A little item from this week’s alumni news in my e-mail:
Alumnus named prime minister of SomaliaThe New York Times—Alumnus Abdiweli Mohamed Ali, MA’88, who holds a master’s degree in economics from Vanderbilt, has been appointed the new prime minister of Somalia. Full story »
Vanderbilt is not as well known for producing African leaders, perhaps, as some universities. But it does have an economics department that has educated Nobel Prize winner Muhammad Yunus, for instance, so it may not be surprising that Somalia’s new Prime Minister got his masters in economics at Vanderbilt.
Cornelius Vanderbilt himself was arguably a quintessentially American character. Surely if he were alive today he would be making money in and around Africa. Maybe in airlines as well as shipping and rail, and maybe fiberoptics and other means of the “transportation of information” along with moving physical goods and people.
From his biography from The New Netherland Institute:
Between the years 1805 and 1810 Cornelius worked for his father and for the ferry services serving Staten Island. In 1810 when he was sixteen years old he convinced his parents to lend him $100 so he could buy a sailboat to start his own ferry and freight business. They provided him with the money but with the understanding that he would share the profits from the business with his parents. He used the money to start a passenger and freight service between Staten Island and New York City. There was a lot of competition in the ferry service business but Vanderbilt competed on the basis of lower fares, asking as little as 18 cents per trip. He was quite successful and apparently was able to repay the $100 loan to his parents within one year. According to local lore, he was even able to earn a $1000 for his parents during the first year of operations as part of their share in the profits.
The war of 1812 provided new opportunities for growth. The forts around New York City expanded and Vanderbilt obtained a government contract to supply them. Between 1814 and 1818 he expanded with additional schooners for freight and passenger services in Long Island Sound and in the coastal trade from New England to Charleston, South Carolina.
In 1818 he sold all his sailing vessels and became a steamboat captain and partner with Thomas Gibbons who operated a ferry service between New Brunswick, New Jersey and New York City. The Vanderbilt-Gibbons partnership charged only a quarter of the competitive fares. It soon became the dominant ferry service on the busy Philadelphia-New York City route. During the 1818-1829 time period the partnership made a fortune.
In 1829 Vanderbilt decided to go on his own and began passenger and freight service on the New York City-Peekskill Hudson River route. Again he competed on the basis of price and quickly eliminated the competition. He then expanded his service to Albany, New York. He also opened passenger and freight service to the Long Island Sound, Providence and Connecticut areas. By the 1840s Vanderbilt had a fleet of 100 steamships and he had become the biggest employer in the U.S.A. At that point he not only competed on the basis of price but also on the basis of comfort, size, speed, luxury and elegance of the steamship passenger transportation industry.
During the California gold rush in 1849 Vanderbilt began steamship service to San Francisco by way of Nicaraqua. His competitiors used the Panama route which was longer. Vanderbilt was able to cut two days off the length of the trip to San Francisco, and it was 600 miles shorter. This part of his transportation business netted him over one million dollars per year. As a result he became the principal transportation service provider on the East Coast to San Francisco route.
In the 1850s he did two possibly foolish things. In 1853 he decided to take his first vacation ever. He had a steam yacht built and made a triumphant tour of Europe. While on his trip he had left the management of the business to contract managers. They tried to fraudulently take over the business while he was away in Europe. Although they were not successful, his temporary absence from his business proved to be costly, but he quickly recovered. . . .
In the 1860s he became aware that the big growth in the future for the transportation industry was not by way of water but by way of rail. So he became interested in railroad transportation . . .
. . . .
A year after the death of his wife Sophia, Vanderbilt now 73 years old, married a distant cousin named Frances Armstrong Crawford, and known as Frank. She was 34 years his junior. The marriage was probably a good one because it gave him a new outlook on life. It is doubtful if his children approved of it. After all, his new wife was younger than seven of his twelve children. It appears that the marriage to a younger woman gave him an imagined extension to his life.
Although Vanderbilt had not engaged in philanthropy at all until that point in his life, through his new wife’s influence, he perpetuated his name through a gift of one million dollars to Nashville’s Central University. One million dollars may not sound like a lot of money, but in the 1870’s it was. Based on the gross domestic product per capita in 1870 and at the present time, the conversion ratio would amount to about 260. So the one million dollars was essentially equal to $260 million in today’s terms. The University would become, and to this day still is, the prestigious Vanderbilt University in Nashville, Tennessee.