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.