Cornelius Vanderbilt died on January 4, 1877, holding a fortune estimated at over one percent of the entire American economy. He was the richest man the country had ever produced, a self-made empire builder who had started with a single ferry boat and ended up controlling the railroads that moved America’s commerce. Measured against the size of the economy of his era, his wealth is often compared to more than $185 billion today, and by the time his son finished expanding it, the family fortune reached a peak estimated at around $200 billion. Just 96 years later, roughly 120 of his descendants gathered for a family reunion at Vanderbilt University in 1973, and not one of them was a millionaire.
The greatest fortune America had ever seen had vanished without a war, a stock market crash, or a crime. It had been spent, divided, and diluted by heirs who never learned how it was made. The story of that collapse has become the classic American example of a warning often repeated: shirtsleeves to shirtsleeves in three generations. The instruction Cornelius Vanderbilt left his family was direct.
He told his heirs to keep the fortune together, not to split it, not to scatter it, and to hold it as one. It was the most important order he ever gave, and within a single generation, it was ignored. The Commodore, as he was known, built his fortune through ruthless competition. Born in 1794 on Staten Island, he worked on the water as a boy and eventually built one of the largest steamship operations in the country.
He then moved into railroads in the 1860s, buying up lines around New York and stitching them into a single system that included the New York Central. He also built the original Grand Central Depot in the city. By controlling the choke point every rival had to pass through, he set the price for the privilege. His methods were brutal.
In the Erie War of 1868, his rivals Jay Gould and Jim Fisk printed new shares faster than he could buy them and bribed the New York legislature to make the maneuver legal. When business partners cheated him, he wrote them a famous letter: “Gentlemen, you have undertaken to cheat me. I will not sue you, for the law is too slow. I will ruin you.
” He did. By the time he died at age 82, Cornelius Vanderbilt had built the largest fortune in the United States, around $100 million. Measured against the economy of his time, he ranks as the second richest American who ever lived, behind only John D. Rockefeller.
He then made a deliberate decision to preserve it. Rather than dividing his estate among all his children, he left almost the entire fortune to one son, William Henry Vanderbilt, with around $95 million going to William and William’s own sons. His daughters and his other son received far less, and several of them contested the will for over a year, claiming their father had been insane or under undue influence. They lost.
For one more generation, the strategy worked. William Henry Vanderbilt, dismissed by everyone as a dull farmer his father bullied, turned out to be a far better steward than anyone expected. In under nine years, he doubled the fortune from $100 million to more than $200 million. For a moment in the 1880s, he was the richest man in the world.
It was the last time any Vanderbilt would add to the family fortune instead of spending it. William is also remembered for a line that stuck to the family. Pressed by a reporter about whether the railroad served the public, he supposedly snapped, “The public be damned. ” The exact words are disputed, but the sentiment fit the family’s approach to business.
Then the discipline died. William Henry did not follow his father’s example. He did not concentrate the fortune in one capable heir. He split his $200 million among his many children.
He chose fairness over the cold preservation that had built everything. The Commodore had grasped something his son could not stomach: a fortune shared among many is a fortune on its way to nothing. The generation that inherited the pieces had no interest in trains or building anything at all. They had something else in mind: they were going to spend it.
They had the perfect era in which to do it, the Gilded Age, when the old rich competed to prove their grandeur. The grandchildren of the Commodore competed to build palaces. Up and down Fifth Avenue in New York, they raised a row of mansions so enormous the papers called it Vanderbilt Row. When Fifth Avenue was full, they built again in Newport, Rhode Island.
The Breakers alone had 70 rooms and required a staff of dozens just to run it. Marble House, next door, cost around $11 million, seven million of it in marble shipped from Italy, for a house lived in for only a few weeks a year. These homes generated no rent, no product, no income. They only cost in staff, coal, and taxes year after year.
Then there were the parties. In 1883, Alva Vanderbilt threw a costume ball at her Fifth Avenue chateau that cost a quarter of a million dollars, with thousands spent on champagne, flowers, and costumes for a single night. She used the party to force her way into New York high society, forcing the Astors, who had sneered at the Vanderbilts as vulgar new money, to recognize them. Both families were the richest of their age.
