The First Tycoon: The Epic Life of Cornelius Vanderbilt (8 page)

Commerce, of course, consisted of the physical movement of people and goods; it only flowed as smoothly as transportation technology and infrastructure would allow. And transportation was a problem that deeply troubled merchants and lawmakers alike. The nation's road network could best be described as barely in existence. In 1816, a Senate committee found that it was as expensive to move a ton of goods thirty miles overland as it was to bring the same ton across the Atlantic from Europe. John Lambert described how in upstate New York goods were carried in narrow, four-wheeled wagons, each drawn by a team of two horses. “It is a very rough method of riding,” he complained, “for the waggon has no springs, and a traveller ought to have excellent nerves to endure the shaking and jolting of such a vehicle over bad roads.” A movement emerged, a rush to build turnpikes—solidly engineered roads, financed by tolls. Turnpikes, Lambert observed, “have tended greatly to improve the country; for as soon as a [turnpike] is opened through the woods… the country which was before a trackless forest becomes settled.”

Even the best turnpike was suited only for short distances, and it was cheaper to move goods by water under any circumstances. But shipping had its own limitations. The coastwise trade traveled mostly in sloops and schooners, small vessels with limited capacity And a journey upriver against the current was sometimes impossible under sail. The 150-mile, straight-line voyage from New York to Albany could take several days. In New Orleans, boats that arrived with goods from upstream were simply broken up for lumber in many cases.
⁵⁹

The speed of transportation largely determined the speed of
information
, which set limits on long-range commerce—the emergence of financial markets, the efficient movement of capital, the transactions between distant regions. News traveled only as fast as people, whether by messenger, the mail, or the shipment of newspapers. When George Washington died on December 14, 1799, for example, the news took seven days to travel the 240 miles from northern Virginia to New York. Under these conditions, few institutions straddled state lines or operated across long distances—even as Americans began to cross the Appalachians by the thousands.
⁶⁰

Americans naturally looked for a revolution in transportation. In 1817, New York State began to construct an enormous canal, 363 miles long, between Albany and Buffalo, a village on Lake Erie. Equally important, a dramatic technological breakthrough had appeared on the North River: a vessel that provided its own motive power, independent of wind and muscle and current. They called it the steamboat.
⁶¹

It can never be known how much thought Vanderbilt gave to these changes and challenges. He was a rough, ambitious young man, striving in his undersize schooners to match the international traders who strutted past in the stiff top hats, swallowtail coats, and trousers that had replaced the eighteenth century's powdered hair and knee breeches.
⁶²
It probably never occurred to him that, in aspiring to their position, he was moving backward. He had started out as a specialist—one in transportation, no less, the field where a revolution was sorely wanted, where businessmen and legislators were looking to invest millions. But at this moment he surveyed the world as it was, saw that the general merchant reigned, and methodically became one himself.

AN OFT-REPEATED BUT APOCRYPHAL TALE
portrays a thoughtful Cornelius in December 1817, tallying his wealth. Just twenty-three years old, he was now supposedly worth $15,000, including $9,000 in cash. But the Vanderbilt of legend was always one step ahead of everyone else. He shrewdly concluded that the economy was about to change, and so he abandoned his enterprises to ride the incoming wave.

In reality, he saw nothing special about the end of this particular year. To all appearances he planned to carry on as before, adding the
General Wolcott
to his tiny fleet in July
⁶³
He had established a solid reputation as a skilled sailor and merchant—albeit a small one, a shopkeeper of the sea. When men approached him on the docks, they now spoke to him not as Cornele, but as
Mr. Vanderbilt
, or even
Captain Vanderbilt
.

On November 24, 1817, he turned at the sound of those words and saw a well-dressed sixty-year-old man looking at him with sharp, hard eyes. The fellow's dark hair was combed forward in the style of the classical Romans, and when he spoke his puffy double chin wobbled. He introduced himself as Thomas Gibbons. He was a staggeringly rich rice planter from Georgia, now of Elizabethtown, New Jersey; recently he had started a ferry to New York from there. Emphatic and direct, Gibbons said that Ebenezer Lester, captain of his ferryboat
Stoudinger
, “has suddenly left my employ.” Given “my present embarrassment,” he said, he needed someone to take charge of the boat “on this day, and, I expect, for a few days to come.” Would Vanderbilt do it?

