August 8, 2025 • 10 mins
On this episode of Our American Stories, when gold prices collapsed in September 1869, it triggered one of the earliest financial panics in American history. Jay Gould and Jim Fisk had spent months driving prices higher in an attempt to corner the market, working backchannels in Washington to shield their plan from regulation. But the scheme unraveled quickly, and when it did, the damage rippled across the economy. Cornelius Vanderbilt, already one of the richest men in the country, moved fast to protect his own interests. In the process, he stabilized a market no one else could touch. T.J. Stiles tells the story of what really happened on Black Friday—and how Vanderbilt’s response changed the balance of private power in public life.
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Episode Transcript
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Speaker 1 (00:10):
And we continue with our American stories. In his Poolit
serprise winning biography, The First Tycoon, TJ. Styles tells the
story of Cornelius Vanderbilt, the man through whose genius and
force of will did more than perhaps any other individual
in this country to create the modern American economy. Our
(00:31):
next story is one that portrays Vanderbilt at his most
skillful and yet his most chilling. The Commodore's personal wealth
had grown so much by eighteen sixty nine that his
private interests had intersected with the public interest. Let's take
a listen to TJ. Style.
Speaker 2 (00:51):
There's no way I could really cover Vanderbilt's life. This
is someone who was born during George Washington's presidency, who
went to work before the of eighteen twelve, and lived
long enough to make deals personally with John D. Rockefeller.
I just want to speak briefly, though, about one incident
in his life that suggests how important he was and
(01:14):
why in many ways his life is relevant today. Historians
hate to draw lessons from the past, but certainly his
life and his career is very resonant with what's happening
right now now. The incident that I'll just take a
couple of minutes to describe took place in September eighteen
sixty nine. In eighteen sixty three is a little background
(01:35):
to this. Vanderbilt turned from steamships. It's spent his long
career in steamboats and steamships, becoming the foremost maritime entrepreneur
in American history to that date. Sold off all his
ships at the age of seventy and turned to railroads,
and during the eighteen sixties he progressively took over the
(01:55):
railroads that connected New York City with the West. Eighteen
sixty nine, he controlled the railroads that he at that
moment was in the process of consolidating into the New
York Central and Hudson River Railroad, what I think is
probably the ancestor the pioneering giant corporation in American history,
(02:16):
and it ran from Lower Manhattan all the way to
Buffalo in the West. So this was a great development
in corporate history, a great development in transportation history, building
a very low cost efficient transportation network that also brought
himself great wealth. But at that time, the most important
channel of commerce was between Chicago and the great seaports
(02:38):
in the east, so connection from Buffalo to Chicago was
extremely important. So in September eighteen sixty nine, Vanderbilt faced
at conundrum as he tried to get at least influence
and healthy relations with the railroads to the west. He
faced an opponent. The opponent's name was Jay Gould. Jay
Gould was one of the last and troublesome of the
(03:00):
many enemies in Connellius Vanderbilt's life, and the two men
were exact opposites. Vanderbilt was six feet tall, athletic, a
fierce competitor, someone who got involved in fistfights as a
young man, and even into his eighties would engage in
high speed harness races on the roads of Upper Manhattan.
Gould was small, slender, had a huge black beard, liked
(03:23):
to put her around in his garden and collect books.
They were complete opposites, but they were very well matched
when it came to wits and wiliness in business. Battle
and Gould controlled the Erie Railroad, the other major railroad
that ran west from New York City, and he needed
a connection to Chicago. So the two men began to
(03:44):
struggle behind the scenes for control of a newly merged
railroad that stretched from Chicago to Buffalo. Well. It's called
it the Lake Shore Lakeshoren Michigan Southern Railway. Vanderbilt bought
a lot of stock in the company, put his son
in law on the board, but his son law soon
found he had an opponent on the board of the
Lake Shore. The man's name was l Grand Lockwood. It's
(04:06):
a short kind of fat Unlike Vanderbilt, had spent his
long career on Wall Street, very much accepted by Newark's
high society, went to Europe every year and collected fine art.
Was a treasurer of the New York Stock Exchange. And
Lockwood had suffered in business combat with Vanderbilts in the past,
and Lockwood made an alliance with Gould, and they sealed
(04:28):
the deal with a fine inner at Delmonico's in Lower Manhattan,
where Jim Fisk, Jay Gould's flamboyant partner, played the entertainer.
