John Jacob Astor (merchant)
Astor, John Jacob
John Jacob Astor
Born July 17, 1763
Died March 29, 1848
First American immigrant millionaire
"Rogues do their work at night. Honest men work by day. It's all a matter of habit, and good habits in America make any man rich. Wealth is a result of habit."
J ohn Jacob Astor was one of the first examples of what became a great American myth: poor boy sails from Europe to the United States and ends up a millionaire thanks to hard work. But in Astor's case, it was not myth: He did sail from London to Baltimore, Maryland, before he was twenty years old, with very little money in his pocket. When he died, he was thought to be the richest man in the United States. The usual version of his life describes how Astor made a fortune buying and selling animal furs, especially beaver skins, to be turned into men's hats; then he made profitable investments in real estate, or land, development in New York City, where his name is enshrined in the well-known luxury hotel called the Waldorf-Astoria. Less famous is his role as an international drug dealer who also made a small fortune lending money to the U.S. government.
The jolly butcher's son
Astor was born in the small German village of Waldorf, near the German university city of Heidelberg. As noted in the Dictionary of American Biography, Astor's father, a butcher in the town, was once described as "jovial, good-for-nothing … much more at home in the beer-house than at his own fireside." John Jacob was the youngest of three sons, and at age seventeen he left Waldorf to join an older brother who was living in London. He paid for his trip by taking a job on a boat carrying timber down the Rhine River.
Astor spent three years in London, working with his brother in a musical instrument shop, learning English and saving money for the trip across the Atlantic Ocean to join his other brother, who was already in New York. Astor decided to wait out the American Revolutionary War (1775–83) in England. In 1783, after England signed a peace treaty with the newly independent United States, Astor bought the lowest-price ticket on a ship sailing to Baltimore. He had about twenty-five dollars in his pocket, and seven flutes, which he planned to sell once he got to New York. The trip had a small hitch at the end: Astor's ship got stuck in ice near Baltimore, and he spent two months aboard the ship until the ice melted in the spring of 1784. While waiting on the ship, Astor got to know another German passenger who had had experience acquiring furs from Native Americans. This chance acquaintance apparently set Astor on his first successful money-making venture: the fur trade.
A bride and three hundred dollars
After arriving in Baltimore, Astor made his way to New York to join his older brother in March 1784. Accounts of his first activities in New York differ, but within two years, Astor owned a small shop in Manhattan where he was in the business of buying and selling furs trapped in the American wilderness, primarily by Native Americans who sold the furs to white traders. Astor had recently married Sarah Todd, whose family gave her a wedding gift of three hundred dollars. This amount was a significant sum of money in 1786 and enough to help the couple establish a business.
Astor was about five feet nine inches tall. Newspaper stories about him later in life described him as slightly over-weight, boxy in shape. He was said to speak with a heavy German accent and write without much regard to correct spelling or grammar.
Success with furs
Astor was eventually highly successful as a trader in furs, which meant buying animal skins either from Native Americans or from white "mountain men" who ventured into the wilderness of the Rocky Mountains and the Pacific Northwest to find and trap animals. Astor then sold the furs he had bought to manufacturers of fur coats or fur hats. For the most part, Astor hired others to negotiate directly in the purchase of furs, although he occasionally ventured out himself, once going as far as Mackinaw in Michigan.
In building his fortune, Astor took full advantage of being in the right place at the right time. He entered the fur business just before furs, and in particular fur hats for men, became enormously popular. He also entered the business just when the United States was on the brink of rapidly expanding into the interior of the North American continent, well beyond the narrow strip of territory east of the Appalachian Mountains that English immigrants had begun colonizing with early settlements in Virginia and Massachusetts. In 1796, the United States and Britain signed a treaty known as the Jay Treaty (after American negotiator John Jay [1745–1829]), which resulted in British withdrawal from military forts in the so-called Northwest Territory (the area around the Great Lakes). The treaty also opened new opportunities for Americans to trade with Canada (which in 1796 was British territory). The effect of the treaty for Astor was to enable him to expand his fur-trading business rapidly.
Astor traveled to London in 1799 in an effort to supplement his growing fur business with trade overseas. While in London, Astor obtained a license from the British East India Company, which controlled trade with India. This license enabled Astor's ships to trade in any port controlled by the company. Although he was already a well-established businessman by then, Astor traveled at the lowest possible cost in a travel class called steerage. Steerage class entitled him to a small bunk bed deep inside the ship. It was the same sort of ticket he had used to travel to the United States from London fifteen years earlier. It was characteristic of Astor for his lifetime to make tremendous amounts of money but to spend as little as possible.
