10 Reasons the Vanderbilts Lost the World’s Greatest Fortune

10 Reasons the Vanderbilts Lost the World’s Greatest Fortune

Larry Holzwarth - August 3, 2018

Cornelius Vanderbilt created a fortune from ferries, steamship lines, railroads, and stock manipulations. He was the first American to give away $1 million, which he donated for the purpose of funding Vanderbilt University. At the time of his death, if his fortune is adjusted for inflation, he was the second richest person in American history. He left 95% of his vast estate to his son William and William’s four sons.

He considered his several other children incapable of managing the vast fortune which he had accrued. The man known as the Commodore lived frugally, a virtue he suspected absent from the character of most of his children. History proved him right. Although his son William nearly doubled the fortune left to him by his father, by 1973, when the Vanderbilts held a family reunion at their namesake university, not one of the 120 attendees was a millionaire.

10 Reasons the Vanderbilts Lost the World’s Greatest Fortune
Cornelius Vanderbilt created one of the world’s greatest fortunes from nothing during his lifetime. Wikimedia

Here are ten reasons one of the world’s wealthiest families simply ran out of money.

10 Reasons the Vanderbilts Lost the World’s Greatest Fortune
Rear view of The Breakers, which faces the sea. Wikimedia

The Breakers

Cornelius Vanderbilt II was the eldest son of William Vanderbilt, and was said to be the Commodore’s favorite grandson. Cornelius developed the reputation of being a scrupulous and hard-working banker, traits which were heartily approved by his grandfather, who left him $5 million in his will. When his father, William Vanderbilt, died he inherited another $70 million. He did little to increase the family fortune, his own estate was about $73 million.

Part of the reason he did not advance the already vast Vanderbilt wealth was his philanthropy. Another part was his investments in real estate. Cornelius II built the staggering Newport mansion, which he and his family called a cottage, named The Breakers. Built on a cliff and with a footprint of about one acre, on a fourteen-acre lot, the house contains 70 rooms on five floors and was built in the style of the Italian Renaissance.

There was a carriage house and stables with a dozen stable boys under a head groomsmen. Although the Vanderbilt family was in attendance at the cottage only a few weeks a year, during the summer social season when Newport was a fashionable resort, the stable and the household servants were at the house full time, year around. The Breakers is but one of the massive houses along the cliffs at Newport, but it is the largest and grandest.

Cornelius II also built a townhouse in Manhattan, on Fifth Avenue, which was his regular residence. It was the largest private residence ever built in Manhattan. Not including the basement the house had six floors. The entrance hall was a full five stories high. The house had 37 servants maintaining the home and the grounds, and others serving as personal assistants to Mr. and Mrs. Vanderbilt. Their seven children had their personal servants as well.

When Cornelius II died in 1899, of complications from a stroke which he suffered three years earlier, he left his widow, Alice Vanderbilt, a trust fund of $250,000 to operate and maintain the two homes. The sum was inadequate, and the expenses of the two houses ate deeply into the Vanderbilt fortune. Alice sold the Fifth Avenue home in 1926. It was later demolished. The Breakers continued to erode the Vanderbilt wealth until 1948 when it was leased to the Newport Preservation Society.

10 Reasons the Vanderbilts Lost the World’s Greatest Fortune
The Chinese Tea House on the grounds of the Marble House in Newport, Rhode Island. Library of Congress

Marble House

William Kissam Vanderbilt was another son of William Vanderbilt who received $5 million from his grandfather, and later a $55 million dollar bequest from his father. Not to be outdone by his younger brother Cornelius II, William built Marble House on Newport’s cliffs, at the cost of $11 million, which included about $7 million worth of marble, more than 500,000 cubic feet of the stone. Marble House was a birthday present for his wife, Alva Vanderbilt.

