Two Time Pulitzer Winner T.J. Stiles on Cornelius Vanderbilt & American Business

The Learning Curve T.J. Stiles

[00:00:00] Albert: Well, hello, everybody, and Happy New Year. Welcome to another episode of The Learning Curve podcast. I’m your host, Albert Cheng from the University of Arkansas, and co-hosting with me today is Charlie Chieppo. Charlie, Happy New Year.

[00:00:13] Charlie: Happy New Year to you, Albert. Good to see you. It’s been a while.

Albert: Well, I hope your New Year’s off to a good start here. And yeah, I can’t believe it’s 2024. I think we all share that feeling to some extent. Well, new year and with the new year, of course, there’s news. So, I saw a story over at EdNext all about apprenticeships.

[00:00:34] Albert: And it’s actually titled Apprenticeships on the Rise, and Pioneer actually released the volume about voc-tech, vocational education, not too long ago. So, I know you guys are doing plenty of stuff there in Massachusetts. I’ll direct listeners to check out that article on EdNext. I mean, it’s a pretty long article, but I think it’s an excellent summary of the state of apprenticeships. I mean, I’m just fascinated to learn about all the work that lots of different businesses are doing, lots of civic and charitable organizations, you know, the way they’re getting involved with trying to make apprenticeships more widely available.

[00:01:08] Albert: And personally, I think it’s a welcome change. We definitely have a college-for-all mentality here and with everything that’s going on in higher ed, you know, rising costs and the politicization of it, I think different options for folks to find employment, find you know, the dignity of work different paths to making that available for people to break into the middle class — I’m all for it. I think we ought to be trying a lot of new things.

[00:01:32] Charlie: It’s close to a no-brainer, I think, is you’re going to get, you know, I know more specifically about the construction industry, but when you look at what some of these career paths pay — and without requiring the cost of college debt — it is certainly an appealing option for a lot of people.

[00:01:48] Albert: Yeah, I definitely think it’s part of the solution to, I mean, you know, the way I like to put it is, the goal not simply be to make college more affordable, but to make it less necessary, open up more pathways. So, what do you got for hot off the press here?

[00:02:05] Charlie: Well, I got one that has me on a little bit of a rampage, but I’m going to try to be calm. So, what I want to talk about is a December 27 column in The Hill by Elizabeth Grace Matthew. This is a column that speaks directly to one of my sort of current public education obsessions. This month, Chicago Mayor, former Chicago Teachers Union organizer, Brandon Johnson, approved a resolution to move toward ending selective enrollment for public schools that serve high achievers. The idea being [that] to differentiate between applicants based on aptitude and achievement is presumptively unfair. And you talk about the soft bigotry of, what was the George Bush the expectations, right?

[00:02:53] Charlie: Yeah. I mean, this is, classic. Anyway, yeah, look, nothing could be further from the truth. A majority of students in Chicago’s 11 selective high schools are low income, about two thirds are black or Hispanic. The reason this piece sort of made me crazy was I just have this sort of growing frustration with the failure in public education to recognize that this obsession with sort of reducing the focus on excellence in public schools in favor of equity only degrades both, and the evidence is pretty overwhelming of that. The author writes the move is a morally unconscionable attack on disadvantaged students and their families. And I think that says it all. All it’s going to do is accelerate the flight from traditional public schools that began with the pandemic. You know, the bad news is, unfortunately, that the victims are going to be the ones who don’t have the means to escape. I think the good news is that as bad as this stuff is, at least I think what it will do is speed the pace at which a response comes, and the pendulum starts to swing the other way. I sure hope so, because this does no one any good.

[00:04:04] Albert: Yeah. Ironically, there’s actually some research evidence out there that testing and using tests to identify high achieving students for these kinds of accelerated programs actually promotes equity. Because it’s this way we can give access to traditionally disadvantaged students, at least, you know, students from those backgrounds, a way to actually get a seat in some of these schools.

[00:04:29] Charlie: That’s so true. I’m not one who, you know, says that everything should be based on testing or anything like that. But, to me, it’s very hard to ignore all this research by E.D. Hirsch and stuff that shows, you know, there clearly is a correlation between test results and just about every measure of a successful life, ranging from how likely you are to vote, how much money you make, to your likelihood of staying out of prison. It’s just very hard to ignore it.

[00:04:55] Albert: Stick with us coming up on the other side of the break, we’re going to have T. J. Stiles, an award-winning American historian/biographer, talk to us about Cornelius Vanderbilt.

