American Fur Company

Both Alexander Mackenzie and Alexander Henry advocated for trade posts on the Pacific Coast, influencing Astor's decision to establish the PFC.

Before John Jacob Astor founded his enterprise in the Oregon Country, European descendants throughout previous decades had suggested creating trade stations along the Pacific Coast. Peter Pond, an active American fur trader, offered maps of his explorations in modern Alberta, Saskatchewan and the Northwest Territories to both the United States Congress and to Henry Hamilton, Lieutenant Governor of Quebec in 1785. While it has been conjectured that Pond wanted funding from the Americans to explore the Pacific Coast for the Northwest Passage,[3] there is no documentation of this and it is more likely that he had sent a copy of the map to Congress due to personal pride.[4] Pond later became a founding member of the North West Company (NWC) and continued to trade in modern Alberta.

In time Pond had an influence upon Alexander Mackenzie, who later crossed the North American continent.[4] In 1802, Mackenzie promoted a plan form the "Fishery and Fur Company" to the British government. In it he called for "a supreme Civil & Military Establishment" on Nootka Island, with two additional posts located on the Columbia River and another in the Alexander Archipelago.[5] Additionally this plan was formed to bypass the three major British monopolies at the time, the Hudson's Bay Company, the South Sea Company and the East India Company for access the Chinese markets.[5] However the British government turned down the offer, leaving the NWC to pursue MacKenzie's plans alone.[3] Another likely influence upon Astor was a longtime friend, Alexander Henry. At times Henry mused at the potential of the western coast. Forming establishments on the Pacific shoreline to harness the economic potential would be "my favorite plan" as Henry described in a letter to a New York merchant.[6] It is likely that these considerations were discussed with Astor during his visits to Montreal and the Beaver Club. Despite not originating the idea to create a venture on the Pacific coast, Astor's "ability to combine and use the ideas of other men"[6] allowed him to pursue the idea.

Astor joined in on two NWC voyages charted to sail to the Qing Empire during the 1790s. These were done with American vessels to bypass British commercial law, which at the time prohibited any company besides the East India Company from commerce with China. These were financially profitable ventures, enough so that Astor offered to become the NWC agent for all shipments of furs destined for Guangzhou. However Alexander Mackenzie denied his offer, making Astor consider financing voyages to China without the Canadian traders.[7] Now a fully independent international merchant, Astor began to fund trading voyages to China along with several partners. Cargoes often amounted to $150,000 in such as otter and beaver pelts, in addition to needed specie. Astor ordered the construction of the Beaver in 1803 to expand his trade fleet.[8]

By the early 1800's the Chicago area was already a large center for the fur trade. The city was largely occupied by soldiers stationed at Fort Dearborn and fur traders in small camps.[9] Prior to the War of 1812 the British maintained control of the area. However, in 1811 John Jacob Astor's American Fur Company began to lay the foundation to move into the area.[9] This foundation began with a partnership between the American Fur Company and two British companies that supplied trade goods to the Chicago area. The terms of this arrangement were such that the partnership would last for five years or until the American government prohibited the use of foreign capital in the United States.[9] This partnership was short lived as after the War of 1812 the United States government banned foreign investors from entering the United States and engaging in trade with Native Americans. Congress passed this law at the urging of John Jacob Astor with the caveat that a special exemption to this law could be granted exclusively by the president. Later this power would be given to Native American tribes and some territorial officials.[10] One years time was enough that John Jacob Astor and the American Fur Company has sufficient connections in the area to fill the void left by the banning of the British Companies that formerly held control of the Chicago fur trade.

Alfred Jacob Miller - Indians Threatening to Attack Fur Boats

To begin his plans of a chain of trading stations spread across the Rocky Mountains to the Pacific Northwest, Astor incorporated the AFC subsidiary, the Pacific Fur Company.[13][14] Astor and the partners met in New York on 23 June 1810 and signed the Pacific Fur Company's provisional agreement.[15] The fellow partners were former NWC men, being Alexander McKay, Duncan McDougall, and Donald Mackenzie. The chief representative of Astor in the daily operations was Wilson Price Hunt, a St. Louis businessman with no outback experience.[14]

From the outpost on the Columbia, Astor hoped to gain a commercial foothold in Russian America and China.[12] In particular, the ongoing supply issues faced by the Russian-American Company were seen as a means to gain yet more furs.[16] Cargo ships en route from the Columbia were planned to then sail north for Russian America to bring much needed provisions.[12] By cooperating with Russian colonial authorities to strengthen their material presence in Russian America, it was hoped by Astor to stop the NWC or any other British presence to be established upon the Pacific Coast.[2] A tentative agreement for merchant vessels owned by Astor to ship furs gathered in Russian America into the Qing Empire was signed in 1812.[16]

While intended to gain control of the regional fur trade, the Pacific Fur Company floundered in the War of 1812. The possibility of an occupation by the Royal Navy forced the sale of all company assets across the Oregon Country. This was formalized on 23 October 1813 with the raising of the Union Jack at Fort Astoria.[17] On 30 November HMS Racoon arrived at the Columbia River and in honor of George III of the United Kingdom, Fort Astoria was renamed Fort George.[18] After the forced merger in 1821 of the North West Company into their long time rivals, the Hudson's Bay Company, in a short time the HBC controlled the majority of the fur trade across the Pacific Northwest. This was done in a manner that "the Americans were forced to acknowledge that Astor's dream" of a multi-continent economic web "had been realized... by his enterprising and far-sighted competitors."[19]

The South West Company handled the Midwestern and Southwestern fur trade. In the Midwest, it also competed with regional companies along the upper Missouri, upper Mississippi, Platte rivers and as far south as New Mexico. These competitors were mostly companies based in Saint Louis, Missouri, which were active in the fur trade as well as in trade of general merchandise, and which were typically founded and led by French colonial families, such as Pratte, Chouteau, Cabanne and Ceran St. Vrain amongst the most prominent, both before and after the Louisiana Purchase or Astor setting up his company. Competition in the wilderness areas between men of the companies sometimes erupted into physical violence and outright attacks.[20] In 1834, the American Fur Company sold its Western Division to Bernard Pratte and Pierre Chouteau Jr., with whom they had been already cooperating, with the latter continuing the business as Pratte, Chouteau & Company.

Through the 1830s, competition began to resurface. At the same time, the availability of furs in the Midwest declined. During this period, the Hudson's Bay Company began an effort to destroy the American fur companies from its Columbia District headquarters at Fort Vancouver. By depleting furs in the Snake River country and underselling the American Fur Company at the annual Rocky Mountain Rendezvous, the HBC effectively ruined American fur trading efforts in the Rocky Mountains.[22] By the 1840s, silk was replacing fur for hats as the clothing fashion in Europe. The company was unable to cope with all these factors. Despite efforts to increase profits by diversifying into other industries like lead mining, the American Fur Company folded. The assets of the company were split into several smaller operations, most of which failed by the 1850s. In 1834, John Jacob Astor sold his interest on the river to replace the old fur company. He invested his fortune in real estate on Manhattan Island, New York, and became the wealthiest man in America. After 1840, the business of the American Fur Company declined.