The following post is part of a series -- actually, it's the last in a series -- on the the emergence of the self-made myth in U.S. History.
The immediate roots of a new order began to emerge in 1815, when former New Jersey Governor Aaron Ogden bought a license from the Livingston interests, which he used to go into business with a Georgia entrepreneur named Thomas Gibbons. Business as usual there. But the two began squabbling, their dispute reaching the point of Gibbons going to Ogden’s home to challenge him to a duel. When Ogden had Gibbons arrested, the latter resorted to a less gentlemanly form of revenge: he launched his own ferry route. It ran between Elizabethtown, New Jersey and New York City in 1818; Gibbons argued that he was allowed to do this under a 1793 federal law that governed coastal (as opposed to, say, Hudson River) trade. Ogden sued Gibbon for violating the state monopoly, and the case snaked its way through the legal system, culminating in the landmark Gibbon v Ogden Supreme Court ruling, which established the supremacy of federal over state law in regulating commerce. [Stiles 43]
For our purposes, however, what matters in this story is a footnote that became an epic in its own right. At point in his struggle with Ogden, Gibbons hired a young man named Cornelius Vanderbilt to be the captain of one of his steamships. Every other person in this saga – Fulton, Livingston, Ogden, Gibbons – came from elite backgrounds and personified aristocratic privilege. Not so Vanderbilt. Born on Staten Island in 1794 as the child of an entrepreneurial Quaker mother and Dutch ferry captain father, he had already established himself as an up-and-comer in the industry, so much so that some of his friends were surprised by his willingness to work for Gibbons. Gibbons himself was nervous about his protégé. “He is striking at everything,” he said in 1822, when Vanderbilt was waging his war by fearlessly plying New York waters, dodging ice, wind, and process servers. “I am afraid of this man.” [epigraph] Gruff, uneducated, and steely in his discipline, Vanderbilt represented a new breed of businessman. Parrington described him as “hard-fisted” and tough as a burr oak.” A few years later, Matthew Josephson, whose classic 1934 book The Robber Baronsremains a classic even if later observers consider him too severe, called him “a Self-Made Man, for whom the earlier, ruder frontier was the native habitat. At the same time, his industrial conscience was already free of those presumptive, restraining codes, as those of the habitual prudence of Franklin’s age of early capitalism."
After Thomas Gibbons died in 1826, Vanderbilt worked for his son William, but soon went off on his own, building a series of ships, starting a series of companies, and expanding his domain to include the trans-Atlantic trade. He entered the chaotic struggle to capture a transcontinental route, which involved steamship travel to Nicaragua, a short rail trip to its west coast, and another steamer to on the Pacific side. For Vanderbilt and like-minded businessmen, a corporate license was like a marriage license: something that pretty much should be had for the asking, success a function of how well you do once you get it rather than a ratification of your (insider) credentials. Increasingly, local, state, and federal governments agreed. By the 1830s, the Whig politicians who had superseded the Federalists were still arguing that corporations should be closely allied to the state, and that governments in some cases should actually own and operate emerging businesses like railroads. But the Panic of 1837, which caused a large number of such enterprises to go bankrupt, undercut these arguments. Though there were widespread suspicions that turning economic activities from shipping to rail and even postal delivery to private interests would engender corruption, consensus formed that this was the lesser evil. So it was that Vanderbilt emerged as a self-styled corporate populist.
Corporate populist: it sounds like a contradiction in terms. But it made perfect sense to Vanderbilt – and in some precincts of this country, particularly those populated by executives who lack degrees from fancy universities, it still does. Vanderbilt’s recent biographer, T.J. Stiles, asserts that Vanderbilt “seems to have believed the Jacksonian rhetoric he so often repeated, a creed of laissez-faire individualism, a vision of a world in which any man might get ahead by his natural gifts than by government favors. And yet, in pursuing his private interests wherever they took him, he felt no obligation to act in the public interest; when competition had served his purpose, he freely sold out or created new monopolies. As he operated on a vast new scale, he brought to head the contradiction inherent in the private ownership of public works – a paradox that would grow starker when he moved from steamships into railroads in the climactic phase of his life.”
As Stiles makes clear, Vanderbilt’s reconfiguration of the self-made man was more than a matter of a ruthless willingness to invest in ships (or railroads), enter price wars, and buy or buy out. He and an emerging array of collaborators/competitors that included Daniel Drew, Jim Fisk, and Jay Gould were also true visionaries in understanding that the corporation was a uniquely powerful instrument for generating wealth that was literally beyond the imagination of earlier self-made men. “In this age of the corporation’s infancy, they and their conspirators created a world of the mind, a world that would last into the twenty-first century. At a time when many businessmen could not see beyond the physical, the tangible, they embraced abstractions never before known in daily life. They saw that a group of men sitting around a table could conjure ‘an artificial being, intangible,’ [Stiles is quoting John Marshall, who also grasped some of the implications of the corporation] that would outlive them all. They saw how stocks could be driven up or dropped in value, how they could be played like a flute to command more capital than the incorporators could muster on their own. They saw that everything in the economy could be further abstracted into something that might be bought or sold …the subtle eye of a boorish boatman saw this invisible architecture, and grasped its innumerable possibilities."
Others who understood that the rules of the game were changing were not nearly so sanguine about it, and saw Vanderbilt as the leading edge of a new unnatural aristocracy. In a famous 1859 newspaper article, New York Times editor Henry J. Raymond compared Vanderbilt to “those old German barons who, from their eyries [eagles nests] along the Rhine, swooped down upon the commerce of the noble river and wrung tribute from every passenger who floated by.” Raymond didn’t actually coin the term “Robber Baron,” but the term took root among his contemporaries, resonating through the generations until it got a new lease of life from Josephson, whose book of the same title became a byword for ensuing generations.
It’s significant that Raymond’s denunciation of Vanderbilt appeared in 1859, which is to say before the Civil War. It shows that the outlines of a new capitalist order had already taken shape before the war radically accelerated it through the sheer scale of the coming wartime economy. (Vanderbilt patriotically donated his time and resources to the Union cause, and after it founded the university that bears his name in Tennessee as an act of national reconciliation – he wasn’t purely selfish.) But the fact that Raymond would accuse Vanderbilt of “competition for competition’s sake” shows the ongoing difficulty even discerning observers were having in accepting that the world had changed.
But changed it had. From this point forward, the self-made man would essentially be perceived as a business man. While this perception was never altogether accurate, it nevertheless persisted, perhaps because it was in the interest of those who benefit from this conflation. We live in the shadow of their success.