History In The Headlines

America’s First Multi-Millionaire, 250 Years Later

By Barbara Maranzani
Born in the town of Walldorf in what is now southwestern Germany on July 17, 1763, John Jacob Astor rose from humble beginnings to build one of America’s first fortunes, thanks to a monopoly on the nation’s fur trade and his even more successful dabbling in New York City real estate. By the time of his death 85 years later, Astor had become the wealthiest person in the United States, with a fortune estimated to be worth billions in today’s money. Two hundred and fifty years after the birth of America’s first multi-millionaire, find out some surprising facts about how he built his fortune.

John Jacob Astor1. Astor tried several different careers before entering the fur business.
After working alongside his father in the family’s dairy business for several years, Astor left Germany at the age of 16 to join his brother in London. For five years, he helped his brother manufacture and sell musical instruments, eventually traveling to the United States in 1784 to serve as the business’ U.S. agent. Just 21, Astor reportedly carried little more with him than a shipment of seven flutes. Once stateside, Astor worked with another older brother, Henry, a successful butcher in New York’s Bowery area, and then briefly worked as a baker. Disillusioned with all of these lines of work, Astor began trading for furs with local Native American tribes, and when a commercial treaty between the United States and Great Britain opened up new markets in the west in the 1790s, Astor sprung into action, establishing himself as the exporter for one of Canada’s premier fur companies—and by the end of the decade he was worth more than $250,000, nearly $5 million in today’s dollars.

2. He nearly lost his fortune during the War of 1812.
In the early 1800s, Astor expanded his business, establishing trade routes to China and Europe, but when the 1807 Embargo Act led to the closure of many European ports to American ships, Astor turned westward for new opportunities. In 1808, he opened the first of several fur businesses, the American Fur Company, followed soon after by subsidiaries including the Pacific Fur Company. In 1811, the Pacific Fur Company established Fort Astoria (in what was then a disputed region known as Oregon Country) the first American settlement on the Pacific coast. Astor’s hold on the region’s fur trade didn’t last long—when war broke out between the United States and Great Britain in 1812 the men at Fort Astoria panicked, selling the business and its holdings to a Canadian-based company. It turned out their fears were well founded: Just months later a British warship arrived with the intention of occupying the fort. Astor’s northwest dreams were in tatters, and the British would maintain control of the outpost for the next 40 years.

3. Astor turned to the U.S. government for help to get him back in the fur game.
After the war ended in 1815, Astor successfully lobbied the U.S. Congress for a series of protectionist legislative bills designed to prevent a repeat of his financial losses in the Pacific Northwest. When Congress passed an 1816 bill barring non-U.S. citizens from owning fur businesses in U.S. territory, the same Canadian company that had purchased Fort Astoria was forced to sell all of their holdings below the Great Lakes to Astor. Six years later, Astor received additional aid from the U.S. government when Congress voted to close all trading posts operated by foreign governments, leaving Astor with a near monopoly on the fur trade.

4. Astor made part of his fortune smuggling drugs.
While his lobbying of Congress continued, Astor briefly turned his attention away from the fur trade. In 1816, he purchased 10 tons of opium from the Ottoman Empire (modern-day Turkey) and shipped it to Canton, China, aboard one of his American Fur Company ships—despite China’s banning of the drug 17 years earlier. After turning a tidy profit on the illegal enterprise, Astor abruptly ended his involvement in 1819. Astor was the first American known to traffic the drug in China, but certainly not the last—several early American fortunes were built on the Chinese opium trade, including that of Warren Delano Jr., the grandfather of President Franklin Delano Roosevelt.

5. Astor entered the NYC real estate scene thanks to his friendship with Aaron Burr.
Though he had dabbled in real estate speculation on earlier occasions, Astor’s first big land deal came in 1807, when former Vice President Aaron Burr was arrested for treason for his involvement in a plot to annex territory in Louisiana and Mexico to establish an independent republic. The financially beleaguered Burr, who had already heavily mortgaged his Manhattan estate, known as Richmond Hill, appealed to Astor for help. Burr had been acquitted, but his reputation was in ruins and he sought a new start in Europe. Desperate for cash, he agreed to transfer the deed to Richmond Hill to Astor for just $32,000—in what Burr later maintained was to be a temporary agreement. Astor, of course, saw nothing temporary about the transaction. In the coming decades he would carve up hundreds of parcels of land from the former Burr estate, negotiating ever hire rental agreements with tenants. As the city of New York expanded northward, Astor sold his already developed land for fresh parcels, following the construction routes of municipal services such as water and transportation lines uptown. By the 1830s, Astor had fully retired from the fur business and devoted his time to his real moneymaking venture, New York City real estate.

6. A library created by Astor’s will formed part of the New York Public Library system.
When John Jacob Astor died in March 1848 his will contained bequests for several charitable groups plus approximately $400,000 ($10 million in today’s dollars) for the creation of a free, public library, to be built in what is now New York’s East Village neighborhood. The Astor Library became one of the most well respected institutions in the city, but the lack of additional financial support from the Astor family left it struggling financially. In 1895, the Astor collection merged with that of another New York philanthropist, James Lenox, and utilizing the funding left by yet another, former New York Governor Samuel Tilden, created the New York Public Library system. The main branch library, on 42nd street and Fifth Avenue, opened in 1911, and for more than a century the entrance has been guarded by two marble lions—originally known as Leo Astor and Leo Lenox after the library’s benefactors, but now more popularly known as “Patience” and “Fortitude.” The original Astor library, in lower Manhattan, was eventually purchased by the Public Theater, then known as the New York Shakespeare Company, which has produced hundreds of theatrical events at the site, including the world premiere of the rock musical “Hair,” in 1967.

7. Astor created the first family “trust” in American history.
Aside from such charitable donations as the library, John Jacob Astor left the bulk of his $20 million fortune (estimated by Forbes magazine to be worth more than $100 billion today), to his second son, William Backhouse Astor, Sr. To ensure the continuation of his family’s wealth, however, Astor planned ahead. In 1834, he created what’s believed to be America’s first family trust, consisting of 125 parcels of valuable real estate covering much of the west side of midtown Manhattan. The Astors’ control of such a large portion of Manhattan real estate led to the coining of one of the family’s nicknames–the “landlords of New York.” The trust was dissolved following the death of the last of John Jacob’s grandchildren in 1919, with more than a dozen Astor descendants sharing in the financial windfall. However, one famous Astor didn’t reap the benefits of the trust’s demise—John Jacob Astor IV, who went down with the Titanic in April 1912.

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Categories: Business, John Jacob Astor, New York City