Cornelius Vanderbilt was born on May 27, 1787 near New Dorp, Staten Island, New York. His family was very poor, and he dropped out of school at the age of 11 to work with his father. When he turned 16, he acquired $100 from his mother, bought two flat-bottomed sailboats, and began a ferry service between Staten Island and Manhattan. He carried both freight and passengers, providing extremely low prices and a solid commitment to reliability. His business became so successful that, a year later, he repaid the money owed his mother, along with an additional $1000.
His reliability and quality of service prompted the US Government to contract Vanderbilt to provide six posts around the New York Harbor with munitions and supplies during the War of 1812. After the war, Vanderbilt expanded his business. He acquired interest in other ships, and started shipping seafood and other goods from Chesapeake Bay up to New York City.
Soon the shipping industry would change, when Robert Fulton invented the steamboat in 1807. Vanderbilt recognized the change, and sold off his company to join Thomas Gibbons on his steamboat operation. Together, they contested Fulton's steamboat monopoly on the Hudson River, winning their case in 1824. In 1829, after saving $30000, Vanderbilt left Gibbons, and started his own steamboat shipping company.
Vanderbilt was so wildly successful in his business endeavors that his competitors would rather pay him off than compete with him. His
New York to
Philadelphia run paid handsomely when the competitors pleaded for mercy. His
Hudson River boats didn't charge passengers for the ride, relying on concession sales to make up the difference. His competitors paid him $100,000, and $5,000 for ten years to convince him to shut down the riverboats. Vanderbilt moved on to the
Long Island and
Boston routes, which he quickly conquered. Abound this time, he earned his nickname, "
Commodore" by dressing in full Navy uniform when on his boats. By 1840, Vanderbilt owned over 100 steamboats, employed more people than any other company in the country, and was worth several million dollars.
The California Gold Rush of 1848 presented another opportunity for Vanderbilt to grow his empire. Usually, the trip to California by sea would involve a trip around Cape Horn in South America, taking 159 days on average. Vanderbilt figured he could cut down on cost and time by sailing steamboats up the San Juan River into Lake Nicaragua, transport the passengers 12 miles by road to the Pacific, and have another boat waiting there for the trip up the coast to California. He formed the Accessory Transit Company in 1851, acquired a contract from the Nicaraguan government for $10000, built a port on the Pacific Coast, and began operations. Accessory Transit Company provided the same trip as their competitors, but 600 miles and two days shorter. As more people took the shorter route, Vanderbilt slashed prices, eventually charging $150 for what was originally a $600 trip. His competitors, subsidized by the government, eventually paid Vanderbilt $672000 a year not to run his trips to California.
Vanderbilt turned his attention to Atlantic trade. The two lines that were in service between New York and London were both subsidized by the government, and became easy pickings for the new company. Vanderbilt concentrated on 2nd and 3rd class passengers, creating a volume for his business. He didn't insure his ships to save money, as the ships he had were of the highest quality. He built the Vanderbilt liner, which was the largest ship in the Atlantic at the time. Made out of high-quality iron and an advanced power plant, it set the speed record across the ocean at 9 days and 1 hour.
By 1863, Vanderbilt had leased or sold off all of his ships, accumulating a fortune of $40,000,000. As a hobby of sorts, he began to manage the Harlem and New York Railroad, which he had acquired a small interest in back in 1857. He slowly began manipulating stock prices, acquiring other railroads piece by piece, until he controlled all the rail traffic in the Hudson Valley. He took over the New York Central Railroad in 1867 and linked his two lines together at Albany, generating $90 million in revenue a year. By 1869, his railroad serviced Chicago, putting it among the premiere lines in the country. Vanderbilt then went about making major improvements to his lines, by increasing traffic capacity and renovating stations. The crown jewel of these improvements was Grand Central Terminal in New York, which was built in 1871.
Even the Panic of 1873 could not keep Vanderbilt down. He continued to pay dividends to the shareholders of the New York Central, even through ridership was down. He leased tracks into Grand Central Station to other railroads, creating jobs for thousands of people in New York. He laid an extra set of tracks between Albany and Buffalo, increasing traffic and revenues. Though not usually into philanthropy, it was at this time that Vanderbilt gave money to causes, including the Church of the Strangers in New York City, and over $1 million to Central University in Nashville, which changed its name to Vanderbilt University.
When he died on January 4th 1877, Cornelius Vanderbilt was the richest man in the United States. He had revolutionized business strategy in the United States through his commitment to efficiency and low prices. His $95 million dollar estate was given almost exclusively to his son, William Vanderbilt.
Resources:
http://voteview.uh.edu/vanderb2.htm
http://www.lasuerte.org/artvandy.htm
http://www.vanderbilt.edu