The First Tycoon: The Epic Life of Cornelius Vanderbilt (13 page)

AT ELEVEN IN THE MORNING
of February 4, 1824, six justices of the Supreme Court of the United States, led by Chief Justice John Marshall, filed into their basement chamber beneath the Capitol and settled under the high windows on the eastern wall of that dim, semicircular room. Even in the February chill the space must have been sweltering, for it was packed with bodies—lawyers and congressmen, men and women—crowded in to witness what everyone knew would be a most important case.
Gibbons v. Ogden
was about to be heard at last.

Two lawyers for each side sat at the single counsel table. Representing Ogden were Thomas Jackson Oakley and Thomas Addis Emmet. Emmet had long defended the monopoly; in 1815, Fulton had given his life to rescue him from the freezing waters of the Hudson. As Attorney General William Wirt noted, “Emmet's whole soul is in the cause, and he will stretch all his powers.” Wirt himself sat for Gibbons, alongside Daniel Webster. “Webster is as ambitious as Caesar,” Wirt had written a few days earlier. “He will not be outdone by any man.… It will be a combat worth witnessing.” With everyone in place, the marshal of the court intoned, “God save the United States and this honorable Court!” Then Webster rose to begin his argument.
⁶²

In far-off New York, the Livingstons were worried. For more than a decade they had fought off or bought off successive rivals; more recently, the New York Court of Errors had given them a resounding victory over Gibbons's challenge. Yet Gibbons had persevered, and Vanderbilt had his own case against them next on the docket. The Livingstons had decided to make one more appeal. After all, the political future looked grim; New York was no longer governed by factions of landed families, but by Martin Van Buren and his plebeian Albany Regency. And Gibbons and Vanderbilt had outmatched John R. Livingston, who warned his family of “an immense loss” if the court overturned the monopoly. It was a risk they could not afford to take.
⁶³

On January 27, 1824, the great clan had sent an emissary, Walter Livingston, to Elizabethtown on one last mission. I have “come on the old business,” he said to William Gibbons. The monopoly had a final offer: Thomas Gibbons would discontinue his case, in return for the Livingstons' “letting T. G. participate in their rights & throwing open the Jersey runs to him.”

William shook his head. “It was too late,” he replied. Livingston said it could be settled in an hour—did his father agree with him? William entered the darkened sickroom and spoke quietly to the suffering old man. Thomas Gibbons glared up at his son and tersely refused. Livingston said “he was very sorry nothing could be done,” William wrote, “& then immediately withdrew”
⁶⁴

The risk was at least as great on the other side. For Vanderbilt, defeat in the high court would virtually doom his future in shipping, forcing him to either buy an expensive steamboat license (assuming John R. Livingston would sell him one) or fall back on his far less lucrative sailboats. If he could avoid debtors' prison, that is: the Marine Court lawsuits had piled up remorselessly, threatening him with bankruptcy. His own case looked doubtful if Gibbons lost. And victory was far from certain. Chancellor Kent, the author of the New York decision upholding the steamboat grant, was one of the most highly regarded jurists in the country. And a new justice had just been appointed to the Supreme Court who had repeatedly ruled in favor of the monopoly: Smith Thompson, a relative of the late Chancellor Livingston.

But Thompson was so new to the Court that he had not yet arrived on February 4, when Webster rose to speak. “With Webster there was also a thin veil of hauteur,” writes biographer Robert V. Remini. “He was a snob about many things: his New England breeding, his education, his legal, linguistic, and literary talents, the fact that… he was the foremost constitutional authority in the United States.”
⁶⁵

The monopoly lawyers would argue, as they successfully had before, that the government of New York had created a valuable property right and the Court was bound to protect it. The public, on the other hand, grew ever more hostile to the idea that the state could carve up the economy and assign a portion to a prestigious family. By 1824, more and more Americans demanded a market open to any who dared to venture in, an economy as democratic as the political arena increasingly was.
⁶⁶
Ogden's attorneys were also to assert a state's authority to interfere with interstate commerce. The claim affronted both Webster's nationalism and his economic vision. If it prevailed, it would establish a constitutional rule that would turn the United States into a collection of feuding principalities, each erecting its own barriers to trade.

