"The duty was enormous in those days. It was twice the cost of the tea, at least: so that a tea cargo of $200,000, when it had paid duty of seventy-five cents per pound (which would be $400,000), amounted to $600,000. The profit was at least fifty per cent on the original cost, or $100,000, and would make the cargo worth $700,000.
"The cargo of teas would be sold almost on arrival (say eleven or twelve months after the ship left New York in May) to wholesale grocers, for their notes at four and six months,—say for $700,000. In those years there was credit given by the United States of nine, twelve, and eighteen months! So that the East-India or Canton merchant, after his ship had made one voyage, had the use of government capital to the extent of $400,000, on the ordinary cargo of a China ship.
"No sooner had the ship Panama arrived (or any of the regular East-Indiamen), than her cargo would be exchanged for grocers' notes for $700,000. These notes could be turned into specie very easily, and the owner had only to pay his bonds for $400,000 duty, at nine, twelve, and eighteen months, giving him time actually to send two more ships with $200,000 each to Canton, and have them back again in New York before the bonds on the first cargo were due.
"John Jacob Astor at one period of his life had several vessels operating in this way. They would go to the Pacific (Oregon) and carry from thence furs to Canton. These would be sold at large profits. Then the cargoes of tea to New York would pay enormous duties, which Astor did not have to pay to the United States for a year and a half. His tea cargoes would be sold for good four and six months paper, or perhaps cash; so that for eighteen or twenty years John Jacob Astor had what was actually a free-of-interest loan from Government of over five millions of dollars."[1]
But it was neither his tea trade nor his fur trade that gave Astor twenty millions of dollars. It was his sagacity in investing his profits that made him the richest man in America. When he first trod the streets of New York, in 1784, the city was a snug, leafy place of twenty-five thousand inhabitants, situated at the extremity of the Island, mostly below Cortlandt Street. In 1800, when he began to have money to invest, the city had more than doubled in population, and had advanced nearly a mile up the Island. Now, Astor was a shrewd calculator of the future. No reason appeared why New York should not repeat this doubling game and this mile of extension every fifteen years. He acted upon the supposition, and fell into the habit of buying lands and lots just beyond the verge of the city. One little anecdote will show the wisdom of this proceeding. He sold a lot in the vicinity of Wall Street, about the year 1810, for eight thousand dollars, which was supposed to be somewhat under its value. The purchaser, after the papers were signed, seemed disposed to chuckle over his bargain.
"Why, Mr. Astor," said he, "in a few years this lot will be worth twelve thousand dollars."
"Very true," replied Astor; "but now you shall see what I will do with this money. With eight thousand dollars I buy eighty lots above Canal Street. By the time your lot is worth twelve thousand dollars, my eighty lots will be worth eighty thousand dollars"; which proved to be the fact.
His purchase of the Richmond Hill estate of Aaron Burr was a case in point. He bought the hundred and sixty acres at a thousand dollars an acre, and in twelve years the land was worth fifteen hundred dollars a lot. In the course of time the Island was dotted all over with Astor lands,—to such an extent that the whole income of his estate for fifty years could be invested in new houses without buying any more land.
His land speculations, however, were by no means confined to the little Island of Manhattan. Aged readers cannot have forgotten the most celebrated of all his operations of this kind, by which he acquired a legal title to one third of the county of Putnam in this State. This enormous tract was part of the estate of Roger Morris and Mary his wife, who, by adhering to the King of Great Britain in the Revolutionary War, forfeited their landed property in the State of New York. Having been duly attainted as public enemies, they fled to England at the close of the war, and the State sold their lands, in small parcels, to honest Whig farmers. The estate comprised fifty-one thousand one hundred and two acres, upon which were living, in 1809, more than seven hundred families, all relying upon the titles which the State of New York had given. Now Mr. Astor stepped forward to disturb the security of this community of farmers. It appeared, and was proved beyond doubt, that Roger and Mary Morris had only possessed a life-interest in this estate, and that, therefore, it was only that life-interest which the State could legally confiscate. The moment Roger and Mary Morris ceased to live, the property would fall to their heirs, with all the houses, barns, and other improvements thereon. After a most thorough examination of the papers by the leading counsel of that day, Mr. Astor bought the rights of the heirs, in 1809, for twenty thousand pounds sterling. At that time Roger Morris was no more; and Mary his wife was nearly eighty, and extremely infirm. She lingered, however, for some years; and it was not till after the peace of 1815 that the claims of Mr. Astor were pressed. The consternation of the farmers and the astonishment of the people generally, when at length the great millionaire stretched out his hand to pluck this large ripe pear, may be imagined. A great clamor arose against him. It cannot be denied, however, that he acted in this business with moderation and dignity. Upon the first rumor of his claim, in 1814, commissioners were appointed by the Legislature to inquire into it. These gentlemen, finding the claim more formidable than had been suspected, asked Mr. Astor for what sum he would compromise. The lands were valued at six hundred and sixty-seven thousand dollars, but Astor replied that he would sell his claim for three hundred thousand. The offer was not accepted, and the affair lingered. In 1818, Mary Morris being supposed to be at the point of death, and the farmers being in constant dread of the writs of ejectment which her death would bring upon them, commissioners were again appointed by the Legislature to look into the matter. Again Mr. Astor was asked upon what terms he would compromise. He replied, January 19, 1819:—
"In 1813 or 1814 a similar proposition was made to me by the commissioners then appointed by the Honorable the Legislature of this State, when I offered to compromise for the sum of three hundred thousand dollars, which, considering the value of the property in question, was thought very reasonable; and, at the present period, when the life of Mrs. Morris is, according to calculation, worth little or nothing, she being near eighty-six years of age, and the property more valuable than it was in 1813, I am still willing to receive the amount which I then stated, with interest on the same, payable in money or stock, bearing an interest of—per cent, payable quarterly. The stock may be made payable at such periods as the Honorable the Legislature may deem proper. This offer will, I trust, be considered as liberal, and as a proof of my willingness to compromise on terms which are reasonable, considering the value of the property, the price which it cost me, and the inconvenience of having so long laid out of my money, which, if employed in commercial operations, would most likely have produced better profits."