The Vanderbilts - Dollars to Dust

by Elliot Hartridge

"Any fool can make a fortune; it takes a man of brains to hold onto it," a famous statement Cornelius Vanderbilt is said to have told his son William Henry Vanderbilt, a statement he may have regretted not passing onto all of his children. 

The Vanderbilts were once considered one of America's richest families, thanks to a booming railroad business but their wealth quickly turned to nothing over many generations. Cornelius Vanderbilt started the family business by borrowing $100 from his mother and piloting a passenger boat on Staten Island in 1810. He  expanded into steamboats and then went on to build railroad empire New York Central. Its tracks stretched Vanderbilt's empire across the United States and gave him a monopoly for all rail service in and out of New York city, the monopolistic power meant the Vanderbilt’s had the ability to price make, and the high barriers to entry limited other firms entering the market.  From his great railroading success, he reportedly accumulated a $100 million fortune by the time of his death in 1877 - more than was held in the U.S. Treasury at the time. Following his death, his son William, ‘Billy’, did his best to expand his fathers wealth: he inherited the family's 87% stake in New York Central and expanded the business, reportedly doubling the family fortune to over $200 million.

Cornelius had urged that the bulk of the family fortune be endowed upon one descendant, but when Billy died in 1885, he left the family's stake in the company to both of his sons, Cornelius Vanderbilt II and William Kissam Vanderbilt. The division of the Vanderbilt fortune in the third generation coincided with a decline in family interest in New York Central and a gradual increase in spending.

Cornelius Vanderbilt II managed the railroads until his death in 1899. William Kissam Vanderbilt took over but retired soon after to concentrate on his yachts and thoroughbred horses, while brother George Vanderbilt's decided to construct a 146,000 acre Biltmore estate which used up a large chunk of the family fortune that was left to him. According to Vanderbilt's book, William is said to have remarked: "Inherited wealth is a real handicap to happiness... It has left me with nothing to hope for, with nothing definite to seek or strive for."

The Gilded Age brought astonishing spending and endless rallies to keep up the family appearances. Among the Vanderbilt family's prized assets was an impressive art collection and a string of houses in Newport, Rhode Island, including The Breakers, and 10 mansions on Fifth Avenue in Manhattan, of course this also ate into the family fortune. On top of the Vanderbilts absurd spending habits, they also became philanthropic - third generation William Kissam Vanderbilt gave $1 million to built tenement houses in New York city, as well as hundreds of thousands of dollars to Columbia University, the YMCA, the Vanderbilt Clinic and Vanderbilt University. It was the third generation who stopped growing the fortune, William's extensive philanthropy and spending left an estate reportedly worth only the amount he had inherited in 1885 when his father died.

Perhaps the most notable fourth generation Vanderbilt was  Cornelius' son Reginald "Reggie" Claypool Vanderbilt, an avid gambler and playboy. His brother, Cornelius "Neily" Vanderbilt III spent vast sums on maintaining a high society appearance. "Every Vanderbilt son... has increased his fortune except me," Niely himself once remarked, according to Fortune's Children.

As the family inheritance was dispersed between more and more descendants, New York Central was undergoing changes. The transport business had peaked in the late 1920s, however by the end of World War II trucks, barges, aeroplanes and buses had cut into its industry.  The family also sold shares in New York Central, allowing the Chesapeake and Ohio Railway to become a major shareholder. New York Central then merged with the struggling Pennsylvania Railroad Company in 1968, creating a larger failing company known as Pennsylvania New York Central Transportation Company. New York Central was once the second-largest railroad in the United States, with 11,000 miles of track spanning 11 states and two Canadian provinces. By 1970, its latest iteration declared bankruptcy; passenger services were taken over by the federal Amtrak in 1971. In April of this year, 6th generation Vanderbilt Anderson Cooper told Howard Stern's radio show: "My mom's made clear to me that there's no trust fund." The first taste of ‘dust’ for the Vanderbilts. This was Indeed true, all of their New York city homes had been torn down by 1947. Today, the wrought iron gates from a Vanderbilt mansion are now the entrance to a 5-acre conservatory garden in Central Park; Cornelius and Alice Vanderbilt's block-long house in Manhattan's midtown district 57th Street is now occupied by high-end department store Bergdorf Goodman.

And though there are not enough readily identifiable businesses or substantial inheritances to get the Vanderbilt family a spot on Forbes' inaugural America's Richest Families list, their legacy lives on through the Vanderbilt University in Nashville, Tennessee, and Vanderbilt Avenue in New York's Manhattan and Brooklyn.