"The Last Kings of Shanghai"

[fiefoe]

A very solid book by Jonathan Kaufman on a topic I've always wanted to know more about. A lot of highs and lows.

• If Shanghai back in 1979 was a black-and-white movie with stilted dialogue, stepping into the Peace Hotel was like entering a 1940s movie. In color. With French subtitles... What was this place? What was this relic of European luxury—even hedonism—embalmed in a city, and a country, that thirty years of Communist totalitarianism had turned drab, egalitarian, regimented, and a little kooky?
• knew from my time in Hong Kong that the Kadoories—led by Sir Lawrence Kadoorie—were one of the city’s richest and most powerful families, owners of the legendary Peninsula Hotel with its elegant lobby, extravagant afternoon teas, and exquisite—and expensive—rooms. The Kadoories also owned Hong Kong’s largest electric company. And a stake in its cross-harbor tunnel. And the tram that ran up the Peak... They were “taipans”—a leftover colonial term that conveyed power and money and roots that stretched back to the Opium Wars.
• you hate them because they were Jewish?” He paused thoughtfully. “No,” he said. “We hated them because they were British imperialists.”
• By 1895, Shanghai had a modern tram system and gas works that rivaled London’s. By the 1930s, led by taipan Victor Sassoon, it had skyscrapers and a skyline that rivaled Chicago’s. It was the fourth-largest city in the world. While the rest of the world sank into the Great Depression, Chiang Kai-shek’s government worked with the Sassoons to stabilize the currency and create an export boom. Shanghai became China’s New York, the capital of finance, commerce, and industry. It also became China’s Los Angeles, the capital of popular culture. In the 1920s and 1930s, Shanghai’s publishing houses produced more than 10,000 pamphlets, newspapers, and magazines. Its film studios churned out hundreds of films, many of them set in the westernized city. Colleges
• The International Concession of Shanghai was governed like a republic of business... Paradoxically, that meant a relatively liberal political atmosphere—protecting Chinese activists, reformers, and radicals from heavy-handed Nationalist Chinese-government restrictions on free speech, communism, and protests.
• American socialite Wallis Simpson, who reportedly learned in Shanghai the sexual techniques that would entice a king to leave his throne a few years later.
• When the Japanese invaded China and joined Germany as an Axis power, the Sassoons and the Kadoories joined forces and achieved one of the miracles of World War II. As 18,000 European Jews traveled 5,000 miles from Berlin and Vienna and streamed into Shanghai fleeing Nazism, Victor Sassoon negotiated secretly with the Japanese while Nazi representatives urged the Japanese occupiers to pile Jewish refugees onto barges and sink them in the middle of the Huangpu River. Together, the Sassoons and the Kadoories did something that Jews in Europe and Palestine and even the United States couldn’t do: they protected every Jewish refugee who set foot in their city,
• It was 1829. His family had lived in Baghdad as virtual royalty for more than eight hundred years. Jews fleeing oppressive rulers was a common historical theme even by the nineteenth century. Jews had been expelled from Britain in 1290, from Spain in 1492. Venice had ordered them confined to ghettos starting in 1516.
• When he was turned away from the old-boy network of British banks, he helped found the Bank of Bombay, which enabled him to finance new railway lines to ship cotton from the countryside more quickly. Two decades later, when the North blockaded the South in the American Civil War, cutting off the biggest supplier of cotton to Britain, David was perfectly situated to step into the breach—and to make millions.
• He swore loyalty to the British Empire and prepared his sons and businesses to serve it. But his Judaism and outsider status softened some of the harder edges of his embrace of British colonialism. In Baghdad, the Sassoons had supported charity extensively and continued to do so in Bombay,
• He came up with the idea of the Sassoon schools. David set up the equivalent of a Sassoon company town, designed to attract Jewish refugees, first from Baghdad and then from across the Ottoman Empire, and turn them into loyal employees.
• Nearly one-third of Bombay’s trade was tied to the state-sanctioned opium business.
• By the early nineteenth century, one out of every ten Chinese was addicted. (By contrast, about 3 percent of Americans misused or were addicted to hard drugs such as prescription opioids, cocaine, and heroin at the height of public concern over the opioid crisis and the “war on drugs”
• David regularly attended the Calcutta Opium Exchange to bid on opium. In what was becoming a familiar strategy, he bought land and built warehouses to house opium bought by other merchants and supplied credit to opium merchants and traders.
