports of the incident may have been exaggerated, since a jury swiftly acquitted Ames. Still, Crawford faced a long fight for exoneration and an eventual lawsuit by his victim.31

When the Commodore returned from Saratoga, he suffered a terrible loss. In October, an epizootic struck New York's forty thousand horses, afflicting them with disease. The New York Herald remarked on “the singular spectacle… of a great city almost at a standstill; of thousands of persons, male and female, young and old, unable to reach their homes after a day of toil except on foot.” Omnibuses, streetcars, carts, and drays sat in the streets, or “were dragged slowly around by horses more dead than alive.” On November 15, thinking the worst had passed, Vanderbilt drove out behind Mountain Boy. Soon afterward the steed fell sick. Worcester came around to the Commodore's stables not much later, and Vanderbilt told him his finest horse was dead. He would rather have given a thousand shares of New York Central, he said sadly, than have that horse die. When Worcester later recounted this remark, William—knowing how much his father valued both money and the Central—could only say, “Whew!”32

The Commodore was in a grim frame of mind, then, when his name began to appear in the newspapers in the ensuing week. Horace Clark and Augustus Schell carried out a corner in Chicago & Northwestern Railroad stock, in alliance with none other than Jay Gould. As with the Union Pacific earlier in the year, the newspapers assumed that Vanderbilt was the mastermind of any operation involving Clark and Schell, and proclaimed a new alliance between Gould and the Commodore. In fact, Vanderbilt had no interest in acquiring the Northwestern, and he would never take part in its management. The linking of his name with the Union Pacific had been bad enough, but to be identified with Gould snapped his temper. On November 26, he dictated a “card” for the newspapers.33

SIR: The recent corner in “Northwestern” has caused some considerable excitement in Wall street, and has called forth much comment from the press. My name has been associated with that of Mr. Jay Gould and others in connection with the speculation, and gross injustice has been done me thereby.

I beg leave, therefore, to say, once and for all, that I have not had, either directly or indirectly, the slightest connection with or interest in the matter. I have had but one business transaction with Mr. Gould in my life. In July 1868, I sold him a lot of stock, for which he paid me, and the privilege of a call for a further lot, which he also settled. Since then I have had nothing to do with him in any way whatever; nor do I mean ever to have, unless it be to defend myself. I have, besides, always advised all my friends to have nothing to do with him in any business transaction. I came to this conclusion after taking particular notice of his countenance. The almost constant parade, therefore, of my name in association with his seems very much like an attempt to mislead the public, to my injury, and, after the publication of this, ignorance or misinformation can no longer be urged as an excuse for continuing this course.

As for Wall Street speculators, I know nothing about them. I do not even see the street three times a year, and no person there has any authority to use my name, or to include me in any speculative operation whatever.


No. 25 West Fourth Street, Nov. 26, 187234

The card shows the emotion and haste in which it was written. The claim that he had had only one “business transaction” with Gould was true only if the definition of a transaction was limited to stock trades, and excluded their relations as railroad presidents. Even then, Vanderbilt neglected the technicality he had insisted on in 1868, that his sale of stock at the end of the Erie War be to Drew and no one else. On the other hand, his denial of any role in speculation rings true; as Worcester would later report, since 1870 Vanderbilt had limited himself to strategic purchases of stock for investment or to control other companies.35 As for his personal opinion of Gould—well, a lot of businessmen didn't like the look of him, let alone trust him.

When asked about the card by a reporter, Vanderbilt said, “The constant association of my name with that of Mr. Gould has injured me greatly.” It made investors reluctant to buy the securities of his railroads, he claimed. He had seen one telegram from England that read, “What is the meaning of Vanderbilt's name being mixed up with Jay Gould's in this affair?” When pressed about Gould, he added:

No man could have such a countenance as his, and still be honest.… I tell you, sir, God Almighty has stamped every man's character upon his face. I read Mr. Gould like an open book the first time I saw him. I did not like to express too strongly an opinion this morning, but if you wish to have it now I will give it to you. You have my authority for stating that I consider Mr. Jay Gould a damned villain. You can't put it too strongly.

As the reporter walked down the stoop into the rain, the Commodore shouted after him, “He is undoubtedly a damned villain, and you can say I said so.”36

Vanderbilt's remarks apparently stung Gould, who proved equally petty. “The poor old Commodore is in his dotage,” he told a reporter. “There is a class of rising financiers whom the old man hates.… While he in his second childhood is uptown amusing himself with his horses, and listening to the flatteries of sporting men, these young business men are rising into financial power which will far exceed the old Commodore's even in his palmiest days.” Gould was wrong, of course. He would never achieve Vanderbilt's power, or even his absolute, unadjusted net worth.37

But this feud drew attention away from what truly made this moment so hurtful, and damaging, for the Commodore. Vanderbilt directed at Gould all the anger and frustration he felt at Clark and Schell's betrayal. The pair went so far as to bail Gould out of jail after he was arrested in a lawsuit at the height of the Northwestern corner. As Railroad Gazette observed, Gould “rarely worked with these men or men of their class, and… was thought to be hardly acceptable in their company”38 Vanderbilt, that student of human nature in the business environment, must have known that this was a very bad sign. Such open defiance of his feelings suggested that Clark, in particular, had begun to think of himself as a great railroad manager and financier in his own right, as he took over the Union Pacific and cornered the Northwestern. As Vanderbilt knew all too well, first pride, then the fall.

ONE BY ONE, VANDERBILT'S old friends passed on. Erastus Corning had died in April 1872. Horace Greeley's wife died at the end of October, swiftly followed by Greeley's defeat in the presidential election and his own demise on November 29. It was publicly disclosed that Corneil owed nearly $46,000 to the editor, on promissory notes that were listed by the auditors of the estate under “items of doubtful value.”39

More and more, Vanderbilt's legacy lingered in his mind as he rolled inexorably toward the same fate. The topic came up when he received a call from a Southern Methodist bishop named Holland N. McTyeire, who was married to a cousin of Frank's. The bishop had traveled to New York for treatment by Dr. William Bodenhamer. The Commodore liked him, and insisted that he stay at 10 Washington Place. McTyeire became a frequent guest. As Frank later wrote, Vanderbilt had high regard for his “noble Christian character & great executive ability”—the latter more important to him than the former, perhaps. Vanderbilt listened closely when McTyeire discussed how the Southern Methodists had received a charter for the Central University to be erected somewhere in Dixie, where the destruction of the Civil War remained all too visible.

McTyeire returned to New York in March 1873, and called at Vanderbilt's home as usual. The Commodore took him aside and said that he would give $500,000 to endow the university. “It was a grateful surprise,” McTyeire later remarked; wisely, he had never asked for any money, let alone such a vast sum as $500,000 represented in 1873. As the Commodore explained, it was his lifelong nationalism, his patriotism, that moved him. “It was a duty” Vanderbilt later quoted himself as saying, “that the North owed to the South, to give some substantial token of reconciliation which would be a benefit, and he wanted to do his individual share by founding an institution.”40

Charles F. Deems testified under oath to hearing similar statements by the Commodore about his motives. Vanderbilt, he said, voiced a fear that “the greatness of his success would give an argument against education and its usefulness; that it had been secretly a life-long regret to him that he was not educated.” But a desire to heal the divided nation was most important. “When the Commodore finally announced his purpose to make the gift, he said that he had this in mind during the Rebellion,” Deems reported. “He spent a million of money in sending a vessel against the Southerners to show his views then, and he wanted to give the money after the war was over to show them that the men of the North were ready to extend the olive branch.”41

Characteristically, Vanderbilt entrusted his gift to McTyeire as an individual. In a letter dated March 17, he placed several conditions on his gift: he specified that the university should be located in Nashville (as a major Southern city), and that the bishop should be the president, with the power to veto resolutions by the university board. McTyeire agreed, and the board swiftly accepted. Indeed, the Southern Methodists immediately decided to change the name from Central to Vanderbilt University42

Vanderbilt had another project already under way to establish his legacy: the construction of two additional tracks on the Central between Albany and Buffalo (where its main feeders, the Lake Shore and the North Shore lines, converged). At the time, most railroads had only single-track lines, so even a complete double track was considered a great thing. The Lake Shore was considered an excellent road, yet it had only one track for part of its length. To construct a quadruple track over the distance of some three hundred miles loomed in the public mind as a monumental undertaking. Work began in 1872 through the simple device of extending sidings at various points along the line until they met. By the end of the year, seventy-five miles had been completed. To move the work along faster (and to consolidate existing debt), the New York Central board voted on January 11, 1873, to issue $30 million in bonds, plus another £2 million to be sold in London.43

“I had this design in mind when I went on the road three [sic] years ago,” he told a reporter. “I got our best people together, and submitted a proposition to them. Suppose all the passenger trains were taken off, and the road given up entirely to freight? How much percent on the current expenses could we save in the transportation of freight?” The Central's freight haulage had risen dramatically since the Civil War. Freight receipts had climbed by 72 percent, despite the fact that freight rates had fallen by an average of 8 percent per year. In 1872, 203,351 freight cars passed over the line; in 1873, it would carry east 255 carloads in a single day, the largest total of any railroad to date. Passenger traffic, on the other hand, remained flat. “We have to run freight trains so rapidly to get them out of the way of the passenger trains that we frequently have to run thirty miles an hour,” the Commodore explained. “But it uses up the rolling stock, knocking the cars to pieces without really carrying the freight any faster.” Ten percent was the lowest estimate he received of the savings to be derived from running freight trains on separate tracks; Vanderbilt thought 15 percent.44