[00:06:42] Albert: T. J. Stiles is an award-winning American historian and biographer. His book, The First Tycoon, The Epic Life of Cornelius Vanderbilt, won a National Book Award, and the 2010 Pulitzer Prize for Biography or Autobiography, and his Custer’s Trials, A Life on the Frontier of a New America, received the 2016 Pulitzer Prize for History. Stiles became interested in Vanderbilt while researching and writing his historical account of another legendary figure, Jesse James, the last rebel of the Civil War. He served as historical advisor and on-screen expert for Jesse James and Grand Central, two films in the PBS documentary series American Experience. Stiles has written for the New York Times Book Review, Smithsonian, Salon, the Los Angeles Times, and other publications. He studied history at Carleton College and Columbia University. T.J. Stiles, glad to have you on the show.

[00:07:39] TJ Stiles: It’s nice to be here.

[00:07:41] Albert: Let’s sketch a little bit about your background and how you got interested in Vanderbilt. I mean, you’ve got two Pulitzer Prizes, a National Book Award for your biographies on Vanderbilt and others as well, but share a little bit to our listeners about your background and how you became interested in American history and, you know, your process of selecting the subjects that you want to write about.

[00:08:01] TJ Stiles: Well, I’ve always been interested in history because history is about everything. And understanding the world and getting good stories at the same time. And my approach to history is very much shaped by wanting to combine scholarly knowledge with storytelling and understanding the human condition.

[00:08:20] TJ Stiles: I like to say that biography is the meeting ground of scholarship and literature. Now I got there. In an indirect way, because I went to Columbia University for graduate school in European history and due to a number of things, I ended up going “abd,” all but dissertation. And so, I didn’t go into the academic route.

[00:08:42] TJ Stiles: I got a job at Oxford University Press working on scholarly books that were intended for the general market. So, there are serious books, but they were what we call trade books. They were not aimed specifically at an academic audience, and I learned there were a lot of great writers who were doing some very serious thinking as well.

[00:09:02] TJ Stiles: And that’s what I wanted to do. And so, my first book was a biography of Jesse James called Jesse James, Last Rebel of the Civil War. And I found in that book that he was a political figure that he was someone who was a former Confederate guerrilla in the state of Missouri. And his life was not about the Robin Hood story.

[00:09:23] TJ Stiles: So that was fascinating to me. And it was a lot of fun to write, and it did well. But, you know, Jesse James, since he didn’t rob trains to get at the railroad corporations, that left open the question of the great rise of the railroad and with it the corporate economy. And that led me to Vanderbilt.

Albert: Well, let’s jump to Vanderbilt. So this is the subject of your book, The First Tycoon: The Epic Life of Cornelius Vanderbilt. Folks know the name — it’s a famous figure in American business history — but folks might not know much about him. So, can you start off by giving us a brief sketch of his life, how he made his fortune in shipping and railroads, how he become wealthy, but also just some other background information about him?

[00:10:05] TJ Stiles: Sure. He was born on Staten Island when Staten Island was not a part of New York city. It was a rural county with only a few thousand people. He was born in 1794. So, he was born during the presidency of George Washington. And he died in 1877 after the end of Reconstruction, after the invention of the telephone, when the corporate economy was pretty well established. And so, his life tracks the great arc of the rise of the industrial and corporate economy. And he himself was a dramatic figure. He was someone who got into fistfights, who engaged in steamboat racing when he was younger,  who waged a private war in Central America during the California Gold Rush, and was this just titanic figure in American history and just a very interesting guy to write about.

[00:10:57] TJ Stiles: It was always a good story. And by being in transportation and by the good luck of being born in New York, he was at the strategic center of the economy. Because we had this sprawling nation with still horses and wagons and sailboats, the same way that the Romans got around. And he was involved in a business and legal dispute over the steamboat, brand new invention, motorized transportation that led him to adopt steamboats, become a steamboat entrepreneur, and he also was a part of the rise of competition as an American value, as an American virtue. And so, the irony of his life is that in his early years, he opposed corporations, which were seen as, as Adam Smith wrote, a species of monopoly. government intervention in the economy by sponsoring corporations.

[00:11:49] TJ Stiles: And then he began to take over corporations and discovered they were quite useful. And he ended up being one of the great masters of the early stock market. And then that led him into railroads as they were becoming the big thing in the economy. And each step of his episodic career was marked by a larger and larger conflict. So, it’s about big stuff. But his career also provides a great story as well. It’s a series of conflicts.

[00:12:16] Albert: Yeah. Well, speaking of conflicts and you mentioning his connection to the steamboat. So, the ferry entrepreneur Thomas Gibbons has a connection to Vanderbilt. And as you were talking about the rise of corporate America, you know, so, and Gibbons was fighting a steamboat monopoly in New York. Talk about Vanderbilt’s connection to that. And there’s a Supreme court case we all know Gibbons versus Ogden, that’s all part of this. So, what’s the deal there? What happened?

