“Commodore” Cornelius Vanderbilt is the first of his class

Misunderstood by many Cornelius Vanderbilt was a financial tycoon that would be the first of his class in the United States and would set the path for the transportation industry and innovate how to do business at the time. Known as the “Commodore” due to his ventures in the shipping industry, he transitioned to the railroad industry making constant game-changing moves that would set him apart quickly, earning him his fortune and legacy.

Cornelius Vanderbilt_patrick dwyer_History of American Financial Titans
Image courtesy of Cliff at Flickr.com

Vanderbilt’s early years and his first strides

It could be said that Cornelius Vanderbilt was born into the shipping business from day one. He was born in 1794 to an impoverished and illiterate sailor. Even at an early age he knew exactly what he wanted and made all the necessary arrangements to accomplish it. Despite his lack of education and his family’s poverty, his perseverance and intelligence turned him into a natural born leader quickly. At the age of 11 he quit school and started working with his father on the waterfront, until when he was 16 and he decided to take out a loan to buy his first small ferry boat. He transported passengers between Staten Island and Manhattan and it’s said that he earned $1,000 in his first year. He accomplished this by aggressive marketing, astute deals and weakening the competition, which would be trademark characteristics of his demeanor as a businessman.

In 1812, at the age of 18, he began dealing with the US government during the War of 1812 as one of the transports that supplied the different posts along the Hudson River. During this time he demonstrated his trait of self-study and discipline by acquiring the skill of shipbuilding and navigation on open water. By the end of the war he had assembled a small fleet and a working capital of approximately $10,000. Once the war was over he went back to ferrying passengers and freight, this time between Boston and the Delaware Bay. This is when he was coined as the “Commodore”.

A year later he surprisingly married his first cousin and later had 13 children. He may have been an influential and successful business, but as a family man he was known to be an awful husband and father, that ignored his children, especially his daughters and cheated on his wife.

Transition into new technologies

Vanderbilt never ceased to surprise everyone by making moves that were ahead of everyone else and his vision lead him to move the industry on new paths. In 1817, sure that the future of the shipping industry was in the new technology of steamboats, he partnered up with Thomas Gibbons and founded the Union Line, a steamship business. As always he proved to be a quick learner and picked up all the knowledge on how to manage a large commercial operation as well as legal matters. They saw themselves caught up in a legal battle for the right to ferry between New York and New Jersey with competitor Robert Fulton and Robert Livingston. The U.S. Supreme Court ruled in favor of Gibbons and gave him exclusive authority to hold interstate trade. In 1827, after Gibbon’s death and his son’s refusal to sell his shares to Vanderbilt, he founded the Dispatch Line buying several boats. The Dispatch Line ran from Philadelphia and New York City. Finally, applying his pressure techniques one again, he finally pushed Gibbon’s son into selling him his shares, to avoid the alternative of losing his business.

He continued his business strategy by creating new businesses offering such low prices and impeccable service that other business had no other choice than to pay him to move his business elsewhere before they were run out of business. He moved from Philadelphia to the Hudson River where he opened the People’s Line and then finally paid off by the Hudson River Steamboat Association moves his operations to the West coast. His cutthroat business strategy made him a millionaire by 1846. From 1847 to 1852 he operated from New York City to San Francisco with the Transit Company until his competition finally bought him out by offering him $40,000 a month to cease his operations. At this point Vanderbilt was in his 60s and decided to buy a large yacht and traveled around Europe with his family.

Grand Central Station_patrick dwyer_History of American Financial Titans_Cornelius Vanderbilt
Image courtesy of Andrew Dallos at Flickr.com

Start of a new era

By 1864, he had retired the shipping industry, but was nowhere near being ready to retire the transportation business yet. At age 70, he became captivated in the railroad industry, seeing its potential he acquired the New York & Harlem and Hudson Line. He was interested in buying the New York Central Railroad, but since they weren’t thinking of selling he decided to cut off their connection to western cities until they finally caved in. By 1873 he had control of the rail traffic from New York to Chicago and innovated by consolidating his operation with standardized procedures and timetables in all of the conglomerate.  Once again, demonstrating his vision, which at the time no one quite understood, he built what is now known as Grand Central Station.

 

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