“Suppose, now, we should save 15 percent on $15,000,000 freight transportation. That would be $2,250,000,” he lectured. “Now, suppose the new tracks cost $15,000,000, on which we should pay 7 percent, which would be $1,050,000. Now, if our business remained just as it is, the new tracks would give us a saving of $1,200,000 a year.” It is significant that he made his calculations based on the railroad's current business. At the start of 1873, after years of rapid growth, such railroad executives as Scott and Clark banked on continued expansion; the older and wiser Vanderbilt did not. “I hope to seem them laid. I am getting pretty old, but I never had better health than now”45

On April 1, 1873, in a further step to put his empire in order, he leased the Harlem to the New York Central & Hudson River for an annual payment of 8 percent of the par value of its stock, the Harlem's now-customary dividend. It exemplified Vanderbilt's pattern: a slow but inexorable advance from financial control to coordination to centralization of the different components of his realm. Of all the Commodore's railroad vassals, only Clark's Lake Shore still ran its own affairs. As Vanderbilt Allen, Commander of the Order of the Mejidie, could have explained, it occupied a place rather like Egypt in the Ottoman Empire—owing allegiance to the sultan, but functionally independent. Not for long.46

NOW THAT THE CENTRAL had issued £2 million in bonds, they had to be sold to English investors. On March 3, 1873, Vanderbilt gave the job to James Banker. He had confidence in Banker's abilities, of course. He bombarded Banker with personal instructions for the disposition of millions of dollars worth of securities up to the moment of his departure for London. But Vanderbilt may have wished to banish Banker in order to halt the growing stock operations he conducted with Clark and Schell.47

His frustration with Clark in particular only had grown in the weeks following the Northwestern corner. In January, Vanderbilt again found his own name dragged into one of Clark's Wall Street operations, involving Western Union. Trading through George B. Grinnell & Co. (a firm in which Clark was a special partner), Clark's circle bulled the telegraph stock in January and February. That circle included Banker, Augustus and Richard Schell, and George A. Osgood. Osgood, too smart for his own good, told a reporter that “he would not allege that the Commodore was acting as the bone and sinew of the clique, for even if he were, it would not be wise to have the fact published as coming from him.” The journalist reported the conversation to Vanderbilt, who became “indignant.” Leaning back in his chair, the Commodore stretched out his arm and said, “My son, when the gang of stock speculators in Wall Street tell you a story about my connection to any enterprise but New York Central, Hudson, or Harlem, don't believe them. I have all I can do to tend to what I have on hand now, and if I had the Western Union Telegraph line I wouldn't want to be bothered with it.” Vanderbilt was being a bit disingenuous himself; he may have had a large, perhaps even controlling, stake in Western Union, though he did not take part in its management, let alone in this attempted corner. More ominously, he now condemned his own sons-in-law as “the gang of stock speculators.”48

“It is well known that several months ago Commodore Vanderbilt quarreled with his son-in-law, Mr. Horace F. Clark,” the New York Herald reported that spring. “The reason of this was stated to be that the Commodore objected to his relative's speculating in Western [railroad] stock, particularly when they were fancy stocks.”49 This was more than a matter of personal pique. A subtle but profound shift in the economic winds could be felt, especially by so experienced an observer as Vanderbilt. In the judgment of English bankers, American railroads had overexpanded. As Junius S. Morgan wrote to Andrew Carnegie from England that spring, “Our market is at the moment over-supplied with American securities.… On the continent it is still worse.” In London, Banker found it impossible to sell the Central's bonds, a matter of regret to Morgan's son in America, J. P. Morgan, precisely because the future of U.S. railroads looked so doubtful. “The kinds of bonds which I want to be connected with are those which can be recommended without a shadow of doubt, and without the least subsequent anxiety, as to payment of interest,” J. P. Morgan wrote to his father on April 16. “I did feel exceedingly disappointed that we could do nothing with the New York Central.… It would do us all far more good to be connected with such a negotiation, even had the profit been small, than anything I have heard of for a long time.”50

On the day that Morgan wrote these lines, the first tremor of the coming shock hit Wall Street—and it brought down the house of Barton & Allen. A squeeze in the money market led to a panic. When banks called in loans to Samuel Barton and Vanderbilt Allen, they could not pay. They had embroiled themselves too deeply in Clark and Schell's operations, especially in the Union Pacific, and Vanderbilt refused to save them. A reporter for the Herald asked Barton outright whether they were doing business for the Commodore. “None whatever, lately,” he replied. Still, he felt wounded, after the long years in which Vanderbilt had taken a special interest in both himself and Allen. “If Mr. Vanderbilt had stuck by us, we shouldn't have failed,” he said. “But he would not.”51

Vanderbilt's stern refusal to rescue his relatives from their recklessness—which he had warned them against many times—split the clan. Daniel Allen took it personally, and broke off his long relationship with the Commodore. Expectations rose of a reckoning between Vanderbilt and Clark.52 But fate intervened.

On June 19, Clark dropped dead at the age of fifty-eight. He had had heart disease—“rheumatism of the heart,” as the press called it—and, after feeling unwell for some days, suffered a heart attack. On June 22, the Commodore and Frank led a parade of mourners into the Madison Square Presbyterian Church for the funeral, including William and his wife, Augustus Schell and his new spouse (married on March 25, with Clark playing a central role in the Quaker ceremony), and delegations from railroad boards from around the country. Afterward Clark was buried in Woodlawn Cemetery53

Worcester rushed back from a trip to Buffalo for the funeral, and stopped to see Vanderbilt at his office on West Fourth Street. The Commodore told him to get into a carriage, remarking, “This is Mrs. Vanderbilt's coupé, and you must be careful not to soil it with your tobacco juice.” As they drove to Grand Central, Vanderbilt became reflective. “Mr. Worcester, there's one thing you ought to inculcate upon your boys, and that is to be very economical.” The source of his mood was an investigation he had launched into the Lake Shore's books. “Clark was foolish,” Vanderbilt said. “This is a lesson teaching us to take care of ourselves.”54

The full scope of that lesson unfolded over the summer. On July 2, the Lake Shore board (led by Schell and Banker, back from London) formally asked Vanderbilt to assume the presidency. He accepted, naming Amasa Stone as managing director. Though Stone took operational control of the company, the Commodore looked closely into its affairs, even traveling down the line to Toledo to inspect its condition. He voiced admiration of the railroad, and let it be known that he was buying its stock.55

In reality, he discovered that Clark had driven the company to the brink of annihilation. Counting on a continuing economic boom, Clark had gone on a reckless spending binge. As a financial columnist later wrote, “There was not a dollar in the treasury. Contracts for construction, equipment, 20,000 tons steel rail, &c., to the amount of $7,894,845, had been made and the work all commenced, with no provision whatever for meeting the large payments.” Vanderbilt ordered an immediate halt to all construction, canceled all free passes, and ordered a new policy of frugality.56

The huge floating debt, amounting to $6,277,485, particularly worried him. Clark had paid for much of his new construction with high-interest call loans from banks, which could demand repayment at any moment. And to pay the most recent dividend—formally approved under Schell and Banker's direction on June 30, just before Vanderbilt took over—Clark had arranged for a call loan of $1,750,000 from the Union Trust Company, a financial institution in which he, Schell, and Banker were directors. “I am one of those men,” Clark had said shortly before his death, “who believe it is the duty of the managers of a railroad to give to the stockholders each and every year a return.” In following that policy, he had put at risk the Lake Shore itself.57

Worst of all, Vanderbilt discovered that Clark, Schell, and Banker had directly involved the Lake Shore in their stock speculations. The same tightening money market that brought Barton & Allen down had caught them short. Desperate to make good their margins, they, as directors of the Lake Shore, ordered themselves—as directors of the Union Trust—to transfer Lake Shore bonds, held as collateral for loans, to George B. Grinnell & Co. “As the story runs,” the New York Tribune later reported, “when Commodore Vanderbilt became President of the Company he insisted that the transaction on the part of the Executive Committee was improper and illegal, and that the gentleman named should shoulder the load themselves.”58

It took time to sort out such an enormous mess, so Vanderbilt followed his typical seasonal routine. He spent August in his usual haunt in Saratoga, the Congress Hall. There Frank completed her husband's long transformation from “illiterate & boorish” to “honorable and high-toned,” in the words of R. G. Dun & Co. The press summarized this evolution in one remarkable sentence: “Commodore Vanderbilt led off in the opening ball at Saratoga.” In September, he returned to New York and learned of the groundbreaking ceremony for Vanderbilt University in Nashville on September 16.59

On the afternoon of September 18, Vanderbilt drove out behind his fast trotters on his daily race through upper Manhattan. He whipped the team back into his stables at seven o'clock, and went up to his bedroom to change. A maid came up to tell him that a reporter from the New York Herald wished to see him. Vanderbilt received him in his second-floor sitting room, where Fisk and Gould had waited five years before. “Rising from his chair with the dignity of an old courtier, he politely invited the reporter to be seated. He then threw himself back in his capacious easy chair and turned his bright and penetrating eyes upon him,” the reporter wrote. “You have heard today, Mr. Vanderbilt, I suppose,” the journalist asked, “of the Wall Street panic?”

“No. I have only just come in from driving, and it is all news to me; but, after dinner, I shall see what the evening papers say.”

The reporter explained that Jay Cooke & Co., one of the leading financial firms in the country, had fallen, crushed by the weight of millions in unmarketable Northern Pacific securities. It was autumn; the moving of the crops had begun; and the year's tight money market had turned anaconda. House after house had collapsed in Cooke's wake. Vanderbilt said he doubted things were really that bad. The reporter added, “I forgot to tell you… that Mr. Richard Schell has also had to suspend payment.”

