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by
T.J. Stiles
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January 11 - February 15, 2012
In the most extreme cases, western “wildcat” banks (named after the design on the notes of a particularly reckless Michigan institution) issued notes with little or no coin in reserve.
Americans had climbed upward on a pyramid of debts that
ultimately rested on high expectations for cotton prices.
instead of housing prices.
“Before paying it, I sent for Mr. Vanderbilt and received from him a most positive pledge that he would never again in any way interfere with the Line,” Palmer wrote. “I asked it in writing but this he declined to give, remarking that I knew his verbal promise could be fully relied on.”
Could be a part of the expectation that doing business by handshake is good thing...it's propogated by the powerful, not those that would benefit from it...follow te money
The steamboat trade had always been the most aggressively competitive business in America. Its fare wars, populist advertising, and highspeed racing embodied the nation's individualistic, unregulated society. It also embodied its mechanized, unregulated violence, with its deadly boiler explosions and reckless desperation to defeat the opposition.
Sole control. It would be a recurring theme in Vanderbilt's life. Always dominating, he increasingly lost interest in investment unless he had power over what was done with his money.
In New York's early, unregulated stock market, insider trading was the norm.
“Some unknown but still reasoning thing puts forth the mouldings of its features from behind the unreasoning mask.” Herman Melville's sense of the world as untrustworthy, as a shroud over a deeper reality captured something essential about this time and place. For such was the world that swallowed Billy Vanderbilt: a netherworld populated by those artificial persons called corporations that masked the real persons behind them; by paper money, that masked real gold and silver; by whispered rumors, that masked the manipulations of self-serving men.
Marx says somewhere that men make their own history, but they do not make it just as they please; they do not make it under circumstances chosen by themselves.
“Capt. Vanderbilt would not agree to bind himself by any written agreement,” the committee reported, “but said his word was better than his bond & that he has no intention of running an opposition to us
how does this actually turn out?
He began to systematically seize power in the companies that provided transportation around New York.
This is like Walmart today and StandardOil decades later. Profits come from an ability to operate wihout real competition.
income lacks diversity
self-made, despite the rhetoric of these observers; the point, rather, is that they struggled to invent social status in a culture that no longer depended upon hierarchy to function. A Livingston of 1800 did not desire distinction; she simply had it. But these latter-day climbers had to conjure up artificial ranks now that the organic ones were gone.
The business culture they created demonstrates how the impulse to stifle competition arose inseparably from competition itself in the American economy,
But he let go of his last link to the Stonington, resigning the seat on the board he had held after stepping down as president.66
The strategic importance was owning it, not running it.
He conferred with Lord Palmerston himself during this visit—though it is unknown whether Vanderbilt kept his ever-present cigar clamped between his teeth, or spoke in curses and double negatives, as had been his wont.
The original Crass American
The pulse of commerce between the Atlantic and Pacific coasts beat twice a month, a pace set by steamship departures. Every two weeks, “steamer day” sent San Francisco into a frenzy, as bankers prepared shipments of gold to New York houses, merchants called in debts to make payment to eastern suppliers, and everyone prepared letters and packages to mail to the “states.”33 When steamers were expected, all eyes watched the tower atop Telegraph Hill,
where signalmen would announce the approach of a paddlewheeler by running out oversize wooden semaphore flags—two long black boards, hanging down on either side of a tall pole. The signal's centrality to life in the city was seen during a performance by a visiting theater company. At a climactic point in the play, an actor flung out his arms, the sleeves of his black robe hanging down, and asked, “What does this mean?” A wag in the audience shouted, “Sidewheel steamer!” The knowing audience erupted in howls of laughter.34
permanent advantage over the Panama lines. A faster passage was one result, of course, attracting both passengers and specie shippers (who lost money with every day gold remained in transit, and who paid a lucrative commission on consignments). But the biggest benefit was the savings Vanderbilt reaped in operational costs. “The route by the Isthmus of Nicaragua is decidedly the most economical route,” declared John A. Buckman,
Economic advantage.
Even if the rival lines agreed to charge the same fare, Vanderbilt would earn a larger profit.
seventeen bodies would be recovered, most of them women, most of them German immigrants returning to the city from a jaunt to breezy Staten Island. A grand jury convened; in mid-August, it indicted Cornelius Vanderbilt for manslaughter.
It was a different corporate environment in the 1850's. Not only did you buy ships for cash an not have insurance, you were personally liable when something went wrong.
Accessory Transit plunged from 40 to 24.* Vanderbilt suffered losses, but revenge mattered more. “Vanderbilt declared that he would rather sink his ships at the dock than that White should make money,”
“Ships are but boards, sailors but men,” Shylock wisely observes in The Merchant of Venice.
Vanderbilt's discovery of this treachery provided the context for what is said to be one of the most famous letters in the history of American business: “Gentlemen: You have undertaken to cheat me. I won't sue, for the law is too slow. I'll ruin you. Yours truly, Cornelius Vanderbilt.” This terse, belligerent note is pure Vanderbilt. It is also mythology. It first appeared decades later, in Vanderbilt's obituary
Success in this operation had been far from certain, but Vanderbilt “was a bold, fearless man,” Wardell later explained, “very much a speculator, understanding all risks and willing to take them.”
Sure, but when did he ever lose?
