Tycoon's War

The North Star was Cornelius Vanderbilt’s private pleasure ship, his statement to the world that he had made it. The cost to build and fit her out, combined with the cost of the four-month cruise to Europe on which he and his family were now embarking, would total $500,000.¹ On this, her maiden voyage, she carried just twenty-three passengers. In addition to Vanderbilt and his wife, Sophia—who had convinced the Commodore to make this trip—those passengers included eleven of the thirteen Van derbilt children and seven sons-in-law. Vanderbilt had even brought along his own physician, and a chaplain, John O. Choules. The minister would later say of the trip, “The Commodore did the swearing and I did the preaching, so we never disagreed.”²

As Vanderbilt prepared to embark on this luxurious excursion, the first vacation he had ever taken in his life, he was asked by Jacob Van Pelt, a friend of fifty years standing, if he had “everything fixed”—meaning, were his investments in good enough shape to allow him to turn his back on business for such an extended period? Vanderbilt had nodded. “Van, I have got eleven millions invested better than any other eleven millions in the United States,” he told his friend. “It is worth twenty-five per cent a year without any risk.”³

To the astonishment of many observers, the Commodore had recently sold his controlling interest in the Atlantic and Pacific Ship Canal Company and the Accessory Transit Company, resigning as director and president of both. Yet no one could deny he had sold those shares exceptionally well, for the two companies had become the highest traded securities on Wall Street. Their value skyrocketed as the Nicaraguan Transit business proved hugely profitable for almost all concerned. Carrying two thousand passengers a month and billions of dollars’ worth of gold as paying freight, it delivered Vanderbilt a personal profit of a million dollars (tens of millions in today’s dollars) in just the first twelve months of operation, despite cutting its through fares to three hundred dollars to take passengers away from competitors that were using the Panama route.⁴

One party not making a large profit from the deal was the Nicaraguan government. It was receiving its annual fee of ten thousand dollars, as provided by the contract with Vanderbilt, but Nicaragua had not seen a penny of the specified 10 percent of profit. That was because Vanderbilt claimed there was no profit. He slyly billed everything possible to the Accessory Transit Company—the cost of Colonel Childs’s canal survey, the cost of the trip Vanderbilt and Joseph White made to England seeking canal financing, even the mortgage payments of ships he had put on the Nicaragua run. In June, the Nicaraguan government had sent two commissioners, Gabriel Lacayo and Rafael Tejada, to the United States to demand payment of the outstanding commissions. The Transit Company had appointed two commissioners of its own to confer with Lacayo and Tejada, but when they met, on the advice of Transit Company general counsel Joseph White, the American representatives claimed that as the company was registered in Nicaragua, there was nothing that U.S.-based officers of the company could do to help the Nicaraguan commissioners. U.S. ambassador to Central America at the time, Ephraim Squier, later described the Transit Company’s dealings with the Nicaraguan government as “an infamous career of deception and fraud.”⁵

Vanderbilt even sold his seven new ocean steamers to the Accessory Transit Company, for $1.4 million in cash and bonds; he no longer owned a single ship on the Nicaragua run. With Vanderbilt’s withdrawal from the business, the Accessory Transit Company set up the Nicaragua Steamship Line to operate its ocean steamers. Transit Company director Charles Morgan was running the business, and Vanderbilt seemed to have lost all interest in Nicaragua. That attitude was attributed by many to the fact that the Canal Company had yet to raise the finance for the Nicaragua canal project. In April 1852, Colonel Childs had delivered his feasibility study, together with an estimate of $33 million to build the necessary canals, locks, and other facilities. British bankers the Baring brothers had not been impressed with Childs’s report—they said his proposed canal was too expensive and too narrow for large vessels. The fees that the company would need to charge ships to make the canal a viable proposition would be too high and would scare off most shipping companies. Since then, other financiers had been equally dubious, and the canal project was very much in limbo.

Yet, Vanderbilt did not entirely sever his links with Nicaragua. He still had a minority shareholding in the Accessory Transit Company and was the largest holder of the company’s bonds. He was still the New York shipping agent for the sale of tickets to and from Nicaragua, and in his absence overseas, his clerk Lambert Wardell would continue to invoice the company for 2.5 percent commission on every ticket to California sold in New York. And then there was the secret arrangement whereby Vanderbilt received 20 percent of the Transit operation’s turnover, an arrangement that he, as company founder, expected to continue.

