B005HFI0X2 EBOK (9 page)

When news of Astor’s ruse spread, other merchants protested. There was speculation that Astor’s “mandarin” was “a common Chinese dock loafer” or an Indian “dressed up in Astor’s silks and coached to play his part.”
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WHEN THE RICH BAILED OUT THE GOVERNMENT

In modern America, the government sometimes is forced to bail out the financial sector. In early America, the rich sometimes bailed out the government.

Stephen Girard bought shares in the first Bank of the United States, which had been created by Alexander Hamilton, and lobbied for the renewal of the bank’s charter in 1811. When Congress refused to renew the charter, Girard bought not only most of the bank’s assets but also the buildings and hired much of the staff. He reopened the former Bank of the United States under a new name: the Bank of Stephen Girard.

During the War of 1812, the federal government suffered from financial distress as well as humiliations such as the burning of Washington, DC, by British forces and the defeat of the American attempt to conquer Canada. The Madison administration turned to Girard and Astor for help. The two foreign-born financiers were joined by a third, David Parish.

Parish was born in Germany into a trading dynasty founded by his grandfather, a British merchant who moved to Hamburg. With the benefit of his family connections, Parish made a fortune in Antwerp during the wars of the French Revolution. In 1806, he went to Philadelphia as the agent for a European syndicate involved in shipping silver from Mexico to Napoleon and appears in that capacity in Hervey Allen’s historical novel
Anthony Adverse
(1933). This made him even richer. He used his wealth to purchase two hundred thousand acres in upstate New York from Gouverneur Morris, developed the towns of Ogdensburg, Antwerp, and Parishville, and set up an ironworks after iron was discovered on land he owned at Rossie. After helping Gallatin, Girard, and Astor finance the War of 1812, Parish moved back to Europe to join a bank in Vienna. A financial crisis in 1825 led to ruin not only for him but also for his father and the following year Parish committed suicide by drowning himself in the Danube.

During the War of 1812, Girard teamed up with Astor and Parish to buy federal bonds and raise loans. In 1813, Girard, Astor, and Parish were the major subscribers to the government’s Sixteen Millions Loan. In the spring of 1814, the three discreetly discussed plans to create a second Bank of the United States. When Gallatin took up his duties as peace commissioner at the end of the war, the Treasury was briefly in the hands of two native-born Americans, William Jones and George W. Campbell, who proved so incompetent that the post was once again given in the fall of 1814 to an immigrant who understood finance, Alexander Dallas, who was born in Jamaica and raised in Edinburgh and London. Dallas worked closely with Girard, Astor, and Parish to design the new bank.

The three financiers profited from the rise in the US bonds that they held following the new bank’s charter. Girard and Astor also obtained seats on the bank’s board of directors. Dissatisfied with its first president, William Jones, who proved to be as inept at the bank as he had been at the Treasury, Girard resigned. Girard was pleased by Jones’s successors, Langdon Cheves and the even more capable Nicholas Biddle.

The domination of trade and finance in the early United States by immigrants from Europe or the West Indies—Albert Gallatin, Stephen Girard, John Jacob Astor, David Parish, and Alexander Hamilton—illustrates how provincial and undeveloped the United States was in this period. As a postcolonial, agrarian country, the early United States resembled the Central American “banana republics” of later times, with their inaccessible hinterlands, landed elites, and port cities where many of the merchants and bankers were expatriates.

As in Southeast Asia, where
guanxi
(connections) link overseas Chinese middlemen living in different countries, webs of kinship ties and personal relationships were critical to the success of most merchants and financiers in the preindustrial era. Girard, Astor, and Parish all worked with family members who lived abroad. This merely reinforced the assumption, among the agrarians who made up nine-tenths of the US population, that trade and finance were foreign and sinister.

ASTOR AND THE INDIAN FACTORIES

When Jay’s Treaty with Britain restored commercial relations between the former colonies and the mother country in 1795, the Northwest was opened up to American fur traders. Astor bought cheap manufactured goods from Britain and sold them to Indians in return for furs, which he shipped to China in exchange for tea, silk, and chinaware. Astor created the Pacific Fur Company, headquartered in the town of Astoria on the Columbia River, to ship furs directly to China. His Southwest Fur Company bought out Canadian rivals in the Great Lakes region. Astor also made deals with the Russian government in then-Russian Alaska.