And they made an agreement to divert the traffic from
the Lake Shore from Chicago over the Erie rather than
over Vanderbilts Railroad. And they made other plans that would
have injured Vanderbilt's interests well. Vanderbilt was a man who
(04:48):
had seen a lot of business combat over the years,
so he was patient. He bided his time. He understood
what I call it in the unseen architecture of American
commerce that was emerging in the nineteenth century, the rise
of abstract financial world that was new for Americans at
that time, a world of credit markets, financial markets, securities, corporations,
(05:11):
things that had no tangible, corporeal existence. It was something
that was at the heart of a cultural as well
as economic debate in America in the nineteenth century. A
lot of businessmen really had troubled grasping this sort of
abstract world that was a step removed from the tangible
world of what we now call the real economy. Vanderbilt
understood it very well, so he waited until September of
(05:35):
eighteen sixty nine, when the credit markets started to grow tight.
America was an agricultural country. In the fall, the crops
in the West were harvested and shipped to Seaport for export.
Reserved accounts deposits in New York banks were drawn down
as merchants and farmers in the West needed to get
cash to be able to handle all the transactions for
(05:58):
the harvest, what they called the moving of the crops,
and on Wall Street stock trading began to suffer at
that time of year, when the credit markets started to
dry up, So Vanderbilt waited until the moving of the
crops began. Then, secretly, because there were no reporting requirements
at that time, through anonymously through multiple brokers, he issued
contracts for the sale of stock in Lakeshore Stock, of
(06:21):
which he owned vast amounts. Well Lockwood, as he knew,
had borrowed millions of dollars to buy on margin, that is,
on credit, millions of dollars worth of Lakeshore stock. Lockwood,
counting on his alliance with Gould to drive up the
shares of Blakeshore, Vanderbilt secretly selling vast amounts, reserving to
himself the right to decide when to deliver the stock.
(06:45):
Once the moving of the crops begins, the credit market
starts to tighten up, stock trading is beginning to slow down,
prices are beginning to hesitate. Then all in one day,
actually three successive days, and one big blow delivers all
of his stock. Stock price collapsed. The heavily leveraged Lockwood
was driven into bankruptcy. He apparently went to Vanderbilt's brownstone
(07:06):
mansion in the Washington Square neighborhood and begged for mercy,
and Vanderbilt sent him away, and Lockwood, one of the
great powers on Wall Street, was driven into bankruptcy. Vanderbilt
then took a large loan from Bearing Brothers the British Bank,
bought back all of the stock that he had sold
at reduced prices, bought back all of Lockwood's stock which
(07:27):
his brokers had sold when he couldn't make his margin calls.
All the stock had gone into the market the prices
had collapsed. He not only crushed his enemy, drove him
into bankruptcy from which he never recovered. He not only
got control of the railroad, absolute control. He also made
a fortune by engaging in this operation in which he
dropped the price of the company and then bought it
(07:48):
back at a lower price. So it was a brilliant operation. However,
the problem is that it contributed to one of the
great panics on Wall Street, Black Friday of eighteen sixty nine.
Vanderbilt also knew that Jay Gould was engaged in a
complex operation the corner of the gold Market. I won't
go into the details, but he knew that the Wall
(08:10):
Street was in peril at that moment, and yet he gambled,
essentially the health of the entire financial system on his
ability to step in and rescue Wall Street from this panic.
When Black Friday occurred, the gold market collapsed, and Vanderbilt
contributed to it by crushing stock prices and driving down
stock prices. Vanderbilt then stepped in did something he rarely did.
(08:33):
He went to Wall Street himself, at seventy five years old.
He strolls down onto the stock exchange. Brokers gather around him.
One broker said to a reporter, I knew it. The
old rat never forgets his friends, and he began to
very publicly make a big show of buying stock. Of course,
he bought stock, outstanding stock in his own railroads, driving
(08:54):
the price up. He arrested the fall of the market,
managed to stop the panic, and brought prices back up again.
This moment shows Vanderbilt both at his most daring, at
his most skillful in the financial markets that even some
of his contemporaries did not yet understand, and at the
same time it's chilling. This is a man who, in
(09:16):
pursuing his own private interests, knowingly pushed the entire economy
to the brink. Gambling on his ability to arrest the
fall and bring it back. The American public was very
lucky that he gambled so skillfully and was able to
carry out the rescue operation as successfully as he carried
out the punishment side of the operation. And that is
(09:39):
the conundrum of Vanderbilt. This man who pursued his own
private interests but had grown to such power, had grown
to such a prominent place in the American economy that
his private interests intersected with a public interest. And when
he engaged in vast public enterprises he contributed. There's no
(09:59):
doubt that he can s ttributed enormously to the wealth
of the American economy, to the growth of the American economy,
to the geographical expansion of the United States. So he
may have died in eighteen seventy seven, but I find
his life to be, if anything, more relevant than at
any point when I was working on the book, having
no idea at the end it would be as relevant
(10:21):
as it is right now.