In April 1803, President Thomas Jefferson (1743–1826; served 1801–1809) signed a treaty with France to acquire a vast stretch of wilderness west of the Mississippi River. The next year, Jefferson sent Captains Meriwether Lewis (1774–1809) and William Clark (1770–1838) on an expedition to explore the new territory. Their demanding trip blazed a wilderness path that eventually made it possible for Astor to make a fortune by expanding his fur-trading business westward into the areas newly acquired from France. More directly, it enabled Astor to complete with the Northwest Company, a well-established English company already trading in furs from the American West.
Astor's contribution was not in blazing a new path through the wilderness. Instead, his contribution was in having a grand vision of how to earn a business fortune from the fur trade and in acquiring the political influence and financial resources to make it happen. Even before the Lewis and Clark expedition, Astor had built his small shop into a prosperous business, and his fortune had grown from the $25 he had when he arrived as an immigrant to around $250,000. In 1808, Astor organized the American Fur Company, with himself
as its sole owner. His business plan was to establish a fortress in Oregon, where the Columbia River drains into the Pacific Ocean. There, Native American and white fur trappers could bring their furs to sell to Astor. In turn, ships owned by Astor would carry the furs to China, across the Pacific Ocean, where they could be sold. While in China, Astor could purchase Chinese tea and other goods that the same ships could bring back to the East Coast of the United States. It was a huge, even magnificent, global trading plan, and eventually Astor made it succeed.
The first step was establishing a fur-trading post in Oregon, which Astor called Astoria. Set up in 1811, the plan almost immediately fell victim to fighting between the United States and Britain in the War of 1812 (1812–14). Threatened with an imminent British military occupation of Astoria, Astor's representative sold the outpost to the Northwest Company, Astor's Canadian-owned main competitor in the fur trade, at a significant loss. It seemed that the War of 1812 had sunk Astor's scheme before it could get off the ground.
But the war actually proved to be a business boon for Astor in another area. The U.S. government needed to borrow money to finance its operations, and Astor was willing to be a lender, although at a great cost to the government (and eventually to the U.S. taxpayers whose taxes paid off the loans). In 1814, at the end of the war, Astor and other investors bought government bonds for about eighty-two cents on the dollar (meaning that the government promised to pay back one dollar in exchange for a loan of eighty-two cents—an interest rate of nearly 22 percent).
Over the next twenty years, Astor's good business judgment enabled him to build one of the great fortunes of early American history—thanks in part to his influence over government policy. For example, in 1816, Astor persuaded Congress to pass a law that barred noncitizens of the United States from engaging in the fur trade, except as employees of American companies. The law was designed to help Astor acquire the trading posts of his main competitor, the Canadian-owned Northwest Company, which were located along the upper (northern) Mississippi River. During the winter of 1821–22, Astor persuaded the Congress to close government trading posts set up in 1796 to trade with Native Americans in the West, thereby giving Astor even more control over the Western fur trade. Five years later, in 1827, Astor bought the Columbia Fur Company, his main competitor in trading furs in the northwest. Buying his competitor left Astor with just one major competitor, the Rocky Mountain Fur Company, which bought furs trapped south of Astor's territory. Although he controlled the fur trade over a vast territory, Astor did not thrive in competition with Rocky Mountain Fur Company. Astor's company suffered losses from attacks by Native Americans. Rocky Mountain's fur trappers were regarded as better than Astor's, and their ability to trade furs with Native Americans was also regarded as superior.
Astor began to lose interest in his fur business. By June 1834, he had sold the business entirely. It was good timing, since the demand for furs as fashionable clothing was beginning to decline during the same period. Astor had made a significant fortune from the business, however, and went on to make even more money buying property in New York City. There were two related business practices during Astor's early success that have long detracted from Astor's story as one of the first, and most successful, rags-to-riches immigrants to the United States. These business practices involve alcohol and the drug opium.
When Astor entered the fur trade, many Native Americans were living a nomadic (wandering) existence in the wilderness of North America as they had been for countless generations before the arrival of immigrants from Europe. Their lives were largely focused on hunting or trapping animals, which they used for food and clothing (such as leather and fur). Europeans had little of obvious value to trade for these mainstays of Native American life. Although colorful beads are famous as essentially worthless items exchanged with Native Americans for valuable furs, the trading of alcoholic beverages also played an important role. Native Americans had no experience drinking alcohol, and many proved to be highly susceptible to alcohol abuse. In effect, they would trade weeks or months of effort acquiring furs for a few hours of the sensation of drunkenness. Alcoholism, as addiction to alcohol is called, eventually devastated the lives of many Native Americans in the nineteenth and twentieth centuries.