Following the War of 1812, one thing stood in the way of the fur trade monopoly of which Astor dreamed. The federal government had set up a system of trading posts, or “factories” (from the term “factor” for merchant), in Indian country, with the goals of winning Indian tribes away from Britain’s influence while protecting them from unscrupulous private traders. However, the government licensed trading companies like Astor’s to compete for trade with the government Indian factories.

In 1821, around the time that Astor was getting out of the opium trade in China, liquor became the American Fur Company’s major item offered in exchange for animal pelts.
⁴⁵
A federal agent wrote: “The traders that occupy the largest and most important space in the Indian country are the agents and engages of the American Fur Trade Company. They entertain, as I know to be the fact, no sort of respect for our citizens, agents, officers of the Government, or its laws and general policy. . . . The whisky is sold to the Indians in the face of the agents. Indians are made drunk, and of course, behave badly.”
⁴⁶

Astor was the archetype of a “crony capitalist,” buying political influence in order to plunder the public domain. Having opposed the creation of the Indian factories in 1796, Astor successfully appealed to President Jefferson to allow him to compete with the government trading posts. Following the War of 1812, Astor successfully lobbied for a protectionist bill that limited the ability of foreigners to trade with Indians on American soil without presidential permission. After he succeeded, he obtained permission to employ Canadian trappers from President James Monroe, who happened to owe Astor thousands of dollars for a loan.

During successive congressional sessions he sent his deputy, a Scots immigrant named Ramsay Crooks, to live in Washington in order to direct a lobbying campaign that included pseudonymous attacks in the press on the Indian factory system and its supervisor, a dedicated and idealistic civil servant named William McKenney. Among those on Astor’s payroll was his legal representative in Saint Louis, Thomas Hart Benton, who happened to be the chair of the Senate Committee on Indian Affairs. On May 6, 1822, the law abolishing the nonprofit factory system went into effect. Crooks wrote Benton: “The result is the best possible proof of the value to the country of talents, intelligence, and perseverance, and you deserve the unqualified thanks of the country for destroying the pious monster.”
⁴⁷

Once the federal factory system had been wrecked, Astor moved to monopolize the North American fur trade, with devastating results to Indian societies and the natural environment. Astor was now free to flood the Indian territories with smuggled alcohol, in violation of federal law. One contemporary observed: “So violent is the attachment of the Indian for it that he who gives most is sure to obtain the furs, while should any one attempt to trade without it he is sure of losing ground with his antagonist. No bargain is ever made without it.”
⁴⁸

The Hudson’s Bay Company of British North America (later Canada) was as ruthless as Astor and his associates, saturating Indian country with alcohol and even attempting to undercut its American rivals by decimating fur-bearing mammals east of the Rockies, in a kind of scorched-earth policy. In 1822, when Congress was debating an absolute prohibition of alcohol in Indian territory, Astor wrote the lieutenant governor of Missouri, William H. Ashley: “If the Hudson’s Bay Company did not employ ardent spirits against us, we would not ask for a single drop. But without it, competition is hopeless.”
⁴⁹
What was called “Indian Whiskey” consisted of straight alcohol mixed with river water and other ingredients as various as red peppers, molasses, ginger, tobacco, gunpowder, and sometimes strychnine.
⁵⁰

Later generations romanticized the fur traders and scouts as mountain men, larger-than-life figures in deerskins and fur hats. The most famous was Kit Carson, a Kentucky-born frontiersman. Carson guided the early explorations of John C. Frémont, who went on to win fame in the United States–Mexican War of 1846–1848 and to be the antislavery Republican Party’s first nominee for president in 1856 (the second was Abraham Lincoln in 1860). More than six feet tall, Virginia-born Jim Bridger was another archetypal mountain man. After his first two Indian wives died, he married a third. He identified Bridger’s Pass for a route used by overland pioneers and later by the Union Pacific and interstate highway 80.

