In 1973, 120 descendants of the millionaire Vanderbilt got together for a family gathering, not a single one of them was a millionaire. Instead, 100 years earlier Cornelius Vanderbilt (known as the Commodore) was considered the richest man in the United States, and that position he held between 1850 and 1875. In addition, after his death in 1977, his son William Henry Vanderbilt maintained that position of the richest man between 1880 and 1885. On the other hand, his descendants do not stand out for their wealth, what happened?
Vanderbilt was not only rich, but he became rich by betting on a new technology that allowed moving goods and people at greater speed and in greater quantities, the steam engine. In a way it would be like the millionaires who are now investing in space transportation.
Cornelius Vanderbilt, richest man in the world
The Vanderbilt family has English and Dutch origins and had emigrated to the US where they worked as farmers in New York, on Staten Island. Cornelius was born in 1794 and left school at the age of eleven to work on his father’s ferry. A few years later he would set up his own passenger transport service between Staten Island and New York. Because of his energy, the other ferry captains called him “the Commodore”, a nickname that stuck with him all his life. At nineteen he married his cousin, they moved to Manhattan (note here having left the farm), and they had thirteen children.
Without leaving his businesses, Vanderbilt was appointed captain of steam ferry entrepreneur Thomas Gibbons, and later director of his company. That allowed Vanderbilt to learn how to run a complex organization and learn about legal issues. They moved to New Jersey, where his wife Sophia ran an inn with the benefits of which she was able to feed and educate the children. Vanderbil left the Gibbons business and began to grow his, going from being a local ferry operator to operating steamboats between California and the rest of the US, with strong demand thanks to the gold rush.
Little by little Vanderbilt became interested in railroads, buying lines and opening new ones. His legacy still remains. Grand Central Station was built in 1913 on top of where Vanderbilt had built its own station in 1869. Vanderbilt began works of philanthropy, which his children and grandchildren would also continue. In 1873 with a million dollar donation, he started Vanderbilt University in Tennessee, which is still one of the best universities in the country today. The Commodore passed away in 1877, leaving a fortune of millions of dollars, being the richest man in the world and leaving his son William H Vanderbilt as the richest man in the world. William H Vanderbilt only outlived his father nine years, but he had time to double the inheritance, his father is said to have told him:
“Any fool can make a fortune, it takes a smart man to keep it up.”
Well, this one had doubled his inheritance in two nine years, so we can’t complain about Vanderbilt Jr., who had inherited most of his father’s fortune. But for Billy Vanderbilt money was a source of problems and he began to sell part of the company founded by the father, the New York Central. Vanderbilt continued his father’s philanthropic labors and lived a luxurious life in his fifth avenue mansion where he kept the more than 200 paintings he purchased.
Vanderbilt grandchildren and great-grandchildren
Soon the money would reach the grandchildren and they seem to they would not be so well focused on getting rich. Billy Vanderbilt instead of leaving the money to the business savvy, divided his fortune equally between the two sons. Grandchildren despite their fortune, at a time full of nouveau riche emerged from the civil war, were not on the list of the 400 most important in New York made by a lady of the Astor family (John Jacob Astor had been the richest man in America in the 1940s and had been dethroned by Cornelius Vanderbilt). It cost them a lot of money to enter that elite that considered them a group of nouveau riche. But they succeeded, in fact many ended up marrying members of the English aristocracy and their descendants have noble titles.
One of the descendants, Arthur T Vanderbilt II wrote a book on the rise and fall of the family. It tells how the third and fourth generation of the Vanderbilts dedicated themselves to building mansions, and competing with each other for the best, largest, expensive and luxurious, they ended up owning several mansions on fifth avenue. These are gone, since in the twenties they were sold to be demolished and the incipient skyscrapers were built. But the greatest of all was Biltmore, en Tennessee, whose construction was completed in 1895 and is a French-style Renaissance castle that is open to the public as a national monument (your photos accompany this article).
In addition to building mansions, the commodore’s grandchildren and great-grandchildren made donations to educational institutions (universities) and cultural institutions (museums, opera, or libraries) while they were disengaging from the business. William Kissam Vanderbilt in 1903 gave control of the railroads to another company after running it for a while and stopped being interested in anything that would make him earn more money.
At the beginning of the 20th century, new income and inheritance taxes were introduced as the government needed more revenue to provide more public services. The Vanderbilts ‘expensive lifestyle became impossible to maintain, and in the Great Depression the Vanderbilts’ income fell further. In 1930 they had to give access to the aforementioned Biltmore mansion. The next members of the family who arrived failed to increase the inheritance, but were dedicated to squandering it.
Additionally, Central New York, the railroad company that was the source of the family’s wealth, began to decline in the first half of the 20th century. At the end of the Second World War, rail freight transport had declined compared to road transport. In 1954 the Vanderbilt family sold their shares and the company went bankrupt in 1970.
In summary, the Vanderbilt family lost their fortune due to a combination of family dilution among many descendants, waste, crisis, taxes, lack of entrepreneurship and technological obsolescence due to the boom in road transport. The Vanderbilts were a dynasty based on the era of steam engine technology, and were overtaken by internal combustion engine technology, never thinking of setting up a trucking company or founding an airline.
Some of the members of the Vanderbilt family continue to be prominent, for example the designer Gloria Vanderbilt was famous for her jeans designs in the 70s and her son Anderson Cooper is a prominent journalist, James Vanderbilt is a prominent screenwriter and film producer, but none of these people are the least bit close to their family’s golden age. Vanderbilt was once synonymous with money, but many years ago it stopped being so.
Ask the readers Do you know more millionaire families who have lost their fortune? Do you think that today’s millionaires have learned and are capable of educating their descendants so that they do not waste money?
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