In the late 19th century, the Vanderbilt family began their rise to fame and fortune with the monopolization of the railroad industry. Cornelius “Commodore” Vanderbilt thought he was laying down the foundation for generations of Vanderbilts.
Little did he know, but his grandkids and their grandkids were more inclined to spend their family’s fortune than add to it. This is the story of how the Vanderbilt family lost their fortune.
Commodore Began Working In The Shipyards
Cornelius “Commodore” Vanderbilt was born on May 27, 1794, in New York. By the time he was 11-years-old, the young boy had dropped out of school and began working in the local shipyard. His father worked there, and he learned the ins and outs of the industry alongside him.
Eventually, steamships would become Commodore’s first business venture, leading to him starting his first major empire in the shipping yard. But it all began with a loan from his parents.
It Started With A $100 Loan
Cornelius “Commodore” Vanderbilt was a young 16-year-old when he first started accumulating the family fortune. It started with a $100 loan from his parents. Commodore purchased a flat-bottomed sailing barge with that money and began ferrying goods between Staten Island, New York, and Manhattan.
The young man made so much money in his first year, about $1,000, that, eventually, he had enough to purchase a small fleet of his own.
Commodore Began Working With The Us Government
After building his brand for about two years, Commodore was contracted by the US government. His job was to bring goods to military outposts during the War of 1812. By the end of the war, the young man had earned about $10,000 in revenue, solely from shipping goods and people.
It didn’t take long for him to team up with Thomas Gibbons and create the Union Line, ferrying people between New Jersey and New York. By 1827, their steamship line was making more than $40,000 per year.
Commodore Began His Own Steamship Line
After Thomas Gibbons passed away, Commodore wanted to buy out his share of the Union Line from his son. The young Gibbons wanted nothing to do with it. So, Commodore left to create his own line, the Dispatch Line.
Eventually, the Dispatch Line was profitable enough to drive the Union Line out of business. And, in the end, Gibbons had no choice but to sell to Commodore. By the late 1850s, he was expanding his reach to astronomical proportions.
His Business Expanded To Railroads
After acquiring the Union Line, Commodore began searching for business opportunities elsewhere. He started investing in the railroads, a venture that would pay off very well. Like the steamships, Commodore eventually acquired numerous small railroad companies, creating a monopoly under his name.
Between the steamships and railroads, Commodore reached millionaire status by the young age of 50 years old. But he was stingy with his money, never wanting to spend it in excess.
William Henry Suffered A Mental Break
During his youth, William Henry opted to work for one of his father’s rivals. But after a severe mental break, he decided to go back to the family farm on Staten Island. There, he boosted the family profits.
After his father’s death in 1877, William Henry rejoined the business world, taking over his father’s railroad empire and increasing the family fortunes from there. Even though he had a mental break while working in the business world, William Henry did a lot for the railroads.
William Henry Vanderbilt Followed In His Father’s Footsteps
William Henry Vanderbilt took after his father, becoming an astute businessman. Instead of steamships, though, William Henry expanded into railroads. By the time of his death, the eldest Vanderbilt increased the family fortune by an astounding $200 million.
After William Henry’s death in 1885, the family fortune was split amongst his eight children. The stakes in the railroad company went to the two oldest boys, William Kissam Vanderbilt and Cornelius Vanderbilt II.
Philanthropy Was The Beginning Of The End
While Commodore didn’t give his money away on philanthropic ventures or charity, aside from starting Vanderbilt university, his descendants did. Louise Holmes helped further female education and even further the Red Cross.
William Kissam Vanderbilt helped fund YMCAs, Columbia University, and increased housing in New York. George Washington Vanderbilt II supported local libraries, the arts, and New York education. This generation of philanthropic Vanderbilt’s was the beginning of the end for the wealthy family.
The Luxurious Spending Began In 1885
When the Vanderbilt children inherited their fortunes, the spending began. William Henry’s children began by building extravagant homes in Rhode Island as well as Manhattan, New York.
Cornelius II, for example, hired an architect to “create a 70 room Italian Renaissance-style palazzo inspired by the 16th-century palaces of Genoa and Turin.” And that wasn’t it. Cornelius II also owned one of the biggest townhomes to ever grace the island of Manhattan!
The Filled Their Homes With Lavish Works Of Art
The Vanderbilts bought land and designed elaborately expensive homes. But they didn’t stop there. After building in pricey locations such as Rhode Island and New York, the various members of the family filled their homes with expensive art, their garages with luxury cars, and even had yachts.
