I knew I had an interesting Vanderbilt story in the library somewhere, but I couldn't nail it down in time to add to the Midge Decter novella earlier this week. So here it (or they, there's two) is now, courtesy Richard Zacks' An Underground Education.
Vanderbilt was tremendously wealthy long before he got into the railroad business. His nickname signifies his previous incarnation as a shipping magnate, beginning with the single ferry his parents bought him (more grounds for Heritage Foundation hero-worship). By the 1850s he was raking in the cash by providing the fastest coast-to-coast transport to the gold fields of California: a mere twenty-five days for $300.
He was able to cut twenty days off the usual length of passage because he had an exclusive franchise from the Nicaraguan government (for $10,000 a year plus 10% of the profits). By 1853 the Commodore decided to take a long European vacation, and sold his stock with the stipulation he receive 20% of the gross. Once he sailed away the new owners--Charles Morgan and C.K. Garrison--promptly stopped payment. Upon his return Vanderbilt wrote them:
Gentlemen:
You have endeavored to cheat me. I won't sue you.
The courts are too slow. I will ruin you.
This he proceeded nearly to do by creating a new line and charging $35 for steerage passage. His rivals were forced to repay all the monies they owed him. But that wasn't enough for Vanderbilt, who secretly bought up all the stock they were forced to sell until he controlled the company again and prepared to fire them.
But Morgan and Garrison weren't exactly pushovers. They financed a White Supremacist American mercenary named William Walker, who went to Nicaragua and overthrew the government. Unbeknownst to Vanderbilt, the new government voided his company's contract, seized its property, and awarded a new contract--to a company owned by Morgan and Garrison. (The grounds for the seizure was that Vanderbilt had been reneging on payment of the 10% royalty by claiming it was only due on that portion of the journey that crossed Nicaragua--and that part, miraculously, lost money, he claimed.)
Vanderbilt demanded that Secretary of State William Marcy do something about his loss of property. Marcy pointed out that the company was incorporated in Nicaragua. Eventually, Vanderbilt financed his own revolution, which re-took the capital and re-established his company's franchise. Miller and Garrison were ruined.
But the Commodore wasn't quite finished. He didn't resume his transit operation. Instead, he blackmailed the major Panama-based transit companies into paying him $56,000 a month to not compete with them. They could afford it, because they had the U.S. government contracts for carrying coast-to-coast mail.
During the Civil War, which was so fraught with criminal defrauding of the U.S. government by captains of industry such as J.P. Morgan and the DuPonts that even Midge Decter could be supposed to have heard about it, Vanderbilt sold decrepit ships at inflated prices through his own agent, who also demanded kickbacks of 5-10%. Indignant soldiers gouged out part of the rotted timbers of one ship and sent it to Congress as evidence.
Somehow, when Congress got around to citing shipping contractors for negligence, Vanderbilt's name was removed from the list before passage.
One thing we are in agreement about, Midge. It just wouldn't have been the same country without the tireless efforts of men like the Commodore.
1 comment:
Great stories, Mr. Riley!
I think what Midge really admires about Vanderbilt is the way he would invade countries and overthrow their governments, just for the sake of his own profits. That's what the American dream is all about!
So, kids, take Mother Midge's advice and help conquer Iraq, so that America's wealthy industrialists don't lose money on their oil investments.
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