Astor, The first multi-millionaire Businessman

Astor, The first multi-millionaire Businessman

   Kautilya Academy    08-11-2019

Astor, The first multi-millionaire Businessman

Astor, The First Multi-Millionaire Businessman :-

John Jacob Astor, who died on this day, was the first multi-millionaire businessman in the United States. At the time of his death, he was the richest person in the US with an estate worth some $20 million – about $140 billion in today’s money.                                                                                                                                                       
To some, he was one of the original “captains of industry”. To others, he was a “robber baron” who owed his vast fortune in part to illegal opium-dealing.

The son of a butcher, Astor was born in 1763 at the village of Waldorf in Germany. At 17 he made his way to England where his brother George had set up a musical instrument business in London.

Astor spent three years in England, learning the language and honing his business skills. He intended to make his fortune in the United States, which he saw as a new land of opportunity after the War of Independence.

He left England in November 1783, but his ship became stuck in ice at the mouth of Chesapeake Bay, where it was stranded for two months. While kicking his heels on board, Astor is said to have fallen into conversation with a fellow passenger who had gone into business trading furs with Native Americans.

What he heard was music to Astor’s ears and he set aside plans for selling musical instruments, deciding to become a fur trader. For a time he did sell pianos and flutes sent by his brother in England, but with the profits he bought furs.

He soon opened a shop in New York and by the turn of the century he had developed it into the country's leading fur company. It would monopolise the fur business for decades, at a time when beaver hats were considered the height of fashion in America and Europe.

Astor also began exporting furs to China and importing Chinese silk and tea, while also turning his attention to the opium trade. China had outlawed it but Astor knew that despite the illegality, opium was still in popular demand.

Ambitious and ruthless, he purchased 10 tons of Turkish opium in 1816 and sent it into China, trading it for goods – tea, pottery and fabrics. He then resold those goods for a fortune in the United States.

It isn’t clear how much opium Astor sold during his years as a drug smuggler. It has been estimated that he offloaded hundreds of thousands of pounds of opium between 1816 and 1825, when he moved out of the trade.

But his fur empire remained his principal business, at least until 1834 when he decided to sell, believing that the industry was too vulnerable to changes in fashion. The beaver hat, it seems, had had its day.

He turned to other investments, including property, money-lending, insurance, banking, railroads and canals, public securities, and the hotel business. The most important was property and he acquired vast holdings of real estate in New York City and the surrounding area. During the last decade of his life his income from rents alone exceeded $1,250,000.

Today, his name is remembered in the real estate market perhaps most famously for the Waldorf-Astoria Hotel.

His great-grandson, John Jacob Astor IV, who died when the Titanic sank (see article, 15 April) built the famous Astoria hotel in 1897. It was considered to be the most luxurious hotel in the world and was located close to the Waldorf Hotel, built by his cousin – and rival – William.

The Astoria was named after the family and the Waldorf after Astor’s native village in Germany. The hotels, which were located at the present site of the Empire State Building, were later combined into the Waldorf-Astoria, currently standing on Park Avenue in New York City.

John Jacob Astor died aged 84 at one of his houses in New York City.
Academic Stephen Schneider of Saint Mary's University, Halifax, Nova Scotia, has written about “robber barons”, whom he describes as “the powerful 19th Century US industrialists and financiers who made fortunes by monopolising huge industries through the formation of trusts, engaging in unethical business practices, exploiting workers, and paying little heed to their customers or competition.”

Astor, he says, was one of them, amassing his fortune through the monopoly held by his American Fur Company during the first 30 years of the 19th century.

“This monopoly,” says Professor Schneider, “was achieved in part by crushing rivals and systematically cheating Native Americans of fur pelts. When his competitors complained to the government, Astor’s agents resorted to violence. With his riches, he routinely paid off politicians to protect his business interests.”

That said, Astor showed a philanthropic streak when he bequeathed $400,000 for the founding of a public library, the Astor Library, in New York City, which was consolidated with others as the New York Public Library in 1895. His descendants took note and became philanthropists as well as capitalists.

But putting any philanthropy in perspective, another academic, author and historian James L. Stokesbury, wrote in 1997: “In his later years, Astor tried to pass himself off as a liberal humanitarian, but the pose was too unnatural, and it never became credible.

“To the end, money was his passion, and to make it his men evicted widows and debauched Native Americans. Though some writers, notably in the late 19th century, regarded him as a great American hero, history has not accepted the verdict.

"Today, in a more complex era, Americans ask more of their heroes than the ability to make money.”

Event Date: March 29, 1848
Event Location: NYC, New York, USA

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