The First Tycoon: The Epic Life of Cornelius Vanderbilt (110 page)

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”
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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.’”
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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?
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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”
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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.
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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.
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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.
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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.
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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.
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