The First Tycoon: The Epic Life of Cornelius Vanderbilt (41 page)

After spending a night trying to run the mighty Castillo rapids, again using ropes, chain, and a winch to haul the boat over, Vanderbilt had to give up. The passengers piled into Nicaraguan bungos and were paddled up to San Carlos, where they boarded the
Director
. “To my astonishment I found the lake a boisterous expanse of water, running as high as the angry Atlantic,” Rabe wrote. Hungry, sopping wet, and seasick, the passengers finally arrived on the western shore, where they were ferried to land in canoes or carried on the shoulders of Nicaraguan porters. The passengers went on to California, some happy, some convinced that the transit was not really ready. Vanderbilt mounted a horse and galloped off to Granada, together with White, to complete his mission.
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Rumor had it that the Nicaraguan government, disturbed at the lack of progress on the canal, planned to revoke the company's charter. Vanderbilt knew that the canal would take far longer than originally envisioned, while the transit business offered immediate profits. To protect the latter from delays to the former, he wanted to separate the two enterprises by chartering a transit company
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But on his arrival in Granada, he learned that Nicaragua had once again descended into civil war. The unity government of 1849 had collapsed. The Liberals had risen in revolt; two hostile governments now faced each other, a Conservative one in Granada and a Liberal rival in León. It was a moment that called for great prudence.
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No one ever accused Joseph L. White of excessive prudence, or perhaps any prudence at all. Believing the Conservatives to be the friendliest government, he “promised to send men and arms to their support, assuring them at the same time that all resident foreigners were on their side,” a reporter wrote. He said he could help wrest control of Greytown from the British. He also paid out $20,000 in bribes.
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On August 14, the Conservative government agreed to charter the Accessory Transit Company, transferring to it the canal company's crucial monopoly on steamboats in exchange for 10 percent of its profits and $10,000 per year.

All this alarmed the Liberals. On August 25, John Bozman Kerr, the (notably bigoted) chief U.S. diplomat in Nicaragua, sent a warning to Secretary of State Daniel Webster from León. “Mr. White seems very naturally to have regarded these people as mere children, who could be led or driven any way he might be disposed,” he wrote; “but I fear he may have carried his contempt for their intellect somewhat too far.” One cynical journalist expressed ironic admiration: by dangling the false promise of a canal, the company had won a monopoly on the transit—“in my humble opinion, the most clever speculation which ever came into a Yankee's head.”
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Too clever, perhaps. On August 22, the rival Liberal government in León addressed an angry letter to White and Vanderbilt. By choosing sides, the Liberals declared, “you have lost the neutrality of a foreigner.” The Accessory Transit Company was created under a curse. White had been true to his nature, and so put the enterprise on the path to destruction from the start.
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For the time being, White's gamble seemed to pay off. The Conservatives remained safely entrenched in Granada, where they were well placed to protect the transit route. Rumor had it that the
Prometheus
carried a shipment of two thousand muskets to them in the fall of 1851. And Vanderbilt's new company flourished. Workers blasted rocks from the San Juan's rapids, and a steam sawmill arrived for construction of a plank road to San Juan del Sur. The creation of Accessory Transit as a separate corporation gave it access to the power of the stock market to gather capital through sales of bonds, issues of new stock, or calls for additional payments from the shareholders. The Commodore's sidewheelers now sailed the Atlantic and Pacific oceans, packed with passengers attracted from the Panama route by lower fares. Vanderbilt earned vast sums from his ships, and as agent of Accessory Transit he kept 20 percent of each $35 ticket for the Nicaragua crossing.
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The success of Vanderbilt's Nicaragua venture had national consequences. Simply put, he helped transform a rush for gold into the lasting establishment of American civilization on the Pacific. By steeply reducing fares and offering faster service, Vanderbilt sped up the flow of migrants to the West and gold to the East, where it had a significant impact on the economy. And he did it not only without a federal subsidy, but in competition with the subsidized line.