As a past master of all things related to the port, young Vanderbilt knew the
Stoudinger
well. It was secondhand and small (smaller, at forty-seven feet, than the
Dread)
. It was so tiny in fact, that it went by the nickname
Mouse of the Mountain
, or simply
Mouse
. But Vanderbilt also knew the critical difference between the
Mouse
and all his own vessels—or, for that matter, almost every craft on the surface of the earth: it ran on steam. And that made it the focus of a legal and business war that was the talk of the waterfront. Perhaps he grasped, in a flash of insight, that his future would pivot on the fate of Gibbons's little boat. In any case, he agreed to take command of the
Mouse
. After all, it was only for a few days.
⁶⁴

*1
The eighth-dollar coin (also known as a “bit”) was so pervasive that stock prices were given in dollars and eighths, a custom that lasted until the end of the twentieth century.

*2
Tonnage represented not the vessel's weight (except in the case of warships), but its carrying capacity.

Chapter Two

THE DUELIST

T
he twenty-three-year-old Cornelius Vanderbilt who took command of the
Mouse
on November 24, 1817, had no way of knowing he was making the most important decision of his life. Then again, not even Thomas Gibbons, who saw a good deal, could foresee how far-reaching their collaboration would prove to be—how it would help unlock the potential of the steam engine, recast the Constitution, and contribute to the remaking of American society. Gibbons had his hard eye fixed on his enemies, unaware that his struggle would inexorably link his own name to Vanderbilt's for the rest of time.

Even as an impulse, Vanderbilt's snap decision to take orders from Gibbons must have mystified his friends and associates, for the brusque sailor was nothing if not commanding. Vanderbilt was proud, of course, and filled with “the desire of riches” that Rochefoucauld-Liancourt had identified as the essential American trait. His sense of physical power, too, should not be underestimated. He was a big man who lived by his strength, straining daily against the wind and current. His combative manner had been hardened in a fringe of society marked by “rough independence,” where confrontation was the stuff of daily life. He sneered with that contempt for weakness that comes naturally to a man who has beaten and cowed other men.

What's more, the engagement with Gibbons set him back a step in his plans to build his fortune. A thriving ferryman, he aspired to more, as he used his boats to embark on the only obvious voyage to wealth in the new republic, setting up as a general merchant. Even as he stepped aboard the
Mouse
and inspected its copper boiler, he kept his periauger plying between Staten Island and Whitehall Slip with passengers and produce, and his schooner nosing along coastal waters with cargoes of fish and woolens.
¹

And yet, he clearly saw the advantages of the connection he had made. Having formed partnerships with his father and his brother-in-law, he recognized that few men in the entire nation commanded greater resources than Thomas Gibbons. Even more important, Vanderbilt and his contemporaries understood that the steam engine (or, to put it more broadly, motorized transportation) was the most dramatic technological breakthrough since the advent of the printing press at the dawn of the Renaissance. To move on water at will, against wind, tide, and current, was to transform a fundamental fact of life; to say that it marked a revolution is to give an overused word its proper weight. A practical education in steam would be worth a few days of taking orders.

What he did not reckon on was how well he would get on with Gibbons. “I always thought Thomas Gibbons a very strong-minded man, the strongest I ever knew,” he said later. “I don't believe any human being could control him; he was a man that could not be led.”
²
He could just as easily have been describing himself. And there, ironically, in this meeting of iron wills, lay the seed of an alliance that would force the freedom of commerce within America's borders and tear down one of the last bastions of the eighteenth-century world—a culture of deference, privilege, and rank already groaning under the pressure of the times. And it all started with the most aristocratic of rituals: a challenge to a duel.

“DUELLING IS AN ABOMINABLE CUSTOM
introduced by the depravity of man,” Thomas Gibbons scratched out on a piece of paper, pausing now and then to dip the nib of his quill into an inkwell. “And good men sometimes are dragged into it by the wicked, thoughtless part of the community.” It was the evening of September 15, 1786; Gibbons was composing a letter to his eldest son, a letter that he believed might be his last. The next morning, he planned to engage in the “abominable custom” with characteristic righteous wrath. As he counseled his son, “Should your character be wantonly sported with, with deliberate caution arm yourself.”