That brought Vanderbilt up short. “Well, there was no reason why Schell should have failed—wanted to be too rich too quick I suppose,” he said. He asked if there was a rumor about the Pennsylvania (there was), and fell into thought. The reporter broke the silence by asking about “the cause of the rottenness in Wall Street.” The Commodore, “giving one of his keen glances over his spectacles and speaking deliberately,” delivered an astute impromptu lecture.

I'll tell you what's the matter—people undertake to do about four times as much business as they can legitimately undertake.… There are a great many worthless railroads started in this country without any means to carry them through. Respectable banking houses in New York, so called, make themselves agents for sale of the bonds of the railroads in question and give a kind of moral guarantee of their genuineness. The bonds soon reach Europe and the markets of their commercial centres, from the character of the endorsers, are soon flooded with them.…

When I have some money I buy railroad stock or something else, but I don't buy on credit. I pay for what I get. People who live too much on credit generally get brought up with a round turn in the long run. The Wall street averages ruin many a man there, and is like faro.60

Vanderbilt was clearly focused as he faced the greatest financial disaster of the century. He would need all his wits to survive.

“Vanderbilt is the only man who can come to our rescue and reestablish confidence,” a broker remarked that evening. “I hope from the bottom of my heart that he will come down tomorrow, as he did on the occasion of Black Friday.… At the present moment there is a similar fight going on to break Vanderbilt's stocks—Lake Shore, New York Central, and Western Union.” The failure of Richard Schell, long associated with the Commodore, gave the downward plunge added momentum. Almost instantly, New York Central dropped from 99½ to 94¾, Harlem from 126½ to 125, Lake Shore from 90½ to 86, Western Union from 88½ to 78. And they kept falling. Two days later, they would hit 89, 85, 79½, and 55¼ respectively. An enormous percentage of Vanderbilt's net worth evaporated. As of October 15, the New York Central's market value would shrink from its pre-panic level by $19 million, the Lake Shore's by $17.5 million, and Western Union's by $16.5 million.61

The crisis soon found its center in the Union Trust Company, the financial agent of Vanderbilt's railroads. Like other banks, it suffered a run—a sudden rush of depositors who demanded their money—which forced it to close its doors. Its president was in Europe and its secretary disappeared with an undetermined amount of cash. The bank's trustees called in the $1.75 million loan to the Lake Shore. But Vanderbilt and Amasa Stone had not had time to restore the railroad's finances, and it could not pay. The disastrous entanglements that Clark, Schell, and Banker had arranged between the Union Trust and the Lake Shore threatened both companies with bankruptcy.62 If either went down, it would drag still more firms and financiers into failure, exacerbating the panic. The result might ruin Vanderbilt himself.

In one of the most painful moments of the Commodore's life, he faced the full repercussions of the greed—the treachery—of three of his most trusted lieutenants. In righteous fury, he forced them to face the consequences, demanding that Banker, Schell, and Clark's estate put in personal notes to repay the advances made to them against Lake Shore securities. Banker and Schell knew it was nearly impossible for them to pay, and Clark's brokerage house, George B. Grinnell & Co., went bankrupt. But the real problem was the $1.75 million that the Lake Shore owed the Union Trust.

Outside the Union Trust's locked doors, Wall Street chattered nervously about the consequences if it should fail. Inside, its trustees anxiously reviewed the books. On September 20, the Commodore went in person to the bank's office, the Herald reported, “looking as placid and complacent, and smoking his cigar with as much nonchalance as though Central was being quoted at 200.… He and Mr. Worcester, the treasurer of the Central road, and several of the directors of the company were closeted together during the forenoon.” The bank's trustees (including former Central director John V. L. Pruyn) had long left its affairs in the hands of Vanderbilt's lieutenants. Now they demanded that Vanderbilt personally pay the Lake Shore's debt. Pruyn—who was so distressed that he appears to have suffered a heart attack a few days later—was especially angry with the Commodore. But Vanderbilt declined to pay. He may have done that as a matter of principle, for he certainly was not individually responsible for the debt; but his refusal also may have been a sign of the precarious state of his own finances.63

On September 21, President Grant arrived in New York to assess the crisis. He set himself up in room 19 of the Fifth Avenue Hotel, where Wall Street's leaders begged him to inject liquidity into the markets by ordering the Treasury to issue the greenbacks it held in reserve. Vanderbilt sent up his card. He was conducted into room 19, where he made his own proposal. “I offered to extend relief to the financial community to the extent of $10,000,000,” the Commodore related afterward. “I offered it in this way—to give $10,000,000 in as good securities as the government could give, provided the government would give $30,000,000.” He suggested, in essence, a version of the open-market operations that the later Federal Reserve would conduct on a daily basis, in which it would fine-tune the supply of cash by buying and selling federal bonds. Grant turned down Vanderbilt's specific plan, but Treasury Secretary William A. Richardson did initiate a policy of buying bonds to nearly the amount he suggested. “I do not know what to say about the future,” Vanderbilt said that night. “You say you newspaper people are in the dark yet, and don't know what to say about the result of all this panic. I am in the same state of doubt myself. I haven't the remotest idea of what the result will be. At present the outlook is very, very gloomy indeed.”64

This public pessimism reveals how deeply the Panic of 1873 worried Vanderbilt. He had guarded his words all his life, knowing the impact they would have on friends, enemies, and the markets. Often he made a great show of unconcern, as on Black Friday in 1869 or during his recent visit to the Union Trust. But now there would be no fooling anyone about how bad the situation had become. The stock exchange shut its doors for ten days in a desperate attempt to halt the frenzy of fear. But the impact soon was felt far beyond Wall Street. “Factories and employers throughout the country are discharging hands, working half time, or reducing wages,” George Templeton Strong wrote in his diary on October 27. “There is a prospect of a hard, blue winter.”

The Panic of 1873 started one of the longest depressions in American history—sixty-five straight months of economic contraction. In the next year, half of America's iron mills would close; by 1876, more than half of the railroads would go bankrupt. Unemployment, hunger, and homeless-ness blighted the nation. “In the winter of 1873–74, cities from Boston to Chicago witnessed massive demonstrations demanding that authorities ease the economic crisis,” Eric Foner writes. The irony is that the fall was far more severe because of the rapid rise of the previous decade. The expanding, increasingly efficient railroad network had created a truly national market. The fates of farmers, workers, merchants, and industrialists across the landscape were tied together as never before. New York had cast its financial net across the country, which meant that credit flowed to remote regions far more easily than before—but also that financial panics affected the entire nation. As Vanderbilt pointed out, railroad overbuilding was an underlying economic problem, and it was exacerbated by Wall Street's craze for railway securities. When the bubble burst, the consequences were felt across the country with devastating suddenness and severity65

Even worse, the long boom had brought hundreds of thousands of workers into the industrial workforce without giving them any kind of cushion against a downturn. Even before the Panic, many had lived miserable lives. In New York, twenty-five thousand ironworkers lived close to their riverside foundries; lacking sufficient income to commute from healthier locations, they and their families jammed into the tenements that made Manhattan infamous. “Admixed with foundries and factories were reeking gasworks, putrid slaughterhouses, malodorous railyards, rotting wharves, and stinking manure piles,” write two historians of New York, “which gave the working-class quarters their distinctively fetid quality” Diseases such as cholera swept Five Points, Corlears Hook, and other impoverished neighborhoods, leading to death rates as high as 195 out of every thousand. The closing of factory doors and slashing of wages in the Panic made a bad situation impossible for many. A “Work or Bread” movement swept the working poor; it would culminate in a protest by seven thousand unemployed workers in Tompkins Square in New York on January 13, 1874. The police broke it up with ruthless force. Homeless and hopeless, many of the unemployed took to the road, giving birth to a new creature on the American landscape: the tramp.66

The tidal wave threatened to engulf even the mightiest of the mighty: the Pennsylvania Railroad and its gifted managers. After a period of rapid expansion, the railroad had accumulated a floating debt of $16 million, with a cash balance of only $4.4 million. J. Edgar Thomson personally made advances to save the company, but he himself was overextended. The disaster ruined his friendship with Scott, who was embroiled in the troubled Texas & Pacific. Scott's protégé Carnegie refused to help Scott, accusing him of “having acted upon his faith in his guiding star, instead of sound discretion.” Many businessmen were guilty of just that crime in 1873.67

The storm swept away many of those closest to the Commodore. His son-in-law Osgood went bankrupt and was expelled from the Union Club. James Banker failed to pay his debts, amounting to some $750,000; Vanderbilt covered them (lest they drag the Lake Shore and the Union Trust down farther), in return for Banker's Fifth Avenue home and other real estate that would have brought $1.5 million in ordinary times. On October 27, Banker resigned the vice presidency of the Bank of New York in disgrace. Augustus Schell felt certain that he, too, would go under. Years later, Chauncey Depew would remember how he walked out the door of the Union Trust with Schell, who “had his hat over his eyes, and his head was buried in the upturned collar of his coat.” As they walked past Trinity Church, Schell said, “Mr. Depew, after being a rich man for over forty years, it is hard to walk under a poor man's hat.”68

In this deluge, it was all Vanderbilt could do to survive. The trustees of the Union Trust talked openly of forcing the Lake Shore into receivership. If that happened, it might start a chain reaction that would have potentially dire consequences for Vanderbilt's empire. Even though the Lake Shore was a separate corporation from the New York Central, both were strongly identified with the person of the Commodore. Should he fail to rescue the Lake Shore, the value of his other shares would sink still lower. Even worse, the Central's credit would likely suffer. Even a highly profitable railroad needed to borrow money on a regular basis to cover its immense expenses; if the Central found itself unable to sell its bonds, it might have to curtail operations, suspend dividends, and skip interest payments, spinning into a self-feeding cycle.