Speaker 1 (10:22):
And great work is always by Greg Hangel around this piece,
and a special thanks to TJ. Styles Pull, a surprise
winning author of the First Tycoon and a little glimpse
this one story into the remarkable mind life of Cornelius
Commodore Vanderbilt. His story here on our American Stories
And we continue with our American stories. In his Poolit
serprise winning biography, The First Tycoon, TJ. Styles tells the
story of Cornelius Vanderbilt, the man through whose genius and
force of will did more than perhaps any other individual
in this country to create the modern American economy. Our
(00:31):
next story is one that portrays Vanderbilt at his most
skillful and yet his most chilling. The Commodore's personal wealth
had grown so much by eighteen sixty nine that his
private interests had intersected with the public interest. Let's take
a listen to TJ. Style.
Speaker 2 (00:51):
There's no way I could really cover Vanderbilt's life. This
is someone who was born during George Washington's presidency, who
went to work before the of eighteen twelve, and lived
long enough to make deals personally with John D. Rockefeller.
I just want to speak briefly, though, about one incident
in his life that suggests how important he was and
(01:14):
why in many ways his life is relevant today. Historians
hate to draw lessons from the past, but certainly his
life and his career is very resonant with what's happening
right now now. The incident that I'll just take a
couple of minutes to describe took place in September eighteen
sixty nine. In eighteen sixty three is a little background
(01:35):
to this. Vanderbilt turned from steamships. It's spent his long
career in steamboats and steamships, becoming the foremost maritime entrepreneur
in American history to that date. Sold off all his
ships at the age of seventy and turned to railroads,
and during the eighteen sixties he progressively took over the
(01:55):
railroads that connected New York City with the West. Eighteen
sixty nine, he controlled the railroads that he at that
moment was in the process of consolidating into the New
York Central and Hudson River Railroad, what I think is
probably the ancestor the pioneering giant corporation in American history,
(02:16):
and it ran from Lower Manhattan all the way to
Buffalo in the West. So this was a great development
in corporate history, a great development in transportation history, building
a very low cost efficient transportation network that also brought
himself great wealth. But at that time, the most important
channel of commerce was between Chicago and the great seaports
(02:38):
in the east, so connection from Buffalo to Chicago was
extremely important. So in September eighteen sixty nine, Vanderbilt faced
at conundrum as he tried to get at least influence
and healthy relations with the railroads to the west. He
faced an opponent. The opponent's name was Jay Gould. Jay
Gould was one of the last and troublesome of the
(03:00):
many enemies in Connellius Vanderbilt's life, and the two men
were exact opposites. Vanderbilt was six feet tall, athletic, a
fierce competitor, someone who got involved in fistfights as a
young man, and even into his eighties would engage in
high speed harness races on the roads of Upper Manhattan.
Gould was small, slender, had a huge black beard, liked
(03:23):
to put her around in his garden and collect books.
They were complete opposites, but they were very well matched
when it came to wits and wiliness in business. Battle
and Gould controlled the Erie Railroad, the other major railroad
that ran west from New York City, and he needed
a connection to Chicago. So the two men began to
(03:44):
struggle behind the scenes for control of a newly merged
railroad that stretched from Chicago to Buffalo. Well. It's called
it the Lake Shore Lakeshoren Michigan Southern Railway. Vanderbilt bought
a lot of stock in the company, put his son
in law on the board, but his son law soon
found he had an opponent on the board of the
Lake Shore. The man's name was l Grand Lockwood. It's
(04:06):
a short kind of fat Unlike Vanderbilt, had spent his
long career on Wall Street, very much accepted by Newark's
high society, went to Europe every year and collected fine art.
Was a treasurer of the New York Stock Exchange. And
Lockwood had suffered in business combat with Vanderbilts in the past,
and Lockwood made an alliance with Gould, and they sealed
(04:28):
the deal with a fine inner at Delmonico's in Lower Manhattan,
where Jim Fisk, Jay Gould's flamboyant partner, played the entertainer.
And they made an agreement to divert the traffic from
the Lake Shore from Chicago over the Erie rather than
over Vanderbilts Railroad. And they made other plans that would
have injured Vanderbilt's interests well. Vanderbilt was a man who
(04:48):
had seen a lot of business combat over the years,
so he was patient. He bided his time. He understood
what I call it in the unseen architecture of American
commerce that was emerging in the nineteenth century, the rise
of abstract financial world that was new for Americans at
that time, a world of credit markets, financial markets, securities, corporations,
(05:11):
things that had no tangible, corporeal existence. It was something
that was at the heart of a cultural as well
as economic debate in America in the nineteenth century. A
lot of businessmen really had troubled grasping this sort of
abstract world that was a step removed from the tangible
world of what we now call the real economy. Vanderbilt
understood it very well, so he waited until September of
(05:35):
eighteen sixty nine, when the credit markets started to grow tight.
