The First Tycoon: The Epic Life of Cornelius Vanderbilt (65 page)

There was only one problem: the Panama Railroad did not want a settlement with Vanderbilt. It profited enormously by carrying passengers for both sides, and it had enjoyed a record business during the fare war. A number of the railroad's directors sat on the Pacific Mail board, and they were certain to resist the agreement. So Aspinwall played a trick. He invited those directors to take a junket with him to Panama. He boarded the steamship in New York with his trunks, along with his guests; then, moments before the ship sailed, he announced that pressing business would keep him at home. When the directors returned from Panama, they discovered to their irritation that the treaty with Vanderbilt had been signed and ratified in their absence.
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As the 1860s began, Vanderbilt attained wealth and influence never before imagined for a private American citizen—“almost kingly power,” as the
Chicago Tribune
said. He controlled American steamship traffic on the Atlantic Ocean, and stood as the largest shareholder in Pacific Mail.
⁹⁵
(In 1860, Daniel Allen took a seat on the company's board of directors to represent his father-in-law's interests.) Vanderbilt arranged a lasting rise in fares (though not to their previous heights), and along the way prevented his friend Roberts from starting a rival line without paying him a penny. When the California postal contract expired after Congress adjourned without making arrangements for a new one, Vanderbilt refused to carry any more mail. This edict threatened to add weeks to communication between the two coasts by forcing the mail to be carried overland. The Commodore relented only after President Buchanan begged him to reconsider and promised to ask Congress to pay him retroactively. Vanderbilt expanded his role in New York's railroads as well. Already a director of Harlem, he helped Drew restructure the bankrupt Erie's debt (for a very large fee), and joined him on the Erie's board of directors.
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One by one, Vanderbilt's enemies lost, surrendered, or met with a violent death. Law had given up; Collins had failed; Morgan, Garrison, Aspinwall, and even Joseph Scott had accepted his terms. Others were less wise, or less fortunate. On August 14, 1859, an uprising in Costa Rica overthrew President Mora. He was executed on September 30, 1860. Even the irrepressible William Walker reached the end of his piratical career. The British captured him on his latest filibustering expedition, and handed him over to the Hondurans, the nearest Central American authorities. They unceremoniously shot him to death on September 12, 1860.
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And then there was Joseph White, who had plagued Vanderbilt from the beginning of the gold rush. In January 1861 White returned to Nicaragua, this time to buy exclusive rights to harvest rubber. As he swung in a hammock on the porch of a hotel, he began to talk with another American, Jonathan Gavitt. “It appears that this conversation was not of a very pleasant character, as Mr. Gavitt had been several months in Nicaragua on business of a similar nature to that of Mr. White's, and the former thought the latter was trespassing on his ground,” the
New York Times
reported. Gavitt sent his servant to retrieve his revolver, then shot White in the leg. After seven days in tremendous pain, White died.
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ON NOVEMBER 4, 1859, VANDERBILT
sued Henry J. Raymond, editor of the
New York Times
, for libel. The article in question—a patently false report that Vanderbilt had supported Walker's last expedition—was hardly the issue. After all, journalists of the day relied heavily on rumor and innuendo; newspaper reporting was inaccurate on a regular basis. The point, Vanderbilt argued in his legal complaint, was “that the said article in the
Times
is the result either of personal ill-will toward him or interest averse to his, which leads to the said newspaper being impelled to assail and if possible injure him.” Personal ill will indeed. Raymond responded with insults the very next day. “We are at some little loss to understand the meaning of this sudden floundering of the Commodore—this explosion of blubber at the prick of a newspaper paragraph,” he wrote. “We don't know whether it indicates that he is growing old and touchy, or that he is becoming ambitious of notoriety.”
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But this attack was also a matter of politics. During the late 1850s, even into 1860, the
New York Times
waged a crusade against Vanderbilt. On February 9, 1859, Raymond published perhaps his most memorable assault, “Your Money or Your Line,” berating Vanderbilt for forcing Pacific Mail to pay his monthly subsidy under the threat of his renewed competition. In this piece, Raymond crafted a lasting metaphor in American culture: the robber baron.