Shrewd, dashing, and more than a bit slippery,
The man scorned as “boorish” by New York's elite had done his best to save the most elite of them all, and had been repaid with treachery.
* interesting....appearances ndveputation mislead.
A popular story attributes the invention of the potato chip to Vanderbilt. In 1853 he supposedly complained that his fried potatoes were not salty or thin enough; the Lake House cook, George Crum, retaliated by frying absurdly thin and salty slices, which Vanderbilt loved. (The Washington Post, May 19, 1917, credited Crum's half sister, Catherine A. Wicks.) There is no truth to the tale. The New York Herald, August 2, 1849, strongly suggests that the potato chip originated with the now-forgotten Eliza, no later than the summer of 1849. See William S. Fox and Mae G. Banner, “Social and Economic
...more
He did not think of his businesses as machinery; rather, he saw them as military campaigns against his enemies. When he could not avoid the merely mechanical aspect of his enterprises he often expressed impatience; but when he was locked in combat he paid attention to the tiniest detail.
For collateral, he took a mortgage on the entire rolling stock, all 180 locomotives and 2,975 cars.
an old railroad financing trick
He was accustomed to taking a leading role in transportation, which was by far the largest sector in the American economy;
Finally the chamber passed the Collins subsidy bill. “Congress was not deluded—it was corrupted,” the New York Tribune declared. “Where the money came from, we do not legally know—we can only give a Yankee guess—but that money passed this bill—money not merely expended on borers and wheedlers, and the usual oyster-cellar appliances of lobby legislation—but money counted down into the palms of Members of Congress themselves—this is as clear as the noon-day sun.”23
For all the apparent contradictions in his behavior, he envisioned his own career—his mission—in terms of a coherent philosophy: Jacksonian laissez-faire. Though the day was approaching when laissez-faire would be the conservative philosophy of a wealthy establishment, at this moment it lay on the populist—even radical—side of the spectrum. Vanderbilt had come of age in a society in which government intervention in the economy was seen as assistance for the elite.
In Vanderbilt's mind, his commitment to competition kept alive the spark of the Revolution. He, Vanderbilt, represented the “spirit of resistance,”
He was the selfish revolutionary, the millionaire radical.
“What is the most interesting feature of the business is, that Commodore Vanderbilt is running his ships entirely unassisted by any Government grant or subvention whatever.” This was indeed international news.
Gutsy
New York was a great shipbuilding center,
Spencer was a man adrift on the tide of fortune.
Like every president since Polk, he believed that the United States had no greater strategic imperative than securing the Central American transit routes to California. “To the United States these routes are of incalculable importance as a means of communication between their Atlantic and Pacific possessions,”
Don't get in tbe way of the need of a powerful force, like communication or oil.
The merchants of New York were a provincial group in their own way; despite their sway over the national economy, they knew and respected best those businesses located in Manhattan, amid their homes and offices.
Though the president was eager to reopen the Nicaragua route, he didn't particularly care who did it,
It's as if politicians are "judges" and not real players in the game.
the nation fell into the greatest financial crisis in twenty years—the Panic of 1857. In retrospect, the warnings of a collapse look all too clear. There was railroad overexpansion: of the twenty thousand miles of line built in the 1850s (tripling the total length of track), 2,500 were constructed in 1857 alone. There was the end of the Crimean War: Russian wheat now flooded the international market, hurting American exports. There was France's need for money: French banks borrowed from those in England, which raised English interest rates, which led British investors to sell off their
...more
Vanderbilt survived the great disaster with no sign of suffering. He must have felt some pain, for he could not levitate entirely above the
great river of credit that carried the economy along. Yet it appears that he possessed deep cash reserves, and never failed to pay a bill or debt even in the worst of the storm.
Conservative, non-leveraged philosophy
As for Drew, he was a curious fellow: bold when he had every advantage, timid at all other times, he was the sort of financier who tried to run ahead of the changing wind rather than fight it.
*
The Commodore began to work on a plan to restructure the large floating debt of about $750,000, to allow the Harlem to put its finances in order, and bought a majority of $1 million in third-mortgage bonds (at a 50 percent discount).
Save cash to buy 50% discount bonds in a downturn, in a business you manage. This was the similar to the RTC real estate crisis of 1991.
With a population of nearly 57,000, San Francisco had grown into a true metropolis, thanks to the gold that poured out of California's mountains to the value of tens of millions of dollars each year. Loaded onto steamers at the city's piers, the precious metal flowed down to Panama and up to Manhattan, where it helped power the American economy and reinforce New York's dominance over the financial nation.
+ Erie Calnal wheat, train raw material, and factories, and immigration...NYC had it going on in 1859.
ON THE NIGHT OF OCTOBER 16, 1859, John Brown led eighteen men into the federal armory at Harper's Ferry, Virginia. A veteran of the fighting against border ruffians in Kansas, he now hoped to spark an uprising by slaves in the South.
George Templeton Strong
Is there a good biography of him?
He had opened secret talks with Vanderbilt, and on November 25 he presented the Pacific Mail board with the results: a tentative agreement to shut down the North Atlantic Steamship Company, sell to Vanderbilt Pacific Mail's seven ships on the Pacific for $2 million, distribute the proceeds to the stockholders, and terminate the
