John Jacob Astor

Introduction

John Jacob Astor (born Johann Jakob Astor, July 17, 1763 in Walldorf, Margraviate of Baden; died: March 29, 1848 in New York City), was born in 1763 in Walldorf, near the cities of Heidelberg and Mannheim in the Margraviate of Baden (now part of the German state of Baden-Württemberg). Astor was among the first wave of German immigrants to arrive in the United States after the Declaration of Independence. Over the course of his career, he applied his great entrepreneurial talent to build the first modern American trade empire with partners in Europe, Asia, and the Americas. He dealt in luxury goods, such as musical instruments, furs, Chinese tea, and silk. Building on the wealth Astor realized from his trading endeavors, he accumulated the largest portion of his fortune from real estate ventures. He speculated in Manhattan real estate and opened the Astor House in 1836, the most famous and elegant American hotel of the period. By the time of his death in 1848, Astor had become the wealthiest man in the United States. His estate was worth twenty million dollars (approximately $570 million in 2010$) and included two hotels, one theater, and many other real estate holdings and buildings in New York City. Even by early-twenty-first-century standards, Astor remains one of the most successful entrepreneurs in American history.[1]

Origins, Family, and Ethnic Background

Astor’s birth on July 17, 1763, is recorded in the Reformed Church register in Walldorf. He was the sixth and last child of Maria Magdalena and Johann Jakob Astor, who had married in April of 1749.[2] His father was a butcher, a trade very much dependent on the vagaries of the local agricultural economy and the varying wealth of his fellow villagers. When John Jacob was three, his recently widowed father married Christina Barbara Seybold and the elder Astor’s household continued to grow, cramping the large family into a small home.[3] As the family grew, the elder children began to leave home one by one. The second eldest child, Heinrich, was the first Astor son to depart. In order to finance his passage to North America in 1775, Heinrich signed up as a Hessian mercenary to fight for the British in the American Revolution. Soon Heinrich changed his name to Henry and, once in North America, left the military. Georg Peter Astor, the eldest Astor child, left home in 1777 and established himself in London as a wooden instrument maker. The same year, Astor’s brother Melchior moved to a neighboring village to work as a butcher and later moved approximately 124 miles (approximately 200 kilometers) north to the community of Neuwied (near Koblenz) to work as a cook. As the eldest son from his father’s first marriage still living in Walldorf, John Jacob increasingly took on new responsibilities at home and in the family business.

John Jacob attended a one-room school in Walldorf that had been established by the Reformed Church in 1737. Johann Valentine Jeune, the head teacher and a descendent of a French Huguenot, shared the teaching responsibilities with Reformed Pastor Johann Philip Steiner. Both educators enjoyed teaching John Jacob because he was talented and easy to motivate. Jeune introduced John Jacob to Calvinist ideas, including the belief that wealth was a reflection of God’s favor and that diligence and engagement were keys to wealth. John Jacob’s education ended in 1777 at age fourteen after his father demanded that he join the family trade. John Jacob obeyed dutifully at first, but when offered the opportunity to join his brother’s instrument building and selling business in London, he leapt at the prospect and convinced his father that such a move was in his, and his father’s, best interest. He left for London in 1780 at age seventeen, leaving behind a life with few prospects for betterment and financial security for a promising new start in the busy, metropolitan capital of Great Britain. John Jacob could not afford to pay for transportation to London, so he walked thirty miles to the river town of Speyer, where he sought employment as a Rhine raftsman in order to earn enough money to pay for the boat fare to Rotterdam and the passage to England.

Social Networks and Immigrant Entrepreneurship

Life in the busy commercial metropolis of London met John Jacob’s expectations. He adapted easily to British life and acculturated rapidly. Astor officially anglicized his name during this period. He honed his business acumen and sales skills working in his brother’s instrument building shop. He was also an astute observer of other business opportunities, such as the sudden boom in demand for textiles due to British wartime needs. As the war neared its end, correspondence between John Jacob and his brother Henry in New York City convinced John Jacob that New Yorkers had a pent-up demand for luxury items. The Astor brothers were eager to cash in on this demand by starting a transatlantic trade in musical instruments. George would produce them in London and John Jacob would import and sell them in New York City. John Jacob left for the young United States two months after the Revolutionary War officially ended, embarking on the ship North Carolina in November of 1783 and arriving in Baltimore in the spring of 1784. After traveling to New York City, he reunited with his brother Henry, and prepared to start a business in which he could make money by applying his prior commercial experience, family connections, and fluency in English and German.

