Vanderbilt amassed his shipping and railroad fortunes by using ruthless business practices against his competitors and selected family members. On his death, he left the first fortune created by an industrial empire.
In the United States, the name Vanderbilt is synonymous with wealth and luxurious living. Cornelius Vanderbilt, from a large but unsuccessful farming family of Dutch and English descent, built the industrial fortune behind the name. Semiliterate, but canny and shrewd, Vanderbilt displayed at an early age the characteristics that would enable him to build an industrial empire. In dealing with his family, business rivals, and potential partners, he was abrupt, harsh, unceremonious, sarcastic, and uncivil.
It was Vanderbilt’s hard work and great physical strength that distinguished him when he plied the waterways around New York City, ferrying both passengers and freight. By undercutting his rival’s prices and challenging the Fulton and Livingston monopolies on the Hudson River, Vanderbilt amassed profits that helped him build and sail more steamboats. A combination of good luck and an exceptionally well-run company enabled him to accumulate his first fortune and the honorary title of “commodore” while in his forties. Parsimonious by nature, Commodore Vanderbilt used his wealth to invest in the development of a short sea route to the Pacific, hoping to gain a financial advantage shipping to California during the gold rush. His vessels sailed to Nicaragua and navigated a series of rivers and lakes to transport goods and people to California rather than taking the lengthier route around South America.
Vanderbilt keenly knew when to both invest in and exit from a company. Accepting that steam locomotives would replace steamships, he shifted his investment strategy to railroads. Investing in the New York and Harlem Railroad, Vanderbilt successfully manipulated company stock shares, creating revenue that enabled him to purchase a dozen railroad lines, including the New York Central, and to create a second fortune in his seventies. Carefully acquiring stock, underpricing his competitors, strategically increasing a company’s public shares for sale, manipulating legislatures, and challenging laws and monopolies always worked for Vanderbilt until he met Jay Gould and lost millions in watered-down Erie Railroad stock. After his death, his fortune was lavishly spent by his descendants.