Marble House was a summer residence, during the rest of the year William had other residences from which to choose. His Manhattan home on Fifth Avenue was known as Petit Chateau, built in the French Renaissance style, and featured a sixty-foot Grand Hall leading from the main entry into the home, of stone which was detailed in carvings and bas relief. A secretary desk once owned by Marie Antoinette was a prominently featured furnishing.

In March of 1883, Alva held a housewarming party which was attended by over 1,000 invited guests. The ball cost a reported $3 million (almost $70 million in 2018). The purpose of Alva’s ball was to force her acceptance in New York society, the matrons of which considered the Vanderbilt wealth to be new money and thus its possessors unworthy of socializing with them. The move was a success, Caroline Astor welcomed Alva into the ranks of the elite.

William also built a country estate on Long Island known as Idle Hour, which was rebuilt of stone after the original frame structure burnt down. After his divorce from Alva (he was unfaithful and it cost him a $10 million settlement) he built a chateau in France, and three thoroughbred horse racing tracks nearby in 1907. Vanderbilt’s horses were highly successful in France, and he became a noted breeder and racing magnate.

The Fifth Avenue mansion was demolished in 1926, to make room for commercial real estate development in Manhattan. Marble House, which belonged to Alva, became a host for feminist rallies held by Alva in the early twentieth century, and Alva added a Chinese Tea House in which to address leaders of the women’s suffrage and temperance movements. In 1963 it was acquired by the Newport County Preservation Society.

10 Reasons the Vanderbilts Lost the World’s Greatest Fortune
Vanderbilt mansions line Fifth Avenue in New York, Easter, 1900. Wikimedia

Buying Acceptance

When Alva Vanderbilt succeeded in being accepted into New York society after her costly ball in the Fifth Avenue mansion it triggered a spending spree among the other Vanderbilts. Alva’s acceptance did not immediately extend to the others of the large Vanderbilt family, and they began to build mansions of their own. One of the first to do so was her own father-in-law, William Vanderbilt, to whom the bulk of the Commodore’s wealth had been bequeathed.

When William Vanderbilt began building his Fifth Avenue mansion, one of several which would be erected by various Vanderbilts, he was the wealthiest person in the world, and according to his own words, frustrated by his wealth. Vanderbilt lamented that his wealth brought him no happiness and instead led to much worry, distrust of friends, bickering within the family, and ultimately to his own poor health.

William also resented the burden thrust upon him by being the recipient of the majority of the Vanderbilt fortune, and after considering the strain imposed on him by his father’s bequest, decided not to follow the Commodore’s model, and divided the Vanderbilt wealth equally among his heirs in his own estate. Following his lead, which was following Alva’s, the Vanderbilt’s went on a frenzy of building expensive mansions and summer homes.

The summer homes remained empty for most of the year but required year round staffing for maintenance of the buildings and grounds, stables and horses. The staffing increased when the various Vanderbilts were in residence. The costs were enormous, and the various members of the family had no problem with spending the money earned by the Commodore and his son William. The core of the fortune shrunk, reducing its earning power.

It wasn’t only houses on which the growing family spent its money. Yachts, including steam yachts, race horses, racing cars, luxury cars, expensive furnishings, and dozens of other luxuries enjoyed by the Commodore’s descendants and their spouses quickly demolished the fortune. Although but one of the Fifth Avenue mansions avoided the wrecking ball (most demolished by 1930) many of the country estates and cottages survived.

10 Reasons the Vanderbilts Lost the World’s Greatest Fortune
Coach house at the Vanderbilt Mansion in Hyde Park. Library of Congress

Frederick William Vanderbilt

Frederick Vanderbilt was the brother of Cornelius II and William K. Vanderbilt, as well as of George Washington Vanderbilt, and five sisters. Upon the death of the Commodore, Frederick received $2 million dollars from his estate. A Yale graduate, Frederick worked in several departments of the family-run New York Central Railroad, eventually becoming its director, as well as serving as the director of more than twenty railroads.