Astor arrived in New York City with a few of his brother’s flutes and a small amount of money. He sold the musical instruments and used the profits to import additional instruments from England. Initially, his business activities did not cover his living expenses. John Jacob’s brother Henry helped him obtain supplemental employment as a delivery boy for a German-American baker named George Dieterich. In the following months John Jacob delivered bread and cakes to the costumers of the small bakery. In this way, he familiarized himself with his new environment. Within a few months of his arrival in the city, American fur trader Robert Bowne hired Astor to assist him with his business. Astor worked for Bowne for several months and learned how to buy and sell furs and prepare peltries. Astor would later put these skills to good use in his own import and trade enterprises.

Henry Astor also introduced John Jacob to the congregation of the German Reformed Church of New York. John Jacob soon became an active member of the congregation, and served as the church’s treasurer from 1791 to 1797. In this important post, he was responsible for managing all of the congregation’s finances. The church provided Astor with a social network of German co-religionists, but he ultimately sought a means of entry into New York City’s well-established, upper-class society. His effort to cultivate relationships with upper-class New Yorkers was a direct outgrowth of his business interests. Only wealthy New Yorkers could afford the luxury items he imported from Europe. In the fall of 1785 he married Sarah Todd, who came from a family of Scottish origin that had resided in New York City for several generations. For Astor, his marriage to Sarah Todd not only brought personal happiness but also economic independence. Sara Todd Astor’s wedding dowry of $300 (approximately $7,000 in 2010$) was modest, but it enabled her husband to expand his small import business. He established his own shop, selling instruments, furs, and other imported luxury goods. Todd was a pious, loving, and business-minded wife and gradually became his most important business partner. She handled the family’s business affairs in New York whenever Astor was away from home.[4]

Sarah Todd’s dowry helped Astor expand his business, but the Todd family’s social connections permitted Astor true entry into upper-class society and enabled him to forge useful connections with merchants, traders, ship owners, and other New York elites. Sarah’s brother Adam was a sea captain with personal connections to many of the other captains and ship owners who delivered cargo to New York. This would prove to be a great asset to Astor’s import trade. Sarah’s stepsister also helped Astor establish many useful business contacts among New York’s merchants. John Whetten, Sarah’s nephew, was a naval officer who provided valuable introductions to ship owners. Astor worked with him often during his time on active duty and later Astor repeatedly gave Whetten command of his merchant ships. It was Astor’s development of the social and economic network to which his wife gave him entry that formed the basis for what became the Astor trade empire.

Two years after his 1785 marriage, John Jacob joined the German Society of the City of New York, as had his brother before him, but unlike his religious commitment to the German Reformed Church, he showed little interest in German-American social issues. Instead, Astor became intrigued by the Freemasons and decided that the secret fraternal order might be a more effective venue than the German Society for cultivating business and social contacts with New York’s social and political elites. In 1789, he was officially accepted as member of Holland Lodge No. 8, which was part of the Grand Lodge of the State of New York. He enjoyed regular meetings with many of his fellow businessmen and other highly placed and powerful New Yorkers, including DeWitt Clinton, who became mayor of New York City and later governor of New York State, and George Clinton, who was DeWitt’s uncle and a close friend of Thomas Jefferson. Later, Astor became a senior warden of the lodge and ended his career as Master of the Holland Lodge.

John Jacob Astor’s business thrived during this era, in part because the family lived relatively modestly and in part because he focused on accumulating capital and reinvesting the profits of his business ventures. In 1789, based on his brother’s advice, John Jacob expanded his business endeavors and began to invest in real estate in New York City. Land in Lower Manhattan was considered a good buy and was in high demand due of the large number of immigrants landing in the city each year. John Jacob approached his dealings in real estate cautiously at first. On May 18, 1789, he bought a lot on the corner of Bowery Lane and Elizabeth Street. Later that year, he bought the neighboring property from James Bolmer, who owned a restaurant nearby. Encouraged by the success of his early real estate transactions he expanded that aspect of his business and acquired more property. He moved his business from its location on Queen Street, where he lived with his wife and young daughter, to a new and bigger commercial space, which he rented at 40 Little Dock Street (now Water Street) in Manhattan. In 1794, he and his wife bought property for their family and business at 149 Broadway, right in the commercial heart of the city where New York’s rich and famous resided.