As the North Star glided by Staten Island in the May moonlight, rockets screamed from her deck and streaked into the night sky. The ship was even equipped with several small cannon, and these boomed a loud blank-cartridge salute. This was all in honor of Vanderbilt’s mother. She lived there on Staten Island, in a little brown house. Staten Island was where Vanderbilt was born and raised, where he went to work at the age of eleven for his father. And it was through his half share in the Staten Island ferry, from Manhattan to the island, that he’d created the foundation of his fortune. He still had a financial interest in the New York and Staten Island Ferry Company, but just a year or so back he sold his ferries and most of his shares to competitor “Live Oak” George Law.

Vanderbilt himself had a large mansion on Staten Island. A three-minute walk from his mother’s house, it was a showplace with a grand portico equipped with tall Corinthian columns. That house stood empty. His wife Sophia would have gladly lived out her days in its placid surrounds, but not the Commodore. When Cornelius built his Manhattan mansion at Washington Place in 1848, Sophia had hysterically refused to move from the island house she loved. So Vanderbilt put her in a private mental asylum for three months until she changed her mind. When Sophia’s daughters warned her that their father was having an affair with a governess, Sophia quickly agreed to move to Washington Place. As much as Cornelius liked Staten Island, it was too far away from the city and too far away from the heartbeat of commerce—which made this European trip all the more surprising to most observers.

The North Star steamed on, past Sandy Hook and out into the Atlantic. In the wheelhouse, Captain Asa Eldridge set a course for Southampton, England. For the passengers relaxing in the palatial saloon below, ahead lay fifteen thousand miles of steaming and sixteen weeks of playing the part of curious rich American tourists in Europe. For Europeans, who had never seen the likes of them before, this American millionaire, his large family, and his fabulous yacht would also be curiosities.

On June 15, just weeks after Cornelius Vanderbilt sailed for England aboard the North Star, William Walker set sail from San Francisco aboard the chartered brig Arrow, heading south for Mexico. Walker had resigned from the San Francisco Herald to set up a law practice in Marysville, California, in partnership with Henry P. Watkins, and the two lawyers had been commissioned by California residents to negotiate with the governor of the Mexican state of Sonora to obtain land at Arispe for an American mining and cattle-raising colony.

Walker and Watkins came ashore at Guaymas on the Gulf of California on July 3. But the town’s prefect, Captain Cayetano Navarro, and the port captain, Antonio Campuzano, were suspicious of the American duo. The Mexican officials sought instructions from the commandante general of Sonora, Manuel Maria Gandara, in Hermosillo, 150 miles to the north, at the same time forbidding the Americans to travel to the interior. Campuzano wrote to his superior: “Your Excellency will perceive that there is undoubtedly an intention to invade this portion of the Mexican territory,” naming Walker as a principal promoter of this feared American invasion.⁶ Commandante General Gandara responded by ordering the detention of Walker and Watkins.

Walker had a reputation for having a silver tongue. “He arrested your attention with the first word he uttered,” said a San Franciscan who knew Walker at this time. “And as he proceeded, you felt convinced that he was no ordinary person. To a few confidential friends he was most enthusiastic upon the subject of his darling project.”⁷ The American consul in Guaymas, Juan A. Robinson, was won over by Walker and had become a convert to that project—an American colony in Sonora—and he argued strenuously with the local officials on behalf of the two Americans and kept them out of jail.

Commandante General Gandara suddenly changed his mind—he invited Walker and his colleague to come overland to see him in Hermosillo. But with Apaches rampaging close to Guaymas and massacring all the men at a nearby ranch, and with no Mexican escort on offer, Walker realized that such an invitation was calculated to lead to their deaths. He and Watkins boarded their vessel on July 16 to return to San Francisco.

While growing up, Walker had read Julius Caesar’s memoirs about his conquest of Gaul. In Sir Walter Scott’s Morte d’Arthur, he had read of the kingdom created by King Arthur and his knights of the round table. Walker would also have grown up with Sam Houston as a hero. Like Walker, Houston had been born and raised in Nashville, then had become a lawyer. He had gone on to serve as a U.S. congressman representing Tennessee and had also been governor of Tennessee. In 1833, Houston had settled in the Mexican state of Texas, and two years later, he became general of the army of Texas settlers that defeated Mexico’s president, General Santa Anna, and created the new Republic of Texas. In 1836, Houston had become the first president of the Republic of Texas. If General Sam Houston could carve a new nation out of Mexican territory, so, William Walker believed, could he.

