The First Tycoon: The Epic Life of Cornelius Vanderbilt (9 page)

Unlike the stuffy, fictional aristocrats of Jane Austen's novels, Livingston and his fellow patricians felt no disdain for trade. They maintained countinghouses in the city invested in urban real estate, and had careers as lawyers and merchants. They embraced Hamilton's financial program, with its stocks, financial markets, and banks. Schuyler, Hamilton's father-in-law, sought to rationalize his tenants' leases for greater profits, and the patricians led the drive to build a canal to Lake Erie. Livingston organized a state agricultural society and promoted merino sheep and gypsum fertilizer. To quote George Washington, they were decidedly a “monied gentry.”
¹¹

Those very activities, however, separated the commercial vision of aristocrats such as Livingston from the emerging ideals of rank-and-file Jeffersonians. He believed in economic development, but in an ordered manner, directed from above. After the Revolution, the seeds of a different notion began to sprout—of an individualistic, competitive economy where one could go as far as his ability and energy could take him. “Adam Smith's invisible hand,” writes historian Joyce Appleby “was warmly clasped by the Republicans.” They criticized the patricians for using their political power to grant themselves special privileges. Corporate charters usually went to the well-connected. Many early banks extended credit only to a closed network of relatives and cronies. Government intervention in the economy largely consisted of special rewards to officeholders and favored men.
¹²

The aristocrats saw no conflict of interest in using public office to enrich themselves. As society's natural leaders, they reasoned, they should be entrusted with economic stewardship as well. This outlook, this merging of the private and public roles of the elite, was the essence of mercantilism, in which the state empowered private parties to carry out activities thought to serve the public interest.
¹³
The standard reward for such an undertaking was a monopoly—just what Chancellor Livingston sought when he offered to meet a most pressing public need, the need for steamboats.

Even before Americans learned of James Watt's work with the steam engine in England in the 1760s, they had dreamed of bolting it to the hull of a boat to speed themselves across the vast stretches of water that linked their scattered communities. Experiments abounded: paddlewheels, early propellers, even a water jet and mechanical oars.
¹⁴
Chancellor Livingston dreamed and experimented as ambitiously as anyone. In 1798, he convinced his friends in the legislature to give him a monopoly on steamboats in New York State waters. Unfortunately he failed to produce a working design of his own, and his monopoly remained unused.

In 1801 he arrived in Paris as Jefferson's minister to France, where he met an émigré American artist and inventor named Robert Fulton. As Livingston helped to negotiate the Louisiana Purchase, he financed Fulton's prototype steamboat, which ran on the Seine in 1803. They returned to New York, where Fulton tinkered with his designs. Finally, on August 17, 1807, the sixty-year-old Livingston invited New York's dignitaries aboard Fulton's final effort, a clanking, 150-foot-long vessel prosaically named
Steam Boat
. Crowds lined the shore to watch the amazing spectacle: a boat moving by mechanical power. It churned up the Hudson at five miles per hour to Livingston's manor, Clermont, where Livingston declared that his cousin Harriet and Fulton were to be married. The steamboat—and Fulton—had arrived.

Fulton created a line between New York and Albany while Livingston maneuvered an extension of the monopoly through the legislature—“a veritable model of state munificence,” as legal scholar Maurice G. Baxter writes—that gave him the right to seize steamboats that entered New York waters from other states.
¹⁵
But Livingston had overreached. With so many inventors and investors interested in the steamboat, the monopoly only served to limit its widespread adoption. The new technology was simply too important for the monopoly to remain unchallenged.

In 1813, Chancellor Livingston died. That same year, Gibbons's neighbor and business partner Aaron Ogden took office as governor of New Jersey, and promptly launched an attack on the steamboat grant, both as chief executive of the state, fighting New York's claims to the waters shared with New Jersey,
and
as a private steamboat entrepreneur. In a bitter battle Fulton successfully defended his monopoly, though at the cost of his own life, after he fell ill from exposure when crossing the frozen Hudson on his return from a lobbying trip to New Jersey. The monopoly lived on in the hands of Livingston's heirs, who came to terms with Ogden. On May 5, 1815, a little over two months after Fulton's death, the Livingstons gave Ogden a license to run his own steamboat between Elizabethtown and New York. Ogden had begun as the monopoly's most potent challenger; he had ended as its ally
¹⁶

Enter the irascible Thomas Gibbons. On the surface, he and Ogden had everything in common: they were of the same party profession, and patrician status. In temperament, however, they were virtually destined to clash. Gibbons was arrogant and explosive; Ogden, wily and sanctimonious. And both were men of infinite calculation. With all the force of a Greek tragedy, their respective traits drew them into an epic conflict, one that would decide the fate of the Livingston steamboat monopoly.

