All this time Harlaem, too, had been having its ups and downs — though rather more downs than ups — and in recent months its corners, too. Mr. Vanderbilt not only lent it money in its extremity in 1857, when its stock grovelled in the market at $3 a share, but bought a considerable portion of the $1,000,000 bonds issue of 1858 which the directors couldn't sell at par, and some of which he finally took at fifty cents to the dollar. He was made a director, but he could see no great promise in the road, and rarely attended directors' meetings. Harlaem was considered a pretty poor prospect. It had in all its nearly thirty years of existence paid only 13 percent in dividends, and why Vanderbilt bought those bonds is not clear unless the bargain price was irresistible. But he bought no more stock, even when it could be picked up for a few pence.
The Civil War did Harlaem little good, save that the general strengthening of the market brought its stock up in 1862 to $9 and then to $12. (Remember that its par value was and always has been $50.) Vanderbilt's name was so potent that the fact that he had become a director caused some others to pick up little blocks of the stock, while yet others who were tempted to sell at the higher prices decided to stay in.
Horse-car lines in the city were more profitable than Harlaem's up-the-country line through a non-industrial area, and in December, 1862, the Harlaem's directors applied to the Council for the right to lay rails on Broadway from Union Square to the Battery — this under their charter, of April 6, 1832, which gave them the right to lay track on any streets which "the Mayor, Aldermen and Commonalty might prescribe." That move brought the stock up to 27. But when smart Wall Street brokers heard that Commodore Vanderbilt was buying Harlaem stock for investment, p167 they snickered behind their hands and unloaded what shares they could get on him at higher and higher prices. But when, early in '63, it leaked out that city officials and councilmen were buying stock, too, small wrinkles of uncertainty began to appear in the wise ones' brows. The price rose to par and then to 60 in April, but editors continued to warn the public that there was no real basis for the advance, for Harlaem was the flimsiest of bubbles.
But late in April, the Council granted the Broadway franchise, and Harlaem stock jumped from 60 to 75 in an hour. The City Council was as usual corrupt, and Henry Clews took it for granted that bribery had been used in getting the franchise; it was the customary thing. But there was also the lure of large profits on stock owned by the "City Fathers." Mayor Opdyke promptly signed the measure, and on the same day hundreds of laborers began tearing up Broadway pavement below Fourteenth Street.
Simultaneously, however, a group of speculators headed by a former bitter antagonist of Vanderbilt on the water, one George Law, who had begun as a day laborer, and fought and chiseled his way to power, were pushing a bill through the Legislature — a more putrid body, if possible, than the New York City government — granting them, in flat defiance of the city's ordinances, the Broadway street car franchise. The Harlaem had tried to impede the move by sending Horace Clark to Albany as lobbyist, but Law — as he later testified on the floor of the Assembly — handed out cash and orders for stock in such quantities to the members that the bill was passed.
Before Governor Seymour could sign it, gangs of workmen, under Law's telegraphed orders, began ripping up the pavement on Broadway farther downtown, and an injunction was served on Mayor Opdyke in an effort to prevent his signing the Harlaem measure, but it was too late. Harlaem directors fled from the city in all directions to avoid injunction measures, but a process server caught one of them, and they were enjoined from further excavation.
It would seem that Law was winning, but now public wrath boiled over. The city was already chafing, as it has done ever since, over Albany interference in its home rue. Furthermore, Harlaem had contracted to pay the city for its privilege — 10 percent of the gross receipts and a yearly license fee of $25 per car — while the Law franchise gave the city nothing. Prominent p168 citizens such as Samuel J. Tilden, William B. Astor and Pierre Lorillard wired protests to Governor Seymour, who was under pressure on the other side from the New York Central and from Peter B. Sweeny, one of the infamous trio later known as the Tweed Ring, now lobbying for Law. Seymour, who seldom did any important thinking of his own, was in a quandary. He consulted Tilden, and upon the latter's advice, vetoed the Law act.
Harlaem stock had taken a heavy fall at the time of Law's injunction, but the Governor's hesitancy in signing the bill checked the decline. When news of the veto reached the Street, Harlaem shot up to 100, and seers who had been calling it worthless now admitted that "no one can tell what the grant may prove worth," which was sound truth, though not in the sense they intended it to be.
Days of excited trading followed, and when the company had its annual election and Cornelius Vanderbilt was elected president, the stock soared to 116. In the election, it was revealed that Vanderbilt owned 8,801 shares, while son-in‑law Clark had 1,350. Possibly each held other shares under brokers' names, for that was a practice of wealthy men even then, as it is today. In this election, Allen Campbell, who had been president for six years, retired as executive and as director, along with several others, and in came James H. Banker and Augustus Schell, both known in the Street as being of "the Vanderbilt crowd." Addison Jerome, who had not long to live, was another new one. Drew continued as director, but Horace Clark displaced him as head of the executive and finance committee. The Commodore, in accepting the presidency, specified that he be paid no salary and that the vice-president — William E. Morris was elected to that post — be the working executive.