Frederick had several residences in Manhattan, including on Fifth Avenue for a time and later at 10 East 40th Street, a building which he owned and which was and is considered an art-deco masterpiece. Evidently bored with railroads, he spent his portion of the Vanderbilt fortune, which increased upon the death of his father, by traveling, building several mansions, including a Newport summer home which he seldom used, and by yachting.

After completing the seemingly requisite Newport Mansion, (Rough Point, just off the Cliff Walk), Frederick built Pine Tree Point, an Adirondack camp on Upper Saint Regis Lake. Vanderbilt hired Japanese workers after the Buffalo Pan-American Exposition to build Japanese-style structures, and remodel the existing buildings in Japanese style. Servants at the camp dressed in Japanese costume.

Vanderbilt also purchased Hyde Park, a 600-acre estate on the Hudson River which had once been owned by John Jacob Astor. With his wife Louise, Frederick built a 54 room mansion in the beaux-arts style, with steel and concrete structural support, its own hydro-electric plant powered by a tributary of the Hudson (which provided electrification well before the rest of the area), and furnished it lavishly, including antiques purchased for them by Stanford White.

Frederick maintained elaborate gardens on the estate, including a rose garden which held more than 2,000 rose bushes. One of his neighbors, Franklin Delano Roosevelt, used portions of the estate to house Secret Service agents when he visited his own Hyde Park estate years later as President of the United States. Frederick’s estate was worth just less than $80 million when he died, and after several charitable donations most of went to a niece, Margaret Van Alen.

10 Reasons the Vanderbilts Lost the World’s Greatest Fortune
George Washington Vanderbilt II envisioned a baronial existence at the Biltmore Estate. Wikimedia

The Biltmore Estate

Besides building a pair of Fifth Avenue mansions known as the Marble Twins, preceded by a townhouse on West 53rd, and a summer cottage in Bar Harbor, George Washington Vanderbilt II built Biltmore House, which remains the largest house ever built in the United States. As the youngest son of William Vanderbilt, he received a lesser amount of the Vanderbilt fortune, and also had little to do in the family businesses which were run by his elder brothers.

George Washington Vanderbilt II (sometimes referred to as the III) purchased 125,000 acres of North Carolina woodlands, intending to build himself a French-style chateau modeled on those of the Loire Valley in France. Essentially Vanderbilt had nothing to do and intended to spend his days as a country gentlemen, pursuing his hobbies of horticulture, agriculture, art collecting, and reading. He hired a forestry expert to manage the unimproved portion of the tract.

While the house was under construction (1889-1896) Vanderbilt traveled extensively to purchase furnishings, including rare and expensive Flemish tapestries, original etchings, paintings and sculptures, carpets, rugs and linens, fountains and mirrors, and antique furniture. As he spent his portion of the Vanderbilt fortune more than 1,000 workers labored on the house, gardens, and outbuildings. A model village was included on the estate, housing most of the workers.

Vanderbilt opened the estate on Christmas Eve 1895, while work was still ongoing. He established the custom of being generous to the children of his employees, in true lord of the manor fashion, bestowing gifts at Christmas and birthdays, and holding celebrations for their benefit. Vanderbilt had hoped that Biltmore would be able to sustain itself, but the sheer size of the house and the expense of maintaining it made that impossible.

When Vanderbilt died suddenly in 1914 the estate was heavily in debt and the sale of 87,000 acres, creating the Pisgah National Forest, was made to the United States Forest Service. Land continued to be sold to defray expenses, and the estate shrank steadily. Through his daughter, the estate passed to the Cecil family, British aristocrats. Biltmore remained a residence, with parts of the house open as a museum, until 1956. It has operated as a museum ever since.