There was much to tell. After landing at Southampton, the party had visited London, where Vanderbilt, who seemed not to have given up on the Nicaragua canal idea after all, inspected the new Thames Tunnel, a similarly audacious civil engineering project. The Vanderbilts attended a reception held by the Lord Mayor of London, and while British nobility ignored them, they were made welcome by the American ambassador. They made excursions to Windsor, Bristol, Bath, and elsewhere. The Commodore, a horse fancier, took the gentlemen to the Ascot races, and the entire party went to Covent Garden to see an opera, with Queen Victoria and her husband, Prince Albert, sitting in the royal box opposite. After the Lord Mayor of Southampton hosted a civic reception for the Vanderbilts, the Commodore reciprocated by taking five hundred British guests on a sail around the Isle of Wight aboard the much admired North Star—“This yacht is a monster steamer,” the London Daily News had gushed on June 4.

And then the Commodore’s floating palace had sailed on, first to Le Havre, from where the party visited Paris, and then to the Baltic, with stops at Copenhagen and then Petershof, from where the Vanderbilts visited St. Petersburg. The czar’s second son, Grand Duke Constantine, paid the North Star a visit and asked permission for his naval architects to copy her design. Vanderbilt, who had designed the ship himself, was delighted to agree. After that, the North Star headed for the Mediterranean and an exotic list of stopovers—Gibraltar, Malaga, Florence, Pisa, Naples, Malta, Constantinople, Tangiers. And then they headed home across the Atlantic, via the island of Madeira.

Once the North Star docked on the North River, Cornelius and Sophia returned to the plain four-story brick Vanderbilt mansion at Manhattan’s 10 Washington Place, a stone’s throw from Washington Square and Broadway. And it was the next day, at his West Fourth Street office behind 10 Washington Place, that Vanderbilt learned from his clerk Wardell that, just ten days after he had begun his transatlantic jaunt, the directors of the Accessory Transit Company had shafted him.

The assault on the Commodore had been led by Transit Company director Charles Morgan. A fifty-eight-year-old, self-educated native of Connecticut and the owner of the Crescent City Shipping Line operating out of New Orleans, Morgan had, like Vanderbilt, made a fortune from the shipping business. By the time he died in 1885, Morgan had owned or co-owned 117 steamships during his career, starting with a little steam packet in 1833. He also operated the Morgan Iron Works on the New York City waterfront, manufacturing many of the steam engines and boilers and much of the machinery that drove his own steamships and those of numerous other operators, including Vanderbilt.

Morgan’s chief collaborator in the conspiracy against Vanderbilt was fellow Transit Company director Cornelius Kingsland Garrison. Born near West Point, New York, Garrison, now forty-four, had started out as a cabin boy on sloops working the Hudson River. A boat and bridge builder in Buffalo and in Canada for a time, Garrison had gone on to make a pile of money building and running Mississippi River steamboats. Once the California gold rush began, Garrison had taken his money to Panama and set up a flourishing bank there with partner Ralph Fretz. They were soon joined in the business by a young friend from their Mississippi River days, twenty-eight-year-old William C. Ralston, who had been engaged to Louisa Thorne, a granddaughter of Cornelius Vanderbilt. To Ralston’s everlasting sorrow, his fiancée had died shortly before they were to be married.

Earlier in the year, Cornelius Garrison had relocated to San Francisco, where, with Vanderbilt’s approval, he had been appointed the Transit Company’s shipping agent. Garrison earned a whopping sixty thousand dollars a year from that contract, but Vanderbilt hadn’t complained—the efficient Garrison reorganized the West Coast operation with very profitable results. The line’s Pacific run had previously been far less well managed than Vanderbilt’s East Coast operation, with complaints about overcrowding, careless crew, poor food, and timetables that were ignored. Garrison very quickly changed that. The San Francisco locals, too, had been impressed by the garrulous Garrison, electing him mayor of San Francisco in November, after he had spent just nine months in the city.

