The Vanderbilts: How the Richest Family Lost Their Fortune

The lineage began when Jan Aertszoon, a Dutch farmer from the Netherlands, emigrated to the colony of New Netherland—the capital of this region known today as New York City—in 1650. Aertszoon was brought over to work as an indentured servant for the Van Kouwenhoven family, the founders of the New Netherland colony.

The name of Jan’s village was De Bilt, and thus the Dutch “van,” meaning “from,” was added. The name evolved into “Vanderbilt” when the English seized control of New Amsterdam, now known as Manhattan.

Several generations later, Cornelius Vanderbilt was born in Staten Island, New York on May 27, 1794. He was raised under humble circumstances—his parents worked as farmers and traveled between Staten Island and Manhattan, selling produce.

As a child, Cornelius would join his father on these journeys, manning the two-masted sailing vessel called a periauger. 

Cornelius attended school briefly, but eventually quit altogether at age 11 to focus his efforts on the waterfront. In 1810, he reportedly borrowed $100 from his mother and bought his first boat, which he used to move cargo and passengers around the New York harbor.

Eventually, he was able to acquire a fleet of ships that supplied government outposts around the city during the War of 1812. This is where the business began to take off. 

From there, he sold all his boats in 1818 and went to work as a steamship captain, learning as much as he could about the growing industry from his boss, the wealthy businessman Thomas Gibbons. By the late 1820s, he was in charge of his own business and quickly became known as an aggressive force, with many of his competitors paying him off, simply so they didn't have to compete with him. 

During this time, he managed the traffic on the Hudson River by eliminating fares on his own ships, before his competitors paid him large sums to move his operation.

Through these practices, by 1846, he had become a millionaire. 

Soon, after taking advantage of the California Gold Rush by offering steamship transportation from New York to San Francisco across Nicaragua—an untouched, and far more effective route—Cornelius decided to try his hand in the railroad industry.

In the 1850s, he had bought so much stock in the New York and Harlem Railroad that, by 1863, he owned the entire line. 

He continued to expand his services with the New York Central Railroad, and later a line between New York City and Chicago, which he consolidated. Before the Grand Central Terminal, Cornelius built the Grant Central Depot, which gave thousands of jobs to the unemployed.

He never outright invested in philanthropy, but his $1 million donation to Central University in Nashville, Tennessee is responsible for it later being called Vanderbilt University.

In his will, he split the bulk of his fortune among his five sons and gave little to his second wife and eight daughters. He made sure to leave a significant amount of wealth, over $80 million, to his son William Henry "Billy" Vanderbilt in the hopes he would carry on his legacy.

According to Fortune's Children: The Fall of the House of Vanderbilt, a history of the family written by Arthur T. Vanderbilt II, Cornelius is reported to have said to his son, William, that, “Any fool can make a fortune; it takes a man of brains to hold onto it.”

Inheriting his family’s 87% stake in New York Central, Billy did what he could and even excelled, doubling the family fortune to well over $200 million. He would be the only descendant to increase the Vanderbilt wealth, and did so by expanding the New York Central Railroad and furthering his father’s holdings.

He also built a mansion at 640 Fifth Avenue—the first of many Vanderbilt mansions to come along Fifth Avenue.

Although his father was not exceptionally charitable, William was the first in the family to become established in philanthropy. He gave to universities and built a block-long building along Fifth Avenue, where he showcased some of the world’s most prized paintings and sculptures.

Upon his death, though leaving much of his fortune to his family, William made the decision to leave a substantial amount to the Metropolitan Museum of Art, the YMCA, and various other charitable institutions.

Despite his father, Cornelius, expressing that the fortune should only be passed on to one descendant, Billy decided to split the wealth between three of his four sons: Cornelius, William Kissam, and George Washington. It is here, in the third generation, where the vast Vanderbilt fortune begins its gradual decline. 

Coinciding with a divide in the wealth came a decrease in furthering the family business and an increase in spending. Until his death in 1899, Cornelius II, who had the largest involvement and interest, managed the railroads and continued his father’s philanthropic involvements. 

William Kissam worked alongside his brother, but was far less interested in what his family had built. Nevertheless, when Cornelius passed away, he seized control of the empire and made the decision to bestow management of the railroads upon an outside firm. From there, he retired and immersed himself in social events, particularly those of the Metropolitan Opera and yacht racing. 

The youngest brother, George Washington, had by far the least interest in the business, particularly in terms of furthering enterprises. He spent much of his fortune on building an estate of more than 146,000-acres.

Over time, the Vanderbilts continued to amass properties, including the houses in Newport, Rhode Island, and 10 mansions on Fifth Avenue, without paying much interest in what would be passed onto their descendants.

Considered to be the most notable Vanderbilt of the fourth generation, infamous playboy and son of Cornelius, Reginald Claypool Vanderbilt reportedly remarked in Fortune’s Children, “Every Vanderbilt son [...] has increased his fortune except me.”

The enterprise remained less concentrated as it was dispersed among more and more descendants, and consequently began to dwindle.

Additionally, in the late 1920s, New York Central was changing. Although the transportation business had peaked during World War II, the building of trucks, barges, and airplanes had diminished the industry.

Furthermore, shares in the New York Central were sold, and after numerous bankruptcies, it was eventually taken over by Amtrak in 1971.

And of late, a 6th-generation descendant of the Vanderbilt family, CNN anchor Anderson Cooper said, during Howard Stern’s radio show, that, “My mom's made clear to me that there's no trust fund."

As of 1947, all of the Vanderbilts’ New York City homes had been demolished, and the family does not have enough substantial inheritance to even be considered one of America’s wealthiest families today. 

Cornelius Vanderbilt, who had built himself up from nothing—but not without making a reputation for himself as ruthless—is nevertheless a name that will live on in the country’s history.

And although there is nothing of his fortune yet to live on for him, there are many lessons to be gained through the ways in which his descendants handled their money.