10 Reasons the Vanderbilts Lost the World’s Greatest Fortune
Socialite Grace Wilson Vanderbilt spent Vanderbilt money with enthusiasm and aplomb. Wikimedia

Cornelius Vanderbilt III

The son of Cornelius Vanderbilt II, Neily, as he was called by friends and family, earned the ire of his parents by eloping with Grace Wilson, a New York socialite whose two sisters had married into London society. Neily’s mother made clear that she regarded Grace as a social climber of no account, and his father cut Neily’s inheritance to just $1.5 million. Neily’s brother later gave him another $6 million, which came in handy, because Grace’s spending was profligate.

Grace and Neily remained married until his death, and Grace created a niche for herself in New York and Newport society, throwing lavish dinner parties in the mansion at 640 Fifth Avenue which Neily had also inherited. Grace promptly had the entire interior gutted and rebuilt, at a cost of $500,000, which Neily could ill afford. Though they had two children together, a son named Cornelius Vanderbilt IV, and a daughter named Grace Vanderbilt the following year, they paid them little attention.

Neily’s time was taken up by yachting and later military service in World War One; Grace’s time by entertaining and socializing, draining the millions bestowed upon them. By 1908 she had assumed the role of the Queen of New York society, based upon the spending of Vanderbilt money. She hosted two types of dinner parties, large gatherings of over 100 people, and smaller, intimate dinners of fifty or so guests, an invitation to which was a mark of social success.

Eventually, Neily’s mother grew to grudgingly accept her daughter-in-law to the point where she began to provide some financial assistance, largely to prevent the Vanderbilt name the shame of indebtedness. The gesture only encouraged Grace to spend yet more, demanding her husband purchase for her a steam yacht. Neily did so, after which he entered the army, mostly to escape his wife and family. He also began drinking heavily. He eventually became a general.

Neily disowned his son when he learned that the young man wanted to enter into a journalism career. He retreated to his other yacht, which was paid for by his mother, and avoided both his wife and the spotlight. In 1940 he sold the New York mansion, with the proviso that he and his wife be allowed to remain in residence until his death. Neily left behind the proceeds from the sale of the mansion following his death, about $4 million.

10 Reasons the Vanderbilts Lost the World’s Greatest Fortune
New York’s Grand Central Station in 1893, when the railroads were at their peak. British Library

The Family’s Declining Business Fortunes

As the various Vanderbilts went about their business, spending the vast fortune accumulated by the Commodore and his eldest son, few of them paid close attention to the sources of that fortune. The New York Central began to decline in value in the 1920s, and the transportation business changed from one of all rail across country to automobiles, buses, and beginning in the 1930s, commercial aviation. Trucks began to cut into freight rates.

The sheer number of Vanderbilts who financed their spending through the existing fortune rather than through earning violated a cardinal rule of maintaining wealth. The practice of spending the interest and dividends earned from investments, rather than the capital itself, is a well-established premise that the family simply ignored, treating their shares of the fortune as if it were a bottomless well until the well inevitably ran dry.

The New York Central stock began to drop, and as it did it took the Vanderbilt fortune down with it, eventually, they lost control of the company to the Chesapeake and Ohio Railroad. The decline in Vanderbilt income coincided with the sales of many of the properties, including Vanderbilt Row, the strip along New York’s Fifth Avenue which once held the Manhattan mansions of several members of the clan.

Like his brother Neily, Reginald Claypoole Vanderbilt contributed nothing to the family coffers. At 21 Reginald came into his inheritance, that same night losing more than $70,000 dollars gambling. A devoted drinker, Reginald lived the life of a rake. He married and had a daughter, abandoned wife and child, remarried after he was divorced, had another daughter, and spent his days’ gambling, drinking, and spending his fortune.

When he died he left behind nothing besides the trust fund established for his daughters during the divorce proceedings. Neily and Reginald were the first of the Vanderbilts to squander their entire inheritance, though in fairness Neily had quite a bit of help spending the money from his wife Grace. The Vanderbilt name by the 1920s still carried the cachet of wealth, but the real wealth was being rapidly depleted.