During Vanderbilt’s European absence, Morgan and Garrison collaborated to manipulate Transit Company stock in their favor. And, on May 30, they had held a board meeting at which Morgan was elected to the vacant company presidency and was appointed the company’s New York agent, replacing Vanderbilt in that role. The board had also voted to cease Vanderbilt’s 20 percent skim of company revenue. Vanderbilt’s clerk told him that the Transit Company’s office at 5 Bowling Green had refused to pay the accounts that he had sent for the Commodore’s commissions. Even Vanderbilt’s attorney and business partner Joseph L. White, who sold his stock and resigned from the board at the same time that Vanderbilt had, not only bought new company stock on the cheap in Vanderbilt’s absence but accepted a Transit Company directorship from Morgan and Garrison.

Vanderbilt’s cash flow from the Transit Company was choked off. The New York Herald, when it learned what Morgan and Garrison were doing, had declared, “Trouble is anticipated upon the return of Commodore Vanderbilt.” ⁹ How right the paper was. Vanderbilt was livid. He immediately dictated a short letter to Wardell, addressed to both Morgan and Garrison: “Gentlemen, you have undertaken to cheat me. I won’t sue you, for the law is too slow. I’ll ruin you. Yours truly, Cornelius Vanderbilt.”¹⁰ This was a declaration of war. The press would call what followed “The War of the Commodores.”¹¹

Offshore at La Paz, Mexico, Juan Robinson’s schooner Caroline swung at anchor with a Mexican flag flying. It was November 4, 1853, six weeks since Cornelius Vanderbilt had arrived back in New York. Longboats from the schooner ground into the beach, and forty-four well-armed Americans jumped out and splashed ashore. Most of these Americans were in their twenties; some, in their teens. They were all, in the words of William Walker, “full of military fire and thirsting for military reputation.”¹²

They made for the residence of Rafael Espinosa, governor of the state of Baja California. Weapons at the ready, the invaders trotted along a dusty street of low adobe buildings. In the shade of a portico on the town’s plaza, three men were waiting—William Walker, his deputy, and the master of the Caroline. Young “Colonel” Walker, as he now styled himself, led the way into the governor’s residence. Walker had originally been heading for Guaymas, on the other side of the Gulf of California, but at the last moment had decided to land at La Paz. For eighteen months during the Mexican War, La Paz had been occupied by a garrison of U.S. Army troops who had beaten off sustained attacks from the Mexican Army. Ironically, La Paz means “the peace.” Walker and his men were about to shatter that peace.

The Americans placed Espinosa under arrest. The few sleepy Mexican police in the town were quickly disarmed. The Mexican flag was hauled down, and in its place, another, of Walker’s design, was run up. Comprising three red horizontal bars on a white field and two stars representing the states of Baja California and Sonora, this was the flag of the new Republic of Lower California—Walker’s new republic. Walker’s men fired a salute. The boom echoed around the town, setting off a cacophony of barking dogs. A proclamation was issued: “The Republic of Lower California is hereby declared Free, Sovereign and Independent, and all allegiance to the Republic of Mexico is forever renounced.” It was signed “William Walker, President.”¹³

Walker then prepared to wait for his law partner Watkins to arrive from San Francisco with 200 reinforcements. Several years before, 260 Frenchmen led by Count Gaston Raoulx de Raousset-Boulbon had attempted the same sort of colonizing venture in Sonora. “A young man of large ideas” and a “gentleman adventurer,” Boulbon had been a newspaper publisher and novelist in Paris before he came to North America.¹⁴ In Mexico, he had proved a failure as both a soldier and a colonizer. His expedition had been routed by the Mexican Army. The count had been shot by firing squad, and his followers ejected from the country. William Walker, who had met Boulbon in San Francisco in 1852, had no intention of emulating the Frenchman’s fate. Full of self-belief, Walker was determined to do things differently.

By January 1854, Commodore Vanderbilt’s assault on Morgan, Garrison, and the other rogue directors of the Accessory Transit Company had gathered pace. A new steamship operator, the combatively named Independent Opposition Line, was advertising in the New York press. For $150 in a cabin and $75 in steerage, Commodore Vanderbilt’s new line would take you to California via Panama. On the run from New York to Panama, the Independent Line was using the North Star. Vanderbilt had stripped his beautiful private yacht and fitted her out to carry six hundred passengers. He would never again trifle with such a fabulous toy and would never again take an extended vacation.