But the Union Trust needed Vanderbilt. For all the trustees' bluster, they knew as well as he did that bankrupting the Lake Shore would accelerate the economy's decline and gain them little in return. In the end, only Vanderbilt could save them, and only they could save Vanderbilt. The Commodore saw his leverage. He applied all his force on that point, patiently negotiating as the weeks went by, waiting for the emotional tide of fear to subside. On October 24, he finally convinced the trustees to accept the railroad's notes, maturing at three, six, and nine months, to settle the loan.

There was a catch: the trustees insisted that Vanderbilt himself be responsible for repayment. Even now, after decades of economic growth and increasing financial sophistication, this one man towered above Wall Street as America's financial prince. For Vanderbilt, it was a test of his faith in his ability to save the Lake Shore. He agreed, putting up his personal Harlem shares as collateral for the railroad's notes.69

In Lake Shore board meetings, the Commodore insisted that Clark's estate and Augustus Schell settle their debts to the railroad, amounting to $1 million. Vanderbilt personally negotiated the terms, and secured full repayment over the next few months. (Because of these arrangements, Schell avoided bankruptcy) And Vanderbilt loaned more than $1 million out of his own accounts to see the Lake Shore through its crisis. On April 18, 1874, the railroad paid off the last of its notes to the Union Trust.70

“Between the panic of September and the quieter days of January 1874, the Lake Shore Company was lifted over all its embarrassments, protected in all its obligations, by the strength of one man, cajoled at eighty years of age into taking the management of a road largely involved by extravagant outlays for construction,” Railroad Gazette reflected. “At one time $6,000,000 of Mr. Vanderbilt's own private fortune in Harlem and New York Central stock was pledged for debts of the Lake Shore road. True, the road was one which could and did repay him; but his wealth was the only thing which enabled him to save it from going to protest.” It was an accomplishment that said everything about Vanderbilt's negotiating skills and iron nerve. Impromptu newspaper interviews with the Commodore, comments by those who dealt with him, and the minutes of board meetings show him in full command as others nearly broke down in fear.71

In the aftermath of the Panic, Vanderbilt did more than survive. He laid the foundation for an integrated network of railroads that would become known as the Vanderbilt System. It would emerge slowly, as his empire absorbed lines weakened by the depression. William would carry the scheme to completion, but there can be little doubt that the Commodore himself envisioned it. In 1874, for example, he would develop a plan—without William's knowledge—to lease the Lake Shore to the New York Central; though the lease was never concluded, it spoke to his independent conclusion that his railroads required integration.72

He also decided to take an active role in the management of Western Union, in which he was reputed to hold a large, even controlling, share. On October 8, he, William, and Edwin D. Worcester entered the telegraph company's board. The executive committee now consisted of Vanderbilt, Worcester, Frank Work, Augustus Schell, William K. Thorn, and the not-yet-bankrupt James Banker (along with Alonzo B. Cornell, Harrison Durkee, Norvin Green, Joseph Harker, and William Orton, who remained as president). William, interestingly, did not go into the executive committee. The synchronization of the Panic with Vanderbilt's election to the Western Union board may have been more than a coincidence. If the Commodore took real estate from Banker in return for paying his debts, then he likely took stock as well—and Banker had been speculating heavily in Western Union. It may have been Vanderbilt's followers' foolishness that made him a leading force in the telegraph monopoly73

Vanderbilt turned eighty on May 27, 1874. After amassing the greatest personal fortune in American history, he had protected it against the greatest financial crisis in American history. Now, at last, he could take on the role he had long envisioned for himself—letting his son and Amasa Stone serve as his prime ministers as he sat back on his throne, an attentive but retiring emperor. Of course, it was never quite that simple.

“THE GRANGER MOVEMENT?” Vanderbilt asked. “What the devil is that?”

The Commodore sat in his office at 25 West Fourth Street, with only Lambert Wardell standing guard outside. It was a September afternoon just a week before the Panic. He spoke to a reporter, who found him “looking strong and healthy enough to drive bears in Central down to the lowest point of despair, and seemed to be clear-headed enough, after all the summer at Saratoga.” As usual, Vanderbilt had a cigar in his mouth and carpet slippers on his feet, wearing a linen jacket and gray pants as he leaned back in his armchair and threw a foot up on the table in front of him.

“The farmers' movement out west,” the reporter said. He had come to ask for the Commodore's opinion of the Grangers, and was surprised at his ignorance.

“Well, I don't know anything about it. Haven't paid any attention to it.” The reporter explained that the movement—formally called the Patrons of Husbandry, which sprouted thousands of lodges, or “granges,” in the Mississippi Valley in 1873—had arisen against the railroads. “They complain generally of high and exacting tariffs, too much special railroad legislation, and of various privileges enjoyed by railroads and used for purposes of extorting unfair prices from the farmers.”

“They do, eh?” the Commodore said, as he tapped the ashes loose from his cigar. “Well, as to special legislation, I agree with them. If they are in favor of making only general railroad laws, I'll be willing to back 'em. Further than that, I don't care what the devil they do. The Central can hold its own.”

“Then pray tell me if prices have been affected by the movement, prices of transportation.”

“I don't know, really. The farmers complain of charges for local transportation or something or other of that sort. But I hardly ever attend closely to railroad matters nowadays. If the farmers are opposed to special legislation, all right. The Central can stand anything the other railroads will. Let 'em give us general railroad legislation, and after that I don't care what they do.”74

At the most trivial level, this interview showed the nearly eighty-year-old Vanderbilt to be alert and engaged, consciously leaving to William and Stone the operational management of his lines. He only concerned himself with strategic and financial matters, as he would in minute detail when the Panic struck days later. But it also demonstrated the limitations of his own understanding of his role, now that he had become the railroad king. Ideological debates made no impression on him. He ignored all aspects of the reporter's description of the Grangers except for the issue of special legislation. And he placed even that point in the context of his competitive relationship with his rivals, rather than a larger philosophical discussion. His words bear repeating: “Further than that, I don't care what the devil they do. The Central can hold its own.” He did not mean that it could hold its own against the Grangers, but against the Erie, the Pennsylvania, or the Baltimore & Ohio.

Vanderbilt dismissed these agrarian radicals with sentiments that had themselves been radical back in his youth. In his formative years, competition had been the stuff of individualism, the egalitarian battle cry. The Jacksonians had seen strong government as the bodyguard of the “aristocrats,” as the creator of “special privileges” for the wealthy, best seen in state-chartered corporations. But two great developments had made antebellum politics obsolete: the rise of the railroads, and the Civil War.

The railroads posed a double, if not triple, conundrum. They could exist only as corporations, since they were too capital intensive, too long-lived, to be personal proprietorships or partnerships. As a result, they made the corporation a fact of life in America, which rendered the Jack-sonian critique of special privileges almost irrelevant. But they remained hotly controversial, thanks to their sheer enormity (on a scale forged by Vanderbilt himself). No other force in society rivaled them. Charles F. Adams Jr. observed in 1869, “It is but a very few years since the existence of a corporation controlling a few millions of dollars was regarded as a subject of grave apprehension, and now this country already contains single organizations which wield a power represented by hundreds of millions.” Railroads virtually monopolized transportation, having eclipsed all forms of domestic water transportation by the 1870s. “Railroads are the greatest and most powerful monopoly on the face of the earth,” one orator said. “They let the public feel their power in the fuel of their kitchens, the bread of their bodies, the material for their houses.” Everything and everyone moved at prices set by the railroads—“a frightening life-or-death power,” as historian Irwin Unger wrote.75

Seemingly omnipotent to the general public, the railroads themselves felt helpless to control rates. As discussed earlier, it was in their interest to take traffic below cost rather than lose it, since such a large percentage of their operating costs remained constant no matter how many trains they ran. This led to ruinous rate wars over “competing points”—cities served by more than one line. Railroads offered rebates to big shippers to attract business, and cut through rates well below those paid on local freight. But what the corporations saw as desperate discounting, western farmers called “discrimination,” as Vanderbilt himself noted. After all, merchants, meatpackers, and millers, not farmers themselves, shipped agricultural products over long distances. And, by separating pricing from distance, rate discrimination represented yet another alarming way in which the corporate system abstracted economic from physical reality. For all these reasons, the Grangers lobbied state legislatures for pro-rata rate regulation.

This lobbying speaks to the second great development of the era: the Civil War, which broke the tradition of a weak and passive government. Wartime necessity is the great centralizer of power and sire of a strong state. Soon after the conflict began, a quick succession of laws had embroiled federal authorities in the national economy. They included the Legal Tender Act, the National Bank Act, the chartering of the Union Pacific, the income tax, the creation of the Secret Service. The war created a new paradigm in the American mind: the notion that an active government could serve as a counterweight to the railroads and other large corporations. Of course, an alert historian of public policy will be quick to note the many ways in which antebellum government didintervene in the economy, from agricultural inspections to patent regulation. But what was new was a willingness among radicals to have government intervene against capital on behalf of farmers and labor—to redress the balance of power between corporations and the rest of society.

