The First Tycoon: The Epic Life of Cornelius Vanderbilt (36 page)

And everywhere Corneil saw men—almost only men—all eager to head for the mines or make money from those who were going. At the time the
James L. Day
sailed through the Gate, one resident counted some two hundred ships in the bay, from virtually every nation with a port on the Pacific. Russians and Australians, Peruvian Indians and Indian Brahmins, Japanese, Mexicans, and Maori, all passed up and down on urgent business. The town was “crowded with human beings from every corner of the universe and of every tongue—all excited and busy, plotting, speaking, working, buying and selling town lots, and beach and water lots, shiploads of every kind of assorted merchandise, the ships themselves, if they could.”
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No sooner had the
Day
pulled into port and the crew begun to unload the disassembled hull of the steamboat than Corneil deserted. Three others abandoned ship with him. He slipped into a town populated largely by young men awash in money with no authorities to inhibit their impulses. Making his way past the tents and shanties into the city's center, he discovered the finest buildings in San Francisco: “Gambling saloons, glittering like fairy palaces,” as a citizen wrote a few years later, “studding nearly all sides of the plaza, and every street in its neighborhood.… Monté, faro, roulette, rondo, rouge et noir and vingt-[et-]un, were the games chiefly played. In the larger saloons, beautiful and well-dressed women dealt out the cards or turned the roulette wheel, while lascivious pictures hung on the walls. A band of music and numberless blazing lamps gave animation and a feeling of joyous rapture to the scene.” All night the gambling went on, with runaway sailors and runaway slaves elbowing between wealthy merchants and ministers of the gospel, all drinking, eating, smoking, gaming.

Gold was everywhere, in solid lumps or bags of dust, thrown about carelessly, measured indifferently, won and lost at the tables with stunning rapidity (as much as $20,000 riding on a hand, it was said). And with the money and the revelry came violence—a flashing knife over a contemptuous word, the crack of a revolver over an attempted theft, a flurry of fistfights and formal duels.
“And everybody made money,”
wrote our San Franciscan,
“and was suddenly growing rich.”

It is difficult to know how all this affected young Corneil, because we know so little of his childhood—just a fleeting image of a furtive second son, overshadowed by his overbearing father, occasionally seized by epileptic fits. But he landed in this most impressive place at an early and impressionable age. By every indication, the San Francisco of 1849 stamped him with its image—a city of gamblers and speculators, confidence men and killers. Cornelius J. Vanderbilt stood in the saloons that remained open all night, swam through cigar smoke and shouted over blaring music, smiled at female card dealers and calmed belligerent miners, learning to talk, learning to charm.

The fever of the place infected even Captain Van Pelt of the
James L. Day
. He and his crew reassembled the steamboat
Sacramento
and started to run it up the eponymous river on September 14; meanwhile his second-in-command, James S. Nash, took command of the schooner and entered the carrying trade on the bay. And they made money, and suddenly grew rich. Within two months, the
Sacramento
earned a profit of $40,000, and the
James L. Day
another $10,000. Unfortunately for Vanderbilt and the other owners, Captain Van Pelt allied himself with a San Franciscan, James H. Fisk of Turner, Fisk & Co., who saw no reason to remit such earnings all the way across the continent. Fisk and Van Pelt decided to auction off the two boats, even though they had no authority to do so. They named a time just before the departure of a Pacific Mail steamship from San Francisco, an hour when the city's merchants were frantically busy with correspondence and consignments of gold for the Atlantic coast. Then Fisk held the auction fifteen minutes ahead of schedule. With no other bidders, he bought the boats himself at ridiculously low prices. He soon sold them, winning a very large profit.

Corneil, on the other hand, did not do so well. Not long after abandoning ship, he ran out of money, most likely at the tables, and issued a draft on his father—a draft his father refused to honor.
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But it was the excitement rather than the bad debt that endured in his memory. It is impossible to contemplate the Corneil of later years without imagining that he carried with him those heady days of utter abandonment and strained to his utmost to recapture them. “Happy the man who can tell of those things which he saw and perhaps himself did, at San Francisco at that time,” wrote our witness. San Francisco would haunt Corneil to the end.

