Before there was Cornelius Vanderbilt, Andrew Carnegie and John D. Rockefeller, the richest man in the United States was John Jacob Astor, who was so rich he became America’s first millionaire!
Leaving behind a fortune of over $200 billion in today’s money, John Jacob ensured that his family would remain as one of the richest for the next 100 years, and incredibly prominent up until the present day…
Early Life
The man who’d become John Jacob Astor was born as Johann Jakob Astor on July 17 1763 in the town of Walldorf in the Electoral Palatinate territory of the Holy Roman Empire, presently the town of Walldorf in the state of Baden-Württemberg, Germany.
Born into poverty as the son of local butcher Johann Jacob Astor, and his first wife, Maria Magdalena vom Berg, Astor’s ancestors originally came from the Duchy of Savoy (present-day Italy) and joined the Waldensian religious group.
Due to political turmoil in the Duchy Savoy at the time, the Astor (or Asdour as they were originally known as) family were forced to flee Savoy with the rest of the Waldensians, initially settling in Zurich, in the Old Swiss Confederation.
Once again forced to flee their homes because of their religion, the Astors made a new home for themselves in the more tolerant Electoral Palatinate territory of the Holy Roman Empire.
Arriving there sometime before 1711 (records are inconclusive), the family first settled in the town of Nussloch, before moving to the nearby town of Walldorf.
It was here, in Walldorf, where John Jacob Astor was born in 1763. The sixth of twelve children, John Jacob lost his mother before his first birthday, with him being raised by his father’s second wife, Christina Barbara Seibold.
In 1768, Astor’s older brothers left their hometown of Walldorf in search of a better life. Astor’s eldest brother, Georg Peter Astor, moved to London, marrying a young British woman and joining a musical instrument manufacturing business owned by his uncle.
Migration to London And America
Having always been closest with his eldest brother, Johann Jakob Astor always said that as soon as he was old enough to, he was going to London to work with his brother.
In 1779, at the age of 16, Astor moved to London, reuniting with his brother and joining his uncle’s business. It was here in London, where Astor learned English and anglicized his name to “John Jacob Astor” – the name he’d make famous.
Saving as much of his wage as possible, John Jacob Astor hoped to use the money he saved to move to New York, where his second eldest brother, Heinrich (Henry) had moved to in 1768.
Eventually, John Jacob had the money and booked passage on the ship North Carolina which was to set sail in July 1783, but was delayed for four months due to fierce Atlantic storms, before setting sail in November that year.
Despite leaving by ship, John Jacob didn’t arrive in the United States conventionally…
Arriving in a particularly cold January, the water in the Chesapeake Bay where the ship was sailing in, froze in sight of the US mainland. After learning that they’d be stuck at sea for at least a few more day, the overeager Astor hatched a plan to get to the US.
In a display of great courage (and great stupidity), John Jacob chose to trek across the ice to reach New York. Despite this being incredibly dangerous, John Jacob arrived in New York safely and began renting a lodge from elderly widow, Sarah Cox Todd.
Originally hoping to join his brother’s butchery business, John Jacob soon saw an opportunity to make a lot more money by importing musical instruments from his uncle in Europe, and selling them in New York, which netted him a small fortune.
Also at this time, John Jacob began to get close to his landlady’s daughter, also called Sarah Cox Todd, who he married on September 19 1785. The couple remained together until Sarah’s death in 1842.
Beyond being John Jacob’s lifelong companion, she also brought a connection to New York’s elite, an acute business sense second only to John Jacob’s (which enabled her to look after the family’s finances when John Jacob was away) and an impeccable eye for furs.
Involvement in The Fur Trade
In 1786, only a year after his marriage to Sarah Cox Todd, John Jacob expanded his import business to include furs too.
Using his wife’s connections, John Jacob was able to forge business alliances with several prominent fur traders who supplied him with a steady flow of fur hats, gloves and coats, all of which were in high demand in New York and Europe.
As demand for his furs increased, so did Astor’s orders, before he eventually left New York and headed West. Once here, Astor learned the ins-and-outs of trapping and preparing the fur, as well as trading with the Native Americans for them.
It only took a couple of weeks for Astor to come away with not only the extra furs he needed, but also the contacts to expand his fur trading business too!