• He hired servants for the families and tutors for his son’s wives—a remarkably progressive move in a country where women rarely received an education. David anticipated that at some point they might need to live permanently overseas with their husbands—
• reported in 1859 that the Sassoons, with their combined interests in China and India, “have arrived at great wealth, approximately five million sterling”—almost $600 million in today’s money.
• Siegfried Sassoon, one of Britain’s leading early twentieth-century poets, became estranged from the family and its “monstrous wealth.” “They made it in the East by dirty trading, millions and millions of coins,” he wrote... The Sassoons fought vigorously against any effort to limit or ban the opium trade.
• Most important, they helped cover his gambling debts, including giving him stock tips and an opportunity to take a “flyer” on opium—buying some stock in opium in India and then reaping a profit when it sold in Shanghai. The family made Bertie so much money that he joked that he should appoint Reuben Sassoon—his weight-loss companion—as his chancellor of the exchequer, Great Britain’s treasury secretary.
• The Chinese discovered that profits in opium had brought the Sassoons 140 million “liang” (a common name for the nineteenth-century Chinese currency)—the equivalent of $2.7 billion in 2018 dollars.
• As the French writer Honoré de Balzac observed, reflecting on nineteenth-century robber barons around the world like the Sassoons: behind every great fortune lies a crime.
• As word of the money to be made in China spread, so did the ambition of the poor Baghdadis flocking to work for the Sassoons. The Sassoons were minting money. They were also minting rivals.
• “If that’s the value you place on life, if you don’t value humanity, I resign right now,” Elly replied. The story entered the family’s lore because it encapsulated how Elly saw himself: a principled, stubborn man railing against the foolishness and shortsightedness of others. It is equally likely that a young and ambitious Elly, captivated by the opportunities all around him in China, simply got tired of working for the overbearing Sassoons.
• Elly’s son Lawrence would joke that the family should commemorate Elly’s departure from the Sassoons by inscribing “a barrel of disinfectant” upon the Kadoorie family crest.
• Elly’s more modest background and straitened circumstances prevented him from amassing the capital he needed to enter the opium trade. He was forced to become more diversified in his business and to develop a wider network of business associates than the British traders arriving from London to seek their fortunes, or even the Sassoons. He became a stockbroker, acquiring stakes in dozens of companies and working behind the scenes with partners and owners, accumulating influence and power as he went—a strategy American investor Warren Buffett would perfect a century later.
• More than 300 rubber companies in Malaysia had borrowed money from the bank and were now teetering on the edge of bankruptcy as the price of rubber fell. With the backing and pressure of the bank, would Kadoorie consider working to consolidate them into a handful of larger companies, cutting expenses and personnel? Indeed, he would. The rubber investment turned out to be not only a financial turning point for Elly but a personal one as well. Up to this point, Elly’s investments had been focused on China’s future and its modernization. Now he also learned that he could capitalize on a crisis,
• THE RUBBER CRISIS that made Elly a millionaire turned out to be one of the sparks that ignited the 1911 Chinese revolution and toppled the emperor.
• Elly on the eve of World War I was essentially a man without a country. Under various treaties, citizens of Baghdad living in China were considered French nationals and looked after by the French. Elly kept applying for British citizenship,
• The Shanghai Municipal Council oversaw the construction of roads, collection of garbage, and payment of taxes. It regulated gas suppliers, trams, rickshaws, and prostitution. It oversaw the police. All the policies of the International Settlement were designed by its business leaders to create the stability, prosperity, and lack of government interference yearned for by foreign capitalists. Representatives of the Sassoons, of course, were permanent members. Shanghai had become, in the words of one historian, a “Republic of Merchants.”
• women in Shanghai—most accompanying their husbands—rose from just seven in 1850 to more than three thousand by 1895, an indicator of just how much better living conditions were becoming.
• The veranda along the front of Marble Hall stretched 220 feet, longer than a city block. A series of garages held several Rolls Royces. Inside, the ballroom was eighty feet long, fifty feet wide, and sixty-five feet high, with 3,600 electric lightbulbs glittering from the ceiling.
• It is difficult today in a world of cookie-cutter hotel chains and frequent business travel to appreciate the importance hotels played in establishing the identity of a city and its social meeting points. For the British, hotels were an extension of colonialism and a symbol of British civility and culture in chaotic surroundings.
• Bitterly disappointed and saying he had been misled, Elly quit as head of the Shanghai Zionists, severing an important tie with the Jewish community. “I’m much richer than the Rothschilds yet they do whatever they please,” he complained. “Only on me are these strictures.”