“We hold that a State cannot create a corporation that it cannot thereafter control,” a council of Missouri Grangers declared. Some went even further: “The time would come when the management of the roads must fall into the hands of the public—of the States,” one radical suggested.76And the Grangers were only one element in an emerging correlation of forces. The labor movement, for example, pushed hard for legal limits on working hours. In May 1872, some 100,000 laborers in New York—two-thirds of the city's industrial workforce—went on strike for eight weeks to demand an eight-hour day. And the populist Greenback Party arose in defense of the most basic federal intervention in the economy—legal-tender paper money77 Vanderbilt's laissez-faire beliefs had morphed from radical to conservative without him even noticing.

Yet the American economic mentality was not a ship at sea, turning in a body in one direction or another. It was more like the ocean itself, in which the new radicals comprised one of many currents. As we have seen, the liberals—an intellectual elite with their own agenda—criticized both large corporations and government activism. Where Jacksonians had resisted state action in order to preserve the equality of the common man, the liberals did so out of fear that an ignorant electorate and uncultured titans would violate immutable economic laws. Human beings were corrupt, they thought, so when human beings meddled with the natural forces of trade they inevitably wrought harm, whether in stock watering by overlords such as Vanderbilt or the issuing of paper money by Congress to please western farmers.

The liberals were not simply “the ideological vanguard of the city's economic elite,” as historian Sven Beckert suggests. The liberals believed the market would solve all problems; many financiers did not. Though most wealthy New Yorkers did indeed want a return to the gold standard, Richard Schell argued that it defied economic reality “I cannot get it through my head,” he said, “that a great country like this should take for the basis of her wealth a commodity of which there are only eleven hundred millions worth in the world.” (Many economists would eventually come to the same conclusion; John Maynard Keynes would famously call the gold standard a “barbarous relic”) And ruinous competition among the railroads transformed even the Commodore—the fiercest competitor of all—into an advocate of cartels. Over the coming decades, J. P. Morgan would make his mark on history by taming competition through financial coordination of rival companies. The corporate chieftains did lobby to keep government from regulating their industries, but they also imposed private regulation of their own making to tame the market in the name of stability and profit.78

As Vanderbilt entered his final years, it was not at all clear how these contradictory currents would resolve themselves into the new mainstream. The liberals won some battles, such as a return to the gold standard and civil-service reform (starting in 1878), which would slowly eliminate the spoils system. Agrarian radicals secured both “Granger laws” in western states that regulated railroad rates and the Bland-Allison silver act of 1878 (which expanded the money supply by adding silver). The Interstate Commerce Commission came in 1887, and the Sherman Antitrust Act in 1890. The courts, though, struggled with the implications of the changing economy. The Supreme Court allowed state regulation of the railroads in 1877, but hesitated to fully endorse the corporation's nature as a legal person. In the railroad tax cases of 1882, for example, the justices “looked through the corporation and saw the property of the shareholders,” in the words of Gregory A. Mark. It took another four years until, in Santa Clara County v. Southern Pacific Railroad, the high court ruled that corporations were entitled to the same rights as natural persons under the Fourteenth Amendment.79

And yet, even before the Commodore's death it was clear that the forces he had helped to put in motion were remaking the economic, political, social, and cultural landscape of the United States. There was the transparently obvious: the dramatically improved transportation facilities that allowed Americans to fill in the continent; the creation of enormous wealth in new business enterprises; and the railroads' economic integration of the nation, bringing distant farms, ranches, mines, workshops, and factories into a single market, one that both lowered prices and dislocated older communities. (The new availability of western foodstuffs, for example, uprooted New England farmers.) And there was the less obvious, such as the emergence of a new political matrix in which Americans struggled to balance the wealth, productivity, and mobility wrought by the railroads and other industries with their anxiety over the concentration of vast economic power in the hands of a few gigantic corporations. Though government regulation would emerge slowly and fitfully—fiercely opposed by many—it would take its place at the center of politics in the decades ahead.

Still more subtle, and perhaps more profound, was a broad cultural shift as big business infused American life. An institutional, bureaucratic, managed quality entered into daily existence—what scholar Alan Trachtenberg calls the “incorporation of America,” a cultural dimension of “managerial revolution” or “visible hand” that business historian Alfred D. Chandler Jr. identified. More and more, the national impinged upon the local, the institutional upon the individual, the industrial upon the artisanal, the mechanical upon the natural. Even time turned to a corporate beat. Time had always varied from town to town, or even by household; the young Jay Gould, for example, had helped families determine when the sun was at its height so they could set their clocks to noon. But the sun proved inconvenient for the schedules of nation-girdling railways. In 1883, writes Trachtenberg, these “distinct private universes of time” vanished when the railroads, “by joint decision, placed the country—without act of Congress, President, or the courts—under a scheme of four ‘standard time zones.’”

By the end of the century, the industrial, corporate economy would color the answers to many of life's basic questions: Where to work? What to buy? From whom to borrow? How to go from here to there? The impact of big business would even be seen in Americans' choice of heroes, particularly the mythologization of Jesse James as an avenger of the small farmer against banks and railroads. In reality, he cast himself as a Confederate avenger against the victorious Union—but the wider nation wanted a champion of the individual against the faceless institution, and so it drafted James.80

In 1873, the railroads were the vanguard of these changes. They comprised by far the biggest industry, and boasted by far the largest corporations. At their forefront stood Cornelius Vanderbilt, child of the eighteenth century, master of the nineteenth, maker of the centuries to come. He never ceased to strive to rationalize his businesses, or to foster cooperation with his rivals. But he could not escape the legacy of the past, or the realities of economics. The irony is that the railroads suffered severely after the Panic of 1873 precisely because of the laissez-faire policies and culture that Vanderbilt himself had championed throughout his life. With the economy in shambles, railway companies battled each other ruthlessly to capture whatever traffic they could, sending prices spiraling downward. As the Commodore faced his final years, his empire fought to survive. Success would depend on how well he had constructed it.

VANDERBILT WAS A HARD MAN. Testifying in 1877, Edwin D. Worcester remembered many instances over the previous three years in which the Commodore had been brusque. He often said about his son Corneil, “He's a very smart fellow, but he has a cog out.” But then, Worcester added, “I have heard him use that expression of ‘having a cog out’ about almost every man he knew, at some time or other.” On another occasion after the Panic, Vanderbilt was sitting with Worcester in the offices at the Grand Central Depot when a Catholic priest walked in and returned $20 “which somebody had obtained wrongfully from the road.” Vanderbilt handed the money to Worcester and instructed him to deposit it in the proper account. The priest lingered and talked about the poverty of his church; Worcester thought to himself that a reward of $10 might be in order, but the Commodore sat silent. Finally the priest left, and Vanderbilt said, “There's considerable good in religion after all.”81

The Commodore was also more complex and contradictory than he has often been portrayed. This could be seen in December 1873, when George Terry called on him to ask for a loan to fund a new business in Toledo. Vanderbilt blamed Corneil's friends for exacerbating his weaknesses, and no friend was closer to him than Terry. Vanderbilt may have suspected that Terry was Corneil's lover; certainly he would have seen no particular reason to like him. But Vanderbilt patiently read through Terry's references, then looked up and asked, “Mr. Terry, if you go to Toledo, what will become of Corneil?” Terry suggested that Vanderbilt give his son a job. “He said that he must not be in too much of a hurry,” Terry recalled, “and that everything would be right for him by and by”82

To the end, Corneil aroused conflicting feelings that Vanderbilt never resolved. “He said that if Cornelius J. had a little more sense he might be fit for business; if a little less, he could be put into a lunatic asylum out of harm's way, where he sometimes thought he properly belonged,” Bishop McTyeire said later. “The Commodore spoke sadly of him, and thought he was not fully responsible for his actions.” Then would come another bad debt, and Vanderbilt would flare in anger. Sydney Corey was at 10 Washington Place when a letter arrived, demanding payment for one of Corneil's bad checks, “which he read with expressions of disgust,” Corey recalled. “He called his secretary, and dictated to him this letter in reply: ‘DEAR SIR:… In reply I beg to say that there is a crazy fellow roaming over the land calling himself Cornelius J. Vanderbilt. If he has come in contact with you, don't trust him.’”83

On August 25, 1874, Corneil composed a bitter letter to his father. “One year ago I assured you that thereafter I should strive to do exactly right.… I told you, in fact, that I was determined to please you, and if I did not the fault should be yours, not mine,” he wrote. But it was not so much his father's disapproval that upset Corneil as the elevation of William. “You have two sons,” he continued, in his wordy style.

Does the fact of your ostensible faith in the judgment, intelligence, and ability of your son William justify the conclusion that the combined intellect of your remaining children sinks to insignificance before his superior attainments, and does it preclude you from displaying a little hope over the reinvigorated intellect of your younger son, and tendering him a bit of charity in consideration of the sickness and disease that temporarily impaired his usefulness in times gone by?84

With each lie, each bad check, the Commodore's frustration grew. By May 1875, their alienation had grown to the point that Corneil would try to get a job on the New York Central for a friend of his by asking for help from Thurlow Weed. He knew that Weed had greater influence with his father or brother than he had.85

Cool and collected in business, Vanderbilt in his eighties often flared at his family, William included. A reporter later testified that, in 1874 or 1875, he made an unscheduled call on the Commodore—as so many reporters did—to ask about a rumor involving New York Central. The reporter said that he had spoken to William already, and repeated William's comments. “The Commodore got up angrily,” the witness said. “Billy Billy, he always tells more than he knows,” Vanderbilt snapped.86

Despite such outbursts, Vanderbilt respected his son's abilities and relied on them heavily. As Wardell recalled, Vanderbilt “detested details,” and relished his leisure hours as he passed into his ninth decade.87 Vanderbilt and William must be viewed as a team, one that the father deliberately crafted. He had long intended for William to carry on the empire and perpetuate the family name, as reflected in the long history of his will, which changed little over the decades. William was, and always had been, the designated heir.

