[b]OLD NEWS[/b] - [i]June & July 2012[/i]

In 1817 Cornelius Vanderbilt, 23, was living with his wife in a Manhattan boarding house and earning his living by piloting a small sailboat around New York Harbor.  His two-masted ferry was light enough to be rowed when the wind died.  He also owned a heavier schooner that could venture into the open Atlantic to carry goods south to Philadelphia or north to New England ports, but his main business was running passengers between Manhattan and Staten Island.

Vanderbilt was tall, robust, fiercely competitive, and thrifty--characteristics that served him well in the rough-and-tumble waterfront workplace.  According to an article published in 1859 in [i]Harper's Weekly[/i], the young Vanderbilt had a reputation for being "skillful in managing his craft," "daring in encountering the roughest weather," and "perfectly reliable in every respect."  He was always alert to opportunities to make money, often sleeping on the deck of his ferry to catch the first customers to arrive in the morning, and at other times venturing out alone in the wake of stormy weather to look for salvage.

Like other operators of New York sailing ferries in 1817, Vanderbilt found himself competing with a new invention--the steamboat, which had been introduced to the United States a decade earlier by inventor Robert Fulton and his business partner, Robert Livingston.  Steamboats were largely immune to the vagaries of winds, ties, and currents, making them more dependable than sailing vessels, and the young-entrepreneur realized that the noisy, smoke-belching "boilers" represented the future of the merchant marine.

He would have liked to get into steamboat navigation, but he was barred from it by an act of the New York state legislature, which had granted to Fulton and Livingston a 30-year monopoly to conduct steamboat traffic on the state's waterways.  After the death of Livingston in 1813 and of Fulton in 1815, control of the monopoly had passed to Livingston's brother and two sons, who issued subcontracting licenses to steamboat operators at exorbitant rates.  Under state law, they were permitted to collect stiff fines and penalties from anyone who infringed on their rights.

Vanderbilt's sense of personal liberty was offended by the policies of the monopoly.  Those policies were also resented by travelers who were forced to pay inflated prices for steamboat tickets in New York state.  In neighboring states like New Jersey, where steamboat operators compete freely against each other, ticket prices were much lower.

In November of 1817, Vanderbilt was contacted by Thomas Gibbons, a wealthy  New Jersey lawyer, politician, and businessman who had recently gone into the steamboat business.  Gibbons believed that New York had no legal right to bar a New-Jersey-based steamboat from carrying passengers back and forth across Raritan Bay between New York and New Jersey.  Gibbons also held a personal grudge against one of the New York monopoly's licensed steamboat operators, Aaron Ogden.  For both reason, Gibbons had started a competing ferry serviced between Elizabeth, New Jersey, and Manhattan, in flagrant disregard of New York's monopoly law.  Gibbons was looking for a captain to command his New-Jersey-based steam ferry, the[i] Mouse[/i], and Vanderbilt had been recommended for the job.

Gibbons explained to Vanderbilt that he was hoping to goad Ogden and the Livingston family into demanding that he join the monopoly or else submit to its state-sanctioned fines and legal fees--penalties that Gibbons intended to disregard.  Instead, Gibbons planned to appeal any conviction all the way to the U.S. Supreme Court.

Vanderbilt accepted Gibbon's offer of a salary of sixty dollars per month and half of the revenue from the [i]Mouse[/i]'s onboard saloon.  Although the total amounted to substantially less than Vanderbilt was earning from piloting his own ferry, he viewed the deal as a good opportunity to learn about the operation of a steamboat, as well as a way to gain the personal satisfaction of defying the monopoly.

In late November, Vanderbilt began carrying passengers between New York and New Jersey for half the rate being charged by Ogden.  Ogden and the Livingston family did not at first resort to legal means to deal with this sudden competition because the monopoly law was so unpopular that they feared a flood of bad publicity if they went to court.  Instead, Ogden tried to fight back by having his mean tear down Gibbon's advertising signs and sending boats to blockade the [i]Mouse[/i]'s docks, but these efforts ultimately proved ineffective.  Under Vanderbilt's command, the [i]Mouse[/i] was soon crowded with passengers taking advantage of her bargain rates.