While some were free agents, most of the trappers and traders worked in brigades headed by a “boosway,” a corruption of the French
bourgeois
. Most were white Americans and English Canadians, but their ranks included French Canadians, including part-Indian métis, Mexicans, and black Americans like Jim Beckwourth, the son of a Virginia slave by a British immigrant, Sir Jennings Beckwith. He was adopted by the Crow nation and blazed the Beckwourth Trail in Nevada and California. Following the decline of the fur trade, some traders served as scouts for the army or explorers, while others opened up trading posts, went into farming or ranching, or joined the Forty-niners in the California gold rush that began in 1848.

While he was poisoning Indians with alcohol and devastating the North American mammal population, Astor was exploiting the traders who worked for him. One of them, William Johnston, complained: “At these exorbitant charges, the traders were through necessity compelled to take the merchandise, the consequence was, and still is, that for them to pay for the goods, and barely to obtain a livelihood, they are in part compelled to use fraud and deceit towards the men they have in their employ.”
⁵¹
Debt forced many of his employees to become, in effect, indentured servants.

In the 1830s, Astor pulled out of the fur trade and devoted his last years to real estate investments and founding a dynasty, which included one descendant who went down on the
Titanic
, another who bought his way into the British aristocracy, and Franklin Roosevelt’s lifelong friend and confidant Vincent Astor. Legend has it that when asked if he had any regrets, John Jacob Astor said that he regretted not having bought every inch of Manhattan.

By 1834, when Astor sold his company, changes in fashion and the collapse of populations of fur-bearing mammals had doomed the ephemeral industry. A government Indian agent calculated that between 1815 and 1830 the fur trade on average sold $3,750,000 of furs, in the following quantities each year: 26,000 buffalo skins; 25,000 pounds of beaver skins; 4,000 otter skins; 12,000 raccoon skins; 150,000 pounds of deer skins; and 37,000 muskrat skins.
⁵²

Astor’s company spread social and ecological blight beyond North America. Visiting Hawaii, his merchants discovered that Hawaiian sandalwood could sell for high prices in China. Hawaiian chiefs began to compete in harvesting the wood and quickly destroyed sandalwood forests. Suffering from disease and demoralization, the native Hawaiian population collapsed from more than a million in 1798 to fewer than a quarter of a million by the 1820s.

“THE CLEAREST AND MOST BEAUTIFUL FLAME”: THE WHALING INDUSTRY IN THE EARLY AMERICAN REPUBLIC

The ecological effects of the American whaling industry were as destructive as those of the North American fur trade.

Two thousand nautical miles west of the coast of South America in the Pacific, on November 20, 1820, the American whaling ship
Essex
was attacking a pod of sperm whales when one whale fought back. The enraged creature rammed the ship and crushed its bow, causing it to sink. The captain and the surviving crew in lifeboats traveled thousands of miles across the open water for three months, surviving by cannibalizing the dead. The story of the
Essex
, along with legends about a white whale called Mocha Dick, because it was said to haunt the waters off the island of Mocha near Chile, inspired a young whaler named Herman Melville who later became a novelist to write his masterpiece,
Moby-Dick
.

The sailors aboard the doomed
Essex
were after whale oil, a term that included both oil made from the blubber of whales and sperm oil or spermaceti, a waxy substance found in the heads of sperm whales. In the days before kerosene and electric lighting, whale oil was coveted for its use in illumination. As America’s minister to Britain following the War of Independence, John Adams, tried to persuade the British to lower their barriers to the import of American whale oil: “The fat of the spermaceti whale gives the clearest and most beautiful flame of any substance that is known in nature, and we are all surprised that you prefer darkness, and consequent robberies, burglaries, and murders in your streets, to the receiving, as a remittance, our spermaceti oil.”
⁵³

When the industry peaked in 1847, nearly seven hundred American whaling ships operated on the oceans of the world. Whaling was the fifth largest industry in the United States, employing seventy thousand people and harvesting nearly eight thousand whales a year. The two largest whaling ports were Nantucket and New Bedford, Massachusetts. New London, Connecticut, and Sag Harbor, New York, were important as well.