Cornelius Vanderbilt- The Third Richest Person Of All Time

The late 19th century saw the rise of some of the wealthiest and most powerful capitalists in America. Ruthless and competitive in nature, they are often attributed as the men who transformed the economy of the country forever for the better, accumulating massive wealth for themselves in the process. If we focus on the 19th century specifically, the greatest and most successful of these robber barons, as they were often called, was Cornelius Vanderbilt, who, in a span of six decades, amassed so much money, which adjusted in today's value makes him the third-richest person ever after John D. Rockefeller and Andrew Carnegie. On this video, we would see the spectacular rise of Vanderbilt through the toughest times of America. The word Vanderbilt literally means, off the build. This name originated from the Dutch village of Debilt, from where Cornelius's great-great-grandfather, Jan Utzon Vanderbilt, emigrated to New York as a servant in 1650. Born in Staten Island, New York, on 27 May 1794, in a poor family, Cornelius Vanderbilt inherited practical skills of making money from his father, who was a ferryboatman. Just at the age of 11, Cornelius dropped out of school to work on his father's business in New York Harbor and ferried passengers and cargo between Staten Island to Manhattan. At a young age of 16, he borrowed $100 from his mother, bought a two-mast ferry oarboat, and started his own ferrying business on the same route. Through his inherent business skills, he earned a profit of more than $1,000 in his first year and also paid back the loan he took from his mother. Such was his energy and eagerness in the trade of ferrying and sailing that other captains nearby started to call him the Commodore, a name that he embraced for the rest of his life. During the War of 1812 between the United States and the United Kingdom, Cornelius started receiving contracts from the U.S. government for supplying cargo to neighboring army outposts. Thus, the war turned out to be a blessing for Cornelius, and by the end of it in 1815, he owned a fleet of boats and had $10,000 of working capital, which is equal to around $160,000 on today's value. On 1817, seeing the potential of using the newly invented steamboats in the ferrying business, Cornelius sold out his boats and joined the New York to New Jersey Steamboat Ferry as a captain after being requested to do so by a ferry entrepreneur named Thomas Gibbons. Cornelius, who, until this point, was running only manual boats, quickly learned how to manage large commercial operations and deal with legal disputes. However, he soon became aware of a battle that was prevailing in the business of the steamboat ferry. Let's understand what was going on. In 1798, the state of New York entered an agreement with a guy named Robert Fulton and his assistant Robert Livingston. If they developed a steamboat capable of traveling four miles per hour upstream on the Hudson River, they would be given a monopoly of steamboat navigation in the waters of the state. Fulton and Livingston managed to develop that kind of steamboat in 1807 and, according to the agreement, got the exclusive rights. Pretty soon, when competitors started to legally challenge their decision, Fulton and Livingston started to destroy the competition by either selling them ferrying licenses or buying up their boats. Although both of them were dead by the time Cornelius entered the business, it was a guy named Aaron Ogden who purchased the rights from them in 1815 and was still holding the monopoly. But Thomas Gibbons, for whom Cornelius was working for, was trying to destroy this monopoly. To accomplish this, Gibbons undercut prices heavily and challenged the state authorities' decision in the U.S. Supreme Court in a famous case known as the Gibbons v. Ogden case. Cornelius proved to be of great help in this matter when he hired one of the best lawyers of that time, Daniel Webster, to fight against Ogden. On March 2, 1824, the Supreme Court ruled in favor of Gibbons, saying that the states had no power to interfere in interstate commerce and the exclusive steamboat navigation of Ogden in the waters of New York was seized. In 1826, after the death of Gibbons, Cornelius left the job and started his own ferry again, this time with big steamboats. In 1834, he entered the Newark to Albany route, which ran through the Hudson River. By bringing down prices to close to zero and running multiple ships in both directions every day of the week, he challenged the existing dominance of the Hudson River Steamboat Association or HRSA, which was a cartel of existing rivals in the route. Each of its members agreed to keep their prices the same in order to improve profits and were charging a high monopoly fare of $2 per passenger until then. With his intent to drive the HRSA out of business, Cornelius started to sell food during the journey for higher prices and carried more passengers per trip to compensate for the loss in revenue due to low fares. On top of that, he had only three ships to maintain, compared to the hundreds of ships that were owned by the members of the association. Unable to compete with this dirty strategy, on December that year, the HRSA eventually agreed to pay $100,000 to Cornelius in 1835, which is close to $2.5 million in today's currency, and also agreed to pay $5,000 each year for the next one decade. In return, Cornelius agreed not to engage in any Hudson River freight or passenger shipping for that decade. Next, he implemented the same tactics in various other routes like Long Island Sound, Providence, Boston, and Connecticut and earned millions from it. By the age of 40, Cornelius Vanderbilt became a pretty wealthy man with a net worth exceeding $500,000 or around $15 million in today's value. Nevertheless, he was still searching for new fields to conquer. During the California Gold Rush, which started in 1848, thousands of people started to migrate to the west coast of the United States in search of the precious metal. As there was neither any transcontinental railway network nor the Panama Canal back then, migrants from the east coast were boating to Panama, crossing the landmass in between by different ways, and boating again to their destinations in the west coast. There was also the less popular and substantially longer route around the South American continent via Cape Horn. Vanderbilt, however, created a new route that reduced the cost by half and the distance by 600 miles that it would take to travel across Panama. He created the Accessory Transit Company in 1851, which carried passengers to Nicaragua, a country which was closer than Panama, then crossed the 12-mile isthmus in between through the San Juan River and Lake Nicaragua and boated their way to their destination. Being a right move at the right time, it became a huge success, and by 1852, it turned out to be the cheapest route to California from the east coast, carrying more than 2,000 passengers a month and earning more than a million dollars a year. This time again, competitors found it impossible to keep up with him and offered to pay him $40,000 each month to stop the Nicaragua route, which of course Cornelius accepted gracefully. By 1864, he had amassed a fortune of $30 million. After donating one of the largest ships of his fleet to the U.S. Navy during the Civil War, he retired from the shipping business. However, now he turned his attention closely to the railroads business. Although he was serving on the board of several railway routes from before, now he started to take active control of the companies with the same style of aggressive tactics that he used to do in the shipping business. These included the E.D. Railway, the Central Railroad of New Jersey, the Hartford and New Haven, and the Newark and Harlem. In 1868, Cornelius fell into a dispute with the treasurer of the E.D. Railway, Daniel Drew. To get revenge, he tried to take total ownership of the railway by buying up all the shares, which is also known as cornering, in the stock market. This brought him into direct conflict with J. Gold and financier James Jr., who had just joined Drew on the E.D. Board. They issued new shares of inflated value or water stock to defraud Cornelius. However, this was illegal and was against the state law, which had set limits on how many shares a company can issue. But Gold bribed the legislature to legalize the new stock. In this way, Cornelius lost more than $7 million in his attempt to gain control over the E.D. Railway company. Although under threats of litigation, Gold returned back the money. Vanderbilt lost his control over the railway and considered it to be a tryout. At the time of his death, aged 82, he had a fortune estimated at $100 million or $2.5 billion in today's value, most of which he left for his son William and his grandchildren. Still today, Cornelius Vanderbilt is deemed one of America's leading businessmen and is credited for helping to shape the present-day United States and, without any doubt, rightfully so.