While Ogden and the Livingston family fretted over whether to impair their public image by taking legal action, Gibbons decided to build a second, larger steamboat for Vanderbilt to captain.  Provocatively named the [i]Bellona[/i] after the Roman goddess of war, the new vessel began service in early October of 1818.

Vanderbilt hoisted a flag on the ship's mast that read: "New Jersey Must Be Free!"  Soon Ogden found himself losing so many passengers to the illegal upstart that he expected to be driven out of business unless he asked the courts to rescue him.  On October 21 he secured an injunction against Gibbons from New York's Chancery Court, forbidding the [i]Bellona[/i] from further violating the monopoly.

Gibbons and Vanderbilt were delighted.  Having finally succeeded in getting the legal contest underway, Gibbons appealed to the court order in New York, but the injunction was upheld on October 6, 1819.  Gibbons appealed again, this time to the New York State Court of Errors, on April 27, 1820, but again the injunction was upheld.  The New Jersey legislature, meanwhile, took Gibbons's side in the fray and passed a bill that authorized Gibbons to seize the boats of anyone who seized ant of his boats under the New York monopoly law.

As the legal battle escalated, Vanderbilt happily continued to run the [i]Bellona[/i] back and forth across Raritan Bay, earning handsome profits and easily dodging New York authorities, who seemed reluctant to confront him.

On May 29, 1821, as the [i]Bellona[/i] was docked at a nondescript pier on the Manhattan shore of the Hudson River, Vanderbilt was approached by New York's High Constable Jacob Hays, a burly man as tall as himself who was known as "the terror of evil doers" and "a police force unto himself."

Hays told Vanderbilt that he was under arrest.

Vanderbilt later recalled: "I concluded to surrender.  I didn't want to back down, however, too hurriedly, and said that if they wanted to arrest me, they should carry me off the boat; and don't you know old Hays took me at my word, and landed me on the dock with a suddenness that took away my breath."

Vanderbilt was taken to court and found guilty of violating the monopoly law, but he and Gibbons appealed the conviction.  Free on bail during the appeals process, Vanderbilt confidently resumed his ferry service between New York and New Jersey, devising a simple but ingenious way to elude the authorities.  Below the deck of the [i]Bellona[/i], he built a small hiding place concealed by a sliding door, into which he slipped when the ship docked in New York.  Police officers who boarded the ship were unable to find the captain until the deckhands were casing off, at which point Vanderbilt would emerge unseen from his secret compartment and offer them the choice of jumping back onto the pier or else traveling across the bay to New Jersey, where they would themselves be subject to arrest by New Jersey port authorities who were sympathetic to Gibbons and Vanderbilt.

While Vanderbilt continued to play cat-and-mouse games with the New York constabulary, the legal battle being waged by Gibbons slowly worked its way to the U.S. Supreme Courte.  On February 4, 1824, deliberation in the case of Gibbons v. Ogden began with Daniel Webster serving as Gibbons's attorney.  On March 2 the court ruled in favor of Gibbons.  Chief Justice John Marshall wrote that only the federal government, and not individual states, could regulate interstate commerce.

This decision had far-reached effects.  In every state, laws designed to protect local businesses from competition were suddenly overthrown.  Many economists feel that the decision played a foundational role in the subsequent prosperity of the United States, which went on to develop a uniquely competitive and largely unregulated economy.

Cornelius Vanderbilt was among the first to profit from opportunities that opened in the steamboat business after the Supreme Court decision in Gibbons v. Ogden.  After working for Gibbons and Gobbons's son William for five more years, he began his own line of steamboats in 1829 and rapidly branched out into the fields of trans-oceanic shipping and railroad building.

When he died in 1877 at the age of 82, Vanderbilt was the richest man in America, owning an estimated one-ninth of all the United States currency then in circulation.