Whilst originally only trading with the Native Americans in the US to avoid having to deal with the British in Canada was smart, it hampered Astor’s expansion. After the signing of the Jay Treaty in 1794, Astor was able to expand into Canada.
Quickly able to take advantage of cheaper fur prices with Native American groups around Lake Ontario, Astor traded with the Ottawa to get fur at a discount. Astor was then able to ship it to New York, and then on to London, where he could sell them at a huge markup.
After the Embargo Act of 1807 was implemented by Congress, John Jacob’s business suffered as he could no longer trade with the Canadians. To rectify this, Astor formally incorporated the American Fur Company (AFC) in 1808.
The AFC had two main subsidiaries – the Pacific Fur Company and the Southwest Fur Company – which both operated in different areas of the country, spreading John Jacob’s influence across the country.
Hoping to extend his influence even further, Astor personally funded several expeditions westwards, hoping to dominate the Great Lakes and Colorado river region.
To that end, his company built dozens of forts in the area, the most famous of which was Fort Astoria in April 1811, which was the first US settlement in what’s now Oregon and had the honor of being named after the man who founded it: John Jacob Astor.
War of 1812 And Revival
In 1812, British restrictions on American trade and the US’s desire to expand eventually led to the War of 1812.
An unintended byproduct of the war (at least in the US’s eyes anyway) was that the British took most of the Astor-owned forts, and many of the Native American tribes who traded with Astor sided with the British over the Americans.
For Astor’s business, it lost not only the outposts it used to collect, store and prepare their furs, but also their means of catching them too. Those furs it did have could get to New York couldn’t be sold to Europe due to the threat of the Royal Navy.
Needless to say, the war nearly destroyed Astor’s business.
Yet, Astor’s business survived. Thanks to proceeds from the Chinese opium trade, Astor was able to keep what remained of his fur business alive. At least, until the war ended anyway.
But the war’s end wasn’t as good for Astor as he’d hoped. When both sides negotiated a peace treaty, the British refused to give up the forts they’d taken from Astor during the war, and the US couldn’t find a compromise.
As such, whilst they could now acquire the raw furs from the Native Americans again, they had no forts to store or prepare them.
Still clinging onto what remained of his empire, refuge came in 1817, when Astor used his congressional contacts to convince Congress to pass a series of protectionist laws, preventing foreign fur traders from US territories.
Those forts the British had taken from him during the war were quickly reacquired by Astor at a fraction of their true value. Other foreign-owned trading forts and operations also fell under Astor’s ownership in quick succession too.
By 1822, John Jacob Astor had a certified monopoly on the fur trading business. Those companies that tried to fight him, such as the Rocky Mountain Fur Company, were either acquired by Astor, or forced out.
In 1830, John Jacob Astor’s American Fur Company controlled 98% of the fur trade in the United States, with the remaining 2% being made up of intertribal trade between different Native American groups. So in effect, he had 100% of the market.
Trade With China
In 1786, the Empress of China trade ship arrived in China after a 14 month-long voyage from New York. Although he’d only just started his fur trading business at the time, John Jacob had always been interested in trading with China.
14 years later, in 1800, Astor was finally able to begin his own trade with the Chinese, initially trading furs with them before eventually expanding to sandalwood, spices, silk and tea, using the port at Canton (now called Guangzhou) just like every other Western trader.
Trading with the Chinese became a secondary business, whilst the majority of Astor’s attention was aimed at the North American and European fur trade.
In 1816, however, Astor’s fur trading business was on its knees. Needing money to continue to keep it alive, John Jacob turned to the Ottomans for help, acquiring ten tons of opium, which he intended to sell to the Chinese.
Whilst it may sound ludicrous today, in the early 19th century, both the British and the Americans were engaged in importing millions of tons of opium into China each year. Much like the fur trade back home, the opium trade in China had low risk and high reward.
John Jacob Astor continued to send ships such as the famed Macedonian to Ottoman ports in Asia Minor (the western portion of modern-day Turkey) to collect opium bound for China until 1825, when his fur business had been revived.
Despite stepping away from trading it in China (where it happened to be illegal during this time), John Jacob Astor continued to sell opium to Britain until his death.
