The american fur company case study

The American Fur Company

The American Fur Company was a relentless monopoly built in the climactic era of the fur trade. It was created in 1808 by John Jacob Astor, a striving German immigrant, in an environment so favorable that over vast North American territories it had more power than the fledgling American government.

In its time, this company shaped the destiny ofa young nation. It made Astor the richest American of his day. Yet by the 1830s its situation had so changed that it and the 300-year-old trade in furs collapsed.

ASTOR ARRIVES IN

A YOUNG NATION

In 1763 Astor was born to a butcher and his wife in the German village of Waldorf. In childhood he met hardship. The family was poor and often hungry, his mother died and a new step-mother was hostile. He spent much time alone but grew into a strong, diligent young man. Finding no joy in his father’s butchering work, at the age of 15 he left the village for London, working four years there to save money for an ocean voyage to the New World. In

1783, at the age of 20, with no education, little money, and speaking poor English, he set sail on a merchant ship. During the long voyage, a fur trader taught him how to appraise and handle skins.

These lessons gave Astor knowledge he needed for an occupation. He would soon show himself an apt student.

At this time, the fur trade on the North American continent was almost 300 years old. It had begun early in the sixteenth century after Spanish and

French explorers made contact with native forest dwellers, and it soon included the British. The Europeans wanted beaver, martin, ermine, mink, otter, bear, deer, muskrat, wolf, raccoon, and other animal skins for fashionable hats and clothing. The Native

Americans, who had not yet entered the age of metal, were eager to get even the simplest manufactured goods such as knives, mirrors, ornaments, and buttons.

This simple mutual advantage proved durable over time.

Indians were the fur industry’s production workers.

Fur traders depended on them to trap animals.

Indian women skinned and prepared the hides.

Overhead costs for traders were low. Instead of collecting wages, Indians traded the pelts for goods worth a fraction of a fur’s ultimate value. Since furs were light, they could be transported economically by mules, barges, and ships to Eastern ports and thence to Europe. The fur companies’ profits were enormous.

Fur trading had transforming effects on society because it promoted settlement. Traders worked on the edges of Euro-American habitation. Over time, fur production in these frontier areas always declined. Populations of fur-bearing animals such as beaver, having slow breeding cycles, were steadily depleted. The reliability of Indian trappers fell as their tribal cultures buckled under thestrains of new values and diseases. When productivity in an area fell, fur traders pushed over the horizon. In their wake came settlers using fresh maps and trails. Farms and towns sprouted.

Indians were killed or dislodged. This unsentimental cycle of the fur trade, repeated over and over, generated waves of migration that settled much of the United States.

ASTOR ENTERS THE FUR BUSINESS

Astor made his way to New York, then a city of 25,000, where he got a job selling bakery goods. He invested most of his $2-a-week pay in small trinkets and in his spare time prowled the waterfront for Indians who might have a fur to trade. Within a year he picked up enough skins to take a ship back to London, where he established connections with fur-trading houses. This was a phenomenal achievement for an immigrant lad of 21 who had been nearly penniless on his arrival in America, and it revealed Astor’s deadly serious and hard-driving personality. Astor worked briefly with a fur dealer in New York City during which time he trekked into the forests of upstate New York to bargain for furs. He soon left his employer and by 1787 was working solely for himself. He demonstrated sharp negotiating skills in trading trinkets for furs and quickly built up an impressive business. One neighbor said: Many times I have seen John Jacob Astor with his coat off, unpacking in a vacant yard near my residence a lot of furs he had bought dogcheap off the Indians and beating them out, cleaning them, and repacking them in more elegant and salable form to be transported to England and Germany, where they would yield him 1,000 percent on the original costs. 1 Astor made great profits and expanded his business but, like other Americans, he was blocked from harvesting furs in the forests of the Northwest Territory. The Northwest Territory was the huge unsettled area between the Ohio River and the Mississippi River bounded on the north by the Great Lakes. After the Revolutionary War, Great Britain ceded this area to the United States but continued to maintain forts and troops there because the American government was too weak to enforce its rights. British fur-trading companies exploited the area and incited Indians to attack American traders and settlers who dared enter. This audacity pushed Congress near to declaring war. To avoid hostilities, England agreed to a treaty in 1794 that required removal of British troops and gave both British and Americans trading rights in the Northwest Territory. 2 “Now,” said Astor on hearing this news, “I will make my fortune in the fur trade.” 3