Drew may have been a little miffed at being left off that committee, but it is more likely that it was just a normal reaction of his devious nature to try another trick when he believed that Harlaem stock, then riding so high, was exceedingly vulnerable. He concocted the idea and broached it to certain city politicians — Bill Tweed is said to have been the chief — of having the Council abrogate the Broadway franchise, and thus bring Harlaem stock down with a crash, those in the secret having previously sold it short. Treachery to his own company didn't worry Uncle Dan'l for a moment; he had no morals, anyhow, even if he did found a theological seminary.
p169 To "take a slice out of 'em" would be "as good as nuts and cheese," to use two of Drew's own favorite sayings. City officials had made some nice profits in the recent rise, and being without scruple themselves, they welcomed the chance to pick up some more easy money. During the first three weeks of June, 1863, the Harlaem quotation slumped from 100 to 80 as the short-selling plotters pounded the market. On the 25th the Council repealed the Broadway franchise, and simultaneously an injunction was obtained against further track-laying. The price promptly broke to 73.
But the Commodore, undaunted, merely uttered one of his most oft-repeated rules of practice, "I bide my time." As the Herald said:
The President of the Company, Commodore Vanderbilt, warned the members of the Council of the folly of their trick, and predicted that they would lose more than they would make by it. But they would have their way, and Wall Street now knows that if it chooses to corner Harlaem, the Aldermen and Councilmen and their sporting friends are short enough of the stock to insure its rising to 125.
The prophecy was more than fulfilled. The Vanderbilt coterie, having plenty of cash, bought heavily, and in one day's frenzied trading, took over thousands of shares, bringing the price up to 97. But they did not stop there. Another day's share, and it touched 106. The shorts, who had sold 50,000 shares, were running around frenziedly, trying to borrow stock for later delivery, "hoping to make better terms hereafter than they can at present." Some of the city dads would probably have murdered Drew if they had had a convenient opportunity. But he was having his worries, too. The Times believed that the equivalent of the entire capital of Harlaem had changed hands in two days. Its comment is worth repeating:
The public sympathies are wholly with Mr. Vanderbilt in this transaction, and there is the most hearty congratulation exchanged on the Street to‑day that the shameless trick and fraud of the City Councils and their stock-jobbing conspirators have been paid off with compound interest.
On June 30 the councilmen, caught in the Commodore's pincers, reinstated the Broadway franchise, evidently hoping thereby to win mercy at his hands. But they mistook their man. p170 Harlaem stock sagged at the news, and the Herald remarked that it might seem strange to outsiders "that Harlaem should rise 30 per cent on the repeal of the grant and fall on the repeal of the repeal. But people who sold the stock short understand the reason." Contrary to their hopes, however, it did not mean that they were going to be let go on parole. A few hastened to sell out at the slightly lowered figure, but most of them hung on, hoping for still lower prices. Instead, the Vanderbilt clique continued to buy, and in August the stock reached 179. There the last of the battered shorts, including Drew and a few Aldermen, covered their sales and emerged, pretty well plucked. The Commodore's vengeance had been slaked, and in September he left the price coast down to 115. He had handled his first big market operation with a skill that amazed the Street, coming out of it not overloaded with Harlaem stock, but virtually in control.
But the Broadway line was not yet in the clear. Property owners sought injunctions against it, and the influence of disgruntled Councilmen was seen in the action. The State Supreme Court, by some curious reasoning, decided that this line did not come within the provisions of the revised charter of 1832, which empowered the company to extend track wherever the mayor and Common Council gave permission, but declared that the proposed Broadway line constituted a new and independent operation, not a mere extension. This meant that the Harlaem must go to Albany for a new franchise. So early in 1864 a bill was introduced into the Legislature to that effect, and Horace Clark, Daniel Drew — without even the faintest flush on his wizened cheeks at the memory of his recent skulduggery — and three other directors went up to push it. The truth of the matter was that Drew was planning cozenage with the state legislators precisely like that which he had concocted with the City Council. There were plenty of venal lawmakers in Albany at the time, and seemingly he had no difficulty in persuading a Senate committee to report adversely on the bill. He now had some powerful coadjuvancy — officials of the New York Central, who would have liked to buy control of the Harlaem as an entrance to New York City, and naturally wanted to do it at the least possible cost, and a fellow-director, Addison Jerome, who had just dropped $800,000 in an attempted corner of Michigan Southern & Northern Indiana stock, and was now nervously seeking a way to recoup.
Senator John B. Dutcher fought hard to bring the Harlaem bill out of committee, but in vain. It was turned down on March 25, p171 and Harlaem stock, which had risen to 145 on prospect of the bill's passing, dropped with a crash to 101. Shorts — Drew of course among them — were selling merrily on the prospect of its skidding still lower. But once more the indomitable old "lion" arose in his wrath. As a result of his heavy buying in the first corner, the Commodore's liquid resources were not great enough for what he wanted to do. He called in his old Staten Island friend Tobin, already with him in Hudson River, who had been buying Harlaem with the hope that the new franchise would go though.
"John, don't them fellows need dressing down?" asked Vanderbilt, referring to the state "Solons."
They certainly did, Tobin agreed, but he didn't see how it could be brought about, as the miscreants held the whip hand. But the Commodore thought otherwise.
"John," said he, "let's teach 'em never to go back on their word again as long as they draw breath. Let's try the Harlaem corner once more."