America was an agricultural country. In the fall, the crops
in the West were harvested and shipped to Seaport for export.
Reserved accounts deposits in New York banks were drawn down
as merchants and farmers in the West needed to get
cash to be able to handle all the transactions for
(05:58):
the harvest, what they called the moving of the crops,
and on Wall Street stock trading began to suffer at
that time of year, when the credit markets started to
dry up, So Vanderbilt waited until the moving of the
crops began. Then, secretly, because there were no reporting requirements
at that time, through anonymously through multiple brokers, he issued
contracts for the sale of stock in Lakeshore Stock, of
(06:21):
which he owned vast amounts. Well Lockwood, as he knew,
had borrowed millions of dollars to buy on margin, that is,
on credit, millions of dollars worth of Lakeshore stock. Lockwood,
counting on his alliance with Gould to drive up the
shares of Blakeshore, Vanderbilt secretly selling vast amounts, reserving to
himself the right to decide when to deliver the stock.
(06:45):
Once the moving of the crops begins, the credit market
starts to tighten up, stock trading is beginning to slow down,
prices are beginning to hesitate. Then all in one day,
actually three successive days, and one big blow delivers all
of his stock. Stock price collapsed. The heavily leveraged Lockwood
was driven into bankruptcy. He apparently went to Vanderbilt's brownstone
(07:06):
mansion in the Washington Square neighborhood and begged for mercy,
and Vanderbilt sent him away, and Lockwood, one of the
great powers on Wall Street, was driven into bankruptcy. Vanderbilt
then took a large loan from Bearing Brothers the British Bank,
bought back all of the stock that he had sold
at reduced prices, bought back all of Lockwood's stock which
(07:27):
his brokers had sold when he couldn't make his margin calls.
All the stock had gone into the market the prices
had collapsed. He not only crushed his enemy, drove him
into bankruptcy from which he never recovered. He not only
got control of the railroad, absolute control. He also made
a fortune by engaging in this operation in which he
dropped the price of the company and then bought it
(07:48):
back at a lower price. So it was a brilliant operation. However,
the problem is that it contributed to one of the
great panics on Wall Street, Black Friday of eighteen sixty nine.
Vanderbilt also knew that Jay Gould was engaged in a
complex operation the corner of the gold Market. I won't
go into the details, but he knew that the Wall
(08:10):
Street was in peril at that moment, and yet he gambled,
essentially the health of the entire financial system on his
ability to step in and rescue Wall Street from this panic.
When Black Friday occurred, the gold market collapsed, and Vanderbilt
contributed to it by crushing stock prices and driving down
stock prices. Vanderbilt then stepped in did something he rarely did.
(08:33):
He went to Wall Street himself, at seventy five years old.
He strolls down onto the stock exchange. Brokers gather around him.
One broker said to a reporter, I knew it. The
old rat never forgets his friends, and he began to
very publicly make a big show of buying stock. Of course,
he bought stock, outstanding stock in his own railroads, driving
(08:54):
the price up. He arrested the fall of the market,
managed to stop the panic, and brought prices back up again.
This moment shows Vanderbilt both at his most daring, at
his most skillful in the financial markets that even some
of his contemporaries did not yet understand, and at the
same time it's chilling. This is a man who, in
(09:16):
pursuing his own private interests, knowingly pushed the entire economy
to the brink. Gambling on his ability to arrest the
fall and bring it back. The American public was very
lucky that he gambled so skillfully and was able to
carry out the rescue operation as successfully as he carried
out the punishment side of the operation. And that is
(09:39):
the conundrum of Vanderbilt. This man who pursued his own
private interests but had grown to such power, had grown
to such a prominent place in the American economy that
his private interests intersected with a public interest. And when
he engaged in vast public enterprises he contributed. There's no
(09:59):
doubt that he can s ttributed enormously to the wealth
of the American economy, to the growth of the American economy,
to the geographical expansion of the United States. So he
may have died in eighteen seventy seven, but I find
his life to be, if anything, more relevant than at
any point when I was working on the book, having
no idea at the end it would be as relevant
(10:21):
as it is right now.
Speaker 1 (10:22):
And great work is always by Greg Hangel around this piece,
and a special thanks to TJ. Styles Pull, a surprise
winning author of the First Tycoon and a little glimpse
this one story into the remarkable mind life of Cornelius
Commodore Vanderbilt. His story here on our American Stories
Host
Lee Habeeb
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