Interestingly, much of this opium sold to the British was later smuggled into China anyway.
Instead of going into China through one of the many ports on the way to Canton (so they could avoid Chinese officials enforcing anti-opium laws) this opium was smuggled over the China-India border instead, as Britain controlled India at the tim.
Real Estate Investments
Using the profits he gained from his fur and China trading businesses, Astor made his first real estate purchase on May 17 1789.
He bought two properties from his brother, Henry for $625 each – one on Bowery Lane (now just known as “The Bowery”) and the other on Elizabeth Street.
Whilst already unquestionable wealthy before, this soon proved the real backbone of Astor’s wealth…
Over the next two years, Astor acquired five more properties in Upstate New York and Lower Canada and continued to acquire properties as the 1790’s progressed. This earned the title of being a bona fide real estate mogul.
To focus on his fur business, Astor didn’t acquire any new real estate until 1789. That year, Astor bought undeveloped land along the waterfront, then at the extent of city limits.
Four years later, in 1793, he acquired a 70 acre farm and built the Astor Mansion on it, with it serving as the family’s seat of power for the next half century. It was also here where the early Astors entertained New York’s elites.
That same year, Arron Burr mortgaged his sizeable Richmond Hill estate to John Jacob for $32,000 before he fled to Europe.
Whilst Burr believed this would only be a temporary deal, John Jacob realized it wouldn’t be, taking the opportunity to sell parcels of land to prospective farmers for a huge profit.
Continuing to acquire various properties over the first quarter of the 19th century, Astor primarily focused on his fur trading business.
Having seen the massive expansion of New York during his own time in the city, John Jacob correctly came to the conclusion that New York was going to continue growing until it became one of the world’s great cities, on a par with London, Paris and Vienna.
Realizing this in the early 1830’s, John Jacob Astor soon sold off his interests in the American Fur Company, using the proceeds to buy as much land beyond New York’s City limits as possible.
Instead of building on them himself, John Jacob let them out to developers, selling them 21-year leases for the land. Eager for profit, the developers built massive buildings on the land, and sold them for millions in today’s money.
By the end of the lease, ownership of the building the developer had built reverted to him, for him to do it all over again (or indeed, his son, William Backhouse Astor Sr.)
This worked so well for him that nearing the end of his life, John Jacob Astor famously said:
If I could do it all over, I would buy every square inch of Manhattan
Death
In his later life, Astor had let his real estate empire take care of itself, with the money generated from deals financing the acquisition of more land and financing even more deals, allowing Astor to semi-retire and become a patron of culture.
During this time, John Jacob also visited Europe on several occasions.
In 1844, John Jacob even got involved in politics, backing former Kentucky Senator Henry Clay for the presidency. Although Clay came in a close second to James K. Polk, it ensured Astor’s name became famous across the country.
Having lived arguably one of most interesting lives of any person ever, John Jacob Astor died in his home on March 29 1848 at around nine o’clock (according to his obituary).
Despite being a member of the German Reformed Church his entire life – both in Germany and in the USA – John Jacob Astor’s body was laid to rest at the Trinity Church Cemetery, the church most of the family attended.
At the time of his death, John Jacob Astor had a reported net worth of $20 million, or roughly 0.9% of the US GDP at the time. Had he done this today, his net worth would be somewhere in the region of $210 billion.
At the time of his death, John Jacob Astor was the richest man in the world, with this title going to Nathan Mayer Rothschild (the head of the British branch of the Rothschild family) after his death.
Besides being a multibillionaire by today’s standards, John Jacob also holds the title of being the US’s first millionaire, with him being a millionaire before most people had even heard of the term!
In his will, John Jacob left the bulk of his fortune to his second son, William Backhouse Astor Sr., whilst his other children got minor, yet still substantial inheritances.
John Jacob also made sure to leave enough money to care for his eldest son, John Jacob Astor Jr., who was notoriously a sickly child and was considered mentally unstable, by both contemporary and modern doctors.
Legacy
Perhaps the most notable part of John Jacob Astor’s legacy is the dynasty he left behind.
Whilst not as rich as they once were, the Astor family are still quite wealthy, with the family name still being world-famous and synonymous with “rich”, even if no one can recognize a single member of the family still alive today.
