John Jacob Astor: America's First Tycoon
by Michael Begun
Interestingly, a large portion of New York's future success as a port would once again rest on the backs of furry woodland creatures, as it had during the New Amsterdam period. Instead of going to Europe to be made into hats, more and more of the pelts obtained from these animals were being shipped much further east to the Orient. In fact, the only other commodity whose appeal to the Chinese could even come close to matching silver were furs; these animal skins, particularly sea otter pelts and the always popular beaver pelts, were most in demand in the years between 1808 and 18l2.i The merchant who most capitalized on this demand might also be the man most singularly responsible for New York's victory in the mercantile port wars: John Jacob Astor. A first generation immigrant from Germany, Astor would die in 1848 with an estate worth $20 million, the first great fortune made in the China trade.ii The majority of this fortune came from Astor's ability to understand and exert control upon the fur industry, which was controlled at the end of the eighteenth century by English merchants around Montreal.iii While the majority of eighteenth century fur traders have been described as "little more than unsophisticated sedentary merchantsunable to control the supply, demands, and markets for their various products", Astor was nothing like this.iv In fact, he utilized many progressive practices normally attributed to more modern magnates such as Andrew Carnegie and Henry Ford.v As a precursor to these moguls, Astor's techniques serve as important models for later business practices used in international trade by New York power players down to the modern era. For instance, although Astor based his business in New York, he often traveled to meet with suppliers and distributors to get a feel for regional markets. In this manner, he was able to sell his furs by piecemeal in the markets where it would generate the most profit. As McKay writes, Astor "had the spirit to enter into operations covering long periods and to wait patiently the result of years."vi Above all, he was motivated by sensible, gradual profit and not the bursts of mercantile triumph that typically drove the boom-bust China Trade.
Astor, with rifle, obtaining furs for an employer during the early years of his career (~1792)
Notice how the ruggedness of this depiction differs from the portrait below.
However, one of Astor's most profitable business moves was his decision to become involved in the China Trade, albeit in a way that allowed him to follow his own set of rules. Unlike most China Trade merchants, Astor was able to utilize market shifts in demand for particular goods to his advantage due to the wide geographical coverage of his endeavors; if something was not selling well in China or elsewhere at a particular time, then he would sell it in an alternate location and time where and when the demand existed. The Chinese routinely bought otter and beaver pelts from Astor, beginning in 1800 when he and four partners shipped a cargo of mostly furs to Canton, sold these, and returned with a very profitable mixture of teas and silks to sell on the New York market out of South Street.vii In 1805, Astor was able to build the Beaver, one of the first American ships designed expressly for the purpose of conducting trade with China. Whereas vessels such as the Experiment had been initially conceived as ferryboats, rather than mercantile ships, and needed to be altered to serve the latter purpose, the Beaver was made to facilitate long voyages. The Beaver's "varied adventures were to epitomize the Romantic Era" of New York's Maritime History.viii For instance, in one of Astor's more high profile ventures, the Beaver was loaded down with pelts on August 12, 1808 and allowed to sail out of New York harbor for Canton, despite the fact that President Jefferson had placed a trade embargo blocking such voyages due to harassment of American ships by Europeans. The Beaver was able to do so, because Astor had acquired the permission of the president to take a "Great Mandarin" from New York back to Canton onboard the Beaver, simply as a matter of national security. The identity of this "Great Mandarin", whose name is recorded as Pun Hua Wing Chong, cannot be precisely determined but in all likelihood, he was either a servant of Astor's, a common Chinese dock loafer, or simply an American Indian dressed up to play the part.ix If Chong was actually of Chinese descent, then it is possible that he was one of the first Chinese to officially set foot in the South Street Seaport. Regardless of Mr. Chong's ethnicity, Astor was able to use this ruse to his economic advantage, making a profit of $150,000 on the voyage's return cargo.
Left: Astor, John Jacob." Online Photograph. Encyclopdia Britannica Online. Right: Astor's ship, The Beaver (Ronda p. 241)
Shortly afterwards, Astor decided to capitalize on this series of successes by founding the American Fur Company, America's first monopolistic trust. The American Fur Company was officially founded with the purpose of spreading American influence first throughout the northern regions of the continent and eventually throughout the world. Most important, however, was that New York City became a center of the thriving company, in which Astor himself would supervise the collection, packaging and shipment of furs.x By 1824, however, Astor decided to withdraw entirely from the China trade as both the European demand for silk and tea and the Chinese demand for fur declined.xii Astor correctly predicted a trend away from the fur hats that had been fashionable for so long and toward silk hats. From the substantial 269 thousand skins exported to Canton in 1804, the number of furs imported by the Chinese would sink to ten thousand by 1836. Like a sound investor, Astor was able to judge market demand and invest accordingly, selling his company entirely in 1834 before fur hit its bottom and investing in a market that remains dominant today: Manhattan real estate.xii In fact, Astor once remarked assuredly "If I could live all over again, I would buy every square inch of Manhattan." This was a much less "Romantic" prospect than international trade, but New York's Romantic Era had really come to an end years earlier at the close of the War of 1812, and Astor was first and foremost a shrewd businessman. The days were gone when an Empress or an Experiment would be greeted by a celebratory salvo and immediate riches on its return to New York's port; the spirit of the dawning age would be much less invigorating, with the drudgery and despair of opium, clerks, and landed property ownership becoming the new norm in New York's international commerce.
i. oward, D. New York and the China Trade. New-York Historical Society. 1984 p. 25, p. 30.
ii. Ibid. P. 30
iii. Haeger, J. Business Strategy and Practice in the Early Republic: John Jacob Astor and the American Fur Trade. The Western Historical Quarterly > Vol. 19, No. 2 (May, 1988) p. 184
iv. Ibid. p.184
v. Ibid. p. 186
vi. McKay, R. South Street; a maritime history of New York. Haskell House, 1971.
vii. Ibid. p. 189
viii. Brouwer, Norman. John Jacob Astor's Beaver
ix. Tchen, John Kuo Wei. Chinese America: History & Perspectives. P. 158
x. Haeger, J. Business Strategy and Practice in the Early Republic: John Jacob Astor and the American Fur Trade. The Western Historical Quarterly > Vol. 19, No. 2 (May, 1988) p. 184p. 197
xi. Ibid. p. 201
xii. Ibid. p. 201
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