[00:12:41] TJ Stiles: We could devote a couple of podcasts to that. Thomas Gibbons was a bad-tempered Southerner who had been cheating on his wife and fighting with his daughter. So, he moved to New Jersey, and this is a guy who owned plantations. He had dozens, if not hundreds of enslaved people. But he moved to New Jersey, kept his plantations, but he moved to New Jersey, got into various businesses, including transportation. And his neighbor, Aaron Ogden, had a steamboat that ran between New Jersey and New York, and he had a license from a legal monopoly in New York, which was set up not so much to sponsor the rise of the steamboat, but it was a steamboat monopoly in New York waters as to reward Robert Livingston, who was the leader of one of the great landed gentry families in New York state, New York state was one of those places that resembled Britain in the sense that it had great landed families with tenant farmers and it’s very unusual in the United States, but its politics reflected that kind of manorial, aristocratic economy.

[00:13:51] TJ Stiles: And so, Livingston — who had met Fulton in France and actually managed to develop steamboat as a result — had this legal monopoly, and when Gibbons got into a dispute with Aaron Ogden, the guy who had the license, he decided that he was going to bankrupt Ogden because he was vindictive. And so, he got his own steamboat and began to compete and that got the attention of the monopoly.

[00:14:16] TJ Stiles: So, a legal battle broke out, which Gibbons intended to bring to the Supreme Court. He sought the advice of such men as Aaron Burr, for example, who was a practicing lawyer in New York. And he hired the sharpest boat operator in New York Harbor, who was Cornelius Vanderbilt. who thought he was only going to work for him for a few days, ended up working for him for years.

[00:14:37] TJ Stiles: So, while they were doing things like dodging the police who were trying to impound the boat whenever it docked in New York, the cases is proceeding to the Supreme Court and Cornelius Vanderbilt, who had no formal education, who very well may have had dyslexia — he would write the three letter word see, you know, the verb I see you three different ways in the same letter — yet he got fascinated by the case he understood that his whole future rested upon it and he actually went as the agent of Thomas Gibbons to New York to hire Daniel Webster as their lawyer. And he stuck around for the proceedings and he actually brought his own case against the monopoly, which was Vanderbilt v. Livingston. And if there had been any errors in the case Gibbons v. Ogden, then the Supreme Court case we all talk about now in terms of the Commerce Clause could very well have been Vanderbilt v. Livingston. It was next on the docket. they made the case that navigable waters cannot be interrupted by state laws and that states, which had often erected various kinds of barriers to interstate trade, that those barriers were unconstitutional.

[00:15:45] TJ Stiles: John Marshall issued this decision, and it was tremendously important for the American economy, incredibly important for the rise of the United States is a unified nation. And Vanderbilt, who’s deeply involved in the technical side, in the business side, was also very much involved in the legal case as well, and it gives a hint of the kind of  all-encompassing grasp he had of his business in its context.

[00:16:27] Albert: Yeah, let’s, let’s talk about that topic a bit more. You portray Vanderbilt in your book as a combative businessman rooted in the ideals of Jacksonian democracy. You know, believed in individual equality and the open market competition there. How did he use his business to compete while also taking on monopolies and preexisting chartered or favored corporations?

[00:16:36] TJ Stiles: He did it two ways. One way is a steamboat is not as capital intensive as a railroad. You can also move it from one route to another. So it was one of the areas in which an individual proprietor could compete effectively against, you know, corporations. Corporations as we should remember during this period before the Civil War tended to be chartered by the state government in special legislation, one by one, and they’re very much mercantilist corporations where the state parceled out part of its sovereignty to private parties to encourage them to develop the economy.

[00:17:11] TJ Stiles: And they’re very unpopular with Jacksonian Democrats, and Vanderbilt really used this in his advertising. He probably believed it himself while he was competing against them. He knew how to keep his costs extremely low. He knew small details of the business, like which routes were more competitive. A lot of his most lucrative routes ran between New York and Boston during the rise of textile manufacturing in New England and how to time his departures, et cetera, et cetera. But meanwhile, in 1838, there was an incident in New York Harbor where the Staten Island ferry — called the Richmond Turnpike Corporation — had a legal monopoly in the ferry between Staten Island and Manhattan and his cousin was competing against it. So, the president of that monopoly ordered his steamboat captain to ram the other boat and sink it while it was carrying passengers in New York Harbor. It rammed it but didn’t succeed in sinking it. The passengers turned into a mob and literally destroyed the building of the monopoly. So this caused the small number of shareholders in this company to panic.

