Cornelius Vanderbilt has been described as an illiterate brute with a short temper, who
was hated or feared by most people he met.
And yet, he’s also one of the wealthiest men in history, an incredibly shrewd and cunning
business magnate who was once the richest man in the world - in fact when he died, he
reportedly had more money than was held in the entire U.S Treasury at the time.
You see, before there was Rockefeller or Henry Ford, there was Cornelius Vanderbilt, whose
been dubbed the original robber barron - the term for successful industrialists who amassed
giant fortunes through extremely ruthless business practices.
But it’s hard to deny Cornelius’ story is one of the greatest rags to riches stories
there is.
Cornelius’ ancestors had originally come to America as servants, so Cornelius’ rise
from nothing to unimaginable wealth and power is truly fascinating.
Let’s now travel back in time to the early 1800’s and see where it all began…
At the age of just 11 years old, Cornelius dropped out of school and went to work on
his father’s ferry in New York Harbour, which transported goods across the river.
After learning the trade, Corenlius wanted to start his own business doing the same kind
of thing.
Which meant he needed a boat.
His mother was a farmer, and whilst she didn’t have a lot of money, she had some savings
which she agreed to loan to her son - $100 to be exact - which would be enough for him
to buy his own small sailboat.
There was one caveat though: in order for Cornelius to get the loan from his mum, he
had to clear an extremely rocky field so that she could farm it.
Cornelius had always had an extremely strong work ethic, and so he immediately agreed - but
it soon became clear removing so many rocks from the field was going to take too long.
So, he managed to convince other local kids to help him with the job, and in return he
promised they’d get free rides on his new boat.
Together they cleared the field, so his mum gave him the $100 loan, and Cornelius bought
his first boat at the age of just 16.
Cornelius then began transporting both freight and passengers, between Staten Island and
Manhattan.
Of course, there was plenty of competition from other ship owners doing the same thing,
but Vanderbilt’s strategy was to undercut everyone else, and offer the cheapest fares
on the market.
He quickly gained a reputation for his reliable and affordable ferry services, and, here’s
the crucial bit: after repaying back his mother for the loan, he reinvested all the profits
he made back into the business.
This meant he soon was able to buy another ship.
And then another ship.
This is basically the capitalist blueprint for success; it’s really not that different
to how Jeff Bezos built Amazon - you initially live frugally yourself, and reinvest all the
business profits straight back into more growth.
And do this over and over again to build your empire.
And because Corenelius worked so relentlessly hard, it wasn’t long before he had a whole
fleet of ships transporting both people and goods across a variety of different routes,
and people started nicknaming him The Commodore.
But then Cornelius got an even bigger breakthrough with The War of 1812 between the United States
and Great Britain, when the American government gave him a lucrative contract to help transport
soldiers on his ships.
Somehow though, despite working such long hours, at the age of 19 Corenlius found time
to marry his cousin, and later went on to have 13 children with her.
Although he wouldn’t find time to be a good husband or father; there are many reports
of Corenlius neglecting them, and having a very unhappy family life.
In fact, he even had his wife briefly committed to an insane asylum at one point.
And a few years later, he committed one of his sons to an insane asylum as well, simply
because he was having eplipetic fits, which Cornelius saw as a sign of weakness and mental
derangement.
But back on the business side of things, trade was booming, and by the late 1820’s, Corenlius
had identified how to step his business up to another level: steamboats.
He knew the steamboat technology was much more efficient than the ships he’d been
using, and so he began investing heavily into buying steamboats instead.
And once again, he used the same tactics that he had with his sailboats: initially undercutting
every single competitor so that he had the cheaper prices, and thus stole all their customers.
At one point he even started offering some boat trips for free.
To Corenlius, it didn’t matter if he was making a loss on every trip, because his logic
was simple: as long as he had more money than his competitors, he could quickly bankrupt
them by taking all their customers, and then once they were out of business, he’d raise
his own prices to more sustainable levels.
These ruthless tactics did indeed bankrupt several other business owners.
But in many cases, Corenlius would simply buy their businesses at a reduced price, once
the ship owners realised they couldn’t compete with Cornelius’ pricing.
There were also a few larger steamboat companies who simply paid Corenlius a lump sump of money
to leave the area and not compete on the same trade routes.
For example, when Cornelius started operating on the Hudson River, a company called The
Steamboat Association who also operated there paid him $100,000 to stop operating his ships
in their territory.
For them, it was cheaper to pay Cornelius off than try to compete with his low prices.
Of course, every time Corenlius got a big payoff like this, or he bought out a competitor
at a discounted rate, his own fleet just got bigger, and thus his power and wealth increased
further.
To Corenlius, making money was a game, and he was determined to win.
However, even as Cornelius’ wealth grew, he would always be considered an outsider
by the wealthy elite.
His lack of school education didn’t help there either, as Cornelius struggled to write
properly, and the way he looked and spoke was certainly not like how most of the upper
class looked and spoke.
But Corenlius used his working class beginnings to his advantage; he advertised his ships
as The People’s Line, affordable ships for normal everyday people.
But Cornelius was never content with what he had, and in 1949 Cornelius identified his
next big money maker…
the California gold rush.
Now, you may have heard the stat that the people who got richest during the gold rush
were often the people selling the pickaxes, not the people actually looking for gold,
as there were so many people doing that.
But if you want to know who got richest of all from the gold rush, it was the ones transporting
people to get there…
You see, after gold was discovered in California, literally hundreds of thousands of people
were travelling there hoping to get rich, the largest mass migration in American history.
But California wasn’t yet linked to the rest of the country by rail, and Cornelius
wanted to cash in on this, so he immediately began offering boat trips to California.
