The biggest one of them all
Review of The First Tycoon: The Epic Life of Cornelius Vanderbilt by T.J. Stiles
This is a significant life no matter which way you choose to measure it, but it is also a compelling story: Cornelius Vanderbilt worked his way up from managing tiny boats between Staten Island and Manhattan to become the owner of a steamboat empire, and finally to become the most successful railroad tycoon of his time.
Unfortunately, I was disappointed by this book for a number of reasons. While Stiles covers what could be called the first American capitalist spanning a tumultuous period of history, you do not get to know what made the man tick and what he did to amass his fortune is often frustratingly unclear. Moreover, Vanderbilt‘s times are covered only in the barest outline. The details can be very interesting, but for the most part Stiles describes the mechanics of maneuvers without offering – at least for me – a satisfying explanation of what was really going on.
In terms of Vanderbilt‘s historical significance, he actively participated in the Supreme Court case (Gibbons v. Ogden) that opened the states up to fully competitive commerce. Then, as part of the technological innovation in shipping technology, he played a fundamental role during the Civil War, protecting sea lanes that enabled the North to import gold and other items as well as supplying state-of-the-art ships to counter the Confederate Navy. Most important, he established the model for corporate capitalism, that is, very big companies based on a fictive legal personality, thereby opening the way to stock trading and manipulation on an unprecedented scale.
There is a lot to learn here about business and management history here, but the truly interesting nuggets are sparsely scattered throughout the book. In the boating transport business (requiring relatively small capital outlays, flexibility of route choice, etc.) Vanderbilt would move in, undercut the prices his rivals charged, and drive them to near financial ruin, only to leave off in return for massive fees – monopolistic gouging. His own profits came from the best routes, such as the passage to California via Nicaragua, which he took for himself.
At nearly 70 years of age, he moved into trains, completely altering his business model and abandoning shipping. In that new industry, capital outlays were unprecedentedly massive: he had to establish and then maintain fixed and inflexible routes, requiring the invention of new ways to raise capital. He then had to exercise bureaucratic means to administer the gigantic new corporations, in the process birthing modern management. Behind closed doors, he negotiated compromises with other tycoons so that their routes could share in profitmaking as well as stock market shenanigans.
Most importantly, corporate capitalism created a disembodied, largely imaginary “market”, where owners could manipulate stocks prices, making profits even when doing and selling nothing. Intimately understanding its conditions of operation, Vanderbilt was one of the first to truly master its inner workings. Finally, with the establishment of the modern corporation under his auspices, business was decoupled for the first time from the owner/founder, becoming a species of immortal construct whose ownership could be passed on. These concepts make the book worth the price of admission and the effort to slog through it.
Along the way, Vanderbilt embodied the Jacksonian democrat with his advocacy of individualistic competition to replace the pseudo-aristocratic privileges that survived the colonial period. He radically lowered the price of transportation via competition (which he controlled), and radically reorganized railroad transport, all while amassing the greatest fortune in the history of the USA.
In spite of all of this drama, somehow Stiles makes the story almost completely dry, with endless details about his fights with Jay Gould and others, long descriptions of how he cornered markets, and the deals he negotiated that led to substantial payoffs for NOT competing (i.e. allowing monopolists to operate without his interference). Even worse, I found it very hard to comprehend how he made his money, let alone putting it in comparative perspective – explanations were rarely clear but instead full of jargon.
To his credit, Stiles is very even handed with Vanderbilt. Acknowledging his ruthless efficiency, he respects his sense of honor and fair play, as well as his intermittent efforts to be good to his family. But his personality and his mind – though uneducated and barely literate, he was the shrewdest businessman of his generation – remain a mystery, in large part due to the silence of the historical record. I was dissatisfied and felt I didn't at all get to know Vanderbilt as a man.
This is a good book, but not a good read. I would recommend it for history lovers and professionals, but not for lay readers looking for a popular history. Stiles does have an elegant writing style, even if he needed an editor.
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