Later, when Astor expanded his enterprise to include trade with China, some part of his success was connected to trading in the addictive narcotic, or pain-relieving, drug opium. In the nineteenth century, China was a largely self-contained society that had something Europeans wanted (silk and tea), but the Chinese were generally uninterested in buying the manufactured goods Europeans could sell in exchange. An exception was opium, the addictive drug closely related to heroin. Opium comes from seeds of a poppy plant grown in India and Turkey and present-day Afghanistan. Britain, by virtue of its control over India in the early nineteenth century, controlled much of the international trade in opium, with China as its biggest market despite strong opposition by the Chinese government.
The East India Company was positioned as the main business that carried out British trade with Asia. Astor obtained a license to ship merchandise by ship to the ports controlled by the East India Company. He began by selling furs in China, returning with silk and tea, and also sold opium in China for at least a decade after 1800. At the time Astor was engaged in the drug trade, it was not as clear to people as it became in the twenty-first century how devastating addictive drugs based on opium can be on a country. A large and profitable international drug trade with China continued for much of the nineteenth century; when the Chinese government objected, the British government went to war twice to guarantee the right of British merchants to sell the drug in China. Some part of Astor's fortune thus came from his profits as an international drug dealer.
Develops land in New York City
By 1834, Astor had retired from the fur business entirely and focused on buying and developing land in Manhattan. At the time, the island was not as densely packed as it became over the next century. Astor could see that the island of Manhattan was already a major American port, that its land was limited, and that, as a major port, there were great advantages to being located on the island, especially in the decades before bridges or tunnels replaced ferries as the connection between Manhattan and the mainland or with Long Island. As with the fur trade, Astor's timing was perfect. Astor had entered the New York real estate (property) business on the eve of a rapid expansion of the city as a major destination for Europeans immigrating to the United States. He preserved and built on his fur fortune by buying land and building apartment houses, putting him in an excellent position to take advantage of the rising demand for living space. His fortune grew significantly during the last fourteen years of his life, partly as a result of buying back houses he had sold to people at a fraction of their value when families fell on hard times and could not afford to repay their mortgages, or home loans, used to acquire the houses. Astor's name became highly unpopular in the popular imagination, as reflected in newspaper articles after he died that were highly critical of his conduct.
Astor died in 1848, in New York, at age eighty-four. He was described at the time as the richest man in America, with a fortune estimated at $20 million (worth about $375 million in 2002). Unlike other self-made millionaires who arrived in the United States with practically nothing, Astor was disinclined to give away his money. He contributed about $400,000 (about 2 percent of the total) to found the Astor Library, which was consolidated with other libraries in 1895 to form the New York Public Library. Astor's small charitable gift later stood in marked contrast to another poor immigrant-turned-millionaire, Andrew Carnegie (1835–1919; see entry in volume 1), who made libraries a particular focus of his effort to give away as much of his fortune as he could after he sold his steel business.
At the time of Astor's death, the New York Tribune criticized him for focusing his whole life solely on making money. Whatever the opinion of newspapers at the time of his death, Astor's fortune passed intact to only one of his sons, William (1792–1875), as his other son was mentally impaired. The Astor family became one of New York's leading social stars throughout the nineteenth century and into the twentieth. When the luxury passenger ship Titanic hit an iceberg and sank in the North Atlantic in 1912, an heir of John Jacob Astor, John Jacob Astor IV (1864–1912), went down with the ship. He was the wealthiest passenger to drown in the famous shipping disaster.
In the twenty–first century, there are few reminders in New York of the man thought to be the richest American at the time of his death. A short block in Manhattan is named Astor Place, and the Waldorf-Astoria Hotel occupies an entire square block of some of the world's most expensive real estate. The subway station that stops at Astor Place, in Greenwich Village, is decorated with molded figures of beavers—a symbol of the basis of the fortune made by a butcher's son from Waldorf, Germany.
—James L. Outman
For More Information
Haeger, John Denis. Astor: Business and Finance in the Early Republic. Detroit: Wayne State University Press, 1991.
Irving, Washington. Astoria, or, Anecdotes of an Enterprize Beyond the Rocky Mountains. Edited by Richard D. Rust. Lincoln: University of Nebraska Press, 1982.
Madsen, Axel. John Jacob Astor: America's First Multimillionaire. New York: John Wiley, 2001.
Baida, Peter. "'Poor Jacob!'" Forbes (October 26, 1987): p. 345.
Bujalski, Scott James. "John Jacob Astor: America's First Multimillionaire." Corporate Counsel (April 2001): p. 75.
Hubbard, Elbert. "John J. Astor." Little Journeys to the Homes of Great Business Men. Online version from Encyclopedia of the Self.http://authorsdirectory.com/b/jastr10.htm (accessed on March 5, 2004).
"John Jacob Astor." The Astor's Beechwood.http://www.astorsbeechwood.com/JohnJacobAstor.html (accessed on March 5, 2004).