Beyond founding a dynasty that continued to this very day, John Jacob also created a recurring theme within his family. Having himself been named in honor of his father and several other prescient ancestors, his descendants continued the trend.
With the John Jacob Astor we all know and love serving as “John Jacob Astor I”, the family went on to name a further seven members of the family after their progenitor.
Among these members are John Jacob Astor IV, a member of the American branch who died on the Titanic and John Jacob Astor VIII, a member of the British branch who currently holds the title of 3rd Baron Astor of Hever.
Having owned a large portion of New York at one point, several places in the city have been named in honor of him, such as the Astoria neighborhood in Queens, and Astoria Park that’s inside it.
Other places named in his honor include Astoria Row and Astoria Place, both in NYC, the town of Astoria in Oregon (build on land previously owned by Astor’s American Fur Company).
Astoria, South Dakota is named in honor of the Astoria in Oregon, and thus, in honor of John Jacob too.
Other things named in honor of John Jacob would include FC Walldorf Astoria, the local sports club in Astor’s hometown of Walldorf and the Astorhaus, similarly located in his hometown.
But perhaps John Jacob’s most important legacy is German-American immigrants. The tale of a poor German man who came to America with nothing, only to become the nation’s richest man, enticed Germans to move to America in search of this kind of riches.
Without John Jacob Astor, the US might not have had so many German immigrants, and with it, so many German-Americans, who are a part of the ancestry of so many Americans, regardless of whether their family name shows it or not!
How Can I Replicate What John Jacob Astor Did?
After reading about the incredible life John Jacob Astor led, you may be wondering to yourself, “how can I replicate what John Jacob Astor did?” Sadly, however, it’s just not that simple.
200 years ago, the fur trade was like how we view tech today; it was the trade to be in. Today, however, that’s simply not the case.
Not only is there not just that much demand for fur items today, most countries have laws about selling items made from fur. For any prospecting John Jacob Astor wannabe, this kills your business in the crib.
Instead, perhaps his life can serve as more of a “how to” guide. Here, you run your own business, perhaps in the tech industry, perhaps not.
Whilst doing this, you use your profits to begin buying up land around major cities, with the knowledge that one day, when these ever-expanding cities expand again, you’ll be in the right place to lease your land to a developer.
Heck, assuming you had the connections to make this happen, you could be the developer!
Either way, you’ll still own the land, with the buildings on top being sold on long leases. When these leases expire, you and your family can sell long leases for the buildings once again, creating a perpetual source of wealth for you and your family.
Alternatively, you could acquire land in the middle of nowhere and partner with a developer (or be the developer yourself) and build an artificial city. They’re surprisingly more commonplace than you’d think, and all the rage in certain parts of the world.
Instead of buying real estate like John Jacob did, you could instead buy other investments with your profits, maybe stocks. Although it depends on your country/region’s tax laws, you may even be able to decrease your tax bill doing this!
What Can we Learn From John Jacob Astor?
Although he died over 150 years ago, the life of John Jacob Astor can actually teach you a lot about starting your own business and becoming financially free, most of which is surprisingly relevant!
Always Give Back
At the time of his death, John Jacob Astor was richer than any man in US history, with a net worth that not only rivalled, but surpassed, the wealthy monarchs of Europe. Even today, John Jacob Astor gives men like Jeff Bezos a run for his money!
Much like Bezos, John Jacob realized his money could do much more than just allow him to live lavishly.
Reminded of his own humble origins, John Jacob bequeathed $50,000 ($1.7 million in today’s money) to the orphanage and poorhouse in his home town of Walldorf, which significantly improved the life of the locals, both rich and poor.
Using this money, the poorhouse built a much larger building and named it the Astorhaus – in Astor’s honor. Completed in 1854, the Astorhaus survives to this day and is now the town’s administrative office and a museum!
During his time as president, John Jacob donated $20,000 ($700,000 in today’s money) to the German Society of the City of New York, greatly benefiting the German-American community in and around New York City.
In his will, John Jacob donated $400,000 ($13.75 million in today’s money) to build the Astor Library, one of New York’s first free public museums. Construction of the library began in 1850 and was completed by January 1854.
Amazingly, the library is still open today!