He outlined his new buying campaign. Tobin was to put up a million, and Leonard Jerome, whose ideas were quite different from his brother's, was brought in, giving the trio about $5,000,000 to play with. The Vanderbilt brokers received orders to buy, and once more the stock began climbing. The bears, who had believed that it would drop to 75 or lower, were still confident, and continued to sell short. There appeared to be no sound reason why the stock should go up save the senseless buying of the triumvirate, but rise it did, and when it passed 150 the short-selling legislators began to lose sleep. Hoping to depress the stock by watering, a bill was rushed through the Assembly, permitting the Harlaem to increase its capital by $3,000,000, by the conversion of bonds; but nobody, either cornerers or cornered, paid the slightest attention to it. Harlaem continued to soar, and adventurers in it were coining money; one man, on a margin of $600, made $40,000 in four months. Meanwhile, the unhappy bears were in the attitude then known in Wall Street as "sitting on their shorts." By the end of April the stock was quoted at 235, and some of the bears were getting out from under and taking their losses. The Vanderbilt group had bought the equivalent of the entire capital stock and 27,000 shares more, which the wretched shorts had no chance whatsoever of delivering. The Commodore was in high feather.
p172 "Put it up to a thousand!" he cried. "This panel game is being tried too often."
But Jerome had more regard for the financial district, where he expected to continue making his living, but for which the Commodore cared little, his interest being primarily in railroads rather than in stocks. The astute Jerome told him that to carry out his threat "would break every house on the Street."
It must be said for Commodore Vanderbilt that he never refused to listen to sound advice. An anonymous circular put forth about this time caused him to hold on a little longer. This document charged that the "Vanderbilt crowd" cared nothing for practical railroading, but were simply bleeding the city and state, "putting the stock up to the visionary price of 260 per cent, and compelling the shorts to pay this ridiculous price to obtain their stock to deliver;" that they had ousted some of the ablest of the company's directors, including President Campbell, who had saved the corporation from bankruptcy. As might be expected, this manifesto had not the slightest effect on anyone save to make the Commodore's face a little more stony. On a day late in June contracts for more than 15,000 shares matured, and the last of the shorts escaped at 285. Loud were the wails of agony as they took a loss of more than a million, some of them going into bankruptcy. For years afterward, "Short of Harlaem" was a cant phrase in the Street, meaning any sort of bad luck.
Here Vanderbilt, heeding Jerome's advice, rested on his oars. His anger had been greatest towards the venal "statesmen" at Albany. "We busted the whole Legislature," he exulted, "and some of the honorable members had to go home without paying their board bills." His revenge had indeed been terrific. Oddly enough, his rage at Drew was much less virulent. That old rascal, in the worst plight of all, facing a loss of $1,700,000, went whining to the Commodore, with tobacco juice dribbling down his chin and pleaded that an old river pal oughtn'ta be hard on a feller that was jest tryin' to git along. Vanderbilt, probably well aware of Drew's ability to wheedle him, turned the penitent over to Leonard Jerome and Tobin, who, after several days of conference, let him off with a loss of, some say half a million, some $700,000. It might have been at that time that Dan'l composed the doggerel often attributed to him:
He that sells what isn't his'n
Must buy it back or go to prison.
p173 Which was in reluctant agreement with Vanderbilt's sound maxim, "Never sell what you haven't got." He is said to have netted some two millions in cash in this deal, not to mention the joy of administering a sound flagellation to a rabble of faithless politicians. Harlaem stock did not appear on the Exchange again for two months after the peak of the corner, and its next sale, in September, was at 65, a little above par. The tumult and the shouting had died, and the hoped-for Broadway franchise which had caused all the trouble was shelved as too controversial a measure for the times.
Drew and Addison Jerome — another heavy loser in the corner — retired from the Harlaem directorate that year, and a few months later Jerome's overstrained heart ceased beating. Tobin and Senator John B. Dutcher, who had fought valiantly but vainly for the Broadway franchise at Albany, came in as directors in that election of 1864, as did half a dozen other new ones, a total of eight out of thirteen. It was a revolution. In the balloting, Tobin's holding was revealed as actually larger than Vanderbilt's; he voted 31,900 shares to the Commodore's 29,607. A. B. Baylis, biggest of all, held 31,993, Horace F. Clark 5,700 and Augustus Schell 3,400.
That summer of 1864 saw the turning point in Harlaem's career — from rags towards riches — and in that of William H. Vanderbilt, who, at the age of 44, came into the board and was elected vice-president. During the previous year he had moved his wife and eight children from the Staten Island farm to his first town residence, 2 West 38th Street.1 And during the next fourteen years, until the elder Vanderbilt's death, William had more to do with the upbuilding of the New York Central system than succeeding generations have been wont to believe. He was no more than a superintendent at first, attending to details of operation; but slowly his power grew, and his father came to rely on him as he had been doing on Horace Clark. The time came when he found that William was worth a dozen Clarks.
The Commodore now had two New York-Albany lines on his hands, and though he favored the direct, gradeless Hudson River as the better of the two, he set about improving the Harlaem also — for it was never a Vanderbilt trait to let a railroad run down p174 or remain ramshackle after it was taken over. New rolling stock and rails were ordered for the Harlaem, and plans were made to double-track it throughout its length.
But the Hudson River was receiving attention, too, in more ways than one. The dividend rate was put up to 7 percent in 1864, and in the following year to 8 percent. In '65 the earnings were near four and a half millions, and the road was being operated at a cost of 62½ percent of income (New York Central and Harlaem costs were much higher), notwithstanding the fact that it was being steadily improved. Six-sevenths of the mileage to lay had been double-tracked with 70‑pound iron rail, and steel, recently introduced, began to be used.