"John Jacob Astor." Dictionary of American Biography base set. American Council of Learned Societies, 1928–36. Reproduced in Biography Resource Center. Detroit: Gale, 2003.
Astor, John Jacob
John Jacob Astor
An American fur trader and businessman, John Astor used his profits from fur trading to invest in a wide range of business enterprises. By the time of his death he was the richest man in America.
John Jacob Astor was born in Waldorf, near Heidelberg, Germany, on July 17, 1763. He was named after his father Jacob Astor, a poor but happy butcher. His mother, Maria Magdalena Vorfelder, learned to be very careful with the little money the family had (a quality she passed on to her son). She died when Astor was three years old. Despite the family's poverty, Astor received a good education from the local schoolmaster. When he reached the age of fourteen he went to work as an assistant to his father. He did this for two years before striking out on his own in 1779. Astor joined one of his brothers in London, England, where he learned to speak English and worked to earn money to pay his way to America.
In 1783, after the peace treaty ending the American Revolution (1775–83; when the American colonies fought for independence from Great Britain) had been signed, Astor sailed for the United States to join another brother who had gone there earlier. The ship carrying Astor to America became stuck in ice before completing its voyage and remained there for two months. During this time, Astor met a German man on the ship who told him how much money there was to be made in fur trading. Astor finally landed at Baltimore, Maryland, in March 1784.
Success in fur trading
Astor soon joined his brother in New York and began to demonstrate his talent for business. He worked for several furriers and began buying furs on his own. In 1784 and 1785 Astor made trips to western New York to buy furs for his employers, purchasing some for himself at the same time. He acquired enough furs to make a trip to England profitable. In London he established connections with a well-known trading house, signed an agreement to act as the New York agent for a musical instrument firm, and used his profits from the furs to buy merchandise to use for trade with the Native Americans. Not yet twenty-two, he had already proved himself a shrewd and intelligent businessman.
Astor's early success convinced him that a fortune could be made in the fur trade. He began to spend more time managing and expanding his business. Between 1790 and 1808 his agents collected furs from as far west as Mackinaw, Michigan. The Jay Treaty of 1794, which led to the British leaving forts and trading posts in the Old Northwest, worked to Astor's advantage, and he expanded his operations in the Great Lakes region. Through an arrangement with the British Northwest Company, he purchased furs directly from Montreal, Canada. By about 1809 he was recognized as one of the leading fur traders in the United States.
Fur business grows
Following the Louisiana Purchase in 1803, which added land that contained part or all of thirteen more states to the union, Astor turned his attention to the fur trade in the Pacific Northwest. He obtained a charter (a grant of rights or privileges from the ruler of a state or country) for the American Fur Company and planned to establish a main fort at the mouth of the Columbia River, with sub-forts in the interior. His fleet of ships would collect the furs and sell them in China, where goods would be purchased for sale in Europe; in Europe merchandise could be bought to sell in the United States when the ships returned.
Although the town of Astoria was established on the Columbia, the company's operations were unsuccessful. After the War of 1812 Astor renewed his efforts to gain control of the fur trade in North America. Through influence in Congress he helped win passage of laws that banned foreigners from engaging in the trade (except as employees) and that eliminated the government's trading post serving independent traders. By the late 1820s he had sole control of the fur trade in the Great Lakes region and most of the Mississippi Valley. This put him into direct competition with the Rocky Mountain Fur Company and British fur interests in the Pacific Northwest. However, by 1830 Astor's interest in the company had begun to decline.
Through Astor's dealings in the fur trade he became involved in general merchandising. During the 1790s he had begun to import and sell a large variety of European goods. During this early period he showed little interest in establishing trade relations with China. Between 1800 and 1812, however, his trade with China expanded and became a large part of his business dealings in Europe. The War of 1812 temporarily disrupted his plans, but it also gave him an opportunity to purchase ships at a bargain price, since declining trade had made other merchants anxious to dispose of their fleets.
After the war Astor had a large fleet of sailing vessels and again became active in the China and Pacific trade. For a time he was involved in smuggling Turkish opium (an addictive drug) into China but found the profits were not worth the risk and abandoned this venture. Between 1815 and 1820 he enjoyed a commanding position in trade with China. Thereafter his interest declined, and he turned his attention to other business activities. One explanation for Astor's success as a merchant was that he had the money to buy quality merchandise at a low cost and a fleet of ships that could transport the goods to markets more quickly than his rivals.