[00:18:21] TJ Stiles: They sold out to Vanderbilt. He took a 50 percent stake on the condition he could have sole control. And it’s interesting because his cousin sued and said Cornelius Vanderbilt has said he will run this corporation with a sole view of profit, which is of course the whole point of a business corporation today. Shareholders sue companies when they don’t run for the sole purpose of profit! But the early 19th-century corporation was a public service corporation. It was both for profit, but also to serve the public. And so, Vanderbilt began to ignore various requirements and he learned how useful a corporation was. And so that dramatic incident shows him discovering the corporation and also how corporate managers and shareholders — these early corporate leaders — began to infiltrate the corporation, the competitive business-minded ones, and take it over and remake it into a version of a private interest, and to change the nature of the corporation from within. The laws that would change the way government saw — courts at least saw — the corporation, they wouldn’t change until much later, Reconstruction and later, but in practice, they began to change through people like Vanderbilt.

[00:19:34] Albert: Well, let’s get into this episode a little bit with his acquiring of his own steamship company. He eventually gained control of the traffic on the Hudson River and cut fares, offered unprecedented luxury on his ships. How did Vanderbilt work his way into leading really America’s inland water trade?

[00:19:53] TJ Stiles: It’s interesting because there’s a couple of things that he did. One was he always had an eye for the strategic center of the economy. This is very much kind of a geographic business tale. So, you know, his first route that he worked on was between New York and Philadelphia, the two largest cities in the U.S. Then, when the Erie Canal opened, the trade between New York and Albany, close to where the Erie Canal comes out into the Hudson was a new strategic center and so he competed on that route and was very successful.

[00:20:22] TJ Stiles: Then, as I said, the Industrial Revolution takes off and the trade between New York and Boston becomes extremely important. And so, he switches his focus to those routes on Long Island Sound and in connection with the very early railroads. What’s interesting about that is not just that he was top competitor. He said things like, “If I can’t run my boat for 25 percent less than my competitor, I’m content to go out of business,” you know, that he was so fierce in cost-cutting. He helped introduce the practice of tipping because he didn’t pay his customer service crews very well. So, tipping took off. A lot of the things that we know from the way airlines are cutting costs and making money through marginal prices like on your bags and getting preferential seating, Vanderbilt introduced a lot of those things in the early 19th century. But again, what he would do is he would find a way to leverage his next step. So, he got involved in the early railroads, which are fairly short, by selling his connecting steamboats, say on Long Island Sound, to the railroad that ran a train down to the port where it connected. And then he, in return, would get shares of stock and go on the board.

[00:21:35] TJ Stiles: And so, he learned about railroads very early on. And very much saw how they were. This is an old myth that he hated railroads. It’s not true. So, he was president of a New England railroad as early as 1847, which he did by undercutting the prices on this railroad, dropping its share value down and then buying it up.

[00:21:54] TJ Stiles: But then a big revolution took place, which again, expanded his scope of operations, which was the California Gold Rush. And when California gold was discovered, it happened to be just when two corporations, which took large federal subsidies for mail delivery to maintain steady connection to California, just started business right as gold was discovered.

[00:22:17] TJ Stiles: So, they kept getting this large federal subsidy, but they were also making money hand over fist because people were dying to get to California. One company ran down to Panama. People were carried across by mule train and canoe, and then they met the steamships on the Pacific side that the Pacific Mail Corporation ran. Very large corporations for the day made lots of money and Vanderbilt entered into this trade.

[00:22:43] TJ Stiles: At first, he attempted to build a canal across Nicaragua. Then he couldn’t get funding in Britain for it. He traveled to the UK. And again, this is a very unlettered, unsophisticated man, culturally speaking, went to the Bering brothers and other banks and couldn’t get the funding. So, his contract with the Republic of Nicaragua allowed him to also open a transit route.

[00:23:04] TJ Stiles: And it was possible to cross Nicaragua by steamboat almost all the way, except for about a 10, 15-miles land passage. So that made it a very comfortable and rapid crossing, even though it’s wider than Panama, where a railroad was eventually built. So, he set up his own unsubsidized transit company. He built ocean-going steamships that were faster and more fuel efficient than his competitor, ran down to Nicaragua, got steamboats on the lake in the San Juan River, Nicaragua, which he helped open up himself.

[00:23:34] TJ Stiles: It literally was bursting through the rapids piloting his own steamboat to open up the route. And then he had steamboats in the Pacific. At the time and I don’t ask me what the equivalent is, he made a million dollars his first year, which was an incredible sum of profit, and while in competition with a federally subsidized line. And it opened up his horizons.

