Cornelius Vanderbilt (1794–1877) was one of America’s first and most accomplished heroes of capitalism. Vanderbilt began life on a humble Staten Island farm and rose to be the wealthiest American at the time of his death.
Throughout his business life, Vanderbilt helped to transform American transportation networks and to provide a stable and cheap means of conducting business at a distance. Prior to the “transportation revolution,” Americans faced a daunting task when they attempted to move from place to place in the vast territory of the United States. With only draft animals and primitive dirt roads or wind power and sailing vessels, nothing in the world could move faster than 20 miles per hour. The advent of steam power, in both watercraft and later railroads, broke through those old barriers and made possible the transportation of goods and people across great distances.
Vanderbilt’s role in the adoption of steam power was a significant one. Facing a state-granted monopoly of steam navigation of New York waters, Vanderbilt and his partner Thomas Gibbons set out to smash the monopoly by proving that free competition and business acumen could provide the market with superior service. Working against the state enforced restrictions, Vanderbilt powered his boat the Bellona into New York harbor for six years in defiance of the state-protected monopoly. His mast carried a bold statement, “New Jersey Must be Free,” indicating his opposition to the quasi-mercantilist regulations imposed by the state monopoly.
Eventually, Gibbons and Vanderbilt prevailed when the United States Supreme Court ruled in Gibbons v. Ogden (1824) that the federal commerce power prohibited states from imposing such monopolies of commerce.
The immediate result of the opening up of trade was a massive reduction in prices (anywhere between a reduction by half up to a reduction by ninety percent) and a growth in capacity. Almost overnight, western rivers and canals had hundred of steamboats carrying the products of newly established businesses to distant markets. Harper’s Weekly observed “in every case of the establishment of opposition lines by Vanderbilt, there has been a permanent reduction in fares.”
The ability to overcome the physical barriers to commerce generated a spur to industry across the United States. The superiority of open competition demonstrated by Vanderbilt would later facilitate the creation of a vast railroad system that further advanced American standards of living through improved transportation, with Vanderbilt himself at the forefront in his creation of the New York Central Railroad system. Vanderbilt as a railroad tycoon built Grand Central Station, where a statue of him still stands.