Still dealing in later years
Astor retired from the American Fur Company and withdrew from both domestic and foreign trade in 1834. He turned to other investments, including real estate, money-lending, insurance companies, banking, railroads and canals, public securities, and the hotel business. The most important was real estate. He had invested some capital in land early in his career. After 1800 he concentrated on real estate in New York City. He profited not only from the sale of lands and rents but from the increasing value of lands within the city. During the last decade of his life his income from rents alone exceeded $1,250,000. His total wealth was estimated at $20–30 million (the greatest source being his land holdings on Manhattan Island) at his death on March 29, 1848, at the age of 84.
For More Information
Haeger, John D. John Jacob Astor: Business and Finance in the Early Republic. Detroit: Wayne State University Press, 1991.
Madsen, Axel. John Jacob Astor: America's First Multimillionaire. New York: John Wiley, 2001.
Astor, John Jacob (1763-1848)
John Jacob Astor (1763-1848)
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.
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).
John Jacob Astor
John Jacob Astor
An American fur trader, merchant, and capitalist, John Jacob Astor (1763-1848) used his profits from fur trading to invest in a wide range of business enterprises. By the time of his death he was the richest man in America.
John Jacob Astor was born in Waldorf, near Heidelberg, Germany, on July 17, 1763. He was named after his father, a poor but convivial butcher. In spite of the family's poverty, Astor was sent to the local schoolmaster, who provided him with an exceptional education, considering the times. When Astor reached the age of 14, his father decided that his son should work with him. The boy assisted for 2 years before, in 1779, he struck out on his own. He joined a brother in London, where he learned English and worked to earn passage money to America. In 1783, after the peace treaty ending the American Revolution had been signed, he sailed for the United States to join another brother who had emigrated earlier. He landed at Baltimore in March 1784.
Astor soon joined his brother in New York and began to demonstrate his talent for business. He received a shipment of flutes from England, which he offered for sale. He also worked for several furriers and began buying furs on his own. In 1784 and 1785 Astor made furbuying trips to western New York for his employers, purchasing furs for himself at the same time. He acquired enough furs to make a trip to England profitable. In London he established connections with a reputable trading house, signed an agreement to act as the New York agent for a musical instrument firm, and used his profits from the furs to buy merchandise suitable for trade with the Native Americans. Not yet 22, he had already proved himself a shrewd and competent businessman.
His initial success convinced Astor that a fortune could be made in the fur trade. He began to spend more time managing and expanding his business. Between 1790 and 1808 his agents collected furs from as far west as Mackinaw, Mich. The Jay Treaty and the British evacuation of forts in the Old Northwest worked to Astor's advantage, and he expanded his operations in the Great Lakes region. Through an arrangement with the British Northwest Company, he purchased furs directly from Montreal. By about 1809 he was recognized as one of the leading fur traders in the United States.
Following the Louisiana Purchase, Astor turned his attention to the fur trade in the Pacific Northwest. Through shrewd political maneuvers he obtained a charter for the American Fur Company. His plan was to establish a main fort at the mouth of the Columbia River, with sub-forts in the interior. His fleet of ships would collect the furs and sell them in China, where goods would be purchased for sale in Europe; in Europe merchandise could be bought to sell in the United States when the ships returned.
Although the town of Astoria was established on the Columbia, the company's operations were unsuccessful. After the War of 1812 Astor renewed his efforts to gain control of the fur trade in North America. Through influence in Congress he secured legislation that prohibited foreigners from engaging in the trade except as employees and that eliminated the government's trading post serving independent traders. By the late 1820's he monopolized the fur trade in the Great Lakes region and most of the Mississippi Valley. This monopoly put him into direct competition with the Rocky Mountain Fur Company and British fur interests in the Pacific Northwest. However, by 1830 Astor's interest in the company had begun to decline.
Through his dealings in the fur trade Astor became involved in general merchandising. During the 1790s he had begun to import and sell a large variety of European goods. During this early period he showed little interest in establishing trade relations with China. Between 1800 and 1812, however, his trade with China expanded and became an integral part of his business dealings in Europe. The War of 1812 temporarily disrupted his plans, but it gave him an opportunity to purchase ships at a bargain price since declining trade had made merchants anxious to dispose of their fleets. After the war Astor had a sizable fleet of sailing vessels and again became active in the China and Pacific trade. For a time he was involved in smuggling Turkish opium into China but found the profits were not worth the risk and abandoned this venture. Between 1815 and 1820 he enjoyed a commanding position in the China trade. Thereafter his interest declined, and he turned his attention to other business activities. One explanation for Astor's success as a merchant was that he had the capital to buy superior merchandise at a low cost and a fleet of ships that could transport the goods to markets more quickly than his rivals.
