The Vanderbilts' $150 billion collapse: the epic rise and disastrous fall of the family's fortune

The trajectory of the Vanderbilt family fortune embodies a drastic journey of wealth accumulation and subsequent dilution, one of the most dramatic rises and falls in American history.

At its peak, the family was wealthier than the United States Treasury, but within less than a century, thanks to rapid family expansion, extravagant Gilded Age spending, and tax law shifts, the famed dynasty's financial prominence was largely eliminated.

Their social prominence remains today however, through the legacies of family members like Consuelo Vanderbilt and Gloria Vanderbilt, their stamp on society and New York City real estate, and of course, notable descendants like Anderson Cooper, a renowned, and beloved, journalist.

The Vanderbilt family roots

The Vanderbilt family first established roots in New York when Cornelius "The Commodore" Vanderbilt's great-great-great-grandfather Jan Aertson, a Dutch farmer, immigrated to what was then New Amsterdam as an indentured servant in 1650. Nearly 200 years later, Cornelius —  the one who would start and grow the Vanderbilt fortune to amounts larger than those held by the U.S. Treasury at that time — was born to a modest family in Staten Island, quitting school at the age of 11 to work on his father's ferry.

He decided to start his own ferry service when he was 16, borrowing $100 to purchase a periauger (a shallow draft sailing vessel) to do so. He later expanded into steamships in the 1820s, and built an empire worth tens of millions, earning the nickname "The Commodore" along the way. By the 1860s, anticipating the decline of shipping, he sold his fleet and acquired key railroad lines, establishing the New York Central Railroad, which boasted tracks all across the Northeast and Midwest, and gave him a monopoly for all rail service in and out of New York City.

At the time of his death when he was 82 in 1877, Cornelius, who had 13 children with his wife Sophia Johnson, had an estimated net worth of $105 million (approximately $3 billion today, or at least $150 billion when measured by relative economic power), and was widely considered the richest person in the world. Believing the bulk of the family fortune should be bestowed upon one descendant, he left his eldest son William Henry "Billy" Vanderbilt an 87% stake in New York Central.

The dividing of the fortune ultimately led to its dilution

Billy took over the rail empire, expanded it, and doubled the family fortune to nearly $200 million in just eight years. Upon his death in 1885 however, he went against his father's advice (and tradition) to split the estate, among his eldest sons, Cornelius Vanderbilt II and William Kissam Vanderbilt, rather than leaving it to a single heir. This decision began the dispersal of the family wealth. 

While both managed the railroads at one point, Cornelius II died in 1899, and William Kissam retired not long after. Moreover their brother George Vanderbilt was already eating at their fortune with his 146,000-acre Biltmore estate in Asheville, North Carolina, part of a huge property (and spending) boom the Vanderbilts became known for in the Gilded Age.

The Gilded Age real estate boom and spending spree

The uber-famous Vanderbilt family property portfolio peaked during the Gilded Age, after multiple Vanderbilt generations built and purchased, almost at once, nearly a dozen mansions — more akin to palaces — on New York City's famed Fifth Avenue. From the 1880s to early 1900s, the family spent nearly half a billion dollars in today's rate building their homes. Such was the sudden abundance of homes that a portion of the famed avenue, now typically referred to as Millionaire's Row, was coined Vanderbilt Row for a time.

This third generation spent lavishly not only on Gilded Age mansions along Fifth Avenue, but also on massive Newport summer "cottages" like The Breakers, and the aforementioned sprawling Biltmore Estate — the largest privately owned house in the United States.

Rising costs & tax changes

The Vanderbilts and their ilk first left Lower Manhattan for Fifth Avenue when the neighborhood became increasingly commercialized. It's the same reason they eventually left for upper Fifth Avenue, but not the only one. Architect and historian Gary Lawrence, who runs the blogs Mansions of the Gilded Age as well as The Gilded Age Society, has explained to HELLO!: "The next generation of the builders of these magnificent homes found they no longer desired to live in their parents' houses, or they preferred more modern, easier to care for homes." Rising real estate taxes and monied, hungry developers didn't help either.

The introduction of the federal income tax in 1913 and inheritance taxes, coupled with soaring maintenance costs for their palatial homes, severely impacted the Vanderbilt fortune, much of which was tied up in these stratospheric, high-maintenance real estate projects that generated zero income and accumulated significant tax liabilities.

Their homes were eventually sold (and most demolished) almost as quickly as they were bought and built. Their empty lots soon were making way for the modern skyscrapers the legendary avenue has become known for today, such as the Buchmann Tower and the Tishman Building, which today house retail stores like Swarovski and Nike at their base. 

The Vanderbilt fortune in the 20th century

In February 1968, New York Central Railroad merged with its longtime rival Pennsylvania Railroad to form Penn Central. Just two years later, as the merger struggled with massive debt and duplicate lines, Penn Central filed for bankruptcy, which at the time was the largest corporate failure in U.S. history. It effectively wiped out the primary remaining source of the family's legacy trust holdings.

Within the family, the buck also stopped with Reginald Claypoole Vanderbilt, great-grandson of The Commodore, and grandfather of CNN anchor Cooper. He spent much of his four decades on Earth spending, before dying in 1925, aged 45, in debt. Per a 1932 New York Times report at the time, he left behind an estate of $423,761, exclusive of a trust fund of $5 million his father left him, reserved for his two daughters: Cathleen Vanderbilt, born in 1905 to Reginald and his first wife, Cathleen Neilson, and younger sibling Gloria Vanderbilt, Cooper's mother.

Gloria was only 18 months old when her father Reginald died. When she was 10, she was thrust into the national spotlight when she became known as the "Poor Little Rich Girl," because of a highly-publicized, scandalous custody dispute between her socialite mother Gloria Morgan and paternal aunt Gertrude Vanderbilt Whitney.

The Vanderbilt heir, who died at 95 in 2019, eventually became a woman of many hats, working as an artist, actress and author, among other roles, including, famously, a fashion designer.

When she died at 95 in 2019, documents obtained by Page Six revealed that Anderson inherited the entirety of Gloria's estate, which was estimated at less than $1.5 million, save for a Midtown East co-op at 30 Beekman Place, which went to her eldest child, Leopold "Stan" Stokowski, Cooper's half-brother. (His late older brother, Carter Vanderbilt Cooper, died by suicide in 1988, when he was 23). Gloria's second-born child Christopher Stokowski, from whom she was estranged, received nothing. 

Vanderbilt reflections on inherited wealth

Per Fortune's Children: The Fall of the House of Vanderbilt, Billy's son William remarked: "Inherited wealth is a real handicap to happiness... It has left me with nothing to hope for, with nothing definite to seek or strive for."

And nearly 100 years later, during an appearance on The Howard Stern Show in 2014, Cooper said: "I think it's an initiative sucker," of inheritances and trust funds, of which he said he had none. "I think it's a curse."

"There is no inheritance … I don't believe in inheriting money," he maintained, noting that his mom — who he described as an "anomaly" in having made "more money in her own life than she ever inherited" despite her infamous trust fund — told him there was "none of that" when it came to a trust fund of his own. 

"From the time I was growing up, if I felt there was some pot of gold waiting for me, I don't know that I would have been so motivated," he mused. 

"It has no reality," he added, referring to his family's legacy. "I have never paid attention to it."