The next day, he and his opponent faced each other with pistols in hand, bellowing their firm intention to kill each other—until their seconds arranged a compromise. Gibbons had been entirely earnest; the essence of the art of the duel, he knew, was a sincere willingness to stake
everything
on the outcome. Killing the foe was entirely secondary; the point, rather, was to bravely expose oneself to deadly gunfire, thereby proving to the world a quality that lies hidden in a man's heart: his honor. In his own case, however, he may have confused honor with ruthlessness, for no trick or ploy was beneath him when he had a goal in mind.

Gibbons came into the world in 1757 as heir to an army of slaves, and a large rice plantation in Georgia, and he never forgot it. In adulthood he opened a thriving law practice in Savannah, and eventually bought more plantations. He accumulated and consumed until he himself had swelled to almost three hundred pounds. Cunning and commanding, he had, his daughter dryly noted, “a particular and singular mode of doing… business.” In other words, he was almost pathologically contentious.
³

In the Revolution, he alone in a family of patriots stood by the king. Imprisoned for treason, he called the sheriff a “damned scoundrel” and accused him of asking for a bribe. Remarkably, he was able to have his conviction overturned after the war, managed General “Mad Anthony” Wayne's campaign for Congress, then fought a duel with the losing candidate, who had accurately denounced him as a man “whose soul is faction… who never could be easy under government.” The two faced off in 1791; they blazed away at each other three times before they settled their quarrel. Gibbons went on to serve as the Federalist mayor of Savannah off and on until 1801.
⁴

That year he established “bachelor quarters,” as he called them, in Elizabethtown, New Jersey. Perhaps he was driven out of the South by tense relations with the wife he left behind (he soon impregnated a young maid in his new home). In any case, it was a financially astute move. New York was just beginning its climb to a predominant role in the South's overseas trade. Living in the North, Gibbons served as his own middleman, and he had ample opportunities for reinvesting his profits in real estate, rapidly multiplying banks, and turnpike corporations that constructed solid new toll roads across New Jersey
⁵
He also discovered a culture surprisingly familiar to him.

Three years after Gibbons's arrival, in that ritual he knew so well, Vice President Aaron Burr shot Alexander Hamilton dead in nearby Weehawken, in the culmination of Burr and Hamilton's long and bitter political rivalry. The duel led to a quixotic turn in Burr's life, sending it on a winding path that led to a trial for treason and an eventual return to a prestigious law practice in New York. It also showed that dueling (which first appeared in America among military officers in the Revolution) was far from the specifically Southern institution that it would eventually become. In the early years of the republic, politicians issued challenges to each other with alarming frequency. They did so in part because the first parties of the early republic were, to a great extent, factions of notables; political disputes quickly became matters of personal honor.
⁶
But the importance placed on honor reveals something deeper: the persistence of an eighteenth-century culture of deference, dominated by an American aristocracy.

The word “aristocracy” tends to be used rather loosely. In the modern world, it is calculated by multiplying wealth by snobbery. During the early republic, on the other hand, it reflected the division of society into distinct ranks. Until the Revolution, wrote historian Bernard Bailyn, Americans had assumed “that a healthy society was a hierarchical society in which it was natural for some to be rich and some poor, some honored and some obscure, some powerful and some weak.” Perhaps most important, “it was believed that superiority was unitary, that the attributes of the favored—wealth, wisdom, power—had a natural affinity to each other, and hence that political leadership would naturally rest in the hands of social leaders.” In New York in particular, these natural leaders came from a closed set of families, distinguished by an inherited prestige. A full century before Gibbons moved north, the aristocrats of his day had already emerged—the Livingstons, Van Rensselaers, Schuylers, Beekmans, Jays, Bayards, Morrises, and others—in a self-perpetuating circle of intermarried clans.
⁷