10 Reasons the Vanderbilts Lost the World’s Greatest Fortune
Alfred Gwynne Vanderbilt died in the sinking of RMS Lusitania in 1915. Wikimedia

Alfred Gwynne Vanderbilt

Alfred was the eldest son of Cornelius Vanderbilt II, and at the death of his father, he received the bulk of the estate, with his brothers Neily and Reginald receiving substantially smaller amounts. Cornelius believed his son to be much better prepared to handle the fortune, and was persuaded to give less to Neily by his wife, who believed that Grace Wilson had married Neily to get her hands on Vanderbilt money. Another brother, William, had died years earlier.

Alfred was educated at Yale and was on a world tour when he learned of his father’s death while in Japan. In his new status as head of his branch of the extended Vanderbilt family, Alfred began working at the New York Central, then the main source of the family’s income. He began, despite his social and financial status, as a clerk in order to learn all aspects of the business. It was Alfred who built the Vanderbilt Hotel at the corner of 34th and Park Avenue, where he chose to reside when in the city.

Alfred married Ellen French in 1901, only to be sued by her for divorce in 1908, under allegations of adultery on his part. Following the divorce, Alfred sought solace in London, and remarried there in 1911, to the heiress of the Bromo-Seltzer fortune, Margaret Emerson. In England, Vanderbilt enjoyed coaching (racing coaches of the old English style) and fox hunting. In 1915, again living in America, he left for a journey to England to purchase fox hounds, embarking on RMS Lusitania.

Alfred perished when Lusitania was torpedoed and sunk by a German U-boat on May Day, 1915. A myth that he was one of the scheduled passengers on Titanic three years earlier was disproven, it was George Washington Vanderbilt who was scheduled to make that fateful voyage before canceling his plans. Alfred’s death was reported by many who observed him assisting a young mother by giving her his own life jacket. His body was never found.

Alfred’s death transferred a large part of his fortune to his brothers Neily (whom he had assisted with funds earlier) and Raymond, which allowed them to squander it. The size of his estate was $15.5 million, and he left bequests for his wife Margaret and their children. She used part of the money to purchase a 47 room mansion in Massachusetts situated on 316 acres. Alfred didn’t squander the Vanderbilt fortune, but his early death allowed others of his family to do so.

10 Reasons the Vanderbilts Lost the World’s Greatest Fortune
A view of Woodlea in 1905. Today the site is a country club. Wikimedia


In 1892 Elliott Fitch Shepard began construction of a 140 room mansion near what was then North Tarrytown (today’s Sleepy Hollow) New York. Shepard was the husband of Margaret Louisa Vanderbilt Shepard, sister of Cornelius Vanderbilt II and granddaughter of the Commodore. The house was constructed on a tract of over 500 acres of land, acquired by Shepard, a banker, publisher, attorney, and judge. Their New York home was part of the Vanderbilt row of mansions on Fifth Avenue.

The house was designed to include 70,000 square feet of living space, with an exterior in the Italian Renaissance style. Shepard envisioned the house as a means of expressing influence and political power, supporting his political ambitions, and though he was a man of considerable affluence, Margaret’s money too was poured into the construction. In March 1893, while Woodlea was still under construction, Shepard died suddenly.

Shepard’s estate was about $1.3 million, well below the costs of completing Woodlea, which fell to Margaret. While Woodlea was being built Margaret lived in another house on the property which had been completed several years earlier. The main house was completed in 1895-96. During the remaining construction period, Margaret lived at the property mostly during the spring and early summer months. Her visits to the property became less and less frequent.

In 1906 Margaret sold Woodlea to a New York businessman for the sum of $1.4 million, despite the property being valued at nearly $6 million. Margaret took up residence in her New York home, in the 900 block of Fifth Avenue, where she died in 1924, having never remarried. Her estate was just over $5 million, less than half of the fortune she had inherited from the Vanderbilt wealth from her father, William Vanderbilt.