The New York Tribune remarked in 1865 that "several thousand tons of steel" were being laid in "the up-track south of Manhattanville;" also that five ties were being laid in the space formerly occupied by four, and long chairs, extending from tie to tie at the rail-ends, reduced jolting and wear and tear. The locomotives — seventy-five roadsters and three dummies for city work — were being converted from wood- to coal-burning. To complete the picture, the stock was considered gilt-edged, and was held at high figures, often 150 or more.
But both to the Sloan and the Vanderbilt administrations, the New York Central had been a most unsatisfactory connection, a seasonal pain in the neck. As soon as the river below Albany opened in the spring, the Hudson River and Harlaem thereafter got little business from it. The Corning administration was accused of changing the markings, "Carriage by railroad" — meaning all the way to New York — put on freight by shippers to "P. L." which meant People's Line of steamboats from Albany to New York. The Central, secure in its rich midstate industrial field and its position as the vital link between New England and the West, not to mention New York, was arrogant. With the passing out of Corning in 1864 and the advent of Dean Richmond (1804‑66) as president, its self-confidence became a little more genial, but none the less rocklike.
Richmond was a storied character — a burly giant, brusque and determined yet kindly, with a voice like the Bull of Bashan and an ugly countenance, which nevertheless, could wear a winning smile. Vermont-born, he never had opportunity for an education, but began life in his teens as a salt boiler at what was later Syracuse. His spelling was bad and his penmanship was dreadful,2 p175 but he had natural aptitude for business, and once he had got a start, his rise was rapid. He was a pioneer believer and investor in railroads, risking some of his early and hard-earned cash in the little Tonawanda Railroad, and later was president of the Buffalo & State Line Railroad. He became one of the most noted shipping magnates of the Great Lakes, and his third major interest was politics. He had long been Democratic State Chairman, and Room 57 at the Delavan House, across the street from the Central station at Albany, was known all over the state as his headquarters.
As Vanderbilt became supreme in Hudson River, he saw in the uncongenial, summer-and‑winter tactics of Erastus Corning that he would never have a satisfactory outlet to the West unless he had something to say about the affairs of New York Central. The Central's watered capital stock being about $25,000,000, it was not practicable to buy control, but at least one might get a couple of fingers in the pie. His brokers therefore began buying, and by 1864, owning several thousand shares, he wielded considerable influence in the NYC election. At that time two factions known as the Corning party and the Olcutt party were fighting for control in the Central board. Corning and Richmond had so far been unfriendly to Vanderbilt, but now, fearing that he might throw his weight with the Olcutt crowd, they made a treaty of peace with him, promising the Hudson River a better deal on traffic and representation for the Vanderbilt interest on the Central board. With this understanding, Corning was elected president, and James H. Banker became one of the Central board.
Tired old Corning resigned very shortly, however, and was succeeded by Richmond. To clinch the alliance still further, Richmond, who had for some time been buying Hudson River stock, became a director in that corporation when one of the board resigned, while Horace Clark was added to the directorate of the Central. The prospect now seemed rosy for a Brotherhood of Man, just as it is predicted it will be after each World War; and there was a similarity, too, in the actual outcome.
The bridging of the Hudson at Albany became one of Richmond's p176 first concerns. Even as vice-president, he had persuaded Corning to operate both through passenger and freight traffic over the bridge at Troy. But Albany was the logical place to cross the Hudson, and though the steamboat interests, the city of Troy and even some people in Albany, as we have already noticed, fought it stubbornly — the War Department, too, didn't care much for the idea — Richmond was determined to put through the project for which a company had been incorporated as far back as 1856. There had been acrimonious debate, in and out of print, injunctions and counter-injunctions. Richmond had fought them all doggedly, and in the end, he won. He could not get private subscriptions of stock in the bridge corporation, so it was taken over by the three railroads using the structure — the Central, one-half, the Hudson River and Western (soon to be called Boston & Albany) one-quarter each; which explains why the New York Central now owns three-quarters of the stock.
Construction was begun in 1864 and completed early in 1866. Albany liked the affair no better after it was done than before, calling it a blot on the landscape. It had nineteen piers and was almost a letter S, a part of the curve on each side of the river being in the bridge itself. What irked the town most of all was that it was a cheap, Howe-truss affair of wood, in an age when iron was coming largely into use for bridges. The railroad companies in defense claimed that it was merely a temporary affair and would probably be replaced within three years. The only part of the bridge that was admired was the draw span, a huge, revolving affair with a space of •110 feet on each side of its central pier when open, so that two steamboats, if they chose, could have passed through each opening simultaneously.
First bridge across the Hudson at Albany, opened 1866.
The bridge company charged tolls, as fixed by law, including three dollars for a carload of cattle. There was a footwalk, and even decades afterward, pedestrians were being assessed two cents for crossing.