THEY CALLED HIM “INDIANA WHITE,”
though the records of the House of Representatives name him Joseph L. White. Curiously, his contemporaries never described his physical appearance; he seems to have cut an eminently forgettable figure. It was his voice they remarked on, his gift for rhetorical explosions and diamond-cutting logic. In 1840 he emerged from an obscure youth in upstate New York, where he had studied law, to become a powerful speaker in Indiana for presidential candidate William Henry Harrison. White was “the most fascinating orator that ever mounted a stump in the state,” in the words of one newspaper. “Probably since stump speaking was invented no effort was ever received with such unqualified and extravagant delight, not merely by the ‘roughs,’ who could appreciate its ‘hits,’ but by cultivated men, who could penetrate its arguments.” He won election to the House that year as a Whig. In Washington he withered, much to everyone's surprise. He possessed “a genius,” the same writer observed, “that only lacked the balance of character to be one of the most powerful men in the nation.” Perhaps, in his only term in Congress, his unbalance began to reveal itself.

Still, White was smart, in every sense that word carried in 1843, when he moved to New York and started to practice law. “He was one of the most social and genial men I have ever met, and a most engaging and eloquent conversationalist,” remarked one New Yorker. “His apropos speeches, his witty and good-humored repartees, were inimitable.” He emerges from these accounts as a highly confident man of sharp wit, a sophisticated and well-connected charmer, a master of both courtroom histrionics and backroom negotiations. As a former politician, he also had ties to the new Whig administration of Zachary Taylor, elected president in 1848. He was, in short, a fixer.
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How and when Vanderbilt first approached White remains uncertain, though two dates suggest the moment when they joined in the Nicaragua canal project. On March 24, 1849, Vanderbilt resigned the presidency of the Elizabethport Ferry Company, as if to concentrate his efforts on something else. On March 29, White sent a letter from a hotel in Washington, D.C., to the new secretary of state, former Delaware senator John M. Clayton. “I have come from
New York
expressly to see you
on business of importance
, & which admits of no delay,” he wrote. “Will you oblige me by writing a note, informing me at what hour to day or tomorrow I can see you
privately.…
I have come on behalf of
seven
New York gentlemen & on their errand. I know something of your engagements, & would not press for an interview under
ordinary circumstances
.”
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Clearly White was an
emphatic
man, impressed with his own importance. In this case, though, he understood his audience. Back in 1835, Senator Clayton had sponsored a bill to encourage Americans to dig a canal across Nicaragua. Now he came into office as secretary of state with U.S. territory on the Pacific, massive quantities of gold coming out of California, and tens of thousands of Americans migrating there. The canal idea had grown dramatically more important for American foreign policy. Clayton listened with great interest as White told him that Vanderbilt had organized the American Atlantic & Pacific Ship Canal Company, and had dispatched David White (Joseph's brother) to Nicaragua to negotiate with the government there.

Not many days later, Clayton appointed Ephraim G. Squier the chargé d'affaires to Guatemala (the chief diplomatic post in Central America). “Considering the motive which influenced you to make this appointment
so speedily,”
Joseph White wrote to Clayton on April 3, “those with whom I am associated & myself… express their & my very sincere acknowledgments to you; and I beg you to examine this
written assurance, that under no possible combination of circumstances will I fail to reciprocate this great favor in any mode which you may designate
.”

This curious letter reveals White as not only emphatic, but insinuating as well—not to mention vain. He assumed Squier's appointment had been a favor, to be repaid on demand. It was an assumption that came naturally to the scheming brain of a political fixer. Clayton, by contrast, was a very high-minded man, focused not on rewarding friends but on public policy. Ignorant of this, White blustered on, listing orders that should be given to Squier to assist in the canal intrigues—“instruct him
to avoid my brother
(now in Nicaragua) in securing the grant”—and assuring Clayton that the company's tolls would discriminate against the British in favor of American ships.

