How The Vanderbilt Family Went From America’s Richest To Losing Almost Everything

Cornelius “Commodore” Vanderbilt, the steamship and railroad tycoon who forged the New York Central Railroad into a transportation monopoly, died in New York City on January 4, 1877. He was worth around $100 million at his death, making it one of the largest private fortunes on Earth. To ensure that voting control over the railroad would remain in his family, the Commodore bequeathed nearly $95 million to his oldest son, William Henry Vanderbilt. The money was given outright, without a trust to shield it against being divided or squandered.

The Commodore’s second son, Cornelius Jeremiah Vanderbilt, suffered from epilepsy and large gambling debts. He was left only the income from a trust fund in the 1877 will, which was little in comparison to his brother William Henry’s enormous inheritance. When siblings contested the will, arguing that Spiritualist mediums had swayed their father’s mind, they settled out of court. Although Cornelius Jeremiah was given his own payout, his gambling debts and loneliness became increasingly difficult to bear. He committed suicide in his New York hotel room in 1882, at age 51.

William Henry Vanderbilt inherited the fortune and became president of the New York Central Railroad. But he didn’t just coast along on it: he kept expanding the railroad system and personally oversaw its operations. When he died in 1885, he was worth close to $200 million, making him the richest person in private history.

When a reporter confronted William Henry in 1882 about a loss-making express train route while the railroad magnate was visiting Chicago in his private car, newspapers around the country printed his response: “The public be damned.” Although Vanderbilt claimed that the quote was distorted, he was widely seen as the embodiment of irresponsible big business, and historians suggest this spurred the drive toward federal oversight of railways.

William Henry divided his fortune (which at the time of his death stood at around $200 million) among his eight children instead of selecting one as his father had done. His four daughters and two youngest sons received relatively small sums, while his two eldest sons, Cornelius Vanderbilt II and William Kissam Vanderbilt, were given some $70 million each and took over the railroad together. This settled the matter, but it also meant that there were now eight fortunes to spend instead of one.

Alva Vanderbilt’s husband, William Kissam Vanderbilt, was one of the eight heirs who inherited a piece of the family’s vast wealth in 1885. Alva wanted to be part of high-society New York, where the Vanderbilts had been denied admission for many years, so she threw a costume party at their newly built Fifth Avenue mansion on March 26, 1883, and splurged roughly $250,000 on flowers, food, and costumes. The party had only one target: Mrs. Caroline Astor, the notoriously snooty society leader. And she showed up. The Vanderbilts were officially in.

Cornelius Vanderbilt II, the eldest of the eight heirs in 1885, commissioned architect Richard Morris Hunt to build a summer house in Newport, Rhode Island. When the $7 million mansion was completed in 1895, it contained 70 rooms. Unlike the railroad stock that paid for it, the house earned nothing back. It only required servants, fuel, and property taxes, year after year.

The youngest child of William Henry Vanderbilt, George Washington Vanderbilt II was among eight siblings when his father died in 1885. Unlike most of his brothers, he did not go into the family business of running railroads but turned to art and farming. When he bought a huge property just outside Asheville, North Carolina, he engaged architect Richard Morris Hunt and landscape architect Frederick Law Olmsted to design the 250-room chateau called Biltmore House. The house cost some $5 million, which was nearly half of what he’d inherited.

Alva Vanderbilt’s daughter, Consuelo, married Charles Spencer-Churchill, the Duke of Marlborough, on November 6, 1895, in New York City, at the urging of her mother, who was seeking prestige. In exchange for the marriage, the Duke received $2.5 million in New York Central Railroad stock and an annuity to himself and his new bride for renovating his family estate, Blenheim Palace, in England. In her memoir of 1956, Consuelo wrote that her mother locked her in her room until she agreed to marry.

By 1903, even one of the heirs in 1885, William Kissam Vanderbilt I, had grown so bored with co-managing the New York Central Railroad with his older brother Cornelius II, who was then its president, that he threw in the towel. Management passed to non-family figures, including J. P. Morgan and other bankers, and men such as the railroad’s executive, Chauncey Depew. William K. Vanderbilt retired to Europe to breed racehorses and once said that having inherited a fortune had left him with “nothing to hope for.” This time, though, it was the Vanderbilt family itself that had lost control of the business.