Astor retired from the American Fur Company and withdrew from both domestic and foreign trade in 1834. He turned to other investments, including real estate, moneylending, insurance companies, banking, railroads and canals, public securities, and the hotel business. The most important was real estate. He had invested some capital in land early in his career. After 1800 he concentrated on real estate in New York City. He profited not only from the sale of lands and rents but from the increasing value of lands within the city. During the last decade of his life his income from rents alone exceeded $1,250,000. A reliable estimate placed his total wealth at $20-30 million (the greatest source being his land holdings on Manhattan Island) at his death in 1848, at the age of 84.
The most complete biography of Astor is Kenneth Wiggins Porter, John Jacob Astor, Business Man (2 vols., 1931). A somewhat critical work which deals extensively with Astor's interest in the fur trade is John Upton Terrell, Furs by Astor (1963). See also Washington Irving, Astoria (1836; repr. 1961); Meade Minigerode, Certain Rich Men (1927); and Harvey O'Connor, The Astors (1941). A background discussion of the fur trade that includes Astor is provided by Bernard De Voto, Across the Wide Missouri (1947). Social histories of New York that discuss Astor are Arthur Pound, The Golden Earth: The Story of Manhattan's Landed Wealth (1935); Frederick L. Collins, Money Town (1946); and Edward Robb Ellis, The Epic of New York City (1966). □
Astor, John Jacob (1763-1848)
John Jacob Astor (1763-1848)
Fur trader and businessman
Emigration . John Jacob Astor was the richest man in America when he died, having amassed a fortune based on the unique economic opportunities of the United States in the early national period. He was born in the village of Waldorf in Germany on 17 July 1763, the son of a butcher. At the age of sixteen he worked his way on a timber boat to England, joining a brother there in the business of making and selling musical instruments. Astor immediately began to learn English and to save money to emigrate to America, arriving in Baltimore in March 1784 with about twenty-five dollars and seven flutes. He made his way to New York, joining an other brother there, and soon set himself up in business. Astor got help through an advantageous marriage to Sarah Todd, a member of the elite Brevoort family, who brought $300 as a dowry.
Fur Trading . Astor soon established himself as a fur trader, a business he learned about from a man he had met on his trip to America who had previously been to the American backcountry and knew of the trade. In the 1790s Astor made many trips to the frontier, going as far as northern Michigan, making many useful contacts. Jay’s Treaty between Britain and America in 1795 helped his business by limiting the English presence in this area and opening up greater trade between America and Canada. Astor pursued contacts with Canadian fur traders, greatly adding to his stock, although he failed in an attempt to contract with the dominant North West Company of Canada for importing their furs into the United States. By 1800 he had accumulated over a quarter of a million dollars.
Western Expansion . Astor soon began selling furs in China, a huge market just beginning to be exploited by American and European traders. He managed to acquire a license to trade freely in ports controlled by the British East India Company, which opened much of Asia to him, and his first venture made a profit of $50, 000. The Louisiana Purchase of 1803 and the reports about the Columbia River basin in Oregon that followed the return of Lewis and Clark from their exploration of that area in 1806 fueled Astor’s ambitions further. He faced competition in the fur trade in the Pacific Northwest from other companies based in Canada and Saint Louis. He countered by forming the American Fur Company in 1808 and planning to establish a huge trading post—to be called Astoria—at the mouth of the Columbia River to gather furs from smaller posts spread throughout the interior. Ships would leave that post for China, exchanging furs there for Asian goods, which they would take on to Europe and then to New York, where they would stock up on supplies for the traders and Indians in the West. Astoria was founded in 1811, but the project proved too ambitious even for Astor. The coming of the War of 1812 further undermined it as the British asserted a military presence in Oregon. Despite setbacks Astor still continued to dominate the fur trade until he sold all his fur companies in 1834.
Other Business. The fur trade was the basis of Astor’s fortune, but not its only component. As early as the 1790s he began to use his fur profits to buy real estate in Manhattan, purchasing lots just north of the growing city and selling them as development advanced and drove prices up, leaving him able to purchase more land even further north. He also profited hugely during the War of 1812, buying bonds from the U.S. government on which he earned about sixty cents on the dollar, plus interest. He was also able to use his government contacts to good advantage in other areas, as when he persuaded Congress to close government fur trading posts in 1822. All his ventures left him with about $10 million at his death on 29 March 1848. He left $400, 000 to found a library, which became the heart of the New York Public Library, today one of the largest in the world. Most of the rest of his wealth and businesses he left to his son William, establishing one of the great family fortunes of the early United States.
John Haeger, John Jacob Astor: Business and Finance in the Early Republic (Detroit: Wayne State University Press, 1991).
Astor, John Jacob
ASTOR, JOHN JACOB
The life of John Jacob Astor (1763–1848), a fur trader who became one of the wealthiest individuals in U.S. history, is a classic example of a rags-to-riches story. Born to a poor butcher in Waldorf, Germany, in 1762, he died 85 years later in New York with a fortune estimated in 1998 dollars at $78 billion.