The patricians owed much of their status to their particular kind of wealth. New York's aristocrats were classic landed gentry, owners of vast manorial estates along the Hudson River that were populated by tenant farmers (a rarity in land-abundant America). Philip Schuyler, for example, held some six thousand acres, while the Van Rensselaers reigned over an enormous “patroonship” established by the Dutch in the seventeenth century. Their relationships with their inferiors were defined by vertical chains of deference and dependence. “As late as 1828,” writes historian Martin Bruegel, an English observer was amazed by the “immense influence” of these manorial lords over their tenants and neighbors. And landed wealth was
proprietary
wealth, the kind that originally defined a “gentleman.” The gentry did not work for their income, and so had the leisure to educate and improve themselves. Strikingly, they neatly adapted to, and even championed, the Revolution: they saw themselves as a refined, disinterested ruling class for a virtuous, classical republic.

Property requirements for suffrage under New York's constitution of 1777 hardened the culture of rank into law. Two distinct levels of wealth were required to vote: one for the state assembly, and a second and higher level for the state senators and governor—establishing a “three-tiered scaffolding of society” as Bruegel writes. In 1790, four of ten adult white men could not cast a ballot of any kind; in some places, only one out of four could vote for the assembly, and one out of five for governor.
⁸

It was in this environment that the duel flourished. In the aristocratic culture of deference, little distinction was made between the person and his position. A leader could only function if he maintained his personal authority; upholding his “character” (as reputation was called), by the duel if necessary, was essential to all aspects of his life. So too in an economy with limited currency and few formal institutions, where transactions were highly personal and usually sealed by an exchange of promissory notes. A lofty character allowed one's notes to “pass current,” to be circulated in the marketplace at little or no discount. The patricians literally could not afford to be defamed, to allow insults to their authority to go unchallenged.

The Revolution marked a decisive turn against the culture of deference. By the time Gibbons settled in New Jersey—the year Thomas Jefferson took office as president, after campaigning against patrician rule—assertiveness as well as deference was visible in the lower layers of society, swelled chests as well as bowed heads. Rochefoucauld-Liancourt noted the progress of this transformation in two telling observations in the 1790s: “They deceive themselves very much who think that pure republican manners prevail in America,” he wrote, pointing out how the citizens painstakingly differentiated between the ranks of society “In balls, concerts, and public amusements, these classes do not mix; and yet,” he added in amazement, “every one calls himself, and is called by others, a
gentleman
.”
⁹

It is the image of a society in the midst of tectonic change. An older, stratified idea of the world was being torn up by political radicalism erupting out of the Revolution, and by a new social dynamism linked to the surging economy. Once-deferential artisans wanted to serve in public office themselves. Average Americans were less and less willing to passively follow the old elite, as they had for so long.
¹⁰

Thomas Gibbons, by contrast, settled comfortably into that old order—or, at least, as comfortably as a cantankerous tyrant could—as he passed his promissory notes among New York's elite, and formed business partnerships with his neighbors Aaron Ogden and Jonathan Dayton, the Federalist senators for New Jersey. He could hardly have been a less likely champion of Jeffersonian ideals. Ironically, a chain of events had already been set in motion that would turn his famously hard head into a battering ram against the citadel of aristocracy. That chain of events—and that citadel—were the work of the most patrician of patricians, Chancellor Robert R. Livingston.

No one better exemplified the culture of deference than Chancellor Livingston. Peering out of serious eyes set between the arching eyebrows and long nose of his bloodline, he looked every ounce the aristocrat. As leader of one of the richest and most prestigious families of Hudson Valley gentry, he presided over a vast manor, serving as patron to hundreds of tenant farmers who came to him, hats clutched to their chests, to ask for favors or pay their rent. In keeping with his family's tradition of leadership, he played a prominent part in the Revolution, serving alongside Jefferson on the committee that drafted the Declaration of Independence, and he later became New York's first chancellor (a chief judge in the state court system). Livingston allied with Jefferson and his Republicans, proving that, under the state's restrictive constitution, the aristocrats and their values crossed party lines, despite the Federalists' reputation as the party of the elite. In 1802, the
New York Evening Post
referred to the Livingstons as a “house of republican nobility” and quoted a junior member of the clan as saying, “To be born with their family name is a fortune to any man.”