How Did Cornelius Vanderbilt Make His Money

The Vanderbilt family was one of the richest families in the United States in the 1800s and that was all due to the efforts of the family head, Cornelius Vanderbilt.

Cornelius Vanderbilt made his money off of the railroad and shipping industries. His career began when he was a young boy helping to run his father's ferry company. Then when he was 16 he ran his own ferry from Staten Island to Manhattan. From there he began a steamship enterprise and then a railroad empire.

You can read more below about Cornelius Vanderbilt's steamship company and his foray into railroads.

Cornelius Vanderbilt's Steamships

When Cornelius Vanderbilt was a young boy, he worked for his father who owned his own ferry company. The family lived on Staten Island and came from virtually nothing.

Vanderbilt's family initially came to the United States in 1650 via his great-great-great-grandfather who emigrated from the Netherlands as an indentured servant to pay for the crossing.

Working as a deckhand on his father's ferry led to Vanderbilt quitting school at age 11 in order to learn the business better. Then when he was 16-years-old, he started operating his own ferry, whether this was with his father's help is debated.

By the time Vanderbilt was 21-years-old in 1817, he had a small fleet of ferries operating and had earned the nickname The Commodore. This was the nickname that ended up following him his entire life.

However, it was that year that he was presented with the opportunity to become the captain of a steamship and work as the business manager for Thomas Gibbons. Under the tutelage of Gibbons, Vanderbilt learned how to operate a large business.

It was after Gibbons passed away that Cornelius Vanderbilt took all of his side businesses and started to operate his own steamboat lines between New York and the areas surrounding it. He also took over some of Gibbons' old routes.

Then he started to compete against steamboat monopoly, Hudson River Steamboat Association, with his new line operating up the Hudson River called The People's Line. They eventually paid him off to stop operating in their territory.

So he moved his enterprise to focus on shipping textiles through the Long Island Sound. Then in the 1850s, he entered into the business of ocean steamship lines because of the California Gold Rush.

The gold found in the gold rush was shipped to the other side of the States via Panama. So it was that Vanderbilt started a steamship line to Nicaragua called Accessory Transit Company.

Due to political circumstances in Nicaragua and an attempt by his competitors to take the company from him, Cornelius Vanderbilt eventually ended up starting a line through Panama and monopolizing the entire steamship business in California.

You can watch a short documentary about Cornelius Vanderbilt's career from HISTORY in the below video.

Vanderbilt's Railroad Empire

The very first railroad that Cornelius Vanderbilt headed was the Stonington Railroad. He took over the presidency of the company by driving down the stock price through cutting fares on the competing lines.

The Stonington Line was used to ship textiles from Boston to Long Island Sound so they could then be transported by steamship to New York. Vanderbilt's move to drive down stock prices to take control of a company was a strategy he used more than once.

In fact, he managed to take control of the Harlem line using a stockmarket corner. The Commodore was now focused on the rail business and, by 1864, he had sold his entire steamship fleet to focus on rail.

The man had great intuition considering that he made this move just as the rail industry was ebbing towards taking over water shipment. After all, it would soon prove more efficient to transport goods across the United States by rail than by water through the Panama Canal.

Although Vanderbilt was never the head of a Trans-American line, he was involved in the Erie Railroad War in 1868. This was when he and Daniel Drew tried to buy up the majority of the shares in the railroad against Jim Fisk and Jay Gould.

It was one of the only trade wars that Cornelius Vanderbilt lost. However, he moved on to focus on building the Grand Central Depot in New York that opened in 1871 later replaced by Grand Central Station in 1913.

Cornelius 'The Commodore' Vanderbilt passed away at age 82 on January 4, 1877. He left his heirs almost $100,000,000, which they eventually squandered.