At age seventeen, Astor left Germany for England, where he learned English and worked for his brother, a musical instruments craftsman. After three years, John Astor had saved enough money to immigrate to the United States. In March 1784, after a long trans-Atlantic crossing, he arrived in New York with seven flutes and $25. During the voyage, young Astor befriended a fellow German emigrant who had previously worked as a fur trader in the United States. The information that he gleaned from his new friend convinced him to make his career in the fur trade.
Starting out in the fur business as a clerk, Astor quickly moved on to work for himself. In 1786 he married Sarah Todd and, with the help of her $300 dowry, opened a store on Water Street in New York where he sold musical instruments and bought furs. Both Astors were very involved in the new business and lived very frugally. Astor often left the shop in his wife's care when he traveled to what was then the U.S. frontier in search of furs. In 1789 Astor purchased his first Manhattan property: two lots on the Bowery Lane for $625.
By 1800 Astor was worth $250,000, and he was the leading fur dealer in the United States. Following a trip to London, England, in 1799, where he obtained a license to ship to any East India Company port, Astor became involved in trade with the Orient. He began expanding the scope of his business by shipping furs to China and importing Chinese silks and teas. A part of his profits from these ventures immediately went into real estate purchases in New York.
The success of the Lewis and Clark expedition in 1806 opened up the great fur lands of the U.S. Northwest. Astor was determined to establish an outpost on the Pacific Ocean. In the spring of 1811, the ship Tonquin arrived at the mouth of the Columbia River. A fort was built and the settlement was named Astoria. For once however, Astor's timing was poor; during the War of 1812 (1812–1814), his agent was forced by the British to sell the outpost to Canada's Northwest Company for $58,000.
Astor emerged from the war wealthier than ever. With a consortium of other businessmen, he bought $2 million in bonds from the hard-pressed U.S. government, paying only 88 cents on the dollar. By the 1820s Astor's Manhattan properties had also become prime real estate; one of his holdings would include the famous intersection of 42nd Street and Broadway. When he saw the fur trade begin to decline, he sold out his commercial interests and turned his strong intellect and acquisitive instincts toward his real estate investments, buying up land in sparsely inhabited northern sections of Manhattan.
Astor did not sell off his land when prices soared; instead, he developed his properties by building commercial buildings and apartments on them. In the hands of his descendants, it was the Astor real estate in Manhattan that was critical to the spectacular growth of the family fortune, which reached $200 million before 1900.
Astor, grieving over the death of his wife, spent his last 14 years administering to his estate and managing his properties. When he died in 1848 he was the richest man in the United States, leaving an estate of some $20 million. His only public bequest was a comparatively insignificant $400,000 to found a public library, the Astor Library, which was later consolidated with other libraries as the New York Public Library in 1895. He left the remainder of his wealth to secure his family's immense fortune for the next century.
"The American heritage 40: a ranking of the forty wealthiest Americans of all time." American Heritage, October 1998.
Baida, Peter. "Poor Jacob." Forbes, October 26, 1987.
Cordtz, Dan. "Land Lords." Financial World, November 12, 1991.
Haeger, John D. John Jacob Astor: Business and Finance in the Early Republic. Detroit: Wayne State University Press, 1991.
Stokesbury, James L. "John Jacob Astor: A Self-Invented Money-Making Machine." American History, December 1997.
Astor, John Jacob (1763-1848)
John Jacob Astor (1763-1848)
Financier, real estate mangnate
Arrival. On the occasion of John Jacob Astor’s death in 1848 the New York Herald described him as a “self-invented money-making machine.” By that time Astor had become the prime exemplar of America as a land of boundless opportunity, where anyone could go from rags to riches, a place where poor boys could make good. Astor rose high indeed from where he started, arriving in New York from his native Germany in 1783 almost penniless. The young immigrant made up in intelligence and ambition what he lacked in funds. Astor started as a clerk for a New York-based fur-trading company but soon ventured into trading on his own. Whatever profits he managed to squeeze out of the fur business he quickly channeled into Manhattan real estate.
Fur Business. In 1808 Astor organized the American Fur Company to take advantage of the high demand for American furs throughout the world. His plan was to establish a fur-trading outpost on the Pacific Coast, but most of the expedition he sent out to start the trading post was massacred by natives after founding Astoria on the south side of the Columbia River in 1811. An overland expedition fared somewhat better, finding the northern Rockies’ South Pass (crossover point for the Oregon Trail in the 1840s) and establishing several fur-trading stations. Operations were interrupted by the War of 1812 (Astor played a major role in financing the American war effort), but he returned afterward and built what amounted to a monopoly on the Western fur trade.