And there Webster struck, in one of the most important speeches of his long career. He pointed out the “extreme belligerent legislation” that New York, New Jersey, and Connecticut had enacted, barring each other's steamboats. “It would hardly be contended,” he intoned, “that
all
these acts were consistent with the laws and Constitution of the United States.” The Constitution had been written to create a commercial “
unit…
complete, entire, and uniform. Its character was to be described in the flag which waved over it, E PLURIBUS UNUM.”

Webster's rivals responded over the next three days, until February 7. Their arguments reflected a social and economic vision that had not kept pace with the growth in domestic trade, the increasing economic integration of the country, the new American outlook. Commerce was the buying and selling of goods, they argued, not the transportation of passengers, and so the commerce clause did not apply; in any case, the states retained powers over commerce that they had had before the Constitution. Wirt concluded for Gibbons with an appeal to national unity warning of civil war.

For three weeks, they waited—Webster and Wirt in Washington, the Livingstons on their manors or the streets of New York, Ogden in Elizabethtown, Gibbons in his sickbed, Vanderbilt in his stables at Bellona Hall. The anticipation could be felt throughout the United States, for everyone sensed that this was a case that would help to define the age. Newspaper editors stood by, day after day, hoping to be the first to publish the result of the “celebrated Steam Boat controversy,” as the
National Intelligencer
called it. On February 19, Chief Justice Marshall dislocated his shoulder, further delaying a decision. On February 23, William Gibbons wrote to his father from Washington that Webster had told him
“confidentially”
that one of the justices had said that his argument had convinced them “that it is a broad constitutional question upon which scarcely any doubt exists.”

On March 2, Marshall led the associate justices into the courtroom and began to read the majority opinion—his own opinion—to the crowd that packed the basement, straining in utter silence to hear every word. He began by paying tribute to the immense authority of the New York courts, whose decision was now at issue. Then he struck at the heart of the matter. “Commerce, undoubtedly, is traffic,” he said, “but it is something more; it is intercourse.” Hardly another word was necessary. As the
Evening Post
succinctly put it, “The Steam Boat grant is at an end.”
⁶⁷

*
The
York
and all other steamboats operating in New York waters that will be mentioned in this chapter, apart from those owned by Gibbons, were run either by the Livingstons or under a license from them.

Chapter Three

A TRICKY GOD

T
he tablespoon glittered in the craftsman's shop. As new silver, it would have been heavy and untarnished in Vanderbilt's hand. Looking into it on March 31, 1824, two months short of his thirtieth birthday, he would have seen himself in his prime: full lips, a long nose, and a high forehead, growing higher by the day as his hairline ebbed. It was the reflection of a man who had just won the biggest victory of his life.

The craftsman had engraved the spoon with a single word:
Thistle
. For Vanderbilt, it was the name of the future. The tablespoon was one of twenty-four specially prepared for the newly launched
Thistle
, along with sets of sugar tongs, mustard spoons, and five dozen teaspoons. Vanderbilt found them acceptable, paid for them, and carried them down to the dock. The
Thistle
belonged to his employer, Thomas Gibbons, but he attended to the boat's every detail himself, from bell covers to block straps, as it was built in a New York shipyard. At more than 123 feet long, twenty-three wide, and 210 tons, it was an “elegant Steam Boat,” in the words of the
New York Evening Post
. On her first trial, it made thirteen miles per hour against the tide—truly a marvel of speed.

On April 19, Vanderbilt commanded it on its initial run to New Brunswick, where an enthusiastic crowd swarmed the dock to meet him. He piloted the
Thistle
to its moorings under the echoing boom of a small cannon, fired by a local merchant and two others to welcome the flagship of the new era of free competition. Then the cannon exploded, blasting off the fingers of two men and scorching the face of the third.
¹

In later years, many observers would ponder the gargantuan figure that Cornelius Vanderbilt had become and wonder if the unchecked marketplace had not blown up in everyone's face. In the immediate aftermath of
Gibbons v. Ogden
, however, no one doubted that the world had become a better place. The Livingston monopoly could not stop steamboats from entering New York waters from other states, the Supreme Court ruled; to the public, this was a blow for freedom.

Chief Justice Marshall's decision provided one of those rare turning points in history that is recognized as one at the time. Newspapers across the country greeted the ruling with lengthy coverage. “The interest excited by the decision,” wrote the
Washington Republican
, “has induced us to… gratify our readers.”
Niles' Register
reprinted the decision in full, filling almost eight pages.