If he thought this would prove appealing, he was mistaken. Clayton believed that any canal must be neutral, or it would lead to “more bloody and expensive wars than the struggle for Gibraltar had caused to England and Spain.” Yet he seems to have tolerated White's insinuations in order to accomplish the larger goal. As he wrote in his instructions to Squier, “A passage across the isthmus may be indispensable to maintain the relations between the United States and their new territories on the Pacific; and a canal from ocean to ocean might, and probably would, empty much of the treasures of the Pacific into the lap of this country.” Clayton thought that the canal was essential to the national interest, but he also knew that Congress would never fund its construction. He needed Vanderbilt and his backers as much as they needed him.
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Joseph White happened to reveal to Clayton the names of those backers, who have previously escaped historical notice. The original organizers of the canal company included Cornelius Vanderbilt, of course, along with White and his brother David, merchants Nathaniel H. Wolfe and Edmund H. Miller, and three Wall Street firms: Livingston, Wells & Co.; Hoyt & Hunt; and Bowden, Groesbeck & Bridgham. The last-named firm suggests the disguised involvement of Daniel Drew, for David Groesbeck was one of Drew's personal brokers and close allies.
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They were not the only American businessmen seeking the rights to a crossing in Nicaragua. No sooner had Squier arrived there than he learned that another firm claimed to have signed an agreement with the government that granted them monopoly rights for a canal or railroad across the isthmus.
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Vanderbilt's canal project had scarcely begun, and already it was mired in the political jungles of Central America.

ON AUGUST 26, DAVID WHITE
signed a contract with the Nicaraguan government. It gave the exclusive right to build a canal to Vanderbilt's American Atlantic & Pacific Ship Canal Company in return for $10,000 a year, 20 percent of the annual profits, and a stake in the business. “It will also be observed that the grant is not only for a canal, but for a rail or carriage road,” Ephraim Squier wrote to Clayton, “a provision which will enable the company to open a route at once across this isthmus, more rapid, easier, cheaper, safer, and more pleasant, than that by Panama. In distance, this route will save 300 miles on the Atlantic and upwards of 800 on the Pacific.”
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For Vanderbilt, the transit route promised to make his Nicaragua adventure profitable during the prolonged canal construction by allowing him to carry passengers across the isthmus. But he may not have realized how lucky he was to get any contract at all. White negotiated it during a rare moment of peace and unity in a country whose divisions would plague Vanderbilt in ways he scarcely imagined in 1849.

The Spanish built cities in Nicaragua a century before Squanto taught the Pilgrims to plant corn, but they left an inheritance of perpetual civil war. When Spain's empire collapsed in 1821, Nicaragua briefly fell under Mexican rule; then it joined the United Provinces of Central America from 1823 to 1838, when it finally assumed full sovereignty. Independence, unfortunately, brought little sense of national cohesion. Unlike virtually every other former Spanish province, it lacked a single metropolitan center. Two cities—León and Granada—fought for dominance. As in other Latin American nations, two parties, generically known as the Liberals and the Conservatives,
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dominated politics, but here they were identified with the two cities: the Liberals made a bastion of León, while the Conservatives were entrenched in Granada. The cities' patricians waged war without end, fighting less out of ideology than geographical rivalry, commanding armies of unmotivated Indians and mestizos who were dragooned out of the sparse population of only 275,000 or so. In 1849 alone, no less than three men declared themselves the supreme director, as the Nicaraguan chief executive was called. “Nothing exists but our misfortune,” declared a government report. “One man fights another, one family opposes another, one town attacks another, all with such a variety of different interests that we will never be able to form a state.”
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Fortunately for Vanderbilt, a popular uprising united Nicaragua's warring elite in 1849. They joined forces to suppress the rebellion, and executed its bandit leader a month before they signed the canal contract (superseding the agreement with the rival company, which had been negotiated before the settlement of the civil war). The unity government embraced Vanderbilt's proposal; for centuries, Nicaraguans had dreamed of a canal that would bring the riches of the world through their borders. “Where is… the patriot, the wise man,” asked one Nicaraguan newspaper, “who does not want to see this productive project carried out?” Enthusiasm for the North Americans swept the country, as Squier arranged a treaty that promised U.S. protection to Nicaragua.
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