Real Estate Tycoon. Astor continued to invest his profits from furs and government bonds in Manhattan real estate. In the early nineteenth century, with the city’s residents packed into the lower part of the island, most of Manhattan was still rural. In 1803 Astor paid twenty-five thousand dollars for seventy acres of Manhattan countryside, including what would become Times Square; by the 1880s those seventy acres were worth $20 million. Astor spent the depression years of 1873 to 1843 buying up most of what became midtown Manhattan at bargain prices. Nor did he neglect the lower part of the island, buying hundreds of lots below Fourteenth Street and collecting two hundred thousand dollars in annual rents by the time of his death. Asked not long before his demise whether he would have invested differently if given the chance, Astor replied, “could I begin life again knowing what I now know, and had money to invest, I would buy every foot of land on the island of Manhattan.”
Millionaire. Herman Melville said of John Jacob Astor that even his name “rings like unto bullion.” When Astor died in 1848, he bequeathed to his family (mainly his son) a fortune estimated at $40 million, making him not just a millionaire but by far the richest man in America. The term millionaire was itself a product of the 1840s, coined to describe the first generation of the super rich, grown fat on the expanding market economy. New York City, Boston, Baltimore, and Philadelphia, along with a few cotton cities such as Natchez, Mississippi, claimed the largest share of this new and expanding class of the fabulously wealthy. In 1845 ten millionaires resided in New York City, a number that increased to 115 by 1860. Though most of the new millionaires were born into prosperous families, Americans focused on those who rose from humble circumstances, such as Astor and Cornelius Vanderbilt, as the true models of wealth in America. They were help up as examples to the world of what could be accomplished in the dynamic young republic with grit, determination, hard work, and (seldom mentioned) ruthlessness, all of which Astor had in abundance.
Kenneth Wiggins porter, John Jacob Astor, Business Man (Cambridge, Mass.: Harvard University Press, 1931);
Edward K. Spann, The New Metropolis: New York City, 1840–1857 (New York: Columbia University Press, 1981).
Astor, John Jacob
John Jacob Astor
John Jacob Astor, one of the richest and most powerful men of his time, was an entrepreneurial wizard who made his fortune from the western fur trade and urban real estate. Astor played a central role in westward expansion in the nineteenth century. He created a complex business structure that spanned the continent and reached out to markets in Europe, South America, and Asia. In many ways, his business practices were the forerunners of the large industries of the late nineteenth century.
Astor was born on July 17, 1763, in the city of Walldorf in present-day Germany. At the age of sixteen, he moved to London, England, to help his brother sell musical instruments. At twenty, he immigrated 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, trading furs for tea and silk. (See Fur traders and mountain men .) Astor was extraordinarily successful, becoming a millionaire by 1807. According to many historians, he was the first millionaire in the United States.
In 1808, Astor established the American Fur Company and set out to command the fur trade from the Great Lakes to the Pacific. To accomplish this, he had to challenge the powerful British fur companies in the West. He hired traders to set up Astoria, a trading post in Oregon , in 1811. From Astoria, the traders were to obtain furs from the Indians and then ship the pelts directly to China. As promising as the scheme first seemed, Astor's timing was poor. In 1812, the United States went to war with Great Britain in the War of 1812 . In 1813, the British Northwest Company surrounded Astoria and forced Astor's agent to sell out the entire post for far less than it was worth. A furious Astor was forced to abandon his Oregon trade.
Although the American Fur Company was unable to capture the Pacific trade, it nonetheless became the largest American fur trading firm in the West as Astor expanded his interest in the Great Lakes region. In 1821, the American Fur Company invaded the Upper Missouri fur trade. By either combining with competitors or buying them out, Astor's company managed to capture much of that market as well. But by the early 1830s, Astor realized that American beavers were rapidly being depleted (over-hunted until there were few left). Beaver hats, once all the rage in Europe, had gone out of style. He sold the American Fur Company in 1834, getting out before the market dried up.
Astor had long invested his profits from furs in New York City real estate. After 1834 and until his death fourteen years later, he continued to buy, improve, and sell land on Manhattan Island. He owned at least $5 million in land when he died. Even as he grew wealthier, his greed seemed to increase. According to those around him, over the years Astor's personality changed. Earlier, he had a reputation as a cunning but fair employer and an honest dealer. In later life, he became known as a harsh, selfish, and greedy man.
Astor speculated in land elsewhere, including in the West. (The town of Astor, Wisconsin , for example, later became 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 $20 million, making him the wealthiest person in the nation. He left $400,000 to found a library, which became the heart of the New York Public Library, today one of the largest in the world. He left most of the rest of his wealth and businesses to his son William, establishing one of the great family fortunes of the early United States.