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John Jacob Astor

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John Jacob Astor (July 17, 1763 — March 29, 1848) was a fur magnate and founder of a renowned family of Anglo-American capitalists, business leaders, and philanthropists. His American Fur Company is considered the first American business monopoly.[1]

Life[edit]

John Jacob Astor came to America in 1783, where his elder brother had settled and invested his savings in the fur trade. In 1784 he went with a cargo of furs to London; sold them and formed connection with fur houses there, and as his capital increased, made annual trips to Montreal, buying furs there and shipping them direct to London, as Canada was allowed to trade only with the mother country. In 1794 Jay's treaty removed this embargo, and Astor, then in London, at once made a contract with the Northwest Company of Montreal and Quebec (then the magnate of the Canadian Northwest fur trade), imported furs from Montreal to New York, and shipped them to all parts of Europe and China. The surrender of the lake posts under the treaty also greatly extended the trading limits, and Astor in a few years became one of the leading merchants and capitalists of the country, having a quarter of a million in 1798, and double that a few years later. In 1807 he embarked in direct trade with the Indians by way of the Mohawk, and with the English fur companies; but found the American trade chiefly monopolized by the Mackinaw Company, and knowing the government's desire to keep its home trade in home hands, proposed with its protection to accomplish this himself. In 1809 he secured a New York charter for the "American Fur Company," but the War of 1812 suspended operations, and after it a government prohibition of British fur trade in the United States broke up the company.

Meantime a grander scheme had been initiated. Sir Alexander Mackenzie, after crossing the continent far north in 1793, had suggested establishing a line of trading posts from ocean to ocean, with terminal, coast and island stations, to draw all except the Russian fur trade into one channel. Lewis and Clarke's transcontinental expedition in 1804 proved its practicability on American soil, and Mr. Astor evolved the plan of distributing such posts along the Missouri and Columbia rivers, with a central station at the mouth of the latter, where all the peltries from the interior and those gathered by coasting vessels were to be collected and taken by a yearly ship to Canton, loading in return with Chinese goods. A later development was to operate a line of ships from the Pacific coast to the Chinese and East Indian ports, with a Hawaiian island for an intermediate port. The Russian Fur Company had already complained to the United States of the casual American trading vessels selling liquor and firearms to their Indians; the American government had consulted Astor for a remedy and his idea was to abolish this irresponsible trading by making his yearly supply ship take its place. To prevent ruinous competition he offered the Northwest Company a one-third interest in the enterprise; but they declined it and sent a company to seize the mouth of the Columbia before his party could arrive. He succeeded in spite of them, however, in planting a settlement, which was named Astoria; but on the breaking out of the War of 1812 the English seized it. It reverted to the United States by the Treaty of Ghent, and Astor wished to revive the project, but the government was cool, and he dropped it, still however, buying his furs direct and trading with many countries, more particularly China, at that time the best fur mart in the world.

He also made large amounts by buying depreciated government securities, which afterward commanded a considerable premium. But his chief investment was the one which has founded the family greatness on a rock. Foreseeing the immense growth of New York city, he bought large tracts on Manhattan Island far beyond the then city limits, taught his son to invest his accumulations in the same way, and established the system of handling them.

In 1827 he and his son William, who had been his partner since 1815, withdrew from the China trade and formed the American Fur Company, chiefly managed by the great expert; but a few years later he retired from business altogether, thenceforth devoting himself to his investments, and devising, in consultation with others, plans for a public library suggested by Washington Irving, — afterward the Astor Library, for which he left $400,000 in his will. He made gifts and bequests to other objects; among them $50,000 for a school for poor children and a home for the indigent aged in his birthplace, Waldorf, called the Astor House. He was much more than a great trader: he had a breadth of conception, a combined energy and patience of execution, a mastery of detail, a retentiveness of memory and a sagacity of judgment, which in the opinion of his intimates would have raised him to greatness in any line. He left two sons, William B. and John Jacob, and three daughters.[2]

Real estate investment[edit]

John Jacob Astor, it is true, entered upon one or two speculative schemes. He bought up the claims to the confiscated lands of departed Loyalists. Chief among these were the claims of Roger and Mary Morris, whose ancestors owned an estate comprising 51,100 acres, or nearly one-third of the area of Putnam County, N. Y. Astor is said to have paid the heirs $100,000 for their rights. The confiscated land had been divided into more than seven hundred farms, on which 3,500 people were settled. Astor threatened suit to oust them. This created consternation among the settlers. Most of them had obtained their titles from the state. It was the state's duty to defend them.

The New York Legislature appointed a commission to treat with Astor. They had to acknowledge the legality of his claim, and asked for a redemption price. Astor at first named $667,000, one-half of the estimated market value. This was considered extortionate and no settlement of the dispute was made.

Astor did not press the case, but the owners of the land were kept in a state of suspense and clamored for a settlement. Their titles were questionable. They could not mortgage or sell their lands. They hesitated to make improvements thereon. Finally, after ten years of bickering, the legislature passed a law providing for a settlement. Astor was to bring five separate suits, and if the United States Supreme Court decided three in his favor, he was to be paid $450,000, subject to a deduction of $200,000, should the court hold that the value of buildings and other improvements placed upon the land by title holders under the state could not be claimed by the contestant.

Astor accepted the offer. The state employed Daniel Webster and Martin Van Buren to plead its 'cause. Astor's attorneys were Emmet & Ogden, the leading law firm then in New York, though it is suspected that Aaron Burr acted secretly as his counsel. Astor won the necessary three cases, and in 1830 there was issued to him, in lieu of cash, $500,000 in New York State bonds. As more than twenty years elapsed between Astor's payment of $100,000 and his award, his actual profit, allowing for interest accumulations at 6 per cent, and attorneys' fees, was probably less than 1oo%-in fact, less than the profit on his urban real estate during the same period.

But Astor did not buy real estate for a profit on "turnover." He bought to hold indefinitely, for income, and his descendants still live from the rentals of scores of lots and plots, obtained at bargain prices by their ingenious and farseeing progenitor. Land-poor individuals, institutions and estates found him a willing purchaser of vacant and non-income producing properties, provided he thought they were cheap. He bought numerous lots from the Trinity Corporation-the largest landowner in early New York. He bought from distressed traders and merchants, and from defaulting mortgagors, and when the crash of 1837 came he still had cash to buy at ridiculously low prices.

Nor did he care to sell, until he obtained a price with which he could make a better investment. And he did not spend money on building and improving property, unless he could reap the immediate reward of such expenditure. Occasionally he asked for and received grants of city land, and though political corruption or graft may have been at the bottom of some of these transactions, he generally rewarded the community by undergoing the expense of cutting streets, draining or filling in the donated plots or the surrounding areas.[3]

References[edit]

  1. Encyclopædia Britannica Online. "John Jacob Astor", referenced 2013-05-28.
  2. "The Encyclopedia Americana (1920)/Astor, John Jacob (merchant)", 1920. Referenced 2013-06-15.
  3. A. M. Sakolski. "The Great American Land Bubble" (document page; pdf, epub), p. 189-191, Harper & Brothers Publishers, New York and London, 1932. Referenced 2013-06-15.

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