At the height of Ogden's battle against the Livingstons, he and Gibbons fell into a dispute over the renewal of a lease for his steamboat pier, which he rented from Gibbons, who characteristically made things difficult. Ogden tried to apply pressure by involving himself in Gibbons's ongoing dispute with his wife, daughter, and son-in-law over Gibbons's will, suggesting strategies to the disinherited family members. This only enraged the easily enraged Gibbons. To make matters worse, Ogden acquired a past-due promissory note that Gibbons had made out to a third party; Ogden deposited it with his banker in New York, who had Gibbons arrested for nonpayment on May 30, 1816 (on Ogden's steamboat, no less). Gibbons bailed himself out and stomped home, steeped in a hatred that soon took on a life of its own. “As we reside within half a mile of each other,” he wrote to Ogden, “and your never intimating to me, nor any of my friends, any claims or cause of action you had against me, I pronounce your conduct
rascally.”
¹⁷

For Gibbons, it had become an affair of honor. On July 25, 1816, he stormed over to Ogden's house, horsewhip in hand. He pounded on the door as Ogden ran out the back and scrambled over a fence. Gibbons tacked up a challenge that read, “Sir—I understand that you have interfered in a dispute between Mrs. Gibbons and myself.… My friend Gen. Dayton will arrange with you the time and place of our meeting.” He later testified in court that “if he had found him at home he meant to have whipped him within an inch of his life in his own house, for he knew he was a coward.”

Ogden, who had no intention of exchanging shots at dawn, had Gibbons arrested for trespass and for dueling. Gibbons decided to get revenge another way, one that stood to increase his own wealth even further: he would drive Ogden out of the steamboat business by running his own paddlewheeler between Elizabethtown and New York. And that—against all logic of politics, social position, and personal conviction—pitted him directly against the New York steamboat monopoly.

In taking on Ogden as an ally, the Livingstons had unwittingly acquired their deadliest enemy yet.
¹⁸

WHEN THE STORM HIT
on the morning of February 3, 1818, Vanderbilt stood in the rocking hull of the
Dread
, which he ran on a strict schedule between Staten Island and New York's Whitehall Slip. Scanning the skies from within the grip of Manhattan's piers, he could see what little time he had to secure his boat. The winds began to howl through the bare masts of the ships that nursed along South Street, driving hail, then rain, then snow down New York's narrow ways.

Then the little steam ferry
York
^*
came drifting past the Battery, just off Manhattan's southern tip. The boat had no business there; as Vanderbilt knew, it made its 10:30 run from Paulus Hook (later the site of Jersey City) to the foot of Courtlandt Street, over on the North River waterfront. What he did not know was that it carried a full load of thirty passengers and three wagons, each with a two-horse team; that the storm had smashed the boat like the butt of a rifle, halting its progress across the Hudson; and that the pilot had decided to seek the shelter of Whitehall Slip. On rounding the Battery, it had met a ruthless ebb tide pouring out of the East River, which ripped the
York
out of control. Waves crashed over the rails, sending tons of freezing seawater knee-high across the deck.

As Vanderbilt stood in the
Dread
, a single glance would have revealed hundreds of masts in the harbor—of boats, barks, and brigs, all anchored or moored against the gale. With the storm rising to its height, none dared to go to the aid of the
York
. Undeterred, he cast off and hoisted sail. Running before the wind, he bore down on the spinning
York
, bringing the
Dread
alongside amid the snow and hail. The two vessels drifted together in the worst of the storm; one by one, twelve passengers clambered over the gunwales into the
Dread
before Vanderbilt had to cut loose. He later tied up safely at Whitehall. Now out of reach, the
York
drifted on with the rest of the passengers, all the way to the Narrows, until it finally landed six hours later.
¹⁹

After the rescue, Vanderbilt returned immediately to work, repairing his ravaged boat, preparing to resume his scheduled runs. If anything, his moment of glory only underscored the distance between himself and the merchants, who read about his exploit in the
Evening Post
.