Woodlea and the surrounding grounds were eventually taken over by a consortium who created the Sleepy Hollow Country Club. Among its founders was Cornelius Vanderbilt III. Another founder was John Jacob Astor IV, who did board the RMS Titanic in 1912 and died in the ship’s sinking. The country club retained much of the gardens and the house served as its clubhouse and event center. Much of its décor remains faithful to that selected by Margaret and her husband in the late 1890s.

10 Reasons the Vanderbilts Lost the World’s Greatest Fortune
Fifth Avenue home of Cornelius Vanderbilt II, circa 1893. Cornell University Library

The Vanderbilt legacy

The huge fortune built by Cornelius Vanderbilt and his son William did not survive the ministrations of their subsequent heirs. The temptations of living luxuriously and the rivalries between siblings, cousins, and their spouses led the family to outspend its income consistently over many years. The massive mansions which dominated Fifth Avenue, each more lavish than its predecessor, simply required too much money to maintain.

By the mid-1920s most of the mansions in Manhattan were gone, by the 1950s all were, at least as residences. One-half of the Marble Twins, built by George Washington Vanderbilt at 645 and 647 Fifth Avenue remains. It is a designated landmark and the site of the flagship store for Versace in New York. Several of the buildings were converted to other uses before demolition to make space for New York’s expansion upwards in the 1920s and 1930s.

The great country estates such as the Biltmore and Woodlea were converted to other uses, a museum and tourist attraction in the case of the former and a country club in the latter. The costs of maintaining such lavish structures and supporting the staff required to operate and maintain them were simply too prohibitive to allow them to remain private residences. The same is true of the so-called summer cottages in Newport, Bar Harbor, and the Berkshires.

While changes in tax laws, creating estate taxes and the income tax itself certainly had a part in the demise of the Vanderbilt fortune, the wealth of other great families survived. Philanthropy had a hand too, the Vanderbilts of different generations endowed Vanderbilt University, the YMCA, the arts, the sciences, medicine, and other charitable causes. But that does not explain the near extinction of Vanderbilt wealth.

The Vanderbilt fortune largely vanished because the Vanderbilt heirs spent it, on houses and estates, yachts and racing boats, limousines and luxury cars, antiques, art, clothes, parties, huge dinners, other entertainments, extensive travel, luxury cruises, and all of the trappings of the wealthy during the Gilded Age and beyond. It took four generations of Vanderbilts to erase what the Commodore created in one, but they managed.


Where do we find this stuff? Here are our sources:

“Fortune’s Children: The Fall of the House of Vanderbilt”, by Arthur T. Vanderbilt, 1989

“The Vanderbilt Women: Dynasty of Wealth, Glamour, and Tragedy”, by Clarice Stasz, 2000

“The Vanderbilts”, by Jerry E. Patterson, 1989

“Biltmore Estate”, by Ellen Erwin Rickman, 2005

“Queen of Golden Age: The Fabulous Story of Grace Wilson Vanderbilt”, by Cornelius Vanderbilt, 1956

“Alva Vanderbilt: All Gilt, No Guilt”, by SHEILA GIBSON STOODLEY, Boston Common, April 25, 2011

“The Vanderbilts: How American Royalty Lost Their Crown Jewels”, by Natalie Robehmed, Forbes Magazine, June 14, 2014

“Torpedoed! The Sinking of the Lusitania”, by Diane Preston, Smithsonian Magazine, May 2002

“The Nineteenth Hole: Architecture of the Golf Clubhouse”, by Richard Diedrich, 2008

“Commodore Vanderbilt and his family: a biographical account of the Descendants of Cornelius and Sophia Johnson Vanderbilt”, by Dorothy Kelly McDowell, 1989

“Are the Vanderbilt Heirs Being Forced Out of the Breakers?”, by SAM DANGREMOND, Town & Country, JAN 18, 2018