The Shape of Cities and the Benefits of Buying and Holding

In 1815, John Jacob Astor (right) loaned future president James Monroe $3,400. Monroe stayed in debt to Astor throughout his presidency. This payment document “to the order of the Honbl James Monroe” and signed by Astor went to auction in October 2012.

By Jim O’Neal

Early land surveys were based on a simple principle: A shape that could be easily reduced to smaller parcels was much easier to sell. Merchant, fur trader and investor John Jacob Astor recognized this when he bought his first property in early 1800 on the lower East Side of Manhattan.

His American Fur Company made a fortune in the far west trading beaver pelts and he earned another by gobbling up land in Manhattan, spending $200,000 in a single year. He built a hoard that eventually grew to over 300 lots.

Land bought in 1800 for $50 an acre had a price tag of $1,500 by 1820 and Astor was a patient investor who made an enormous profit.

Underpinning the growth in both Manhattan land values and Astor’s personal wealth was a plan drawn up by the city in 1811 for New York’s future growth. They correctly chose rectilinear and rectangular streets instead of circles, ovals or stars.

By contrast, Washington, D.C., was superbly laid out by Pierre L’Enfant, with its avenues radiating out from the Capitol and White House. This required oval and star shaped lots, but this was a disaster since there was no market for odd-shaped land parcels. Most land developers and speculators lost money.

Critics of Astor were disgusted by his inability to disguise his greed. He shoveled food into his greasy mouth, scooped up peas and ice cream with a knife and wiped his hands on tablecloths. But his greed for land in Manhattan paid off big. When he died in 1848, his estate was valued at $25 million – 2½ times more than the next wealthiest Americans.

“Buy and hold” is a time-tested formula for success in land, coins, art and other rare collectibles. The Intelligent Collector is filled with similar amazing stories of wealth creation through shrewd, knowledgeable acquisitions – combined with patience.

Jim O'NielIntelligent Collector blogger JIM O’NEAL is an avid collector and history buff. He is President and CEO of Frito-Lay International [retired] and earlier served as Chairman and CEO of PepsiCo Restaurants International [KFC Pizza Hut and Taco Bell].