Interestingly enough, all of the lavish spending was to boost their position in society, since the Vanderbilts were considered to be “nouveau richer,” or, new rich.
The Vanderbilt Ball Was Worth A Pretty Penny
To secure their place in high New York society, William Kissam’s wife, Alva, hosted the Vanderbilt Ball in 1883. They weren’t among the top 400 families, and that was going to change!
Alva decided a costume party was in order, inviting 1,000 people. According to the New York Times, the party was a lavish “fairytale,” with guests trying their hardest to outdo one another costumes and jewels. At the time, the party cost a solid $250,000.
Cornelius III Was The First Not To Increase The Family Fortune
After getting his inheritance, Cornelius III didn’t think to buy a property or even increase the fortune. Instead, he began spending every cent he had. Cornelius III’s spending and lack of initiative were an issue for the family of wealthy business-minded people.
Eventually, his fortunes dried up, and he had a falling out with the family. During an interview, Cornelius III once commented that “every Vanderbilt son… has increased his fortune except me.”
Reginald Gambled And Drank His Money Away
Reginald was Cornelius II’s youngest son; as such, he got a smaller fortune for his inheritance. Even so, it was still a solid $15.5 million. On the night he received the money, his 21st birthday, he gambled away $70,000. And his gambling problem didn’t stop there.
Between playing the tables and drinking, Reginald eventually lost his millions. He was more of a spender than someone who wanted to help increase the family funds.
The Grandchildren Were “Lazy”
With all of the millions the family had made over the years, by the time Commodore’s grandchildren got their inheritance, they had no trouble taking the money and running. The family fortunes were running dry with steamships going out of fashion in favor of ground transportation, which wasn’t good.
But the worst decision the family made was sharing their majority stock over their railroad company. During the ’50s and ’60s, their once booming company was bankrupt.
Gloria Vanderbilt Made Her Own Living
Reginald’s daughter, Gloria Vanderbilt, was heir to a huge trust fund. One that their little family was banking on since Reginald spent his fortune on gambling and drinks. But her inheritance is almost a moot point since she helped the family fortune, unlike her father.
In the 1970s, Gloria actually became a fashion designer, creating interesting jeans before branching out into different avenues of the industry. But, by that time, the “family money” was gone.
Gloria’s Son Got Nothing
Gloria Vanderbilt’s son, Anderson Cooper, didn’t inherit a cent of the Vanderbilt family fortune, namely because, well, there wasn’t anything to give. After the grandchildren of the infamous Commodore decided to stop working and give up the family company, the funds dried up.
During an interview with Howard Stern, Cooper said, “My mom’s made clear to me that there’s no trust fund… [and] I don’t believe in inheriting money.” Considering he makes millions working for CNN, he’s probably okay.
The Millionaire Status Was Gone
For years, the Vanderbilt family was the wealthiest in the United States. Everything pretty much went downhill once Commodore passed away in 1877. The grandchildren didn’t work, and the funds dried up.
About 30 years after his death, the Vanderbilts weren’t considered one of the wealthiest families anymore, with many members losing their millionaire status. By 1973, 120 Vanderbilt family members lost their millionaire status and were working odd jobs.
Their New York Homes Were Torn Down
Once New York royalty, living it up in their 130-room mansions on Fifth Avenue, the Vanderbilt’s fell swiftly from grace. By the late 19th century, New York was the place for the wealthy, something the Vanderbilt’s dried-up fortunes couldn’t live up to.
By the time 1926 rolled around, developers bought land on Fifth Avenue, and the family couldn’t pay them off, resulting in the demolition of William Kissam and Cornelius II Vanderbilt’s respective homes.
Commodore Didn’t Think His Heirs Were Worthy Of His Fortune
Interestingly, Commodore didn’t think his children, particularly his sons, were ever worthy of his fortune. He was a self-made man, and he considered his sons to be fools, even admitting them to mental institutions a time or two.
William Henry and Cornelius II were the only two living sons at the time of Commodore’s death, and they did little to please their father. Ironically, he told William, “Any fool can make a fortune; it takes a man of brains to hold onto it.”
The Funds Were Gone
By the time the ninth generation of Vanderbilts came to be, the family fortune of the 19th century was gone. As it turned out, none of the later generations heeded Commodore’s warning: “Any fool can make a fortune; it takes a man of brains to hold onto it.”
Through lavish purchases, spending, and philanthropy ventures to keep up appearances, the Vanderbilts went from being one of the wealthiest families in the United States to nothing, losing their fortune.