To augment the North Star, Vanderbilt had purchased the year-old SS Cortes from the New York & San Francisco Steamship Line. And he brought in as his partner in the Independent Line Edward Mills, who was “justly entitled to be described as the pioneer of ocean steam navigation,” according to a leading San Francisco newspaper.¹⁵ Mills, who had years before established a transatlantic steamship line from New York to Bremen, Germany, put his ocean steamers Uncle Sam and Yankee Blade on the Independent Line’s route from Panama to San Francisco. Setting up the Independent Line’s New York ticket office at 9 Battery Place, not far from the Transit Company’s ticket office, Vanderbilt installed son-in-law James Cross as the Line’s New York agent.

The Independent Line’s four ships were immediately filled to capacity on every trip. Vanderbilt had halved the fare offered by all his competitors, including the Transit Company. He was also offering travelers a chance to sail on his world-famous former private yacht, plus the fastest trip to California available. The North Star turned out to be the greyhound of the seas, enabling the Independent Line to quickly boast a new record for the trip from New York to San Francisco—under twenty-three days, despite using the longer route via Panama. By the summer, this would be lowered to twenty-one days, fifteen hours. The Commodore, determined to put the Transit Company out of business and ruin Morgan and Garrison, announced plans to construct more steamers for the Independent Line fleet.

In January, too, Vanderbilt offered a block of five thousand Accessory Transit Company shares for sale at twenty-five dollars each. The stock had recently been selling for above thirty. The Vanderbilt offering was snapped up—the buyer was reputed to be Charles Morgan.¹⁶ To observers, the Commodore was clearly dumping his Transit Company shares. With the Independent Line increasingly biting into the Transit Company’s business, and its profits, the stock market price of the Accessory Transit Company, already on the slide since Vanderbilt ceased to be president, continued to decline.

After receiving two hundred reinforcements and leaving twenty men to garrison Ensenada, he had marched into Sonora to annex it to his republic, driving a herd of cattle ahead of him. Trying to cross the Colorado River on rafts, Walker lost his cattle, the column’s food supply. Many of his reinforcements subsequently lost heart and deserted, heading north for Fort Yuma, in U.S. territory. With his original men and forty from the second party, Walker had turned back for Ensenada. But when he reached the town, it was to find that his garrison had been wiped out by Mexican irregulars led by Colonel Guardalupe Melendres, a wealthy local landowner. Realizing the game was up, and fighting off the Mexicans and Apaches along the way, Walker had led his bedraggled survivors toward the U.S. border south of San Diego. Near the village of Tia Juana, three miles from the border, Walker had found Colonel Melendres and hundreds of Mexican militia in his path.

Melendres had sent a message to the U.S. military commander at San Diego, then just a rundown mission with a U.S. Army camp garrisoned by eighty troops, telling the commander that he, Melendres, was chasing Yankee bandits toward the border. Melendres had asked the U.S. Army not to intervene, and the American commander had assured Melendres he would not cross the border. When Walker’s motley band appeared, Melendres sent them an offer of free passage to the border—if Walker was handed over. But the exhausted men who for a solid year had “fought and starved for Walker,” had refused to give up their leader. They had fought their way through the Mexicans, making a dash for the United States.¹⁷

At the border, a stone monument marked the invisible line that separated Mexico and the United States. A party of U.S. Army infantrymen from San Diego waited in wagons on the American side of that monument. The soldiers had been told that Colonel Walker and the last of his “filibusters” were approaching. Filibusters—it was a term that Walker abhorred. Based on the Dutch word vijbuiter, meaning “freebooter,” it was applied to Frenchmen, Spaniards, Cubans, and Americans who had tried to colonize parts of Mexico and liberate Cuba with force of arms in recent times. Walker, an idealist who didn’t see himself in the filibuster mold, led thirty-five exhausted, starving survivors to the border marker and crossed back into the United States.

These men were sallow-faced, with tattered clothes and bushy beards. Most sported wounds. Charles Gilman, one of the oldest men in the party—he had a teenage son back in San Francisco—had to be carried back into the United States. Gilman had lost a leg, which had been amputated out in the desert by Walker after Gilman took a bone-shattering Mexican bullet. According to Walker, Gilman suffered “long and cruelly.”¹⁸ As Walker himself limped onto U.S. soil with one foot bandaged, Major Justes McKinstry, district quartermaster from the post at San Diego, who had orders to apprehend these men for breaching the U.S. Neutrality Act of 1818 by occupying foreign territory using force of arms, now called on them to surrender.

