1947

Harlem stock, with a par value of fifty dollars, traded as low as nine during the Civil War before the Commodore's arrival on the board lent it standing. In December 1862 the directors applied under their 1832 charter to lay rails down Broadway from Union Square to the Battery, and the stock jumped. Smart brokers snickered at the news that Vanderbilt was buying for investment and unloaded their shares on him at rising prices, until the franchise was granted in April 1863 and the stock leapt again. The speculator George Law pushed a rival bill through the legislature awarding himself the Broadway franchise in defiance of the city's ordinances; Governor Seymour, advised by Samuel Tilden and lobbied by William Astor and Pierre Lorillard, vetoed it. At the annual election Vanderbilt, revealed as holder of 8,801 shares, was elected president, stipulating that he take no salary while the vice president ran operations. The cornered interests had yet to learn what that election meant.

Daniel Drew saw Harlem's elevated price as the setup for a raid: he schemed with city politicians, Boss Tweed said to be chief among them, to have the Common Council abrogate the Broadway franchise and crash the stock after those in the secret had sold short. Through June 1863 the plotters pounded the quotation from 100 to 80; on June 25 the Council repealed the franchise and an injunction halted track-laying, breaking the price to 73. Vanderbilt's response was one of his standing rules of practice: I bide my time. His cash-rich coterie bought by the thousands of shares, 97 one day and 106 the next, while the shorts who had sold fifty thousand shares scrambled to borrow stock. On June 30 the trapped councilmen reinstated the franchise, hoping for mercy and mistaking their man; the clique kept buying into August, when the last battered shorts, Drew and a few aldermen among them, covered near 179. In September he let the price coast down to 115, emerging not overloaded but in control.

The courts ruled that the Broadway extension required a new franchise from Albany, and in early 1864 Harlem's bill was killed in a Senate committee, Drew again conspiring with legislators, this time alongside New York Central officials who wanted Harlem cheap as their own entrance to the city. The stock collapsed from 145 to 101. Vanderbilt summoned his old Staten Island friend Tobin with a proposal to teach the legislators never to go back on their word, and ran the corner a second time with a war chest of roughly five million dollars assembled from Tobin and Leonard Jerome. The bears kept selling as the stock climbed past 150 and 235; the group ultimately held the equivalent of the entire capital stock plus twenty-seven thousand shares the shorts could never deliver. Told that squeezing them to a thousand might break every house on the Street, Vanderbilt settled for less; in late June the last contracts settled at 285, with losses above a million dollars and bankruptcies to match. His verdict on the affair: they had busted the whole legislature.

The summer of 1864 marked the turning point in the Harlem's fortunes, from rags toward riches, and in those of William Henry Vanderbilt, who at forty-four entered the board and was elected vice president, having moved his wife and their eight children off the Staten Island farm and into his first house in town. No more than a superintendent at first, attending to details of operation, William slowly grew in power until his father relied on him as he once had on Horace Clark, and concluded that the son was worth a dozen Clarks. For the fourteen years until the Commodore's death, William had more to do with building the New York Central system than later generations credited. The corner also revolutionized the board itself: Drew retired from the directorate that year, and the election swept in eight new directors out of thirteen, a complete overturn that revealed the Vanderbilt interest in command. The pattern for the empire was set: control the stock, install the family, run the road.

Vanderbilt never let a railroad run down once he owned it. Holding two New York to Albany lines, he preferred the direct, level Hudson River route but rebuilt the Harlem too, ordering new rolling stock and rails and planning to double-track the line throughout. On the Hudson River Railroad the dividend rate rose to seven percent in 1864 and eight percent the following year; 1865 earnings approached four and a half million dollars while the road operated at just 62.5 percent of income. Six-sevenths of the mileage was double-tracked with seventy-pound iron rail, and newly introduced steel began going down by the thousands of tons; the Tribune noted five ties laid where four had gone before, and longer chairs at the rail-ends to reduce jolting and wear. Seventy-five road locomotives were converted from wood to coal burning, and the stock was regarded as gilt-edged, trading at 150 or more. Efficiency, in his hands, was not a slogan but a dividend.

Vanderbilt's breaking point with the New York Central came in the winter of 1866 and 1867. A snowstorm ending December 28 tied eastern New York rail traffic into the worst knot it had ever known: eight trains stalled at West Albany, passengers plodding through the drifts, some unfed since leaving Syracuse the previous morning. The river froze, and the Central grudgingly fed the Hudson River Railroad some business. On January 14, 1867, Vanderbilt struck with a newspaper notice: since the Central had terminated their arrangements, the Hudson River road would henceforth sell tickets and check baggage only over its own line, ending all through traffic at East Albany. Passengers and shippers cried out; editors wrote with white-hot pens of the mad rivalries of railroad kings trampling a helpless public; the legislature ordered an investigation and bills to prevent such blockades. The Central, whose East to West business was its lifeblood, tried detours over uncooperative New England roads while its traffic strangled.

Before the investigating committee, William Vanderbilt testified that the Hudson road kept eighty-two engines and equipment enough for two thousand tons of freight a day, yet the Central expected that capacity to stand idle through the nine months of open navigation. The Commodore conceded nothing: he had always served the public because it was his interest to do so, and as for the courts, the law went too slow for him when he held the remedy in his own hands. Historians treat this testimony as the source of the apocryphal sneer about law and power that no witness ever actually heard him utter. On the hearing's third day a telegram signed W. H. V. announced that satisfactory arrangements had been made and the trains would connect as usual that night. In November, stockholders led by Edward Cunard and John Jacob Astor Jr., representing thirteen million dollars of stock, begged him by letter to take their proxies, and at the December election his eighteen-million-dollar ballot decided control of the New York Central.