Charles A. Rapallo, Vanderbilt's longtime lawyer and a justice of the New York Court of Appeals since 1870, would attest that the Commodore drafted his final will on July 14, 1868. It was modified on January 9, 1870, to incorporate his prenuptial agreement with Frank, and amended again on January 16, 1874, to give Frank the use of 10 Washington Place for the rest of her life. Under its terms, Frank, Phebe Cross, Emily Thorn, Sophia Torrance, and Mary La Bau each would receive bonds with a face value of $500,000; Catherine Lafitte would receive the interest from $500,000 worth of bonds; Ethelinda Allen, the interest of $400,000; Eliza Osgood, the interest of $300,000; Cornelius J., the interest of $200,000. Frank also would get two thousand New York Central shares.88

In the 1870s, these were all vast sums. At the time, a skilled worker in New York might earn $400 to $600 per year—far less than 6 percent interest on $200,000 worth of bonds.89 But these figures were dwarfed by the unspecified “residue” left to William. In the Commodore's mind, he was not rewarding one child at the expense of the others, but taking a necessary step to preserve what he had built. Henry N. Phillips remembered how Vanderbilt told him in the summer of 1874, “I have not been fool enough to get this thing together to have it scattered when I am gone. Not a single share will go upon the market after my death.” At Saratoga in 1875, Vanderbilt said, “Harry, a million or two is as much as anyone ought to have.” Phillips joked that there was an easy way to get rid of his excess money. “No, there ain't,” Vanderbilt replied, “for what you have got isn't worth anything unless you have got the power; and if you give away the surplus you give away the control.” Vanderbilt looked beyond his son to build a foundation for the dynasty's third generation, by assigning tens of thousands of Harlem and Central shares to William's four sons, Cornelius, William K., George W, and Frederick W. He also brought William K. onto the Central board in place of the disgraced James Banker.90

The public recognized William H. Vanderbilt as the heir, and he assumed a place of distinction in aristocratic, fashionable circles well before his father's death. He joined the American Geographical Society of New York. He purchased expensive fine art, from European paintings to Japanese vases. He sent his sons to Yale and other leading universities. He rented expensive pews at the Episcopalian Church of St. Bartholemew. He went on the board of the company created to build the Brooklyn Bridge. When his son William K. married Alva Smith at a fashionable church in Murray Hill on April 25, 1875, the New York Sun proclaimed it “certainly the grandest wedding witnessed in this city for many years.… The blockade of carriages was immense, the line extending for twelve blocks north and south. The church presented an uncommonly brilliant scene.” The Commodore and Frank attended, as did a roster of the city's elite, filling the guest book with such lofty names as Lorillard, Peabody, Cutting, and Morgan.91

As the Commodore intended, his son and grandsons moved smoothly toward the assumption of his throne. In June 1874, after Amasa Stone stepped down as managing director of the Lake Shore, Vanderbilt made William the vice president and operational manager of the railroad, just as he was on the Central. He did so “that in the event of his (the Commodore's) death Billy might succeed him without election,” recalled Edwin D. Worcester. “This means a great deal, and I am afraid a great deal to our disadvantage,” the superintendent of the Michigan Central wrote to James F. Joy. “He [William H. Vanderbilt] is ambitious, headstrong, and our experience shows to some extent unreliable & unfair.” He feared that William would turn the Vanderbilt railroads into a truly integrated system, leaving the Michigan Central on the outside. The consolidation of the Vanderbilt empire and dynasty went hand in hand.92

William even adopted Vanderbilt's personal project, his eponymous school. Until virtually the moment of his death, the Commodore involved himself closely in the founding of Vanderbilt University. When Bishop McTyeire issued a draft upon Vanderbilt, also in June, the Commodore scolded him for making it “at sight,” meaning payable immediately, and instructed him to make all such drafts “at three days,” lest one arrive when he was out of town and his bankers refuse payment. “I mentioned it at the time to Frank,” he wrote. “As it happened it made no kind of difference as I was on the spot.… My kindest regards to your dear Lady. From hearing Frank talk of her, I have almost got to loving her, so look out!” More substantively, he paid detailed attention to the university's needs, and gave further gifts (with conditions) until his donation amounted to just under $1 million—mirroring his gift of the Vanderbilt to the Union navy, as he had intended. William began to give as well, and traveled to Nashville to inspect the university in September 1875, shortly before it formally opened on October 4. William later wrote to McTyeire, “It is my purpose to execute as far as I am able my Father's wishes.… Among the many things to which he gave thought and care, none was more important to him than the work he hoped would be accomplished by the Vanderbilt University”93

But Vanderbilt's obsession with building a dynasty wounded those who were not a part of his plans. In June 1875, for example, his daughter Emily Thorn and her husband, William, paid a visit to 10 Washington Place before they went on to Newport, the favorite summer resort of the younger generation. William H. Davidge, a onetime president of the Pacific Mail Steamship Company and a good friend of Vanderbilt's, was present. He remarked, “Commodore, you have got some nice grandchildren. I know Thorn's children and I hear about his daughters.” Vanderbilt replied, “Yes, they are nice children, but they are not Vanderbilts.” Emily, clearly upset, said, “Father, they are your grandchildren, nevertheless.” At that, William Thorn recalled, “the old gentleman turned the subject.” The exchange hurt the Thorns. Both vividly recalled it years later. Indeed, it has become an oft-told example of Vanderbilt's misogyny, of his egotistical fascination with his own name, as perhaps it was. But the Commodore may have been deliberately retaliating against his daughter for snubbing Frank after his wedding.94 In any case, it clearly demonstrated how hard a man Vanderbilt could be.

J. EDGAR THOMSON DIED on May 27, 1874, and Thomas Scott assumed the presidency of the Pennsylvania Railroad. The Commodore met with Scott just two days later at a secret conference of the trunk lines at the Windsor Hotel on Fifth Avenue. With a sharp slackening of business in the aftermath of the Panic (and the onset of a depression), a sense of desperation had settled over the railroads, which began to slash rates to attract traffic, any traffic. William managed the Central's rates according to a principle his father had established on taking over the railroad: to follow, in self-defense, the cuts made by other lines, but not to initiate them. The Central had no reason to be the aggressor. With its rich local business in New York State, its cheap-to-operate line with low grades and few curves, and its four-track core between Buffalo and Albany, it found itself in the strongest competitive position of any trunk line. At the time of this conference, it boasted twice the passenger traffic of the Erie and 81 percent more than the Pennsylvania; and, though the Pennsylvania carried 10 percent more freight, the Central earned a significantly larger profit per ton, per mile.95

The conference had been arranged because no business needed cooperation more than the railroads, which could not relocate to escape or accommodate competitors. But the Commodore's character played a role as well. Over the decades, his personality had evolved in parallel with his changing material interests. He had earned his reputation as a ferocious competitor in steamboats, a business notoriously prone to warfare, due to the low start-up costs and the inherent mobility of the physical capital—the steamers—which allowed a proprietor to fight on one route after another. It was also a time in his life when New York's merchant aristocrats derided him as a boorish outsider. After devoting himself to railroads, however, he had consistently pursued peace, seeking industry-wide agreements (though he remained ready to fight when attacked). The transformation reflected the nature of the railroad business, but it also suited his late-life status. The elite now thought of him as an “honorable & high toned” gentleman, precisely the sort of man who sought dignified arrangements, not economic bloodletting.96

Af the end of this conference, though, the executives left the Windsor Hotel as divided as before, and prices fell still farther. “The trunk lines this year have been carrying a heavy traffic at very low rates,” Railroad Gazette would summarize at the end of the 1874. For the efficient and profitable Central, the boost in traffic brought by low rates was not entirely a bad thing. Where other railroads' securities plunged in value, the Central's first-mortage bonds brought a 5 percent premium. But the prevailing prices cut margins to a minimum, so the Commodore and his son continued to seek peace in an attempt to bring order out of chaos.97

That summer Vanderbilt invited the presidents of the trunk lines and other important railroads to another conference, this one in Saratoga. On July 30 they met in his personal quarters. They arrived at a far-reaching agreement known as the Saratoga Compact. They would establish two bodies to regulate the industry's rates and traffic: a Western Bureau, consisting of the major trans-Appalachian companies, and a Trunk Line Commission for the East. The two boards would set rates, settle disagreements, and banish the costly use of commission agents, rebates, and drawbacks. Further meetings in New York on August 11 and in Chicago on September 2 worked out the details.98

It was a grand accomplishment—one that immediately foundered. Two lines, one weak and one powerful, refused to take part. The Grand Trunk Railway of Canada declined to enter the compact because of its competitive disadvantages. As a long, roundabout line between the West and the Atlantic, it could only attract business with absurdly low rates, and so declined any price-fixing arrangement. President John W. Garrett of the Baltimore & Ohio, on the other hand, refused because of his competitive advantages. His was the shortest route between Chicago and a seaport (in this case, Baltimore), so he insisted on the right to set lower rates than the other trunk lines.99

Vanderbilt responded to this intransigence with patience and self-possession. On November 12, he and William stepped off a special train in Baltimore and went to Garrett's offices. There they met Thomas A. Scott and Hugh J. Jewett (the new president of the Erie). One observer described Garrett as “a portly figure” with a round face, “bluish-gray eye, and solid, unanxious tread and pace.… He had a hard, round head, a slow and gracious manner.” His firm pate and rotund dignity may have reminded the Commodore of Erastus Corning or Dean Richmond; in any case, he impressed Vanderbilt, and the two got along well. “We have had a very pleasant interview in Baltimore, as pleasant a one as ever was held when so much capital was represented,” Vanderbilt told the Evening Post. “I believe Mr. Garrett… to be a high-toned, honorable man, and that he is willing to concede to any equitable arrangement between all the parties, if the equities can be got at. As to the general principles of railroading, I find by conversation with him that President Garrett exactly agrees with me on all of them; or, in other words, I agree with him so far as he has expressed his views to me.”