With the completion of the bridge — which was elaborately celebrated on Washington's Birthday, 1866, with Richmond, Chapin of the Boston & Albany and two Hudson River directors as co-stars — Hudson River and Boston & Albany trains began operating into the Albany station, and the Central launched its gorgeous Red Trains between New York and Buffalo, so called because the cars were painted crimson instead of the conventional yellow. These trains carried the improved Wagner sleeping p177 cars, whose predecessors had begun operating on the Central in 1858, as described in Chapter 7.3
The Schenectady Evening Star on October 21, 1865, remarked that "Mr. Wagner, superintendent of the sleeping cars of the New York Central Railroad, has now eight elegant sleeping cars on the road. Each cost eight or nine thousand." He had now reduced the tiers of berths to two, upper and lower, and made them more comfortable. To him was due one great improvement in passenger cars of all sorts. Travelers in the old flat-topped cars suffered terribly from bad ventilation. If there were ventilators alongside the sleep passenger, the inrush of cool air might give him a cold or sparks come in and set him afire. To obviate this, Wagner in 1859 invented the monitor or clerestory device, a superimposed roof with ventilators in its sides, was successful and which was applied to all types of passenger cars for generations thereafter. The new cars for the Red Trains were said by some gossips to have cost anywhere from $18,000 to $24,000 each. News writers gazed with rapt admiration at their ceilings, "highly finished in green and gold and fresco," and noted that "At either end are convenient saloons and costly mirrors." Of course they did not mean liquor saloons.
Meanwhile, that other product of the New York Central countryside, George M. Pullman, was working on the idea, and in 1863 produced his first sleeper, the Pioneer. It was not very successful, and in the following year he did better. He thought of gadgets which must have caused Wagner deep chagrin because he didn't think of them first — namely, the folding upper berth and the hinged back and seat cushions for the lower berths, all of which made the porter's work so much easier nights and mornings. Pullman cars came into wide use on other lines than the NYC, while Wagner's cars ran all the way from New York to Cincinnati via Cleveland. In 1870, Wagner contracted with Pullman for the use of his upper berth and seat contrivances, with the understanding that Wagner could use them only on the p179 New York Central lines; but as those lines soon began reaching out towards Chicago, his field was not as limited as it sounds.
An illustrated weekly artist's idea of a New York Central sleeping car in the 1860's
The building of the bridge at Albany meant that the railroad station must be moved •half a mile to northward, which would put the Delavan House's nose out of joint. But as the Schenectady Union remarked, "Several years must elapse before the new depot will be finished. There must first be laid a foundation of solid stone •from five to fifteen feet above the present level, and thus the floor will be raised to the level of the bridge, which now crosses the street on a trestle." But it was fortified in 1868 that the tracks were not quite high enough yet when, on St. Patrick's Day, an ice jam in the river backed water over both the Central and Hudson River rails for a day or two.
Albany did not like the new depot, either. Not many years later, a new bridge, an iron one this time, was under way a half mile to southward, where the passenger bridge is today, though necessarily with the sharp curves at each end, much like the upper one. It was opened in 1872, and then the station was moved back to the old site, and the older bridge was used for freight traffic. Both bridges were later replaced by steel structures. After the opening of the Castleton Cutoff, •ten miles below the city, in 1920, all through freight went that way, leaving the north bridge at Albany to be used, as it is now, for local freight and those fast passenger trains too snooty to stop at Albany. The Delavan House was burned in 1893 and on its site the present Albany station was built. On the second floor is the Board Room, with portraits of the Commodore and Erastus Corning on the walls, where the annual meetings of the great corporation are still held.
Richmond was a busy man during the six months that followed the bridge opening. He now had the entire NYC line, with the exception of •about 15 miles near Rochester, double-tracked with the heaviest rail obtainable, and was beginning to lay steel. He had for years fought valiantly to obtain abrogation by the state of the two-cent fare limit imposed upon the Central when it was incorporated in 1853. As the New York Tribune pointed out, "The expense of maintaining and operating the road has more than trebled since the restriction was imposed; this increase in the cots of materials and labor, and in the amount of taxes, having arisen from causes over which the company have no control, and for which they are in no wise responsible." But the prevailing knavish regime at Albany blocked all of Richmond's efforts.
p180 His actions and those of others around 1866 are difficult to explain rationally at the present day. Despite the agreement with Vanderbilt, the Central did not send much freight down over the Hudson River Railroad after the river opened up in the spring. Richmond was not generally regarded as a perfidious man. He had much on his mind at the time, including politics, and his health was evidently beginning to fail, though no one dreamed that his death was so near.
On the other hand, an action of Commodore Vanderbilt's is equally inexplicable. That perpetual mischief-maker, Daniel Drew, had been instrumental in promoting a typical nuisance road, the Saratoga & Hudson River (the name is sometimes used in reverse), from Schenectady down to Athens on the river, •thirty miles below Albany (it is a part of the West Shore track now), Drew had inveigled his friend Vanderbilt into putting up a quarter of the necessary funds, an unexplainable indiscretion which the Commodore later ruefully called "the most foolish of my life." Drew, who took another quarter of the stock, became president, but there was some New York Central money in the pot, too; and the idea seemed to be that two of the People's Line boats, the Drew and the St. John, would make Athens their northern terminus instead of Albany, the thought being that the river might be open that far up most of the winter, and Central freight could go down to New York that way. It was therefore a frank rival of the Hudson River Railroad, and just why any of the Commodore's money went into it is a mystery deeper than Who killed Whom at Mayerling. But the arrangement lasted only a few weeks. Albany was the natural terminal for the boats, and for lack of business the Athens port was presently given up, while the line leading down to it became known to history as the White Elephant Railroad.
