when vanderbilt beat government corruption

From Capitalism: the Unknown Ideal:

When Vanderbilt began to organize several small, obscure railroads into what was to become the New York Central system, he had to obtain a franchise from the City Council to permit his railroad, the New York and Harlem, to enter New York City. The Council was known to be corrupt, and if one wanted a franchise, one had to pay for it, which Vanderbilt did. (Should he be blamed for this, or does the blame rest on the fact that the government held an arbitrary, unanswerable power in the matter and Vanderbilt had no choice?) The stock of his company went up, once it was known that his railroad had permission to enter the city. A little while later, the Council suddenly revoked the franchise— and the Vanderbilt stock began to fall. The aldermen (who had taken Vanderbilt’s money), together with a clique of speculators, were selling the Vanderbilt stock short. Vanderbilt fought them and saved his railroad. His ruthlessness consisted of buying his stock as fast as it was being dumped on the market, and thus preventing its price from crashing down to the level that the short-sellers needed. He risked everything he owned in this battle, but he won. The clique and the aldermen went broke.

And, as if this were not enough, the same trick was repeated again a little later, this time involving the New York State Legislature. Vanderbilt needed an act of the legislature to permit him to consolidate the two railroads which he owned. Again, he had to pay the legislators for a promise to pass the necessary bill. The stock of his company went up, the legislators started selling it short and denied Vanderbilt the promised legislation. He had to go through the same Wall Street battle again, he took on a frightening responsibility, he risked everything he owned plus millions borrowed from friends, but he won and ruined the Albany statesmen. “We busted the whole legislature,” he said, “and some of the honorable members had to go home without paying their board bills.

About christopher fisher

The blog is meant for educational/entertainment purposes. All material can be used and reproduced in any length for any purpose as long as I am cited as the source.
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