27 Aug John Jacob Astor
John Jacob Astor lived the classic American success story. Born into a society where there was minimal opportunity for upward mobility, he left Europe at a young age. With $25 in his pocket, Astor journeyed to America where he witnessed the birth of the United States, worked his way up from virtually nothing and became the richest man in the country. His descendants became American royalty, and his achievements became a model for other entrepreneurs to follow.
Born in Germany in 1763 to a working-class family, Astor’s father was a butcher whose shop kept the family fed, but just barely. With 11 children, there was no money for anything except the bare necessities. His mother had passed away when he was still very young, leaving him to find his way in the world with very little individual attention from his father or stepmother. This trauma and feelings of inadequacy may have been the clicking points that contributed to his drive and self-sufficiency later in life.
Astor worked as an apprentice in his father’s butcher shop, but Astor disliked the meat business and felt that his prospects for advancement as a shopkeeper or salesman were limited in his small village. He went to London to live with an uncle who ran a small business making musical instruments, where he learned the trade. London was crowded and immigrants were kept at the bottom of the economic ladder. Astor decided to emigrate to the new United States of America.
With only $25 to his name and a case of flutes and sheet music to sell, John left for America aboard a ship during the winter of 1784. On board, he met a fellow German who was a fur trader. This individual gave Astor a thorough education on the ins and outs of the fur business, a particularly lucrative trade in America. He also gave Astor a few personal references for fur traders in the New York area.
Arriving in New York, Astor immediately began working, holding down regular shifts in a butcher shop and hawking sheet music and flutes at street markets during his off-hours. When those ran out, he had his uncle ship more from London. Then, using the connections he had developed on the passage from England, he obtained a job as a clerk for a furrier company where he earned a reasonable salary while learning more about the business.
Part of Astor’s new job was making fur buying trips on behalf of his employers. Astor traveled through the countryside buying furs from Native Americans, trappers, farmers, and everyone else who regularly killed the abundant game in the region for food or sport. He would also buy furs for himself, selling them at a considerable mark-up. Astor was good at execution, busily buying and selling.
His expertise at the execution was evident when he used his fur proceeds to book passages back to England, delivering furs to London and using a portion of his profits to buy more musical instruments to bring back to America and sell. While the English were enamored of authentic American furs, English flutes were considered a premium product back in the United States. Finding a perfect market fit on both sides of the Atlantic, Astor was soon operating his own fur trading shop in New York.
Astor’s fur buying excursions were moving further and further afield by the end of the 1780s. Although he continued going on buying trips, he now also delegated this task to several agents who helped him cover the territory so he no longer had to gather inventory all by himself. Astor had found a gold mine in furs, and he took advantage while the market was hot. Business was so good that Astor rented a warehouse in Montreal to serve as a distribution hub, and he increased the number of buying agents, extending his reach as far west as Michigan.
Astor was one of the top fur traders in North America. His import/export business continued as well, and he added silks, spices, and other goods. In addition, Astor invested a significant portion of his profits in Manhattan real estate, a market that would grow in profitability.
By 1800, Astor was worth about $6 million of today’s dollars, making him the first American millionaire, and business was getting better. He purchased a fleet of eight ships and began trading furs and other goods with China, one of the first few American merchants to do so. Once again he found a perfect market fit. The most valuable trade good for this market was ginseng, which Astor could purchase cheaply from American growers and sell at a 600 percent profit in China. In 1834, 71-year-old Astor sold off the American Fur Company while furs were still in demand, locking in his profits. He retired to his Manhattan mansion where he continued making a considerable amount of money using leverage by buying and selling real estate. He had already amassed hundreds of acres of property, including the land which would eventually become Times Square. Astor was also a landlord and collected hundreds of thousands of dollars a year in rent.
When John Jacob Astor passed away in 1848 at the age of 84, he was considered the richest man in the United States. Some newspapers depicted him as a ruthless miser who gave little of his fortune to charity compared to other tycoons. Others recognized him as the embodiment of the American dream. He had arrived in the brand-new United States with only a few dollars and some flutes and sheet music to his name and had parlayed these into the most significant personal fortune the country had ever known. Astor could be considered the first great American entrepreneur.