• Solomon’s wife, Flora, announced from Bombay that she would take over the firm as a kind of regent until her son was old enough to step in... Her marriage to one of his sons had raised eyebrows; she essentially had married her uncle. But no one could argue with her intelligence and education.
• With her husband dead, Flora knew better than to challenge her brothers-in-law directly. Like the Empress Dowager Cixi in China, she would be the regent ruler of David Sassoon and Co. only until her son was old enough to take over, thus ensuring the male line of Sassoon control. The London brothers agreed.
• Rachel declared she wanted a newspaper of her own. Her doting husband, Frederick, bought The Sunday Times and named Rachel editor in chief. Soon, the editor of The Observer quit, and Rachel was named editor of that paper as well—the first woman in Britain to edit two national newspapers. It would be eighty years before another woman was to have so senior a position on Fleet Street. Rachel emerged as a feminist and a liberal... Rachel’s greatest scoop came when she plunged into the controversy over the Dreyfus affair.
• She was now a childless wealthy widow. One Sassoon relative declared that Rachel appeared listless at one moment and then started “raving wildly.” She refused to file her husband’s will with the court, which raised suspicions about who would inherit his fortune. Her brother, who hadn’t seen her for fifteen years, filed a petition that she was a person of “unsound mind.”
• Frustrated by the aimless drift at the top of the firm, Silas Hardoon, one of the original “Baghdad Boys” David Sassoon had hired to work in Shanghai, quit the company in 1920 and set up his own firm, buying up real estate all across the city.
• The British, Sassoon proposed, should woo Gandhi to their side, creating a coalition to oppose Communist members of his movement that Gandhi was having increasing trouble controlling. “The moment you remove the British regime you remove the only thing on which India is united,” Victor predicted in a letter to a friend. “Gandhi’s difficulties . . . look like increasing instead of diminishing as [his] success comes nearer.”
• the multicourse India-inspired lunch that, on Thursdays, included a Bombay-style vegetable curry accompanied by a bottle of ice-cold Bass ale. Room service delivered “Capon Sourdough” cooked with Madeira, foie gras, and truffles, and “Crêpes Georgette” sprinkled with finely chopped pineapples marinated in kirsch.
• In the lobby of the hotel, Victor installed a recording booth that looked like a phone booth where guests could record toasts and greetings and be handed a pressed vinyl record as a souvenir.
• “At the mercy of General Chiang Kai-shek’s dictatorship, the merchants do not know what the next day will bring, confiscations, compulsory loans, exile, or possible execution.” The son of a dye merchant was arrested by Chiang Kai-shek’s Nationalists as a “counterrevolutionary,” but was released when his father “donated” $200,000 to Chiang. Another merchant paid half a million dollars when his three-year-old heir vanished.
• He had, he believed, correctly diagnosed India’s future and the problem Gandhi’s rise would cause Britain and capitalists like himself. He was convinced that moving his fortune to China and investing in Shanghai had been a shrewd move despite the upheavals that regularly rocked the Chinese Nationalist government... Victor wrote from Shanghai to a friend. “I suppose it is because there is always so much doing. We have wars, revolutions, panics, alarums and excursions of all kinds daily.” Nevertheless, Victor believed “nothing really happens.” The Nationalists believed in Victor, too.
• On a promontory overlooking the sea, even farther north than Kowloon in the New Territories, Elly started building a weekend retreat known as Boulder Lodge. Victor Sassoon had judged Shanghai a safer bet than India. To the Kadoories, Hong Kong was starting to look like a safer bet than Shanghai—or at least a good hedge.
• One school-themed costume ball required guests to arrive dressed like schoolchildren. Victor greeted them dressed as a schoolmaster, with mortarboard and a birch switch to hit recalcitrant students.
• Victor’s office floors in the Cathay contained segregated bathrooms, one marked “Gentlemen” and the other “Chinese.” ... A few years later, the Chinese leftist writer Lu Xun visited the Cathay to see a British friend. When he entered the lobby elevator, the Chinese elevator operator ignored him. After waiting a few minutes, Lu Xun walked up seven floors.
• Victor learned, as America would learn later, that the Nationalists had their own agenda. The Shanghai boom lauded by Fortune in 1935 was in many ways a state-created chimera. The high yield of government bonds was sucking money that would have otherwise been invested in Chinese banking and industry and putting it instead in the hands of investors such as Victor, Chiang Kai-shek’s government, and the army.