Both would lose almost all of it. The Vanderbilts soon ran out of things to buy in America and started buying things you cannot build: titles. Consuelo Vanderbilt, the Commodore’s great-granddaughter, was pushed by her mother Alva into a marriage with Charles Spencer Churchill, the ninth Duke of Marlborough, a man who owned a crumbling palace called Blenheim and needed cash to save it. Consuelo did not want him.
She was in love with someone else, and by her own family’s later admission, her mother locked her in her room until she agreed. Alva would testify years afterward: “I forced my daughter to marry the Duke. ”
On November 6, 1895, Consuelo walked down the aisle of a Manhattan church weeping behind her veil. The settlement that went with her was around $2.
5 million in railroad stock, handed to a British Duke to prop up an English palace. The marriage was a misery and was annulled in 1926. The money did not come back. Every generation, the money was divided again.
The Commodore kept it in one pair of hands. William split it among many. Those children split it among theirs. There was no family trust holding the capital as one block, no holding company, no family office running the whole fortune as a single enterprise.
The pile was no longer growing while dozens of people spent from it. By around 1907, only 30 years after the Commodore’s death, not a single Vanderbilt ranked among the richest people in America. Rockefeller, Carnegie, and Ford had passed them. The monuments went down with the money.
The marble palaces on Fifth Avenue were bulldozed one after another as the family could no longer afford them. By 1947, the last of the great Vanderbilt mansions on Fifth Avenue was gone. The Breakers in Newport was handed to a local preservation society in 1972, which paid only $365,000 for a house that had once symbolized the richest family in the world. That leads to the family reunion in 1973, when about 120 of the Commodore’s descendants gathered at Vanderbilt University.
As Arthur Vanderbilt II tells it in his book Fortune’s Children, there was not a millionaire among them. Between all 120 of them, they had less than a single million dollars. Yet two members of the family did keep something. The first was Biltmore, the largest private home ever built in America, constructed in the 1890s by George Vanderbilt, another of the Commodore’s grandsons.
For decades, it was a beautiful money pit. By 1960, it was losing a quarter of a million dollars a year. Then one heir did something different. George’s grandson, William Cecil, left a banking career and decided he would treat Biltmore as a business that had to earn its keep.
He turned the house into an enterprise with tours, a working farm, restaurants, and later a winery. In 1968, after years of grinding, Biltmore turned its first profit in the family’s history. It was just $16. 34.
Cecil’s own comment was that it beat losing half a million dollars. He opened the Biltmore Winery in 1985, and the estate grew as a real business. Today, Biltmore brings in more than $200 million a year, draws well over a million visitors, and is still owned by the Vanderbilt family, now into its fifth generation. Cecil’s philosophy became the family creed: “We do not preserve Biltmore to make a profit.
We make a profit to preserve Biltmore. ”
The second person who kept something did it by keeping almost none of the inheritance at all. Reginald Claypoole Vanderbilt, a great-grandson of the Commodore, was born in 1880 into staggering wealth. He never worked.
He gambled and drank, and he went through most of an inheritance of around $25 million. The story goes that on the night of his 21st birthday, he lost $70,000 at the card table before morning. He drank himself to death at age 45 in 1925. Reginald had a daughter named Gloria Vanderbilt, who grew up famous for being a poor little rich girl in a family whose riches were already draining away.
Gloria did something the palace builders never did. She went to work. She built her own name and her own fortune in fashion and design, putting her name on a line of blue jeans that sold by the millions. Gloria had a son, Anderson Cooper, the news anchor, a direct descendant of Cornelius Vanderbilt.
Cooper has said publicly that his mother made clear there was no trust fund. “I do not believe in inheriting money,” he said. He called an inheritance an initiative sucker and a curse, noting that if he had grown up believing there was a pot of gold waiting for him, he did not think he would have been motivated to do anything at all. The Vanderbilts who were handed fortunes spent them and vanished.
The ones who had to build, Gloria in fashion, Anderson in television, the Cecils in business, are the ones with anything to show for the name today. The richest man in America gave his family one instruction: keep it together. It is the one thing they could not do.