[00:23:56] TJ Stiles: He was operating a transcontinental international corporation. He also got into the transatlantic steamboat steamship business. When he sold out of Nicaragua, he came back in just as an American filibuster soldier of fortune conquered Nicaragua and went to war with its neighbors. And Vanderbilt not only funded the war effort from Costa Rica, but he sent a secret agent who knew the river and route well, who led a commando force in and seized all the steamboats, which cut off this man, William Walker, the soldier of fortune, from reinforcements — which forced him to surrender his forces. It’s really an amazing story. But Vanderbilt, he got revenge, but he didn’t set up the steamship business again. But at that point, the Civil War was about to break out, and his life was going to change dramatically.

[00:24:45] Charlie: Well, Mr. Stiles, Charlie Chieppo here. Thank you for joining us. So, you mentioned a minute ago geographic aspect of his story. And it seems that western expansion and Midwest, west coast are all central themes of century U. S. history and among the common features of historical figures that you’ve written about. Could you set the stage of America in the early to mid-1800s and talk about the West, as well as how it informs some of the ambitions of both the country and the subjects of your books?

[00:25:13] TJ Stiles: Sure. The United States, until the Erie Canal, was very much confined to east of the Appalachian Mountains. There were a lot of settlers who were filtering into Kentucky and Ohio, et cetera. But it didn’t pay to ship their crops back. As a matter of fact, it’s one of the reasons why we have so much American whiskey, is that when they distilled their grain into whiskey, it was worth sending over the mountains to the east.

[00:25:38] TJ Stiles: So, the Erie Canal opens things up, and then there were a number of projects to build railroads as very much as national development projects or state development projects over the Appalachians and all of this activity, which continues after the Civil War as well, is really confined to connecting the Midwest as we now call it to the East. There’s a separate project in the South, which doesn’t draw railroads or these activities, and that involves expanding the slave economy westward across the South. But what we’re talking about now is the Midwest. Now, California Gold Rush, which is really only possible because of ocean-going steamships and the central American isthmus crossing, means that there is now a substantial community from the United States on the West Coast in this large area, which is inhabited by native people who really operate what I call a separate world system.

[00:26:37] TJ Stiles: And, you know, they have their own idea of nations and trade, international relations, how they use natural resources, their economies are very different, completely different system. Then starting in the 1850s, but accelerating at the end of the Civil War, then you have the U.S. government is really encouraging the settlement and development of the West, which again means trampling on native people. There are a lot of wars of conquest, which happened in the 1860s and ‘70s. So, these areas now fall under a new federal project to connect the West to the East, which is the transcontinental railroad.

[00:27:15] TJ Stiles: So, the transcontinental railroad is a federally subsidized project, private corporation, but federally subsidized and the Union Pacific, which is the most notable one, that’s the first one, is followed by others. These railroads don’t actually cross the entire continent. Rather, they connect in the Midwest to this Eastern railway network, which is developing.

[00:27:37] TJ Stiles: Vanderbilt himself gets involved only to the extent of reaching Chicago. And he gets interested in the New York Central Railroad, which follows the route of the Erie Canal. And again, he understands the geography of trade and of commerce. The Erie Canal is a fairly level route. It doesn’t go up and over the mountains. So, he takes over the railroad, which runs alongside it, which is the New York Central, which connects the Hudson River Railroad, which again, very level following the Hudson River South. So, not only is it level, which means cheaper operations, but it runs through a series of industrial cities in northern New York you know, Utica, Syracuse, Rochester, Buffalo — these are all on the New York Central Railroad. Then he gets involved in taking over railroads west of the New York Central — which only covers New York State — notably the Lake Shore and Michigan Southern Railroad.

[00:28:37] TJ Stiles: These are all formed out of consolidating smaller companies, which were formed by local businessmen to serve their local communities, but due to the logic of the railroad they get absorbed into a larger line. So, Vanderbilt, by the end of his life, controls a vast network of railroads, which run from Chicago to New York.

[00:28:59] TJ Stiles: this is really the core of the American industrial and agricultural economy as one railroad. I think it was Henry Poor, the famous railroad journalist, said that the entire length of the Union Pacific and Central Pacific Railroad would not provide as much business as a railroad a hundred miles long east of the Mississippi.

[00:29:22] TJ Stiles: So, Vanderbilt doesn’t care about transcontinental railroads, even though it very much reflects what’s going on, the development of the West and the federal government’s involvement in that development. So, Vanderbilt puts a different light on that traditional story of Western expansion by showing that where money was really being made wasn’t so much in the West as in the Midwest, as that was fully settled and developed. And it’s not too much later that the transcontinental railroads really become profitable.

[00:29:52] Charlie: Well, following on Vanderbilt’s role as a railroad tycoon, can you talk a little bit about his competition with Jay Gould and his business dealings with John D. Rockefeller?