Just thirteen days before, the governments of Mexico and the United States had ratified the Gadsden Purchase agreement, via which the United States would pay Mexico $10 million to acquire thirty thousand square miles of Sonora to add to what would eventually become the American states of Arizona and New Mexico. The agreement had originally been signed back on December 30, when William Walker and his little army were in control of Baja California and threatening Sonora, and many people would credit Walker’s presence there as the reason the Mexicans proved so eager to sign the Gadsden Purchase. For, as a codicil to that agreement, the U.S. government had undertaken to strictly police its Neutrality Act and actively prevent American citizens like Walker from entering and occupying Mexican territory.

But instead of placing Walker and his men in custody, McKinstry allowed them to give their parole and proceed to San Francisco to await legal proceedings against them under the Neutrality Act. That same day, the party continued north, with their arms and without an escort.

After Walker and his companions arrived, sick and sorry, back in San Francisco in mid-May, they learned that a civil war had broken out in Nicaragua between the conservative Legitimista party, which was in power, and the liberal Democratico party, whose exiled leaders landed from Honduras on May 5, just three days prior to Walker’s surrender at the Mexican border, with a small armed force. The Democraticos had since captured several key towns in northern Nicaragua.

Soon after returning to San Francisco, Walker was employed by young newspaper publisher and merchant Byron Cole to edit his Commercial-Advisor. Far from soured by the outcome of the Sonoran enterprise, in hindsight Walker saw it as “an opportunity of tremendous experience” and a valuable learning exercise.¹⁹ Walker and his employer, Cole, a restless New Englander not much older than Walker, held similar expansionist views about extending American influence south of the border, and they took a keen interest in news coming out of war-torn Nicaragua over the next few months, agreeing that perhaps it was not to Mexico, but farther south, to Central America, that they should be directing their thoughts for the future.

Nicaragua particularly appealed. At fifty-seven thousand square miles, it was the largest Central American nation. It was a country rich in natural resources, yet its population of just 260,000 had not exploited the country’s potential—less Nicaraguan land was being farmed now than thirty-five years back, when the Spanish were still in charge. Perhaps, Walker and Cole concluded, this Nicaraguan civil war might open the door to strong American leadership in the region.

The U.S. Navy’s sloop-of-war Cyane sat off Greytown, on Nicaragua’s Caribbean coast, with her guns aimed at the town. It was July 13, 1854, and at 9:00 A.M., the warship’s captain, Commander George H. Hollins, gave the order to commence firing. Her cannon boomed, and cannonballs whirred across the bay. A day earlier, Hollins had given the 440 residents of Greytown twenty-four hours to evacuate. Now the Cyane lobbed 177 projectiles into the deserted town, which consisted of just two streets of wooden buildings thatched with palm leaves. When the bombardment ended, Greytown had been leveled

This astonishing act was in response to an assault, in Greytown, on America’s latest chargé d’affaires to Central America, Solon Borland. After a collision on the San Juan River, a black boatman had been shot dead by the American captain of a Transit Company riverboat. The Greytown authorities had attempted to arrest the steamboat skipper, who had taken refuge at the house of the U.S. commercial agent in Greytown. When Ambassador Borland arrived in the town on May 16 to escort the riverboat captain to safety, there was a riot and Borland was hit on the head with a bottle. When town authorities failed to arrest anyone for this assault, the U.S. government had dispatched the Cyane to Greytown, with Commander Hollins under orders to take appropriate action.

Some would suggest that the Greytown unrest had been sparked by anti-U. S. feeling going back to an April 1852 agreement between the U.S. secretary of state, Daniel Webster, and the new British ambassador to the United States, John M. Crampton. The agreement had guaranteed the rights of the Canal Company in Nicaragua and provided for British withdrawal from Greytown, after which the town would be returned to the control of the Nicaraguan government. The residents of Greytown—mostly British and American—much preferred an efficient British administration to sloppy Nicaraguan management. But, by the time of Borland’s 1854 visit to Greytown, the Webster-Crampton Agreement was more than two years old, and still Britain had shown no inclination to withdraw from the Mosquito Coast.

The Greytown affair worked in Cornelius Vanderbilt’s favor. For the civil war now raging in Nicaragua had not prevented the Accessory Transit Company from continuing to convey thousands of passengers across the country, as both sides in the conflict recognized the neutrality of Transit Company travelers and guaranteed their safety. But once the news reached New York that a U.S. warship had flattened the town at the Caribbean terminus to the Nicaraguan Transit, the fear of being caught up in military action caused many travelers to bypass Nicaragua and use ships on the Panama route operated by Vanderbilt, Law, and others. The Accessory Transit Company’s business went into decline, and as a result, its share price slumped even further. It was almost as if Vanderbilt had engineered the whole affair.