Ten years after John Jacob emigrated from Walldorf, he owned a successful import business and was a substantial property owner, achievements that would have been impossible for him in the German village he left behind. In 1789, almost five years after his arrival in the United States, he became an American citizen and the following year, his name appeared among other prominent New York City merchants in the New York Directory and Register and he would continue to be prominently featured in the directory for the remainder of his life.

Commercial Networks

The cold New York winter of 1788-1789 proved to be a boon for Astor’s fledgling import business. Local demand for furs increased dramatically and Astor could have sold many more if only he had had them in stock. To prevent future shortages, Astor decided to hunt for furs himself. He bought the necessary supplies in New York City and set out for the relatively unsettled northwestern corner of the state near the Canadian border and Lake Ontario. He targeted beavers and raccoons, because their furs were popular for coats, caps, and gloves. First, he followed Native American trails on foot, but soon he bought a canoe to move north more quickly. He slept outside and ate fish or meat from the animals he hunted. After a couple of weeks, he returned to New York City with many furs. With Sarah’s assistance, he dressed the animal skins skillfully and made a substantial profit selling them in his store. The large profit margin on furs fueled Astor’s ambition to expand his trade business. On subsequent trips, he brought beads, clothing, and wooden toys to trade with the Native Americans for furs and used the music from his flute to gain their trust in trade negotiations.

Other merchants began to copy Astor’s trade practices. Trade routes were established throughout upstate New York and merchants began to look to Montreal in British Canada as a source for additional furs. British colonial regulations required that Canadian furs had to be exported to London before they could be imported to the United States. This made imported Canadian furs much more expensive in the New York market. After Jay’s Treaty loosened trade restrictions between Canada and the United States in 1796, Astor began to import furs from Montreal directly to New York City. The region around the Great Lakes became more accessible to American traders as a result of the treaty. Consequently, competition in the New York fur trade stiffened, but Astor continued to profit due to his head start and years of experience.

Astor began to look for other outlets for his supply of furs. In 1800, he decided to enter the China trade. The first American-flag vessel had sailed to China in 1784, two years after the emperor of China had allowed certain merchants in Canton to trade with non-Chinese merchants. In the years that followed, Astor had watched the cautious steps taken by fellow New York merchants in the China trade. After careful research and meetings with fellow merchants and ship owners, Astor decided to ship furs and Hawaiian sandalwood to China and purchase silk, tea and spices for sale in New York. Silk was particularly important to Astor, since it was becoming fashionable in New York City and would complement his fur sales.[5]

Thomas Jefferson’s Embargo Act of 1807, which forbade American-flag shipping from leaving American ports for foreign destinations in response to attacks on American vessels by British and French warships during the Napoleonic Wars, halted Astor’s overseas trade endeavors. The embargo was nothing short of a financial catastrophe for Astor, particularly since he also faced serious competition in the Great Lakes fur trade from the British-Canadian North West and Hudson’s Bay Companies. Astor decided to outflank the powerful, continental fur-trading duopoly by establishing fur trading posts on the Pacific coast and cementing American claims to the Oregon Territory. Astor’s plan for trading posts on the Pacific depended on support from President Jefferson. In 1808 he wrote, confidentially, to his friend DeWitt Clinton and explained his expansion plan with the expectation that Clinton would use his family connections to secure presidential consideration of the proposal. At the time, DeWitt Clinton’s uncle, George Clinton, served as Jefferson’s vice president.

In his first letter to the president on February 27, 1808, Astor asked for Jefferson’s permission to trade with the Native American tribes west of the Mississippi River. He also inquired about government assistance in the form of military support in the case of attacks by hostile Native Americans or the British. Jefferson was delighted with Astor’s letter because Astor’s plan mirrored his own vision of how the American West should be developed. An exchange of letters ensued in which Astor developed his idea of expanding American fur trading networks to the Pacific and impressed the president with his vision. Astor’s ambition was to gain control over the new fur trade in the relatively unexplored territories by establishing his own fur trading company. The company would provide structure and pace for the development of the West and would drive the British trading companies from United States territory. New York would serve as the enterprise’s headquarters.