Like those old German barons who, from their eyries along the Rhine, swooped down upon the commerce of the noble river and wrung tribute from every passenger that floated by, Mr. Cornelius Vanderbilt, with all the steamers of the Accessory Transit held in his leash, has insisted that the Pacific Company should pay him toll, taken of all America that had business with California and the South Sea, and the Pacific Company have submitted to his demand.… He has… devoted himself to the study of the steam navigation of his country—not with the object of extending its development, but for the purpose of making every prosperous enterprise of the kind in turn his tributary or his victim.

Though Raymond never used the exact phrase “robber baron,” it entered the American lexicon as a term for an industrialist who wields his power unscrupulously, to the harm of others. Yet it is essential to note how the metaphor originated. Raymond criticized Vanderbilt for
preying upon
monopolists. He attacked him for, as he wrote elsewhere, “driving too sharp a competition.”
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In “Your Money or Your Line,” Raymond derided “competition for competition's sake; competition which crowds out legitimate enterprises… or imposes tribute upon them.” On July 13, 1860, he called on “our mercantile community to look the curse of competition fully in the face.”

To later generations of Americans, Raymond's critique would make no sense. Vanderbilt was a robber baron because he was excessively competitive? Vanderbilt's enterprises were not “legitimate,” even though they were more successful than those that supposedly were? Was competition supposed to have no winners or losers? And wasn't it Pacific Mail that was the monopolistic force that restrained trade by buying off competitors (a policy that made it immensely profitable)?

Raymond's arguments reflected a deep and persistent strain of Whig philosophy. The editor himself was a “reliably orthodox” Whig, and his newspaper was founded by “Whig bankers,” as two historians write.
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When he tried to express his loathing for Vanderbilt, he drew on a political vocabulary, a political mind-set, now decades old, crafted in a younger America with limited capital and few large enterprises. The Whigs had strongly believed in economic development, and had championed legal devices such as corporations to assist wealthy men in concentrating capital for useful purposes. Pacific Mail, which originated in a federal plan to guarantee mail service to the Pacific coast, offered a perfect example of their ideals; more than that, the elite status of its incorporators appealed to social prejudices that lingered among old New York Whigs. Raymond even depicted corporations as fragile creations. In “Your Money or Your Line,” he made the argument that “no joint-stock company… can ever be a match for a single man” who possessed a large sum of money. Raymond gave voice to a certain strand of Whig thinking that had always condemned the destructive tendency of free competition, casting it as piracy that annihilated capital.

“The idea of depicting Vanderbilt as a corsair because he establishes rival lines to successful steamboat companies is not consistent with experience or common sense,” argued
Harper's Weekly
, in a direct counterblast to the
Times's
famous editorial. “It is because competition is free—because it is encouraged in every branch of trade and enterprise—that this country has become rich and prosperous.”
¹⁰²
On March 5, 1859,
Harpers
published an adulatory profile of the Commodore in which it continued this argument. “It has been much the fashion to regard these contests as attempts on his part to levy black-mail on successful enterprises.… He must be judged by the results; and the results, in every case, of the establishment of opposition lines by Vanderbilt has been the
permanent reduction of fares.”
It added, in a much-quoted line, “This great boon—cheap travel—the community owes mainly to Cornelius Vanderbilt.”