Of course, several other people did too, but where Cornelius differentiated himself is
that he found a new route to California via Nicaragua, which was about 600 miles shorter
than the route via Panama everyone else was using.
He agreed an exclusive deal with the government of Nicaragua, and a result, Corenlius’ trips
were faster and cheaper than the competition, and thus he attracted far more customers.
As more and more people flocked to the gold rush, it was Cornelius who was cashing in
on every single trip.
But in 1853 Corenlius did something that he’d basically never done before...
He took a vacation.
He was about to turn 60 years old and had been working pretty much non-stop ever since
he was a kid, so he decided to finally have a proper break and bought a gigantic yacht
to go on a tour of Europe with his family… and immediately, everything went wrong.
He’d left management of his new transport business in Nicaragua to two men called Morgan
and Garrison, who were partners in the business - but they ended up betraying him, and making
a shady deal with the new president of Nicaragua, a man named William Walker who’d forcefully
taken charge of the country.
The deal basically meant Cornelius’ exclusive rights to operate his ships throughout the
country would instead be given to just Morgan and Garrison instead.
When Cornelius found out, he sent them one of the shortest and most ominous letters ever:
“Gentlemen: you have undertaken to cheat me.
I won’t sue you for the law is too slow.
I’ll ruin you.
Yours Truly, Cornelius Vanderbilt.” - and that’s exactly what he did.
Cornelius immediately setup another transit company nearby and used his classic trick
of offering ridiculously low prices to steal customers.
He then refused to transport passengers to or from Niacragua to create a blockade of
the country.
He also convinced the nearby countries to not recognize Walker’s new government.
And eventually, he helped start a war to completely overthrow the new government in Nicaragua.
Basically, as Cornelius had stated in his letter, he had completely ruined those who’d
crossed him.
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Now, by this point Cornelius was nearly 60 years old, and when most people get to the
age of 60 they’re looking to retire, and wind down for a more relaxed life.
But not Cornelius.
He was about to monopolise an entirely different industry.
But before that, let’s quickly go back to his personal life.
Because in 1868, Corenelius’ wife died, the one he briefly sent to an insane asylum.
And then just one year later, Cornelius married a different woman, called Frank Armstrong
Crawford.
And yes I double checked that wasn’t a mistake; his wife’s name was indeed Frank - this
was supposedly because Frank’s parents had agreed to name their child after their best
friend, and they’d obviously just assumed they were having a boy.
But when they had a girl, they still stuck with the name Frank anyway as agreed.
So anyway, Cornelius married Frank, who was more than 40 years younger than him.
And as if this wasn’t weird enough, this woman called Frank, who was 40 years younger
than Cornelius, was another one of his cousins.
I’m not joking.
Cornelius first marriage was to his cousin Sophia, but with her dead, a year later he
was now marrying another of his cousins called Frank.
And look I know marrying your cousin was more common back then, but still, the guy’s been
all over the world yet both his wives were his cousins.
So, Corenelius’ personal life was still as weird as ever, but business wise, he was
really just getting started…
You see, Cornelius was always looking to the future, and just like he’d previously identified
steamboats as the next revolutionary technology, now he was looking at railroads.
He realised more and more shipments were happening not by boat, but by train, and so if he wanted
to continue to dominate transportation, that’s where he needed to focus.
So, Cornelius began selling off his fleet of ships, and instead began investing in railroads.
Now until Cornelius got involved in the railroad business, there were a huge amount of different
railway services that were independently owned, but Cornelius started connecting railroads
between different regions, and building an interconnected network.
He wanted to consolidate all these different railways into one giant railroad empire, and
by doing this, he began to build a monopoly in railroad transportation.
Of course, as always, Cornelius reinvested most of the profits to buy even more railroads
and expand even faster.
Before long, he’d built the largest railroad in the world.
Now, in his final years of life, Cornelius did start diverting some of his huge wealth
towards philanthropy - for example he established the Vanderbilt University for a million dollars,
which at the time, was the largest charitable gift in American history.
But around this time, Cornelius grew increasing ill and became bed ridden.
Despite his weakened state, he was still his usual fiery aggressive self.
For example, when he saw members of the media outside his house to report on his illness,
he had to be physically restrained after going outside to attack them.
But after many months of fighting his illness, he died in 1877, aged 82.
The New York Times announced his death, stating The immediate cause of his death was exhaustion,
brought on by long suffering from a complication of chronic disorders.
At the time of his death his fortune was worth around 100 million dollars, but adjusting
for inflation, that today would have been around 200 billion dollars.
It’s estimated that on paper, he had around one-ninth of all the American currency in
circulation at the time.
And yet despite that, he lived a relatively modest life - he consistently ploughed almost
all his income, and his time, into his business.
When he died, around 90% of his fortune went to his oldest and favourite son, and then
he split the rest between his other many children, most of which he viewed as weak and undeserving.
Cornelius Vanderbilt was clearly a polarising figure; hated by many, but normally with a
grudging respect.
Even his enemies would have to admit that he drastically improved and expanded transportation
- first through sailboats, then steamboats, and eventually railroads, and in the process,
he’d helped connect different parts of the country together, allowing for much easier
transport of both people and goods, and at affordable prices.
In many ways he shaped the American economy more than any other entrepreneur had before
him.
And It’s quite amazing that he turned that initial $100 loan from his mum into a fortune
that very few other people in history would ever match.
However if you want to find out the historical person who was even richer than Cornelius
Vanderbilt, just click this video right here.
Trust me this one is a really wild ride.
I’ll hopefully see you there.
Cheers!