It is often thought that youth is the time of grand horizons, of great dreams and bold plans. In fact, the reverse is often true: how little the young have experienced, how little they know of what might be. Vanderbilt daily glimpsed the emporium of New York, but he saw it strictly from sea level. He may have begun to buy and sell his own small cargoes of fish and fabrics, but he was removed from the countinghouse kingdom on the far side of South Street—the merchants who endorsed bills of exchange with glasses of sherry in hand, the auctions of federal bonds and British imports. His was a gunwale-to-gunwale existence of weather in the face and physical strain. He encountered the Anglo-Dutch elite only when they called on his sailor's skill and knowledge—as they did again just three weeks after the storm.

Late on the night of February 23, the British ship
Neptune
ran aground at Sandy Hook. Twenty-two days out of Jamaica, the merchantman carried $404,000 in gold and silver, of which $339,000 belonged to the New York branch of the recently refounded Bank of the United States. That precious metal formed the very foundation of the most important branch of the nation's central bank; every note, every record of deposit, every check it issued was considered a promise to pay in specie. Though no lives were at risk, the loss of the cargo might have a devastating effect, sparking a panic. None of the bay's boatmen had been able to salvage it, as waves battered the helpless vessel. So on February 26, Vanderbilt piloted the
Dread
down to Sandy Hook to see the stranded ship for himself. Two boats were luffing uselessly around its inert hull. Vanderbilt neatly steered his craft alongside and began to haul the specie across the gunwales. Later he met the federal revenue cutter
Active
and transferred the cargo. A possible financial catastrophe had been averted.
²⁰

By the time of this second rescue, Vanderbilt had already begun his foray into the world of wealthy men. When the
Mouse
was laid up for winter refitting, Vanderbilt had returned to his sailboats. But he seemed to sense that there was more to be made of his relationship with Gibbons; so when Gibbons asked him to check on the work being done to the
Mouse
, he agreed.

On the day the
Neptune
ran aground, Vanderbilt hurried over to the shipyards of Corlears Hook, the southeastern bulge of Manhattan island, and marched into the sprawling steam-engine works of James P. Allaire. A friendship quickly grew up between these two men, who both valued tough-minded competence, and Allaire willingly tutored Vanderbilt in this new world of steam. Few knew more about it. Allaire had worked on Fulton's first boats, then leased the inventor's engine works after his death and moved the machinery to these yards on Cherry Street. Allaire had built the
Mouse
himself, in fact, to test a paddle design. He walked Vanderbilt through the yard, pointing out the replacement parts for the boiler, the new toilet (or “necessary”), and the boring mill where the piston cylinder would be prepared.

Vanderbilt moved on to the shipyard of Lawrence & Sneden. There, beneath a swarming crew of caulkers and carpenters, glistened an entirely new hull ordered by Gibbons, for a vessel provisionally called the
Violin
. This sleek steamboat-in-creation stretched twice as long as the
Mouse
and would soon be fitted with Allaire's newest machinery. “I have saw the Violine,” Vanderbilt reported, in his characteristically direct style, “and think she will be a fine Boat.” It soon received a new and lasting name: the
Bellona
, after the Roman goddess of war. It would prove a fitting title indeed.

When Vanderbilt next sailed up the narrow Kill Van Kull to Gibbons's Rising Sun Landing, where a crew of workmen hammered together a pier and buildings to serve the
Mouse
and the
Bellona
, Gibbons greeted him with a demanding air. Obese and diabetic from a life of rapacious eating and drinking, Gibbons constantly grumbled about “the agonies of my frail body” that often left him housebound in Elizabethtown. Gibbons needed someone to help run his new steamboat enterprise; his first preference, his son William, spent much of his time overseeing the family's plantations. Gibbons observed that Vanderbilt stood in marked contrast to the “worthless fellows” who ran so many of the harbor's boats; his manner and conduct earned as much trust as Gibbons was grudgingly willing to give. He asked Vanderbilt to become his permanent captain, and move to Rising Sun Landing—directly under his hard eye.