[00:30:03] TJ Stiles: There’ve been a lot of stereotypes and simplifications with Vanderbilt, because until my book nobody had done a full-scale biography of him because there are no Vanderbilt papers. So, there are a lot of stereotypes and I found some very interesting things. Jay Gould was a young broker who had gotten into Wall Street, and he got onto the board of the Erie Railroad. This is one of four, the four trunk lines, the railroads that cross the Appalachians, and it was not as profitable as the New York Central, which Vanderbilt came to control in 1867, but it was very important, and it was a potential threat to Vanderbilt’s lines.

[00:30:44] TJ Stiles: He started to buy up stock in the Erie Railroad in 1867, not because of its potential threat as a rival business, but because an old friend of his, Daniel Drew, had started to [00:31:00] short sell Erie stock. Daniel Drew is the treasurer of the company and he often profited at the expense of his own shareholders. And Vanderbilt was upset because he wanted a rising market in general which Drew had agreed to. So, to get personal revenge begins a corner Erie stock. But Jay Gould and his newfound-friend on the Erie board, Jim Fisk, they see a threat to their role in the Erie Railroad. So, they begin to conjure up ways to create new stock there’s a lot of cultural reasons why there were strict limits on how much stock a company could issue. There were laws that strictly limited how much stock a corporation could issue, and they broke all those laws.

[00:31:42] TJ Stiles: They just began to issue new stock like crazy. So, the price keeps falling, even though Vanderbilt is getting a larger and larger amount of stock himself. And it culminates when Daniel Drew goes personally to the New York State legislature to bribe the legislature en masse to legalize their stock issue and the legislature voted against him and then he came to town and then they completely reverse the 100 or something like that.

[00:32:12] TJ Stiles: And this is when he was a wanted fugitive. He had actually escaped from New York on a rowboat. So, what happened is, is that there are various legal things that Vanderbilt could hold over their heads. So finally, they come to terms. They agree to repay Vanderbilt his losses. So, Vanderbilt at least was made whole again, but now he had this new enemy, Jay Gould. And Jay Gould, it’s interesting because Vanderbilt was ruthless, but Jay Gould to Vanderbilt’s mind, broke all of the rules that Vanderbilt operated under. He really believed in a code. It was, you know, a code among thieves, but for example Jay Gould and Jim Fiske, they took over the Erie Railroad and they began to cut prices on cattle cars from the West.

[00:32:57] TJ Stiles: So, the New York Central followed suit. Then they cut it down to almost zero. It was like one dollar for an entire cattle car full of cattle. So, again, the New York Central followed suit. Then Jay Gould and Jim Fisk basically called a press conference and announced they had huge amounts of cattle and shipped it East on the New York Central Railroad. So, they had forced their opponents to basically make shipping cattle free and then they bought a bunch of cattle and shipped it. So, you know, they did this just to embarrass Vanderbilt. They lost a lot of money as a corporation. They did it just to embarrass him. And, you know, it drove him crazy.

[00:33:34] TJ Stiles:  Now, they never actually got the better of him. One of the reasons he took over this connecting line to Chicago, The Lakeshore, was because it was threatening to make an alliance with the Erie Railroad and with Jay Gould. And so, Vanderbilt moved to snuff that out. And it was a very successful.. So Vanderbilt was never actually seriously hurt, but he was deeply embarrassed by all these maneuvers.

[00:33:59] TJ Stiles: Jay Gould himself went on to become a very successful corporate manager, especially with the Missouri Pacific system. And so, he became more than just the Loki of corporate finance. But it was very much in the headlines all the time, this personal rivalry between the two of them.

[00:34:15] Charlie: I think one theme that’s emerging here is that it wasn’t a real good idea to cross Cornelius Vanderbilt. He had a long memory.

[00:34:24] TJ Stiles: No, and you know, it’s very interesting, he had a long memory, and he was extremely cunning. Daniel Drew also was very cunning on the stock market. And so here are two guys — Vanderbilt started off, you know, selling boatloads of fish that he brought up from the Delaware River and Jay Gould started off driving cattle to market and they learned about markets on the ground with these very nitty-gritty operations early in the American economy.

[00:34:52] TJ Stiles: So, at the end, when you’re dealing with, you know, tens of millions of dollars of stock being traded with options and futures being traded, they understood all of it and they were masters of it very early on. It’s fascinating, he was very capable of getting revenge, either in business or in the stock market. But what’s interesting about him is that as the corporation became so much larger as the financial markets had such a larger sway over the economy as a whole, Vanderbilt’s ideas about the corporation and the role of government never changed. So when he was young, he saw himself as a leader of free enterprise, somebody who opposed government intervention in the economy back when government intervention in the economy meant not regulation, but establishing corporations and benefiting the wealthy with even more privileges as they saw it. Late in life, when he was sitting atop the corporate economy, he had the same view, but only now that view was directed against regulation, against laws that were designed to reign him in. He took over the New York Central Railroad by cutting off all rail traffic into New York City from the West via the New York Central during a huge blizzard in 1867 when no shipping could reach Manhattan neither. So, he basically blockaded the city of New York and, you know, it collapsed the share price of the New York Central and he bought up control of it.