“It is the fashion to praise the Chief Justice's opinion,” John Randolph of Virginia observed. Indeed, it proved to be almost universally popular, perhaps the most popular of his long career. The
Evening Post
captured the mood when it called the decision “one of the most powerful efforts of the human mind that has ever been displayed from the bench of any court.” It represented “a forecast, in relation to the destinies of our great confederacy.” John Marshall foresaw a destiny of commerce, free and abundant, and the people wholeheartedly agreed.
²

“Chief Justice John Marshall's great disquisition on the commerce clause,” writes legal scholar Leonard W. Levy, “is the most influential in our history.” In constitutional terms, it completed his great nationalist project, the establishment of federal supremacy. It struck down the New York steamboat monopoly as an affront to Congress's exclusive jurisdiction over interstate commerce, refuting the claim that the states shared power in that area. In practical terms, it threw the high court's weight behind the gathering momentum of competitive individualism—of laissez-faire—in American law and culture. “Marshall's nationalism,” writes R. Kent Newmeyer, “aimed to create not a nation
-state
but a national market, an arena in which goods and credit moved without hindrance across state lines.” Though the decision said nothing about the legality of government-granted monopolies as such, it added to a growing sense among many that they ran against the natural law of economics and the principle of equality And Marshall fully recognized the need to expand transportation to develop (and unify) the sprawling republic. (After the Court adjourned at the end of March, he ruefully decided to return home by taking his first trip in a steamboat.)
³

A century after
Gibbons v. Ogden
, legal historian Charles Warren hailed the decision as “the emancipation proclamation of American commerce.” Marshall's admiring biographer, Albert Beveridge, claimed that it “has done more to knit the American people into an indivisible Nation than any other force in our history, excepting only war.” More recent legal scholars have stepped back from such extravagant praise, noting the ways in which this sweeping decision was soon hemmed in.
⁴
And yet, there is much truth in these earlier assessments, especially when the case is set in a context larger than constitutional law. Marshall captured and codified a new mood in the country, after nearly fifty years of independence. Commerce, interstate commerce in particular, was the stuff of daily life as never before. The chief justice proclaimed that, yes, the United States was a common market; no matter how the states would later eat away at the edges of his ruling, he gave voice to what most Americans now believed—that freedom of movement and trade across state lines was a basic right.

Gibbons v. Ogden
came at an extraordinary moment. Within a year, the most important work of public engineering of the era, the Erie Canal, would be complete from Albany to Lake Erie. The unleashing of steamboats in New York waters and the opening of the canal that connected the nation's interior to the Atlantic coast would integrate markets and open the way for new economic growth. They would also guarantee New York City's dominant position in the American economy, and make way for Vanderbilt's rise.
⁵

The results could be seen almost at once. The
Thistle
was only the first of many new vessels to be launched after the death of the monopoly. The steamboats registered at the New York Custom House jumped from one or two per year to twenty-two. Even more churned in from neighboring states. In November 1824,
Niles' Register
reported, the number of paddle-wheelers in New York had increased from six to forty-three. New York went from stumbling block to keystone in the American economy
⁶

Aaron Ogden—hero of the Revolution, former New Jersey governor, former United States senator, hated by no one but Thomas Gibbons—went bankrupt. Gibbons had the great satisfaction of seeing his old foe descend into the indignity of debtors' prison. He went free thanks to the aged but still-influential Aaron Burr, who lobbied the New York legislature to enact a law to spare all Revolutionary veterans from imprisonment for debt. Ogden moved to Jersey City in 1829, received an appointment as collector of customs there, and died on April 19, 1839. A man who merely played by the rules of the day, he paid for the sins of the entire system, and was sacrificed for its transformation.