Thanks in large part to reduced transportation costs, San Francisco matured from a dust-blown, mud-lined tent camp with gambling saloons into a brick-walled, warehouse-filled commercial center with gambling saloons. Numerous devastating fires in the city's first few years destroyed the shanties and rough wooden buildings thrown up by the first settlers; by necessity sturdy masonry structures went up along the orderly streets that stretched from the bay up the steep hills. “The characteristics of a Spanish or Mexican town had nearly all disappeared,” wrote one resident. “Superb carriages now thronged the street, and handsome omnibuses regularly plied between the Plaza and the Mission.… The old stores, where so recently all things ‘from a needle to an anchor’ could be obtained, were nearly extinct; and separate classes of retail shops and wholesale warehouses were now the order of business. Gold dust as a currency had long given place to coin.” It was still a fast town, but it also became a place of aristocratic display. “A striking change was observable everywhere and in everything. The houses were growing magnificent, and their tenants fashionable.”
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The pulse of commerce between the Atlantic and Pacific coasts beat twice a month, a pace set by steamship departures. Every two weeks, “steamer day” sent San Francisco into a frenzy, as bankers prepared shipments of gold to New York houses, merchants called in debts to make payment to eastern suppliers, and everyone prepared letters and packages to mail to the “states.”
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When steamers were expected, all eyes watched the tower atop Telegraph Hill, where signalmen would announce the approach of a paddlewheeler by running out oversize wooden semaphore flags—two long black boards, hanging down on either side of a tall pole. The signal's centrality to life in the city was seen during a performance by a visiting theater company. At a climactic point in the play, an actor flung out his arms, the sleeves of his black robe hanging down, and asked, “What does this mean?” A wag in the audience shouted, “Sidewheel steamer!” The knowing audience erupted in howls of laughter.
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As the owner of one of the two primary steamship lines, Vanderbilt emerged as a powerful presence in San Francisco, where he never had and never would set foot. Railroad and newspaper promoters there besieged him with requests for investment. “If you knew of the hundreds of applications that we have daily for the same thing,” he replied to one, “you would at once see that it would be ruinous to grant them.”
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Rather than send money to California, Vanderbilt needed it close to home. His Nicaragua line posed a serious threat to the established interests on the Panama route, and those enemies had decided to strike back.

THE GHOST OF VICE PRESIDENT
Daniel D. Tompkins bedeviled Cornelius Vanderbilt. When Tompkins had sought state assistance to develop Staten Island during the War of 1812, the New York legislature had chartered the Richmond Turnpike Company. Under the company's aegis, Tompkins started the first steam ferry to the island, which became known simply as the Staten Island Ferry. When Vanderbilt took over the ferry in 1838 it was still technically the Richmond Turnpike Company, the creature of eighteenth-century mercantilist philosophy. As such, it differed from later corporations in one important respect. This artificial person existed for a fixed term of years, after which its charter would expire. Just before it perished on April 1, 1844, its chief officers—Vanderbilt and Oroondates Mauran—assigned its leases and real-estate titles to two private citizens, Cornelius Vanderbilt and Oroondates Mauran. When Mauran died in 1848, Vanderbilt, as we've seen, purchased his stake, and was immediately forced to defend his title to the corporation's lands. New York's attorney general argued that the dead company's property reverted to the state. Vanderbilt battled back in court, where he repulsed the state's assault year after year. The ferry was worth defending, and it could pay for a few lawyers: the
New York Times
estimated its annual profits at $50,000.
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George Law never showed much interest in Staten Island. From his office in the Dry Dock Bank, he turned his eye toward Albany and Washington, where he bribed and bargained his way into government contracts, or to Panama, where his U.S. Mail Steamship Company connected to Pacific Mail, and where he had invested hundreds of thousands of dollars in the stocks and bonds of the Panama Railroad. By mid-1851, he had taken a number of steps to restore the original steamship monopoly. He had reached an agreement with Pacific Mail to divide the oceans (as noted earlier); he had purchased Charles Morgan's rival steamships, the
Empire City
and the
Crescent City
, along with Morgan's agreement to abandon future competition; and he had driven off or intimidated most of the lesser steamship owners who dared oppose him.
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And then Vanderbilt opened the Nicaragua route.

