The Vanderbilt name is legendary in America. When we name some of the most famous self-made made men in our country’s history, rail baron Cornelius Vanderbilt sits near the top of the list.
At the time of his death, he was worth around $100 million, a staggering total back in 1877 — more money than the American government had in the bank. It represented about five percent of all the money that was in circulation in the country.
Natalie Robemed, writing for Forbes, noted that one of Cornelius “Commodore” Vanderbilt’s driving principles of wealth management was to keep the money together. It’s said that he told his son Billy that “Any fool can make a fortune; It takes a man of brains to hold onto it.”
Billy took his father’s teachings to heart and doubled the Vanderbilt fortune during his time as its overseer. How then, did it come about that the truly staggering Vanderbilt financial legacy is nonexistent, just a few generations later? Because even well-intentioned people don’t always do as they’re told.
Commodore Vanderbilt started the family’s business with $100 he borrowed from his mother. He used it to start piloting a passenger boat to Staten Island back in 1910. Seven years later, he met Thomas Gibbons, a ferry boat owner, who asked the Commodore to pilot a steam ferry between New York and New Jersey, giving the Commodore the chance to get in on the new steam technology.
The benefits weren’t just counted in terms of financial rewards, either. The Commodore was in a position to start networking among the well-off, and by 1830, he’d parlayed that into a lucrative business running steamboats between New York and various points around the surrounding area, according to the Gentleman’s Journal.
From steamboats, he bought into the rapidly expanding railroad market, creating the New York Central Line, which connected New York with points all across the country and had a monopoly on services in and out of New York.
On the Commodore’s death, his son Billy took the helm. The family held an 87 percent share in the New York Central Railroad, and continued expanding the business, amassing a fortune of $200 million by the time of his death nine years later.
Billy’s death marks the point that the Vanderbilt family’s fortune began to change. Despite his father’s warnings about dividing the family fortune, he divided the family’s share of the business between his two sons, Cornelius II and William Kissam Vanderbilt.
Around the same time, the family’s interest in New York Central began to decline, and to complicate matters, the Vanderbilts began to also show an increasing urge to make more of a mark in society and spend more of their massive fortune. William married Alva Erskine Smith, a woman with grand social aspirations, and the couple had three children. In her desire to establish herself among the old money elite, in 1883, Alva had a stunning new house built on Fifth Avenue, called Petit Chateau.
The rather ironically named “little house” was so large that its first party included 1,200 guests. Alva’s social ambitions didn’t stop there. She essentially bullied their daughter, Consuelo, into marrying the Duke of Marlborough as a way to solidify the family’s place in high society. The dowry the Duke received was a mind-boggling $2.5 million — the equivalent of about $70 million, today.
William’s brother, George, took his share of the family’s estate and went to North Carolina, where he used about $4.5 million of his $5 million legacy to erect the Biltmore estate. Biltmore is the largest private family residence ever built in the U.S., having 250 rooms.
The Vanderbilt real estate frenzy didn’t stop with those two homes. The family had nine other mansions along Fifth Avenue, and two homes in Newport, Rhode Island. The Marble House, built in 1892, was William’s 35th birthday gift to Alva, and cost $11 million.
Not to be shown up by his brother, Cornelius II also built a summer home in Newport, called the Breakers. The house alone, excluding any grounds, covered a full acre, and it had 70 rooms.
This third generation of the family also became philanthropists, endowing Vanderbilt University, making sizeable donations to Columbia, the YMCA, and various other organizations and charities. In just one generation, the Vanderbilt family had gone from accumulating money hand over fist to spending more than their holdings were earning.
The commodore’s great-grandchildren continued the trend. Reggie Vanderbilt, father to fashion designer Gloria, was a notorious playboy with a fondness for gambling who died in his forties from alcohol-related liver failure. Cornelius III, Reggie’s brother, spent a fortune maintaining a presence in high society.
As marriages were dissolved and remarriages occurred, the family fortune was being spread around an increasing number of relatives. At the same time, the nature of the freight market was changing. The transport market reached its apex in the late 1920s, but over the next couple of decades the supremacy of railroads was being undermined as barges, buses, and planes began gaining more of a market share — not only in hauling freight, but also for passenger transport.
The family ended up selling many of its shares in the New York Central Railroad to another railroad, the Chesapeake and Ohio Railway, further decreasing the family’s income stream. By 1970, the railroad that had created the Vanderbilt fortune was declared bankruptcy.
By 1947, none of the homes in New York City still stood. The gates from one of those houses is in Central Park, marking the entrance to a conservatory garden. The location where Petit Chateau once sat is now the fashion store Zara, and Bergdorf-Goodman now sits on the site of the block-long house that Cornelius II and his family lived in.
Some people say that Vanderbilt’s real problem was that after the Commodore and Billy’s generations, each that followed felt less of a need to strive. Having such enormous resources meant that there was very little to aspire to or that could present a real challenge, so people found other things to occupy their time.
As a result, all that remains of what was arguably the greatest fortune in the country is the results of their various philanthropic activities, a truly remarkable art collection, and a pretty romantic history.