[00:36:19] TJ Stiles: So, he was ruthless, and he didn’t believe that the government should intervene. There’s a reason why he was Ayn Rand’s darling. He very much believed that individuals should be allowed to fight it out, and everybody should be allowed to pursue their own self-interest. So, what’s interesting is that started off as a radical viewpoint in America and his life was so long that he lived to see and help make it a conservative viewpoint.

[00:36:43] Charlie: Right, interesting. That’s fascinating. Well, let’s shift gears a little bit. Shortly before his death in 1877, Vanderbilt donated a million dollars, equivalent to $27 million in 2022, to establish my law school alma mater, Vanderbilt University in Nashville. Would you discuss the common ware as a philanthropist, why he founded Vanderbilt, and the other ways in which he spent or invested his wealth in the decade after the American Civil War?

[00:37:10] TJ Stiles: Yeah, Vanderbilt in general was not a great philanthropist. I mean, a good example of his thinking is that he gave 95 percent of his estate to his oldest son. His many daughters were not happy about this. And he told them, I’ve given you enough to live like ladies and it was basically up to their husbands to make money for them. So, you know, he was determined to build an empire and have it last and remain. But he was very patriotic and this is the most kind of altruistic side of him.

[00:37:38] TJ Stiles: So, when the Civil War broke out, he very much wanted to donate his largest steamship. It was one of the largest steamships in the world, not the largest but one of — and also, one of the fastest named typically the Vanderbilt and he tried to donate it to the U. S. Navy when the Civil War broke out, but it wasn’t until the Merrimack, the Confederates called it the Virginia, the Southern ironclad, started to cause havoc that suddenly Stanton and Lincoln remembered his offer and he offered again.

[00:38:09] TJ Stiles: And so, he met with Lincoln personally and donated his ship. So, he reinforced it, equipped it, brought it personally down to Hampton roads and it played a role, never fought the Merrimack, but it played a role in bottling it up. The Confederates were in fact afraid they would be run down by this huge ship. And then it went on to serve in the Union fleet. So, this was a warship that as a civilian vessel cost a million dollars to build. So, after the war,  he was very interested in reconciliation with the South. Now, by that he meant the white South. He really didn’t care about the freed people, but he wanted to reach out to the South. He believed in reconciliation and his second wife, after his first wife died, his second wife was from Mobile, Alabama, and she introduced him to the Methodist bishop from the South who had a project. The Tennessee legislature had passed a lot to establish a university. There are very few in the South. And so, he liked the bishop. And he wanted to reach out and help the South in some way to sort of match his gift to the Union Navy now that the war was won. He agreed to give a million dollars to Vanderbilt University in the end, it was in increments on the condition that the bishop — I can’t pronounce his name properly, McTeer — would have sole control. He very much believed in the right man. And so he wanted his man, the bishop to have sole control, not to be outvoted by the board of trustees. And so, they made those arrangements. And he never managed to visit.

[00:39:43] TJ Stiles: This is very late in his life. But he very much saw it as a personal project. And I believe William Vanderbilt, his son and heir, did eventually visit Vanderbilt University. But that was an enormous endowment. I mean, it was, for the time it was an unparalleled gift.

[00:39:59] Charlie: Wow. Yeah. That’s a lot of money. You just talked a little bit about how he sort of doled out his estate among his children. Could you talk about the massive wealth he possessed, you compared him to current moguls like Bill Gates and some of the key  members of his family and also Vanderbilt’s legacy?

[00:40:17] TJ Stiles: Sure. I don’t like the idea of simply translating 19th-century figures into 21st-century figures when it comes to money. Sometimes we have to do it because we need something to wrap our minds around, but the nature of the economy has changed so much that the simple values don’t really translate. So, for example, the economy was much narrower then. In the 1870s, railroads were by far the largest and also most strategically important companies in the U. S. economy, but there’s nothing that equates to them today, not Apple, not anything in the digital or electronic sector, as important as they are. There’s just such a large and diverse economy now that $1 million then versus, say, $50 million now, it’s not the equivalent. So, I tried to think of Vanderbilt’s role in his holdings compared to the monetary circulation at the time. So, my book came out in 2009, finished it in 2008. Bill Gates was the wealthiest person in the U.S., in the world, in fact, and if you were able to sell all of his estate at full market value, he would have taken one out of every 158 dollars out of the economy using the feds M2 figure. So, that’s a huge single share of the economy. If Vanderbilt had been able to sell his entire estate at the moment of his death, he would have taken one out of every 20 dollars out of the U.S. economy. It is absolutely unbelievable. And it was concentrated in railroads and specifically in the railroads that connected to the nation’s largest city and largest port and one of its largest industrial hubs as well — New York City. So, he had not only this vast share of American wealth, but he also had control over the center of its economy.