It wasn’t until 1913 that the 16th Amendment established the federal income tax, and 1916 that another law established the federal estate tax, both meant to fund a swelling government and an impending war effort. From that point forward, every Vanderbilt death meant selling off stock just to cover the government’s bill.

George Washington Vanderbilt II passed away unexpectedly following an operation in 1914, and Biltmore’s numerous rooms and extensive staff represented a continuing drain on resources. Fulfilling arrangements he had already made, his widow, Edith Stuyvesant Vanderbilt, sold a large tract of land in 1914 for $435,000 to the U.S. government. It was to become the nucleus of Pisgah National Forest, the first of the Vanderbilt holdings to be transferred outside the family.

Alfred Gwynne Vanderbilt, a grandson of William Henry and one of the biggest remaining shareholders in the family’s rail empire, was 37 when he boarded the British passenger liner Lusitania, which was torpedoed by a German U-boat in Irish waters on May 7, 1915. According to survivors, he could not swim and gave his lifejacket to a woman, then perished aboard the ill-fated ship. His estate, worth $26 million at the time, went immediately into probate court and into trusts for his young children.

Cornelius Vanderbilt II’s son, Reggie Vanderbilt, got $7.5 million and never worked. He spent his fortune on racehorses, drinking, and gambling over the next 20 years. When he died of liver disease in 1925, his estate was valued at only $423,761. His daughter, Gloria Vanderbilt, would not inherit any of that, but rather survive off another trust Cornelius had established for her.

In the mid-1920s, as Manhattan’s commercial district encircled them, the expense of keeping up the mansions on Fifth Avenue, both in terms of property taxes and the wages of large staffs, became prohibitive. Cornelius Vanderbilt II’s widow, Alice Gwynne Vanderbilt, sold her home at 1 West 57th Street for $7 million. It was demolished not long afterward to make room for the Bergdorf Goodman department store. The mansion William Kissam Vanderbilt had built for Alva’s famous ball was razed about the same time to erect an office building.

When George Vanderbilt died, his daughter, Cornelia Vanderbilt Cecil, inherited Biltmore House. In 1930, with railroad dividends in freefall due to the Depression, she opened the home to tourists for $2.00 per person, just enough to pay the property taxes. The largest private home in the country was now open for tourism to keep from drowning.

When Gloria Vanderbilt’s father, Reggie Vanderbilt, died, her grandfather gave the 10-year-old a $5 million trust. Gloria Morgan Vanderbilt took $126,000 a year out of the trust for herself. In 1934, the girl’s aunt, Gertrude Vanderbilt Whitney, filed suit to gain custody of the girl. Whitney alleged that Gloria Morgan Vanderbilt was spending her money on trips to Europe and ignoring her daughter, and Whitney was granted custody of the girl. The court also required that further withdrawals from the trust be carefully reviewed, and the $5 million remained untouched.

By 1940, the Triple Palace, 640 Fifth Avenue, William Henry Vanderbilt’s home, was the only Vanderbilt residence left on the avenue. General Cornelius Vanderbilt III, William Henry’s grandson, sold the property to the Astor Estate, with the stipulation that he and his family would continue to live there after his death. The General died in 1942, and Grace Wilson Vanderbilt moved out in 1945. The house was then torn down, its marble mantels and bronze doors put up for sale.

The Breakers, a 70-room summer residence in Newport, was bequeathed by Cornelius Vanderbilt II to his youngest daughter, Countess Gladys Vanderbilt Szechenyi. However, by 1948, taxes and maintenance on the building far exceeded her annual earnings. Consequently, she leased the whole estate to a local preservation nonprofit for a token $1 a year, letting the group take over maintenance and open the house for public tours, while her family kept rooms on the third floor.

For decades, the main income for the family had come from dividends on the New York Central Railroad that Commodore Vanderbilt built up into a monopoly. But by the 1950s, the railroad was being eroded by the advent of highways and airlines taking away customers, as well as heavy taxation and the loss of passenger rail lines. In 1954, corporate raider Robert R. Young won control of the company’s board in a proxy fight with the last family shareholders. Young died by suicide in 1958 as the railroad’s losses mounted.

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