The Livingston clan was stunned by the Supreme Court's decision. “I had no idea of the court's going to the extent it has,” mused a troubled Edward P. Livingston. “It seems to have adopted opinions which I had thought settled long ago.” He and his brother Robert L. felt insulated, however; their North River Steam Boat Company operated entirely within New York State boundaries, where the monopoly still prevailed. The defeat really belonged to their uncle, John R. Livingston, whose rights covered the waters shared with neighboring states. But the ill-tempered John was determined to make his nephews suffer just as he did. Bitterly admitting failure in his battle against Vanderbilt, he took the
Olive Branch
off the line to New Brunswick and sent it to Albany to compete against his own family. In the resulting court case, the now more democratic state courts overturned the monopoly entirely. John R. Livingston, one of the oldest survivors of the culture of deference, had destroyed its last remnants. Like the rest of the old patricians, the Livingstons had become merely rich men in an economic war of all against all.
⁷

For the man who sat in the office of the
Thistle
as it floated at its New Brunswick dock, counting out shillings and scratching entries in ledgers, the courtroom victory posed an entirely different conundrum. As the commander of Gibbons's forces, Vanderbilt had fought loyally under his chief in a great campaign. But his service had been a whetstone to sharpen his ambition. Now, with Ogden crushed, the Livingstons dispersed, and the monopoly in ashes, what was there to keep him in his master's pay? If even the aging chief justice had caught the rising spirit of the times—a rough, combative individualism—what would restrain the mariner-businessman who best embodied it? In Gibbons's dark, suspicious heart, he knew it was only a matter of time before his iron-willed captain fought his battles for himself.

WORKMEN BUSTLED AROUND BELLONA HALL
, hammering together an extension on the building, laying a new terrace, making improvements to the stables. Vanderbilt urged them to finish by the end of May, when traffic between New York and Philadelphia would pick up dramatically
⁸
His mind raced with ideas for the months ahead, searching for any competitive advantage for the Union Line. The Supreme Court had eliminated Ogden and the Livingstons as competitors, but in so doing had unleashed anarchy upon a business long restrained by law and custom. Already a new rival had appeared: the Citizen's Line, which ran the steamboat
Aetna
(or “Etney” as Vanderbilt typically chewed up the name). The war of all against all had begun.

As if to underscore the uncertainties of the age, the
Aetna
erupted in a massive boiler explosion on the waters of New York Harbor on May 16, 1824. The spectacular accident created a new anxiety—“the lurking fear that we might burst the boilers,” as one passenger called it. Though Americans were still entranced with the technology of steam, the
Aetna
disaster planted a seed of that most modern awareness: that progress marches with tragedy, that new capacities breed new horrors. At the time, the press merely focused on the choice of machinery, angrily denouncing the
Aetna's
owners for using a high-pressure engine.
“Let no such boats be trusted,”
the
Evening Post
fumed. Vanderbilt swiftly took advantage by notifying the newspaper that all of the boats on the Union Line “are propelled by the low pressure Steam Engines.”
⁹

Time would show that the difference between high- and low-pressure engines barely mattered when opposing captains strained their boilers beyond their limits. It was not merely the technology but the new culture of economic conflict that made the steam engine so dangerous to the public. Yet competitive zeal was what powered Vanderbilt in those weeks after
Gibbons v. Ogden;
rivalry seemed to make his mind ever more nimble, ever quicker, in these rapidly changing times.

At the end of May, he spent his thirtieth birthday consumed by the threat of a new and more dangerous foe, “the elegant Steam Boat
Legislator,”
as the
Evening Post
hailed it. “The
Legislator
has a large and airy centre dining cabin,” the paper reported, “finished off with mahogany and curled maple; a ladies' cabin richly and beautifully furnished; beside a large and convenient forward cabin containing a bar for refreshments, &c. and is in reality a splendid floating Hotel.”

Vanderbilt informed Gibbons that the
Legislator
belonged to a corporation based in New Brunswick; the shares were selling below par, he noted, and soon they might be able to buy enough to take control. (The par value was the official price which the original incorporators were technically obligated to pay.) It was a remarkable piece of creative thinking. In 1824, the corporation was a mysterious abstraction to most Americans, but Vanderbilt already grasped its nature and the market in stocks.
¹⁰
Indeed, the proposal offered an early hint of methods that would later define his career.

But it went nowhere. Instead, he and Gibbons met the
Legislator
with a fare war that drove the cost of the forty-mile journey from New York to New Brunswick down to a shilling. “But within a few days past the fare has been still farther reduced,” commented the
New York Daily Advertiser
on June 4, “and they now carry for nothing; in some instances a good dinner has been given to all who would accept it.” Vanderbilt—always alert to his personal interests—touted his inn in Union Line advertisements. “The elegant hotel, Bellona Hall, is connected with these boats,” he boasted, “where travellers can be well accommodated, and horses kept at low rates.”