Astor intended to lay out his trading route from St. Louis to the Pacific following in the footsteps of Lewis and Clark’s expedition through the Louisiana Territory. He wanted to make use of the knowledge gained from the expedition, but more importantly he wanted to take advantage of the region’s geography to further his business activities. Following the Louisiana Purchase, the United States had gained control of the entire length of the Mississippi River and Astor planned to use the river as the main route into the Louisiana Territory. The natural network of regional rivers branching westward from the Mississippi would provide access to hunting grounds and trading posts in the trans-Mississippi West. The furs would be brought to St. Louis first, and then shipped down the Mississippi to the Gulf of Mexico where they would be loaded onto ships for the sea voyage to New York.

Astor called his new business the American Fur Company, underscoring his own sense of patriotism. The trading company was incorporated for twenty-five years and capitalized with two million dollars (approximately $36 million in 2010$) in assets. Since Astor preferred to keep the company’s financial control in his own hands in order to increase the wealth of his family, he did not invite other investors to join the firm and tailored the organizational structure of the company to suit his needs. As the company’s sole owner, he made all the decisions and bore all the risk, sharing none with the nine managing directors he employed and who reported to him.

The Embargo Act of 1807 and subsequent trade restrictions forced Astor to focus on American-based business endeavors. Trading in furs and real estate provided income and helped him accumulate wealth during these years. He invested his profits from the pre-embargo China trade into New York real estate. The city had grown significantly over the years, and Astor believed that more immigrants would continue to arrive from Europe. In fact, the number of New York City inhabitants doubled from 33,000 to 60,000 between1790 and 1800. Astor began to purchase real estate in Manhattan outside the original colonial city limits. By 1819 he had invested $715,000 (approximately $12 million in 2010$) in Manhattan real estate, an investment of most of his cash and liquid capital that paid off because the city continued to grow during the early decades of the nineteenth century.

Astor continued to invest in real estate and housing from 1819 to 1834, when he stepped back as president of the American Fur Company. During these 15 years, Astor spent another $445,000 to acquire real estate and buildings. When he retreated from the fur trade after 1834, he entered a third phase of acquiring real estate. By then he had become convinced that the real estate business was the perfect business for him, because it allowed him to capitalize on the housing needs of thousands of immigrants arriving annually in New York City. He spent about $832,000 on real estate between the years 1834 and 1848. In total, he bought nearly two million dollars (approximately $57 million in 2010$) of Manhattan real estate, making his New York real estate endeavors the most important of all of his enterprises and providing the bulk of a fortune that far surpassed the wealth of all of his contemporaries. His courage to invest in unsettled farmland, his business instincts, and his foresight when it came to the future development, growth, and expansion of New York enabled him to become the richest man in America.

Astor was always concerned about his public image. He often discussed it with his advisors, and followed their strategy in order to make sure that his name was always associated with positive achievements and economic success and that only the most successful or most prestigious projects would bear the name Astor. Accordingly, the outpost in the Oregon Territory on the Pacific coast was named “Astoria,” his most prestigious hotel was the Astor House, the library he donated was the Astor Library, and in his will he provided funds for the construction and operation of a poorhouse in his hometown of Walldorf, named Astorhaus, which opened in 1854. Astor’s donation to the library represented his most significant philanthropic project. He wanted to enable all New Yorkers to educate themselves regardless of class. Astor was grateful for the education he had enjoyed as a relatively poor child in Walldorf, and he cherished learning as a highly valuable good. The Astor Library was first located on Astor Place, formerly Lafayette Square, close to William Backhouse Astor’s house, an Astor landmark in his beloved city. About fifty years after Astor’s death, however, New York City officials merged the Astor Library with the Lennox Library and the Tilden Trust to create the New York Public Library. The front of the current building still proudly shows visitors Astor’s mission: The Astor Library Founded By John Jacob Astor For The Advancement Of Useful Knowledge MDCCCXLVIII. Inside, the first room is still called Astor Hall, capturing the spirit of Astor in the library.

Astor accumulated his fortune in order to provide for his family and hence he made a will that assured that none of his children, grandchildren, and other kin would ever experience the kind of poverty that he had endured during his childhood. In return he demanded success and discipline from his heirs; he expected eagerness, diligence, and entrepreneurial achievements from all members of the family and punished underachievers, who did not help increase the family fortune, by withdrawing care and financial support. When John Jacob Astor died, he was proud patriarch of his family and a respected member of New York’s elite. William Astor was his primary heir. He succeeded his father as patriarch of the family and inherited the title of the richest man in the United States.