Knowledge is Power
Throughout his business career, John Jacob Astor gained a reputation for being an incredibly astute businessman with a keen intellect, having the ability to devour knowledge better than most people.
And this was because very early on in life (whilst still living in modern-day Germany), John Jacob learned a simple lesson:
Knowledge. Is. Power.
Yet John Jacob didn’t just devour any knowledge. It all had a purpose. Whilst he undoubtedly devoured any kind of knowledge he could, he often tried to learn things that he thought may help him and his business further on down the line.
Entering the fur trading business, John Jacob learned all he could, from what made beaver pelts so nice, to how find the best ones, to how to trade them effectively with both the Native Americans and European traders.
Growing older, John Jacob began to learn that New York’s population was growing, and how it was likely to become a major global city.
With this, he began devouring information about how major European cities grew over time, which ultimately informed him how to invest in New York real estate.
This is why he helped establish the Astor Library after his death.
Found a Dynasty
Although he donated a lot of money during lifetime and in his will, the amount of money he donated was nothing compared to his total net worth, which was inherited by his children.
Whilst most businessmen, split their empire as fairly as possible by giving each of their children an equal stake (which is in turn, split equally between their own children at their deaths and so until the family fortune becomes diluted), John Jacob Astor did not.
Instead, he gave the majority to his second son and heir, William Backhouse Astor Sr.
At the same time, he gave those children who survived into adulthood – and weren’t mentally unstable like John Jacob’s first son, John Jacob Jr. – a much smaller inheritance that was still much more than they could ever spend in a lifetime.
Learning from his father, William did something similar, splitting his fortune between two sons, John Jacob Astor III and William Backhouse Astor Jr., who went on to found the British and American branches of the family respectively.
Both branches went on to achieve both business and political prominence on both sides of the Atlantic, with both surviving to the present day.
Today, the British branch is the most prominent, holding two titles (Viscount Astor and Baron Astor of Hever) and being members of the House of Lords, whilst the American branch is mostly made up of authors and businessmen of some note.
Don’t be Afraid to Bite Your Pride
Today, it’s all too common to see old businessmen clinging on to dying industries out of pride. Many of them have spent their lives building up say, a coal power company, only to see the demand for coal decline in recent years.
Faced with the facts, many of them are refusing to consider alternatives, saying things like “Company X was founded on coal and it will stay on coal” even as things like renewable energy become more and more popular.
During his lifetime, John Jacob Astor faced a similar problem.
Having spent most of his adult life building one of the largest fur trading empires history has ever seen, European demand for fur began to decline as John Jacob got older.
Realizing this, John Jacob had a choice: sell the company whilst it was still worth something, or keep the company and watch it crumble as he got older, for it to ultimately bankrupt the family after his death.
John Jacob chose to bit his pride and sell his empire whilst it was still worth something. He then used the money he got to invest in real estate, which ultimately made the family rich.
Without him biting his pride, we probably wouldn’t remember the Astor family’s name…
You Have no Excuse
John Jacob Astor was born into poverty in a small town in modern-day Germany very few people have heard of, and even fewer could accurately place on a map. He lost his mother at a young age, and he constantly wore rags and worried where his next meal was going to come from.
But he rose above it.
John realized that staying in Germany was pointless, he had very little chance to further himself and gain financial independence. So he moved to the UK, a foreign country hostile to him and his people and that spoke a completely different language.
Once again, he rose above it.
He didn’t make excuses, he lived frugally, he taught himself English and eventually, he was able to leave the UK and move to the US – the land of opportunity for immigrants like him.
Whilst he knew his brother, John Jacob didn’t know anybody else and he was forced to do it all over again, as well as adapt to early American English.
Moving to the US was arguably harder than moving to the UK as well. Much of the British upper classes had European relatives – especially German ones – with many speaking German and being friendly to Germans, even if the British people weren’t.
In the US, however, most of the country’s wealthiest families were quite insulated, intermarrying with one another. many were also the descendants of early British or Dutch colonists, who had natural prejudices against Germans for various reasons.
Yet he rose above it, becoming friends and allies with many of them, and using them to create a fortune still talked about today!
Has the story of John Jacob Astor inspired you? Tell me in the comments!