While Vanderbilt had little time for the law, to beat Morgan and Garrison he even took them to court, suing the Accessory Transit Company for his outstanding commissions. But when the case came before a judge and Transit Company legal counsel Joseph L. White reminded the court that the company was registered in Nicaragua, the judge decreed that Vanderbilt would have to contest his claims there. The Commodore then sought to place an attachment on the SS Prometheus, which was now Accessory Transit Company property, with the object of selling it to obtain the money the company owed him. If the court went against him and ruled the ship to be Nicaraguan, he said, then the Prometheus had no legal right to operate in U.S. waters. Attorney White responded that while the company was registered in Nicaragua, its ships had been registered in the United States, in the names of the officers of the company, so, technically, they were American. Again, the court ruled against Vanderbilt. The Commodore went away empty-handed and permanently soured toward the law as a remedy. A decade later, he would growl, “By God, I think I know what the law is. I have had enough of it.”²¹

But Vanderbilt’s other measures were biting—by the fall of 1854, the price of Transit Company shares had dropped to twenty-one dollars. Morgan and Garrison were then approached by Marshall Roberts, astute operator of George Law’s U.S. Mail Line. Like the Transit Company, Roberts’s line and William Aspinwall’s Pacific Mail Line had been suffering from the stiff competition from Vanderbilt’s Independent Line. Roberts proposed that, to get the Commodore off all their backs, the Transit Company pay Vanderbilt’s outstanding financial claims for commissions and buy the Uncle Sam and Yankee Blade from Edward Mills. Meanwhile, in the same deal, Aspinwall’s Pacific Mail Line would buy the North Star and the Cortes from Vanderbilt. It would be costly, but the existing operators would end up with some fine ships, and most importantly, Vanderbilt and Mills’s Independent Line would cease to be.

The proposal was put to Vanderbilt, and to the surprise of many, he accepted it. When the deal was finalized in January 1855, the New York Tribune reported that the settlement had been “amicably arranged.”²² This deal signaled, so Morgan and Garrison believed, that Vanderbilt had given up on his plan to ruin them. But the Commodore had done no such thing. Having wrung his outstanding commissions from his enemies—money few observers thought he had any hope of recovering—Vanderbilt would embark on a fresh campaign to ruin the pair, cashed up with their money.

For two months, nothing was heard from Vanderbilt. Meanwhile, the hard-pressed Accessory Transit Company failed to deliver a dividend in January, due to the cost of the settlement with Vanderbilt and Mills. But with the Independent Line no longer competing for its passengers, the Transit Company issued an optimistic forecast for the coming year’s earnings. Then, in March, Vanderbilt’s son-in-law Daniel Allen, former Transit Company vice president, launched a legal action against the current directors, accusing them of incompetent management, misappropriation of funds, and the illegal issuing of forty thousand new shares in the company in 1853 to finance the purchase of Vanderbilt’s seven ships. Allen succeeded in convincing Judge John Duer, chief judge of the New York Superior Court, to issue against Morgan and Garrison an injunction that prevented them from issuing more stock or entering into new contracts with the company.

The market rated Morgan and Garrison good managers, with many observers expressing the belief that the Transit line had actually been better run during their reign than during Vanderbilt’s. The pair had also added New Orleans to the East Coast points of departure, with a monthly service from New Orleans to Greytown, and this had helped increase passenger numbers. Shareholders had been particularly impressed with Garrison’s management of the West Coast operation, and they were worried that, because of the injunction, Garrison’s contract with the company would not be renewed. The uncertainty caused shareholders to dump Transit Company stock—its value plummeted to fifteen dollars.

With the share price down, Vanderbilt began to acquire Accessory Transit Company stock, a parcel here, a parcel there, frequently using friends as the buyers. Meanwhile, with the Commodore designing new ocean steamers to take on the Cunard Line and the Collins Line on the transatlantic run to Europe, Morgan and Garrison were totally blindsided. Month by month, Vanderbilt discreetly rebuilt his stockholding in the company he’d tried to destroy, working toward the day when he could again boast a controlling interest and could kick out Charles Morgan and Cornelius Garrison.