For three or four years past, the destiny of the Central had slowly been moving towards a climax. Its president, Dean Richmond, had been a lifelong Democrat, but he did some of his own thinking, and with the end of the Civil War, he saw the need of a new alignment. Early in 1866, he was promoting a National Union Party, designed to unite the better type of Democrats with conservative Republicans behind Andrew Johnson, in opposition to the "radical" Republicans like Thaddeus Stevens, who were determined upon unmerciful punishment of the beaten South. Had Richmond lived to carry out his aims, some of the horrors p181 of the Reconstruction period might have been averted. But in the early summer of that year, his health declined noticeably.
With the aid of the great Albany editor, Thurlow Weed, he organized a National Union Convention in Philadelphia in August; but he was compelled to remain in his hotel room a great deal of the time, and without him the convention was not a great success. On Saturday night, the seventeenth, he returned to New York in company with Samuel J. Tilden and another friend. On Sunday he went to Mr. Tilden's residence in Gramercy Park, where he fell ill and died eight days later, shocking the railroad world. He was buried up at Batavia, on the old Tonawanda Railroad, which had been his first investment in railroad stocks, and the entire population of the little town, together with hundreds of others from the surrounding country, followed him on foot to his grave. With his death, his National Union movement fell apart.
It is interesting to speculate on what would have been the course of events had Richmond lived a few years longer. He was willing to cooperate with the Hudson, but so determined a character would not have endured seeing Vanderbilt move in and take control of the New York Central. The clash between these two giants, if they had actually locked horns, would have been epic; it would have shaken the earth of New York state. But such conjecturing is idle now. In the emergency, Richard M. Blatchford, vice-president, was made acting president of the Central, and it was with a less adamantine administration that the Vanderbilts negotiated in behalf of the Hudson River a new freight rate treaty.
By mere considerations of mileage, the NYC should have had a flat two-thirds of the revenue between New York and Buffalo and the Hudson River one-third. But William H. Vanderbilt, who was the Hudson representative at this conference, pointed out that there were other considerations. His road had to maintain enough equipment the year around to take care during the brief winter season of the flood of additional traffic which the Central then poured upon it, but which during the rest of the year was handed over to the boats below Albany. Vanderbilt's words had a suspicion of a threat in them when he said that the HRR should be paid a bonus for maintenance of this equipment which had to lie idle the better part of the year. How much of a bonus? asked the conferees, to which William replied, $100,000 p182 a year. His father, it may be interjected here, had wanted to ask more, but William, the wiser head of the two, had set a figure which he thought would be accepted and would not again upset amicable relations.
And there was another matter. Railroads were learning something about accounting, and the Hudson had found that yard and terminal expenses were heavier than anybody had dreamed of in earlier days. Not to mention the warehousing, often it cost more to get a car from Thirty-first Street down to Chambers Street than from Albany to Thirty-first Street. The Central ought to pay a share of this terminal expense, said Vanderbilt — an arrangement which has since become standard railroad practice. The NYC men boggled at this, but agreed to pay the $100,000 bonus. The Commodore, probably chagrined at their easy acquiescence and convinced that he could have gotten more, later claimed the Central "took advantage of my son at a moment when he was off his guard" — which was ridiculous, of course.
But that interim regime in Central did not last long. With the death of Richmond a new force appeared in its affairs — a group headed by William G. Fargo, the ex-freight agent, now a wealthy man as a result of his holdings in the American Express Company and Wells, Fargo & Company. With him were two prominent Wall Street operators, Henry Keep and Legrand Lockwood. Keep had been president of the Michigan Southern & Northern Indiana when Addison Jerome tried to corner the stock, and had practically ruined Jerome by inflation of the stock issue. This group bought shares in quantity and soon had Vanderbilt outvoted. In the December election, Lockwood voted on his own or by proxy, 46,000 shares, Keep 35,000 and the American Express Company (Fargo appearing only in a minor capacity) 40,000. In all, they controlled 175,000 votes, a considerable majority. Keep was elected president and Fargo vice-president, and the two Vanderbilt representatives were laughingly tossed off the board. Moreover, the very first act of the new directorate was the rescinding of the agreement to pay the Hudson that $100,000 annual bonus. Little did the triumphant faction dream of the power of the lightning they were defying.
Again the Commodore's favorite maxim, "I bide my time," sustained him. He did not bring suit to enforce the contract, as some would have done. He knew a trick worth ten of that. As he testified later, he had little confidence in the law. He knew that zero hour for the other fellows was at hand, and p183 if they had not been so drunk with new-found power, they would have known it, too. By the way, he had sold the 6,000 shares of Central stock which he had bought at one time and another.
Hard upon the heels of the Central election came a great snowstorm, ending December 28, which tied rail traffic in eastern New York into the worst knot it had ever known. Eight trains were lying stalled at West Albany that morning; some passengers plodded through the snowdrifts from there into the city. Some aboard the trains hadn't eaten since leaving Syracuse on the morning of the day before. Six locomotives tried to pull two passengers up to West Albany, but couldn't make it up that steep grade. Three trains on the Hudson River were reported lying •a mile below Greenbush, and others were scattered all the way from there to Poughkeepsie.
But that was as naught compared with the tie-up which a white-haired old gentleman in New York was planning. The river froze, and the Central graciously began giving the Hudson River Railroad some business. On January 14 the Commodore struck, and his stroke was a thunderbolt. It appeared as a notice in the newspapers:
Jan. 14, 1867.