Alas, it was not up to these two alone to make the peace. An obstacle arose, and its name was Thomas A. Scott, whose sleight-of-hand approach to managing the Pennsylvania aggravated Garrett. (It also landed Scott in trouble with his own stockholders, who launched an investigation of his regime in 1874.) Garrett insisted on the abolition of Scott's independent fast-freight corporations, which funneled much of their profits to the Pennsylvania's president; not surprisingly, Scott refused. The result was a highly personal spat between the two, who traded public recriminations in early 1875.100

When the Pennsylvania and the Baltimore & Ohio fought, the New York Central could not avoid the resulting repercussions. A desultory rate war raged through 1875. William managed the rise and fall of prices, though his father remained informed and engaged. On June 23, the eighty-one-year-old Commodore gave a long interview to the New York Times in which he discussed communications with James Joy, the rate war, and the condition of the Lake Shore. He bridled when asked if he was selling Lake Shore short. “That is a lie!” he snapped. “You may say that he who tries to injure the property which he is managing for stockholders, and endeavors by any means to deteriorate its value, is a thief.”101 And yet, he remained close friends with Daniel Drew, the past master of deteriorating his own corporations' value.

The railroad war proved to be Vanderbilt's main point of interest in the management of Western Union, still run by William Orton. On November 17, 1875, Garrett wrote to the Commodore to inform him that the Baltimore & Ohio was ejecting Western Union from its line along that railroad in favor of Gould's upstart Atlantic & Pacific telegraph company. As Orton succinctly summarized the situation, “The competition between the Railroad Companies for Western business has caused the rivals of the New York Central to strike at the Western Union for the purpose of injuring the Commodore.” Still, Vanderbilt, for the most part, was content to let Orton manage Western Union, as William did his railroads.102

This conflict would not end in a glorious victory. Rather, it offered a quiet affirmation of William's capable management and the Commodore's strategic gifts. As it dragged on through 1876, the New York Central continued to pay 8 percent dividends; in fact, the board made them automatic, issued on a quarterly basis. Even the Lake Shore resumed dividends. By glaring contrast, the Pennsylvania and the Baltimore & Ohio were forced to halt dividends altogether. Of all the competitive advantages that entered into this feat, the most important was the great infrastructure envisioned by the Commodore and completed by the end of 1874: the St. John's Park Freight Depot, the Grand Central Depot, the Fourth Avenue Improvement, a huge North River grain elevator, a double-track bridge at Albany, and especially the four-track line to Buffalo. The Central cut expenses by more than 20 percent on the freight traffic that now increased with the low rates. “This enormous gain is due chiefly… to the separate freight tracks, permitting a uniform moderate speed for freight trains,” Railroad Gazette wrote at the end of 1876. The Commodore's calculations were proved correct.103

The rate war also led to Vanderbilt's last great acquisition: the Canada Southern Railway. Launched in 1871 by Daniel Drew and John F. Tracy as a rival to the Great Western of Canada, it was completed from Detroit to the Niagara Suspension Bridge in 1874, just as rates began to plummet. By the end of 1875 it was penniless, with $700,000 in floating debt, $1.4 million in unpaid bonds, and a workforce that received nothing but promissory notes for their wages. Indeed, it was in a far weaker condition than any company the Commodore had taken over in the past. But, given its strategic geographical location, its very weakness made it a threat. Left alone, it would likely fall into the hands of, or make an alliance with, the Grand Trunk, to the Central's injury. And it did possess a well-laid-out line with low grades. Vanderbilt opened negotiations with the Canada Southern directors to rescue their line, and they arrived at an agreement on December 18, 1875. He purchased 48,195 shares (of nearly 100,000 total) for $10 per share, with the right to acquire the remaining fifty thousand shares as they became available. By January 1, 1876, Vanderbilt owned a total of 85,000. On that day, he gave Worcester the stock certificates and ordered him to put ten thousand shares in the name of William; one thousand each in the name of William's sons William K. and Frederick; ten thousand in Worcester's own name; ten thousand in the name of Augustus Schell; and ten thousand in the names of several others. Worcester had each of these individuals endorse the certificates, then handed them back to the Commodore.104

Other business battles raged during these years, such as squabbles over the Wagner sleeping-car company (in which William owned much stock), pooling arrangements with the Fort Wayne, and the telegraph war with Gould's company. These were managed by William and Orton. From the Commodore's perspective, the storm that began in 1873 had come and gone (though the depression would continue to 1879). He had triumphed.105

VANDERBILT MADE A HABIT of facing eternity. Even after marrying the pious Frank, he occasionally tried to speak to the dead. Mary E. Bennett, a friend of the Commodore's, would recall how he took her to a séance in the fall of 1874. They sat at a table, two raps sounded, and the medium intoned, “This is for you, Commodore. It is from your wife.”

“Business before pleasure,” Vanderbilt said. “I want a communication from Jim Fisk. Give me some paper.” He wrote a question for Fisk's ghost.

“Jim Fisk is here,” the medium said. Vanderbilt asked a question aloud about the stock market, and the medium gave an answer.

“That can't be so,” Vanderbilt said, “but I will watch and see if you are right or I am.” At that, Bennett recalled, he began to joke with Fisk, “and asked him how he liked it on the other side. Fisk said he liked it pretty well, and told the Commodore he would find out soon enough, for he was pretty near the end of his line.” Then Vanderbilt contacted Sophia and asked her for advice about Corneil.106

Bennett's account reveals Vanderbilt's ongoing interest in the world beyond—specifically his need to stay in contact with those who had died before him—and his continuing faith in his own sagacity even in the face of the supernatural. The Commodore found the sessions with the dead comforting, but he kept his own counsel.

As for his most famous intermediaries with the spirit world, Victoria Woodhull and Tennie C. Claflin, he had turned against them years before. For a time after Vanderbilt's second wedding, it was rumored that John Morrissey relayed his messages to the sisters. But their notoriety grew, and with it the Commodore's disenchantment. One by one, their brokerage customers—most of them women who wanted to patronize a female-run firm—began to sue as the sisters' extravagant promises fell through. Whether they invested any money on the stock market at all was an open question. They and Col. Blood spent most of their time on Woodhull & Claflin's Weekly, “devoted to the interests of free love and the ‘pantarchy’ whatever that may mean,” the Times wrote. They became embroiled in lawsuits with their mother, herself a shady character, and were evicted from their fine townhouse on East Thirty-eighth Street. Woodhull briefly became a leading figure in the women's rights movement, and offered herself as a candidate for president in 1872. She and her sister were also indicted for sending obscene material through the mail that year, the fastidious federal authorities judging their radical weekly to fit the definition. Finally they launched a vicious attack on Vanderbilt in lectures and their newspaper, for he had spurned them. Called to testify on January 4, 1875, in yet another lawsuit against them by a duped investor, he said, “I have not had business relations with them as bankers or brokers. I do not recollect of any authority given by me to them to use my name in their business.” By then, his connection with them had become a distant memory.107

Decay and death continued to claim Vanderbilt's friends. In March 1876, Daniel Drew went bankrupt. He had been battered repeatedly in stock market battles with Jay Gould, and never recovered from the Northwestern corner in 1872. His failure, one newspaper reported, “causes no special disturbance, as it would have done a few years ago.… The whole story of ‘Uncle Daniel's’ disasters is summed up in three words—he was tricky.” Railroad Gazette remarked that Drew “has been a great railroad man in his way, which way has been almost entirely that of a speculator in railroad securities.” This judgment was not entirely fair. Drew had been a great steamboat entrepreneur, and had helped start the Canada Southern, though that railroad proved to be a disaster for him, perhaps even the final blow. The real victims of his failure were his charities, especially Drew Seminary. He had endowed them with promissory notes which he could not pay. Vanderbilt said he was “sorry for Daniel Drew, whom he always advised to stop speculating and turn pious in real earnest.”108

A reporter called on Drew, seeking his reflections on his rise and fall. “I had been wonderfully blessed in money-making; got to be a millionaire afore I know'd it hardly,” he said. “I was always pretty lucky till lately, and didn't think I could ever lose very extensively. I was ambitious to make a great fortune like Vanderbilt, and tried every way I knew, but got caught at last. Besides that I liked the excitement of making money and giving it away.” He should have quit Wall Street long ago, he mused, when he was worth $8-$10 million. “One of the hardest things I've ever had to bear has been the fact that I couldn't continue to pay the interest on the notes I gave to the schools and churches. And then my children ought to have been left with large fortunes, as they had a right to expect. The thought of these things at first came near killing me or driving me crazy, but I have got over the worst feelings now.”