[00:42:17] Charlie: Right. Interesting. Well, do you have a passage from the First Tycoon hat we could end with, that you’d like to read?

[00:42:24] TJ Stiles: Sure. This is actually from the middle of his career, when he’d become wealthy, but it just taken over his first railroad. He hadn’t even gotten involved in overseas shipping with steamships. He hadn’t become the great railroad tycoon. And so this is kind of a — shows Vanderbilt, it’s something we really haven’t talked about his relationship to New York society that very much class-conscious aristocracy-dominated New York society in 1848.

[00:42:55] TJ Stiles: So, it just gives you an idea of how Vanderbilt had to break his way in socially as well as in terms of business: “New York’s New Year in 1848 began as it always did with one of the annual traditions that marked the march across the calendar in the island city. The first of the year brought the tradition of the New Year’s Day call a custom practiced in New York by the elite, the wealthy and respectable, who debarked from private carriages before the brownstone townhouses that shouldered together in the streets radiating from Washington Square that increasingly line 5th Avenue North, reaching nearly to 20th Street. To meet the torrent of visitors, women fortified themselves in their parlors amid rosewood and red satin, dispatching servants to usher in the gentlemen who raced up the steps to make their calls, stopping long enough to hand off their hats and remark on the weather. George Templeton Strong, a rising young lawyer in Wall Street, informed his diary that he had made 80 calls by 6 o’clock on New Year’s Day, “and got home at last tolerably tired.”

[00:44:03] TJ Stiles: Neither Strong nor any other wealthy and respectable diarist is known to have recorded a visit to 10 Washington Place, to the parlor of Sophia Vanderbilt. That was her husband’s fault. When the Mercantile Agency, the nation’s first credit bureau, first reported on Vanderbilt in 1853, it examined his character as much as his finances. The result says much about the attitude of New York’s establishment toward the self-made Vanderbilt: “Started early in life as master of a small sailing craft between Staten Island and New York City. Manifested great ability in enterprise and was taken hold of by the late Thomas Gibbons of New Jersey,” observed its reporter. “From this position, Vanderbilt has risen to great prosperity in his way. He has a large fortune.” These words were honest, respectful, and only slightly snide. Unfortunately for Vanderbilt, it was a long report. After the commercial judgment came social, and it was blunt: “He is illiterate and boorish, very austere and offensive, and has made himself very unpopular with the inhabitants of Staten Island. So much so that his leaving there is subject of great rejoicing by the inhabitants and was manifested by a public jubilee among the Astors and Aspenwalls, the Skylars and Grinnells, Cornelius Vanderbilt did not belong. He had no place in their traditions.”

[00:45:29] Charlie: Wow. You’ve just painted a fascinating portrait of him. Thank you so much joining us. This is great.

[00:45:35] TJ Stiles: I really enjoyed it. Thank you.

[00:46:55] Albert: Excellent interview. And to close up here is the Tweet of the Week. This is actually a tweet from late last year, but really caught my attention from our friends at EdSurge. Is student happiness enough for academic success? Dive into our latest article exploring how the ancient Greek concept of eudaimonia might be more beneficial for students’ mental health and performance. Check it out, and I don’t know, maybe I’m just a sucker for all things classical but I mean, this is something that I’ve always thought and been in discussion with others. I’ve got to differentiate the difference between fulfillment and human flourishing and simple psychic and emotional indicators of happiness. And this article is fascinating because it talks about a study that shows how the latter psychic feelings of happiness or life satisfaction aren’t predictive of students’ mental health and academic performance later in life. It’s actually eudaimonia, or what we think of as flourishing and having a sense of purpose. So, Charlie, I don’t know if that’s a result that surprises you, but certainly caught my eye.

[00:48:01] Charlie:  Yeah, it does a little bit. You know, I haven’t thought enough about that, that’s one I think I’ll have to look into. You piqued my interest.

[00:48:07] Albert: Yep, great, well, hey, and thank you for kicking off this year on this episode.

Charlie:  Great to co-host with you.

[00:48:12] Albert: My pleasure. Next week we’re going to have Gabby Thomas, the American Olympic track sprinter. So be sure to tune in for our interview with her. Until then, I hope you have a great day and a great start to your new year.