This defense of the Commodore sounds more logical to the mind-set of later centuries, but it, too, drew upon an earlier generation's political rhetoric—that of Jacksonian Democrats.
Harpers
argued that he had championed the fight against the aristocratic elite, against those artificial monsters the Whigs loved so much: “powerful corporations, who enjoyed a monopoly of the traffic, and whose wealth and obvious soullessness were a terror to steamboat men.” It praised Vanderbilt, on the other hand, specifically as an
individual
, in battle against such devils. “We have heard it said that no man in this country gives employment directly or indirectly to so many persons,” the
Herald
wrote. “He began life by working to live, he now lives to work.”
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The truth is that neither Andrew Jackson nor Daniel Webster, nor anyone else who had helped to create the Democratic and Whig parties, had imagined a man like Vanderbilt. Few previously had accumulated so much wealth, in either absolute or relative terms; and there was probably no one who had ever possessed such sway over public affairs—over the survival of a railroad, or a government, or over the great corridor to California. Nor did he exist in some kind of polar opposition with corporations and monopolies. By 1859, he operated almost entirely through corporations; he proved himself an expert at using the stock market to concentrate capital or avenge himself on his enemies, and emerged as a master of corporate structure. He saw the corporation as just another type of business organization. For many old Whigs and Democrats, on the other hand, the corporation remained a political animal. Whigs had approved of it as a means of harnessing private enterprise for the public good; since corporations remained few in number, they may not have imagined that they one day would become commonplace. On the other side, Democrats who praised Vanderbilt's competition failed to grasp that he was using the corporate form to create enterprises on an unprecedented scale, gaining control over vast channels of commerce. He represented a new creature on the American scene, and political language and logic had not yet come to terms with him.

Vanderbilt was clearly an unsurpassed competitor, and the good he thereby wrought was well described by
Harper's Weekly
. He was a fighter by nature, a cunning and proud warrior. He always felt that he could take care of himself, under any circumstances. He seems to have believed the Jacksonian rhetoric he so often repeated, a creed of laissez-faire individualism, a vision of a world in which any man might get ahead by his natural gifts rather than government favors. And yet, in pursuing his private interests wherever they took him, he felt no obligation to act in the public interest; when competition had served its purpose, he freely sold out or constructed new monopolies. As he operated on a vast new scale, he brought to a head the contradiction inherent in the private ownership of public works—a paradox that would grow starker when he moved from steamships into railroads in the climactic phase of his life.

Raymond's attack on Vanderbilt, for all its incoherence, spoke to a budding sense that this increasing concentration of wealth and power in the hands of one man posed a challenge to democratic, egalitarian society. Unions could not restrain Vanderbilt from slashing wages and firing strikers; no federal or state laws prohibited his inside trading on Wall Street; few taxes touched his wealth; no regulatory agencies examined his vast affairs or rendered them transparent. It is true that Vanderbilt created tremendous wealth in this environment; it is also true that the limited government deliberately crafted by the Jacksonians—staffed by political appointees, without any kind of professional civil service—lacked the means to check any abuse of his power. And his power would grow dramatically in the next decade and a half. But before Vanderbilt died, a new political matrix would begin to emerge.
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So much for the meaning; but there remains the man himself. In December 1859, a fierce Atlantic storm smashed the
Ariel
, threatening it with destruction. Its captain, a man named Ludlow, went out on deck to direct the construction of a drag, or emergency sea anchor, to save the ship. “A tremendous sea broke upon her forward deck,” the
Times
reported. Ten feet of water swept over Ludlow, and “the heavy drag, composed of plank and timbers, struck him on the side.” He lived long enough to gasp, “Tell the Commodore I died at the post of duty.”
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Those words deserve to be the last about the Commodore as commodore. They call to mind Tolstoy's observation in
The Sebastopol Sketches
, a soldier's view of the Crimean War. Discipline and obedience, he wrote, ultimately depend upon “the subordinate's recognition that those placed in authority over him are possessed of a higher degree of experience, military prowess, or—not to beat around the bush—moral development.”
¹⁰⁶
But a superior who lacks real ability—or character—draws only scorn. In a quasi-military (or, more properly, quasi-naval) culture such as that of the merchant marine, a commander need not be sweet-tempered to be admired; rather, he had to be skilled, knowledgeable, fair, and preferably tough.