As coarse and conniving as Law was, he lived under the same informal code of the transportation business that Vanderbilt had defined in court twenty years earlier. It was a code honored in the breach as often as the observance, but it was recognized nonetheless. If a man had a steamboat line, he was entitled to enjoy it in peace. If a competitor moved against him, then the competitor's other lines were fair game for a counterattack. They called it “self-defense.” And so, with Vanderbilt cutting into profits on one of the most lucrative lines of transportation in American history Law struck back on the route Vanderbilt had plied since childhood.
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Shortly before the Commodore went aboard the
Prometheus
to inaugurate the Nicaragua line, he gave orders for the construction of a ferry house on Staten Island, on a lot he had acquired through the late Richmond Turnpike Company. A crew went to work on the structure, only to discover that Henry M. Western claimed the property as his own, and had leased it to the New-York & Staten Island Steam Ferry Company.

The moving force behind the new ferry company was Law, who had joined with Western and other Staten Islanders who were eager to break Vanderbilt's monopoly. With the Commodore away, his men worked warily alongside Law's employees, who built a dock for the new ferry on the same lot. Law's men started to openly harass Vanderbilt's, throwing obstacles in their way and nailing up boards. One of Vanderbilt's subordinates went to court for an injunction, which briefly stopped the intimidation. But Law's workers still snarled threats, and violence hung in the air.

On the afternoon of July 26, as Vanderbilt piloted a steamboat through the far-off jungle, a mob of three hundred workers, armed with axes and crowbars, marched down the road toward the new building, led by Henry Western. “Tear it down,” he bellowed. “It is on my land and I will be responsible.” The mob rushed forward, swinging axes and shouting, “Down with the building!” Vanderbilt's foreman tried to stop them, telling them not to “cut” the structure. “They replied,” the foreman later testified, “that if deponent did not get out of the way they would cut him too.” They razed the building to the ground, then ran a wooden footbridge over the foundation to the dock, where the boats of the new ferry began to land on July 27. Law's men posted a guard, but Vanderbilt's men reportedly retaliated by cutting down the pier's pilings.
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Elsewhere Law took a more subtle approach to countering his opponent. He worried that Vanderbilt's boast might prove true, that the Nicaragua route might consistently carry passengers between New York and San Francisco in twenty-five days, roughly a week less than the average on the Panama route. On July 21, Law told the postmaster general that most of his ships would sail directly between New York and Panama to save time; a separate postal steamer would tag along behind, making the multiple stops mandated by contract. Yet passengers traveling by way of Nicaragua still arrived from California eight days ahead of those on the Panama route. So Law and his partners resorted to a whispering campaign, spreading accounts of the poisonous climate and long delays encountered on Vanderbilt's line. Even the London
Times
took note of “the constant attempts to depreciate its success and underrate its convenience.”
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The Nicaragua transit
did
suffer problems. After all, it ran through hundreds of miles of rapids-filled river and storm-tossed lake. Only small, shallow-draft boats could run the river, a guarantee of overcrowding. Droughts and heavy rains both made for delays. The route ran through a wilderness without amenities; it would take time before hotels and restaurants could be built. Steamships arrived early or late. Cholera and tropical diseases plagued travelers in this era of dim medical knowledge. Passengers often complained, bitterly and publicly. But all this was true of the Panama route as well.
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Vanderbilt returned to New York to find that Daniel Allen already had filed a lawsuit against Law and his company for the attack on Staten Island. The Commodore prepared for a long war to keep his monopoly on the ferry. To fight the aspersions cast on the Nicaragua route, he served as his own publicist, writing letters to the press to tout his accomplishments. He constructed a new steamboat for Lake Nicaragua, named
Central America
. “When the expedition that has thus far marked the progress of this little vessel is taken into consideration I think it will somewhat astonish the world,” he wrote. “I had her built in 27 days.… Let some one try to beat it.”
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