Astor, John Jacob (1763-1848)

John Jacob Astor (1763-1848)

Sources

Fur trade magnate

Corporate Pioneer . Considered one of the richest and most powerful men of his time, John Jacob Astor was an entrepreneurial wizard who made his fortune from the western fur trade and urban real estate. Astor was a key part of many of the economic changes that propelled westward expansion in the nineteenth century. He created a corporate structure that spanned the continent and reached out to markets in Europe, South America, and Asia. In many ways his business practices anticipated the creation of the large corporations in the late nineteenth century made famous by John D. Rockefeller and Andrew Carnegie.

Millionaire Fur Trader . Born on 17 July 1763 in the city of Walldorf in what is now Germany, Astor left for London, England, at the age of sixteen to help his brother market musical instruments. At age twenty he arrived in Baltimore, Maryland; he soon moved to New York City, where he established a prosperous business purchasing furs in Canada for resale in Europe and the United States. He expanded his interest in furs and entered the profitable China trade, where Astor and his agents traded furs for tea and silk. Because of his extraordinary success, the forty-four-year-old Astor was a millionaire by 1807. With business connections in Europe, Asia, and North America, he had reached the peak of the American fur industry by 1811.

The American Fur Company . In 1808 Astor decided he wanted to command the fur trade from the Great Lakes to the Pacific and thus challenge the powerful British fur companies in the West. His men set up a trading post in Oregon, named Astoria, in 1811, from which they were to obtain furs from the Indians and then ship the pelts directly to China. Promising as the scheme first seemed, Astor’s timing was poor. In 1812 the United States went to war with Great Britain. In 1813 the British Northwest Company surrounded Astoria and forced Astor’s agent to liquidate the entire post for a paltry $44,000. Astor was furious, especially when the American government refused to help. Astor then opted to abandon Oregon and turn his attention elsewhere. Though the American Fur Company, which he established in 1808, was unable to capture the Pacific trade, it nonetheless became the largest American fur trading firm in the West.

Monopoly . In the 1810s Astor expanded his interest in the Great Lakes region. By 1819 he had secured the largest share of the area’s fur market. In the same year his grandson accidentally drowned, and the depressed Astor began to withdraw from the business, leaving daily affairs under the control of others. In the next fifteen years Astor traveled to and from Europe but remained the principal company decision maker. In 1821 the American Fur Company invaded the Upper Missouri fur trade; by merging with and buying out its competitors, Astor’s company managed to capture much of that market as well. Nevertheless, even the best-prepared company could not avoid the long-term problems of animal depletion or changing fashions. Recognizing these limitations, Astor sold the American Fur Company in 1834 before the market dried up.

Land Speculation . Astor had long invested his profits from furs into real estate in New York City. After 1834 and until his death fourteen years later, he continued to buy, improve, and sell land on Manhattan Island. In fact, from 1800 to 1848 Astor had invested $2 million in real estate; he owned at least $5 million in land when he died. Astor speculated in land elsewhere, including in the West, where the town of Astor, Wisconsin, was to later become Green Bay. He bought stock in railroads and canals, purchased government bonds, and was involved in various banks. When Astor died in 1848, his estimated worth was at least $8 million, a vast fortune at the time.

Reasons for Success. Astor succeeded where many failed for several reasons. He recognized the profits to be made in the West. He acquired his fortune because he tended to be attentive to and careful about his commercial ventures. He integrated his fur business horizontally through cutting deals with his competitors whenever possible. Astor watched, and successfully predicted, the market and kept tabs on company expenditures. Astor likewise attempted to integrate vertically; he worked to have the highly organized American Fur Company obtain furs at the source and control sales all the way to Europe or China. Lastly, he possessed many friends and acquaintances in political office. John Jacob Astor’s business strategies, remarkably similar to those developed by later corporations, enabled him to become one of the richest men of his time while serving as a major component in America’s westward expansion.

Sources

John D. Haeger, “Business Strategy and Practice in the Early Republic: John Jacob Astor and the American Fur Trade,” Western Historical Quarterly, 19 (May 1988): 183-202;

Haeger, John Jacob Astor: Business and Finance in the Early Republic (Detroit: Wayne State University Press, 1991).