The reporter asked Drew who he thought were the richest men in New York. Alexander T. Stewart, he guessed, was worth $40 million, “but Vanderbilt was surely worth a hundred millions of money if he owned a dollar.”109 Stewart did not hold that fortune for much longer. He died on April 10. Three days after, the city saluted the department-store magnate with “an immense funeral,” as the New York Herald described it, attended by the rich and powerful, including William H. Vanderbilt. The Commodore did not go to his friend's service. He was sick in bed himself.110

On April 14, Frank sent word to Dr. Linsly asking him to come see the Commodore. Linsly found his patient in great distress. Vanderbilt's autopsy would show that he had an enlarged prostate—common in older men—which led in turn to cystitis, or an infection of the bladder, which was not draining properly. This condition was painful enough, but Vanderbilt also had terrible bowel disorders. He had anal stenosis, a constriction often caused by scar tissue—in his case, the result of surgery he had had decades earlier for hemorrhoids. In particular, he appears to have suffered from diverticulitis, another ailment that commonly afflicts the elderly, in which a pouch (diverticulum) forms in the lining of the colon and becomes infected and inflamed.111

Internal abdominal pain may well be the most unbearable of all. Vanderbilt loathed opiates, the only effective pain medication available. Even when he took them, they increased the constipation from his stenosis, which forced his waste into the infected pouch in his colon. The press reported, “His physical condition is rapidly going to pieces.”

Unfortunately, Dr. Linsly was thrown from his carriage in a severe accident on April 15, and would remain bedridden for several weeks. Vanderbilt demanded an “electrical physician,” William J. Bennett, who found the Commodore “howling like a wild beast with pain, so that he could be heard all over the house, calling upon God to relieve his sufferings and asking why the Lord persecuted him so much.”112 Vanderbilt's world had narrowed to the perimeter of his bed—to the surface of his skin—and it was aflame, with no hope of dousing the fire. He screamed; he exploded at those around him; he felt helpless after a lifetime in command.

Dr. William Bodenhamer would later talk about his treatment of Vanderbilt during the month when Linsly was bedridden. He spoke at length about Vanderbilt's faith in Spiritualism and his short-tempered explosions. He said that he explained to Vanderbilt that his enlarged prostate was likely the result of gonorrhea or “excessive venery”—too much sex. As for Vanderbilt's mental state, “I do not know that I ever did know a more clear-headed man under such suffering,” Bodenhamer declared. “I never saw him when his mind was not clear. In my opinion, he was at all times capable of transacting any business he was accustomed to.”113

Knowing the public impact of his illness, Vanderbilt pulled himself together to see a reporter in early May. He sat up in his sickbed and explained that he was recovering, though still weak, and he knowledgeably discussed the ongoing rate war. He explained that the New York Central “is placed on the defensive by all the other trunk lines—one road demanding the right to reduce fares because it is a longer route, and the other roads demanding the same right because they are shorter routes.” The natural superiority of New York as a port, he said, gave the Central a critical advantage. All it had to do was defend itself. “‘In other words,’ said he, as he turned to look through some letters just brought him, ‘since I have been a railroad man it has always been my practice to let my opponents make the rates, and I follow them so long as they do not put the rate so high as to be an imposition on the public’”114

A few days later, a reporter for the New York Herald called at 10 Washington Place. As a servant held the door open, the reporter saw Frank striding toward him when “the well known voice of the Commodore came rolling vigorously after her, saying, ‘Tell the gentleman from the Herald that even my slight local disorder is now almost entirely removed.… Even if I were dying I could knock all the truth that there is in the wretches who start these reports out of them, and that, as vigorous as I am at present, I would, were they within easy reach, knock all the lies for hereafter out of them.” Frank, now at the door, said “the Commodore's declaration was quite in accordance with her view of the case.”115

William often came to consult with his father, as did Worcester. On one occasion, Worcester found the Commodore stretched out on a kind of bed set up over a bathtub—presumably so he could sit in steam—smoking a cigar. Vanderbilt said that he wished to establish a home for disabled employees, and endow it with $500,000 of second-mortgage Lake Shore bonds. He wanted it to serve New York Central workers first, and later those of the Lake Shore as well. He ordered Worcester to draw up a plan but keep it from William until he was finished. Also, Worcester recalled, “the Commodore said he did not want the lazy to be assisted by the institution.”116

All the while, he suffered. At the end of May, Frank began to keep a diary, a grim record of his agony, his bowel movements (or lack of them), his fevers, his explosions, his despair, his love for her. “Regrets so any hard expressions he uses during the painful paroxysms,” she wrote on June 4. “Com. strained all day. Had a natural passage from the bowels in the night,” she wrote on June 17. “So tempted to temper & hard words. Dr. says disease makes him so,” she wrote on June 26. On days when he was feeling better, he laughed and joked and teased his nurse and doctors mercilessly117

Often he received visits from his sister Phebe, who was close to the Crawfords. Speaking of Frank, he told her, “She has been so good to me, so true, so pure. I know she will never do dishonor to your name, Phebe. Say to my family too no matter how they do, they will always find her a Lady.… She may be like other women, but I have never detected any selfishness in her.” This combination of honest affection, keen searching of character, and harsh characterization (“like other women”) was vintage Vanderbilt. As he told Frank after a particularly bad night, “Tho' my manner had been rough to you, there was always love beneath my rough exterior to protect you from all harm.” His capacity for love did not contradict his famously domineering nature; it simply made him more complex. Frank wrote,

He never lost the habit of controlg others. Lizzie his nurse was disposed to argue for what she thought would make him comfortable. He would say, “Quick quick Lizzie not a word but do the work.” Asked for his spectacles & put them on with great deliberation & took Dr. Eliot's hand & examined his nails, ran his fingers over them very closely & carefully to see if they could possibly hurt him. His flesh was so sensitive. Dr. had trimmed his nails fortunately118

Both sides of his personality came out when dealing with his daughters. One day Martha Crawford asked if Frank really had to speak to Sophia Torrance, who had snubbed Frank so often. Some in the family said she should, Crawford said. “Who said so?” Vanderbilt asked. “No. She [Sophia] misused [Frank] & let her make the first advances.” At his insistence, Sophia apologized and shook hands with Frank in his presence. On August 4, he spoke to Mary La Bau, who demanded that he redraw his will. “Now don't be stubborn & give trouble,” he said. “I have left you all enough to live like ladies.” Frank wrote, “When she began to argue that she was not stubborn, he merely waved his hand at her, as if he could not hear more.”119

He frequently received visitors, ranging from old steamboat captains to Thurlow Weed. He sent telegrams to Bishop McTyeire. He read and criticized Worcester's lengthy report on the home for railroad workers. He listened to Frank, her mother, and Phebe sing. On September 12, Frank wrote, “He sent to the sitting room for me, kissed me, & asked me when I was going to the Centennial.” The national centennial fair in Philadelphia was the great cultural event of the age. Vanderbilt said, “You ought to go one day at least, & come home at night.” It took weeks before she was willing to leave his side, even for so short a time. When she read him the news of Braxton Bragg's death, he snapped, “Yes, I know about that.” (Someone had told him earlier.) Frank wrote that he “remarked how well it [was] he had not taken him [Bragg] in his business as he once wished he had (that was when we were married). Head still so clear.” His memory was sharp, she noted; he often corrected others, saying, “I don't forget what I remember.”120

His condition rose and fell, his pain swelled and subsided. In August, he endured an unspecified operation. Frank could tell it was “awfully painful.… It was heart-rending to witness his agony.” The doctors felt certain that he would die in its aftermath, but he rallied. On September 27, she noted, “He agrees with Dr. Linsly ‘No cure.’ Com seems oppressed but I played the piano for him & he revived wonderfully”121

Vanderbilt faced eternity. “He has queer dreams occasionally,” Frank wrote. “He dreamed he had been away down to the bottom but was coming up again & that it took all the power of the steamer Vanderbilt to pull him out but she did.” On October 5, he discussed business with Amasa Stone for half an hour, then met with Worcester. Afterward he called Frank to his bedside. “This morning he was trying to express himself to me about his soul & salvation & said for the first time, ‘Why don't you talk to me?’” she wrote. “I did & afterwards read him some beautiful prayers & he would say amen & ‘How sweet’ & showed plainly he enjoyed & felt them.” He actually prayed to Jesus for salvation. “I asked, ‘Dear, is it because you love him or is it to be relieved of the pain?’ He replied, ‘To be candid—both.’” He turned to Linsly and said, “Dr., it may be selfish, but I would take Frank with me, if I could.” He even said farewell to Corneil. After many refusals, he allowed him in for a last chat. “Poor unfortunate boy,” he said. “You make good resolutions but are not able to keep them from here to Broadway”122

Almost every day during his long illness, the nation's leading newspapers published reports on Vanderbilt's condition, what he had eaten, how he had slept, what visitors said of his condition. This extraordinary attention underscored Vanderbilt's unique, self-made position in American society—the personification of the otherwise faceless corporations that increasingly overshadowed the land. But the death watch also prepared the public and the markets for his demise, assuring that there would be no collapse of his stock prices. Vanderbilt's long agony was his final gift to William.

On December 16, William attended a conference at the Windsor Hotel that ended the rate war on favorable terms. Two days later, he went to 10 Washington Place, along with Worcester and the auditor of the Lake Shore. The Commodore spoke to them at length about the proper relationship of the Canada Southern to his other railroads.123

By this time, Vanderbilt's diverticulitis had resulted in a perforated colon. Fecal matter squeezed out of the intestine. Peritonitis set in.

At 9:12 a.m. on January 4, 1877, William sent a telegram to Bishop McTyeire at Vanderbilt University “Father is very low. Be prepared for the worst.” At 11:41 a.m., he sent a second telegram. “Commodore passed away at nine minutes to eleven this morning.” At 9:55 p.m., he sent a third. “Father passed away at nine minutes of eleven o'clock this morning without a struggle, surrounded by his entire family,” he wrote. “Dr. Deems offered up prayers a few minutes before, all of which he perfectly understood and responded acquiescence by motions.… Mrs. V. is very much depressed & we all feel very sad. A great loss which we hardly realize.”124

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