The Hudson River Railroad Company give notice that the arrangements heretofore existing between this company and the New York Central Railroad Company having been terminated by the Directors of the New York Central Railroad Company, this company will after Thurs., the 17th of Jan. inst. only sell tickets and check baggage over their own road and will only recognize tickets sold at their own offices and by their own agents. Passengers will after that date be ticketed and baggage checked to and from Greenbush or East Albany, the terminus of the road. The same rule will be observed as to freight.
C. Vanderbilt, President.
By the above notice passengers will observe that the Erie Railway is the only route by which they can reach New York from Buffalo and without change of coaches or rechecking of baggage.
Simultaneously, official notice was sent to the NYC that by action of their directors, the Hudson and Harlaem would terminate all freight and passenger traffic at East Albany. The new bridge stood unused by any trains save those of the Boston & Albany. The Central was thrown on its beam-ends, while the p184 cries of passengers and shippers rose to the heavens. With the river frozen hard, ferries could not run, and another snowstorm added to the miseries of New York-to‑Western travelers, who had to trudge across the best way they could, if at all. Editors wrote with white-hot pens of these mad rivalries of railroad kings, with the helpless public trampled under foot. The New York Legislature ordered its Railroad Committee to investigate the affair, and bills were introduced with intent to make such jams impossible in future. The Central tried to establish a New York connection by way of the Boston & Albany, Stockbridge, the Housatonic Railroad, New Haven and the New Haven Railroad, but it was a long detour and the New England roads were not very cooperative.
The legislative investigation was soon under way. William H. Vanderbilt, to whom railroads were feminine, impressed the committee favorably as a witness. Said he:
The position the Hudson River road occupies is this: she has an equipment of 82 engines, with cars and material enough to do all the business the Central road can give us. She has an equipment to do a business of 2,000 tons a day if she can get it. The New York Central Railroad asks the Hudson River Railroad to maintain that equipment to do their business for 90 days in a year and to leave it standing during the remaining nine months in the year when the navigation is open.
He described the efforts to obtain a satisfactory agreement, and reminded the committee that the breaking of relations had not been made a springboard for stock speculation. Asked whether his father owned a majority of the stock in Hudson and Harlaem, he replied that he could not speak with accuracy, but "he does not own the Hudson River Railroad. He may possibly own one-half of the Harlaem Railroad." He thought the Commodore held about 17,000 of the Hudson's 69,000 shares.
"He owns a controlling interest?" persisted the questioner.
"Yes, if 17,000 is a controlling interest in 69,000 shares," retorted Vanderbilt, and added honestly, "He may have other shares not standing in his name."
Horace F. Clark told the committee of Keep's grudge at the Commodore because the latter had opposed the leasing of the Saratoga & Hudson River to the Central. He said Keep had told Banker that "he would have revenge against Mr. Vanderbilt if it cost him half he was worth."
p185 E. D. Worcester, New York Central secretary, startled the committee and the public by revealing that during Richmond's brief presidency, Vanderbilt had offered to lease the Hudson River to the Central at 10 percent annually and the Harlaem at 8 percent, assuring Richmond of his support of the latter's presidency as long as he wanted it. The offer was rejected. Worcester also claimed that the monthly settlement of accounts between the two roads usually showed a balance in favor of the Central, which that company found mighty hard to collect from the Hudson. This may have been intended as an offset to the long-standing claim of the Hudson for rental charges on a dozen locomotives lent to the Central a few years ago at $50 a day, including the crews, which bill was still unsettled.
The Commodore, brought to the stand, said he had sold his Central stock and didn't vote in the last election because he didn't want any interest in a property "owned by such a set of men." He said that Keep had boasted to him, "We can live without the Hudson River Railroad; we don't want the Hudson River Railroad." Asked whether the people did not have rights as well as himself and the New York Central, he replied,
"I have always served the public to the best of my ability. Why? Because, like every other man, it is my interest to do so, and to put them to as little inconvenience as possible. I don't think there is a man in the world who would go further to serve the public than I."
"Did you not know that the law provides a remedy for all wrongs, and that railroad corporations have no right to take the redress of their own wrongs into their own hands, to the detriment of the public?"
"The law, as I view it, goes too slow for me when I have the remedy in my own hands."
"Could not the Hudson River Railroad enforce their claim for the $100,000 through the courts of the law?"
"They might; I will not give an opinion on that point. I stated a while ago that I, for one, will never go to a court of law when I've got the power in my own hands to see myself right. Let the other parties go to law if they want, but by God, I think I know what the law is; I have had enough of it."
"Would you recommend all other citizens to pursue the same course?"
"I would recommend them all to pursue the course I pursue. What is it? To do nothing wrong; to pursue a straightforward, p186 direct course and deal with everybody else as you would like to have them deal with you."
Historians think that it is from these remarks that certain none-too‑careful journalists distilled and elaborated the sentiment popularly attributed to Cornelius Vanderbilt, "Law! What do I care about law? Hain't I got the power?" One can find no valid nor respectable testimony to the effect that anybody ever heard him say such a thing, and it remains as apocryphal as General Forrest's alleged, "Git thar fustest with the mostest." Without claiming saintliness — which would be absurd — for Commodore Vanderbilt, and discounting his affirmed allegiance to the Golden Rule by several percent, one sees in his testimony here a distrust of the law's inefficiency and its all too frequent chicane which is and has been shared by millions of other citizens.