Conclusion

The name “Astor” developed into a “brand” that became synonymous with luxury, wealth, exquisite products, and exceptional hotels for over two hundred years. Both the famous Waldorf-Astoria Hotel and the Hotel Astor in New York were founded by two of John Jacob Astor’s great-grandsons. Movie lovers might remember Astor Pictures, a production company that existed until 1956, and the actress Lucile Langhanke, whose career took off after she started to perform under the name Mary Astor. Then there is Margret Astor, founder of the famous line of cosmetic products, and Astor cigarettes, the ones with the elegant red packaging. Not to mention the first American settlement on the Pacific Ocean named Astoria when it was founded in 1811 by Astor’s fur traders near the mouth of the Columbia River. New Yorkers encounter the Astor name all over the city. There is Astor Place, Astor Boulevard, the Astor District, and the former Astor (now the New York Public) Library. In the southwestern German town of Walldorf visitors will note the Astorhaus, John Jakob Astor Street, and FC-Astoria Walldorf, the local soccer club.

John Jacob Astor’s wealth was so exceptional in the first half of the nineteenth century that his career set a new benchmark for entrepreneurial success in the United States. His fortune was so outstanding that it encouraged contemporaries to integrate tales of it in the founding myths of his adopted homeland. Admirers, as well as critics, have shaped public opinion about Astor, the former praising his business sense, economic foresight, and his courage to follow his instincts to the fullest measure he deemed reasonable, the latter seeing him as a greedy capitalist lacking any sense of the moral obligations expected of a republican citizen, especially in the Jacksonian era when Astor was caught in the middle of the national debate between economic liberalism and republicanism.

In the 1850s a negative image of Astor gained prominence and became the dominant narrative for his biography. A close and careful reading of the archival sources, however, reveal a man who worked hard to make his way from poverty to wealth—extraordinary wealth— someone who was always enthusiastic about his projects and tried roads untraveled in order to advance his business ventures and make a better life for himself and his family. Astor had excellent business instincts and social skills, invested in projects with a high profit potential and limited risk, and followed his visions without compromise, though not to the point of recklessness. He diversified his investment portfolio when this concept was far from being an established entrepreneurial principle. He never relied on returns from a single product, service, or project; he always developed a fallback plan so that failures would not wipe him out completely; he seized opportunities and turned his engagement in pursuits that interested him into new branches of entrepreneurial activity and investment. He was skillful at building reliable networks in financial, social, and political circles and, as a consequence, gained profitable access to presidents, governors, senators, mayors, merchants, and bankers.

Astor’s business practices were a model for American entrepreneurship in later periods. He focused on sales of high-end consumer goods and real estate development, keeping his investments low and the turnover high. Unlike economic giants of later decades, such as Cornelius Vanderbilt and John D. Rockefeller, Astor never invested in precious metals like gold or silver. His broad portfolio based on mercantile trade and real estate investments made him virtually independent of economic trends and shortages in deliveries due to harvesting problems or changes in consumer preferences. If profits from one trade item fell, he simply added a new one. His entrepreneurial activities were essential for the development of the American fur trade in particular and the trans-Mississippi West in general. He was one of the engines for westward expansion and his commercial actions helped cement the United States’ claim to the Oregon Territory.

Accounts of Astor’s success soon became a pull factor among potential German immigrants. The story that spread among Germans was the tale of the poor little boy who had become the richest man in America. The newspapers that targeted those eager to leave Germany were full of stories about Astor’s life and fortune. Every time economic circumstances worsened in Germany, newspapers recounted his example thereby motivating fellow countrymen to pursue their American dream. Often only after their arrival in New York did most new immigrants realize that the Astors were vastly and uncommonly rich, with John Jacob Astor’s experience representing the exception rather than the norm.

In his later years, Astor engaged with German immigrants by establishing an office to assist new arrivals when they reached the city. He became president of the German Society of the City of New York, and provided various means for immigrants to improve their lives. In this instance, too, he followed a hands-on approach and supported those who had plans to establish themselves as merchants or craftsmen. He showed them how to take their first steps in this direction. He made his own successful business development the model for those who were as hard working and engaged as he was and his vision and accomplishments inspired and guided many other traders, merchants, and immigrants who attempted to follow in his footsteps. For his fellow Germans, he became a symbol of what an immigrant entrepreneur could achieve in the New World.

Notes