New Yorkers, prominent among whom was Samuel Sloan.
As we enter the Civil War period, we find the three important properties which were afterwards to make up the Vanderbilt system all developing rapidly and logically into the strategical relationship which would make ultimate consolidation inevitable. The completion of the Erie Railway and its gradual development as the only through line across the State from New York to the Great Lakes; the opening, expansion, and general solidification of the Pennsylvania lines and their aggressive policy of reaching out to the lake region on the west and across New Jersey on the east; the extension of the Erie interests into the New England field, and the possibility that the latter might gain control of the Harlem or the Hudson River Railroad—all these considerations naturally aroused in the New York Central interests a desire to insure the future by obtaining for themselves control of the lines that would connect their own system with New York City and the Eastern seaboard.
During the Civil War, however, no progress was made in this direction. It was not until 1869, four years after the closing of the war, that any radical change took place. But in the years that had intervened, a new and commanding figure in the railroad world had come upon the scene. This man had grown to be the dominating genius, not only in the field of railway expansion, but in the world of finance as well. His name was Cornelius Vanderbilt. Born in 1794 in very humble circumstances, he had received little or no education, and as a youth had eked out a living by ferrying passengers and garden produce from Staten Island to New York. He had painfully saved a few hundred dollars within a year or two after his marriage, and with this capital he began his career in the transportation business. From his first ferrying project he engaged in other undertakings and laid the foundation of his subsequent fortune in steamboat navigation. About 1860, at an age when most men are beginning to retire from active affairs, the "Commodore"—as he was called on account of his numerous fleet—entered actively into the field of railway development, management, and consolidation. The extraordinary character and genius of the man are well depicted by the events of the years that followed.
Before the opening of the Civil War and until immediately after its end, the New York Central and the Erie systems were controlled by bitterly antagonistic interests. These interests were beginning to foresee the day when extremely aggressive competition would call into play their greatest energies. Vanderbilt, wiser than his generation, foresaw more than this. His vision took in the vast future values of the properties as developed trunk lines, and the greater possibilities of their control and operation as a consolidated whole. He was in a very real sense the forerunner or pioneer of the great consolidation period of a half century later. He was the Harriman and the Hill of his day.
The Erie had its own approach to New York City, but the New York Central was connected with the metropolis only by the river and the two independent roads—the Harlem Railroad and the Hudson River Railroad. To get the latter two roads under his complete control was Vanderbilt's first object. He would then have unimpeded access to New York and so become independent of the river.
He began his ambitious plans by making himself the master of the Harlem property, and in so doing got his first experience in railroad stock manipulation and at the same time picked up a moderate fortune. It was comparatively easy to buy the control of the Harlem Railroad. The Company had never paid a dividend, and, in 1863, when the Commodore quietly began his work, the stock was selling below thirty dollars a share. Before the close of this year he had manipulated the stock until it had reached ninety-two, and by a corner, in August of that year, he raised it to 179. On this deal Vanderbilt reaped a nice little fortune—but evidently not enough to enable him to carry through the ambitious plans which were in the back of his head, for in 1864 we find him manipulating another corner and this time running the price of the stock up to 285. In this wise the Commodore not only added millions to his already growing fortune but also made himself a power in the financial world. Financiers began to fear him, and he found it comparatively easy later to buy up the control of the Hudson River Railroad, which he did by paying about 100 for the stock. Then he began speculating again, sent Hudson River up to 180, and incidentally reaped another fortune for himself.
By this time Vanderbilt had achieved a great reputation as a man who created values, earned dividends, and invented wealth as if by magic; other railroad managers now began to lay their properties at his feet and ask him to do with them what he had done with the Harlem and the Hudson River. For under the Commodore's magic touch the Harlem Railroad for the first time in its long history began to pay dividends at a high rate, and in four years the earnings of the Hudson River property had nearly doubled.
One of the first properties to be placed at Vanderbilt's feet was the New York Central, and the control passed into his hands in the winter of 1866-67. He was now in a powerful position and immediately began to lay his plans for obtaining control of the Erie Railroad in the following year. In the latter effort he did not succeed, however, and after a protracted and dramatic contest he was defeated by his great adversary, "Uncle" Daniel Drew. The story of this contest need not be detailed here, as it is given in full in the chapter on the Erie Railroad.
In the fall of 1869 the Commodore, having secured everything in the railroad field he had sought except the Erie, put through his scheme for consolidation. The New York Central and Hudson River Railroad was incorporated. It included the old New York Central and also the Hudson River Railroad but not the Harlem. The capital of the consolidated company was placed at ninety million dollars, a figure of such magnitude in those days that the world was startled. The system embraced in all nearly 850 miles of railroad lines. A few years later the Harlem Railroad was leased to the property at a high valuation and a large dividend was guaranteed on the stock, the ownership of which was retained by the Vanderbilt family.
The Vanderbilt system as it is now understood really began with these transactions. From this time on, its history has been similar in many respects to that of other large systems which were the outgrowth of merger or manipulation in these early days. During the remarkable period of commercial and industrial development in this country from 1870 onward, when thousands of miles of new lines were built every year, when the growth of population was beginning to make the States of Ohio, Indiana, and Illinois centers of wealth and production, and when the wonderful Northwestern country embracing the States of Michigan, Wisconsin, and Minnesota, was so rapidly opened up and brought nearer to the Eastern markets, the Vanderbilt railroad interests were not idle. The original genius, Cornelius Vanderbilt, was soon gathered to his fathers, but his son, William H. Vanderbilt, was in many ways a worthy successor.
By 1885 the Vanderbilt lines had grown in extent and importance far beyond any point of which the elder Vanderbilt had ever dreamed. Long before this year the system included many smaller lines within the State of New York, and it had also acquired close control of the great Lake Shore and Michigan Southern system, with its splendid line from Buffalo to Chicago, consisting of more than 500 miles of railroad; the Michigan Central, owning lines from Detroit to Chicago, with many branches in Michigan and Illinois; the Canada Southern Railway, extending from Detroit to Toronto; and in addition to all these about 800 miles of other lines in the States of Ohio, Indiana, Michigan, and Pennsylvania.
In this same year 1885, another event of importance took place. The New York, West Shore and Buffalo Railroad, which after strenuous efforts extending over many years had constructed a new trunk line from Weehawken along the west shore of the Hudson to Albany and thence to Buffalo, came under the control of the New York Central. The great system in the Middle West, now known as the "Big Four," or Cleveland, Cincinnati, Chicago and St. Louis—embracing 750 miles of lines westward from Cleveland and Columbus, Ohio, to Indianapolis, Springfield, and Cincinnati, and having traffic connections with St. Louis—was also a Vanderbilt property at this time, although not under the formal control of these interests. Another important competing line secured in this period was the New York, Chicago and St. Louis, built to parallel the Lake Shore and known as the "Nickel Plate" route. This road extended from Buffalo to Chicago, and, like the West Shore, had been constructed with the hope of ultimately selling out to its competitor.
The development of railroad properties under the Vanderbilt influence was not confined to the territory east of Chicago and the Mississippi Valley. As early as 1859 a large system of roads had been merged in the section extending westward from Chicago to Omaha and radiating throughout Iowa,