The hearing was in its third day when the New York Central superintendent handed the chairman a telegram. The Central, whose business between East and West was its most important item of income, whose competition with the Erie and Pennsylvania its greatest threat, was in no position to hold out long against irresistible force. The telegram was signed W. H. V. and it read:
Satisfactory arrangements having been made between Hudson River and Central roads, the trains will connect as usual. The night train will go through tonight.
That was all. It meant that a humbled New York Central management had surrendered unconditionally. And so, relations were resumed. The Legislature proceeded to pass a bill forbidding railroads to revoke through ticketing and baggage-checking arrangements, but little did Vanderbilt care. He knew that he had won a victory far greater than was apparent on the face of it. The proud New York Central Railroad was now, as it were, in the hollow of his hand. The Keep-Fargo clique had lost face with its stockholders which it could never recover. Vanderbilt saw the pathway into the future clearly before him, and he proceeded to step out on it. He bought back far more than the 6,000 shares of Central which he had sold. On July 4, 1867, the Albany Argus editorialized:
The Vanderbilt interest, it is said, is steadily absorbing large amounts of stock, with a view to the ultimate control of the line. Indeed, a league of companies (if not a positive consolidation) p187 reaching from New York to Chicago, including the Central and its two debouchees, the Hudson River and the Harlem, is a subject of much speculation. It is needed. The idea is based on the necessity of counteracting the consolidation of the lines from the West through Pennsylvania.
Late that summer, one of those periodic rate wars broke out, with the Central, Erie and Pennsylvania as contestants. That was the precipitate which clarified the situation in the minds of the leading stockholders. They saw that the Central alone could never compete with those longer lines already based on Eastern seaports; it must have effective coordination with rails which carried it right into New York City. On November 12, 1867, a remarkable letter was written to "C. Vanderbilt, Esq." It read:
The undersigned stockholders of the New York Central Company are satisfied that a change of administration of the company and a thorough reformation in the management of its affairs would result in larger dividends to the stockholders and greatly promote the interest of the public. They therefore request that you will receive their proxies for the coming election and select such a Board of Directors as shall seem to you to be entitled to their confidence.
They hope that such an organization will be effected as shall secure to the company the aid of your great and acknowledged abilities.
This was signed by Edward Cunard, John Jacob Astor, Jr., and others, "representing over thirteen millions of stock." The Commodore's reply was written without hesitation. Thanking the writers for their confidence, he agreed to accept the proxies, "and I will vote upon them as I shall vote upon my own stock."
Here is a fact to be remembered. Vanderbilt did not force his way back into New York Central; he was invited in by a bloc of shareholders representing very nearly one-half of the capital who had observed that when he took hold of a railroad, he cleaned it up, eliminated graft, and somehow had the knack of spending money to improve it beyond all recognition and yet making it pay.
At the annual election that December, the old master himself was present in the character of the New Broom, and he certainly swept clean. He dropped a ballot in the box representing $18,000,000 in stock, and as the Central's total capital then was $28,537,000, this represented a decided majority. The Keep-Fargo p188 crowd were routed; it was Waterloo for them, after one year of rule. Vanderbilt bought most of Keep's stock, and that gentleman retired from the East to play with the Chicago & Northwestern. The new board was a picture of revolution. Only one old member, H. H. Baxter, remained. The Commodore himself was elected president, his son-in‑law and long-time shipping associate, Daniel Torrance, became vice-president, while among other new directors were Son William, Son-in‑law Clark, William A. Kissam, another in-law, James H. Banker and Augustus Schell, all of the Commodore's personal following, plus Chester W. Chapin of Springfield, head of the Boston & Albany and one of the Commodore's chief counselors, Amasa Stone, Jr., of Cleveland, president of the Cleveland, Painesville & Ashtabula, and James F. Joy of Detroit, president of the Michigan Central. Here the prediction of the Argus five months before is seen on the way to fulfillment. Both north and south of Lake Erie, the Central was reaching out fingers towards Chicago.
1 It seems almost incredible that Mrs. Hamilton McK. Twombly, one of the daughters who came up from the farm, a little girl of ten at the time named Florence Adele, is still alive, aged ninety-three, as this is written.
2 Most of his letters were written by a secretary and merely signed by him; but this historian has seen in the New York archives some letters written entirely in his own hand, and can testify that the yarns about their illegibility are somewhat exaggerated. His script is bad, but not as difficult to read as that of Horace Greeley, which is frequently impossible.
3 John Webster Wagner (1817‑82) was born at Palatine Bridge in the Mohawk Valley, of German stock from the Rhine Palatinate which settled large areas in that vicinity, coming first about 1720. Webster Wagner became station agent at Palatine Bridge for the Utica & Schenectady Railroad in 1843. He was instrumental in having the first baggage car converted into a sleeper, and then organized the New York Central Sleeping Car Company, which by 1860 had built four of the three-tier-berth sleepers at a cost of about $3,200 each. He was killed in one of his own cars in a wreck at Spuyten Duyvil, January 13, 1882.
Images with borders lead to more information.
The thicker the border, the more information. (Details here.)
of the Century
A page or image on this site is in the public domain ONLY
if its URL has a total of one *asterisk.
If the URL has two **asterisks,
the item is copyright someone else, and used by permission or fair use.
If the URL has none the item is © Bill Thayer.
See my copyright page for details and contact information.
Page updated: 25 Feb 13