• this meant that instead of buying Nationalist bonds, they could now sell their silver holdings to the United States for a quick, clear profit of 10 percent. The consequence for the Chinese economy was catastrophic. More than $170 million worth of silver poured out of China in the first eight months of 1934—the equivalent of $3 billion today. Bond sales plummeted. Without bond sales, Chiang’s military buildup slowed; Mao’s Red Army was able to break through the weakened Nationalist blockade and begin the Long March to a safe new base in Yenan.
• His real estate holdings alone were worth more than a half billion dollars. But he was a prisoner in a golden cage. The success of real estate depended on Shanghai’s continued growth, and he was no longer free to send his profits out of the country. If the Nationalists controlled silver, they controlled the banks, the loans given to investors, the ability of foreigners like Victor to move money in and out of the country. The Shanghai Banking Coup ended Victor’s infatuation with the Nationalists and Chiang Kai-shek.
• But they did need to show a Shanghai visa to obtain an exit permit to escape Austria. So, Ho began issuing visas. By June 1938, three months after Hitler had annexed Austria, he had issued 300. Four months later, he had issued 1,900. The holders of Ho’s visas didn’t all travel to Shanghai, but they were able to use the papers to get transit visas and escape elsewhere—the United States, Palestine, and the Philippines.
• In Japan’s quest to build a navy and attack Russia, Schiff saw an opportunity to weaken the hated czar. He arranged more than $200 million in loans for Japan’s military (more than $33 billion in current dollars) and encouraged other American bankers to lend money as well. The loans ended up financing construction of half the Japanese navy, which then decisively defeated Russia’s Baltic fleet and helped Japan triumph over Russia in 1905.
• IN JULY 1938, thirty-two countries including Canada, Australia, and New Zealand met in Évian, France, to decide what to do about the tens of thousands of desperate Jews trying to flee Germany, Austria, and the rest of Europe. All but one—the Dominican Republic—announced they were refusing entry.
• Victor made available the first floor of one of his luxury skyscrapers, the Embankment Building, as a reception center for refugees, where each was given blankets, bedsheets, a tin dish, a cup, and a spoon. He installed a kitchen in the basement to provide 1,800 meals a day. He turned one of his factories into a dormitory for the refugees.
• turned one of his buildings on Nanjing Road into the Immigrants’ Thrift Shop, where refugees could raise funds by selling their belongings. He established a training camp to give vocational training to 200 men as mechanics, joiners, and carpenters.
• The plan went nowhere, but the thousands of Jews arriving in Shanghai served Japan’s purpose. Keeping the Jewish refugees “under our influence . . . has a sort of ‘hostage’ sense,” Inuzuka cabled to Tokyo. “As the war in Europe develops, to obtain a place of refuge for Jews . . . is a pressing necessity and their desire to obtain a place of safety at any cost obviously becomes more and more earnest.”
• In a surprise attack coordinated with their December 7, 1941, bombing of Pearl Harbor in Hawaii and their attack on the International Settlement of Shanghai, Japanese planes were dropping bombs on Hong Kong’s airport. Japanese troops and artillery swept into the colony from China across the frontier border a few miles away.
• From Statue Square, the Japanese paraded the captured civilians in a “humiliation parade” to buses that would carry them to internment camps. Barbed wire lined the roads; dead bodies hung from the wire, shot by the Japanese. Emily Hahn, The New Yorker writer who had been Victor Sassoon’s lover in Shanghai, witnessed the scene. “Think of it,” she wrote later. Hong Kong’s British elite “who behaved like kings, sitting as they did on that heap of coolie labor. Remember this. And then, suddenly, this!”
• “You’re an occupying power now,” Margolis told Inuzuka. “Occupying powers don’t like riots. Hungry people riot. You and I and our countries can be fighting out there, but I think it would be to your benefit to let me use the credit I have.”
• Lawrence became a leader of the prisoners, organizing meetings to discuss the future of Hong Kong to keep up spirits. He taught himself shorthand, so he could take notes at the meetings. Several times a week Lawrence joined the female inmates in the courtyard of the family wing of the prison to wash his family’s clothes, nailing an empty perforated can to the top of a mop handle and using it like a plunger to wash his son’s dirty diapers in a bucket of soap and water. He was the only man who took on wash duty. He told Muriel it was a good way to hear the gossip and news of the camp.
• After moving back to Marble Hall, Lawrence would slip down to the drawing room late at night and, out of earshot of the Japanese guards, listen to the American Armed Forces Network. It was there he followed the progress of the American forces and, in August 1945, learned of the dropping of the atomic bomb that the American announcer said “would change the course of humanity.”
• In 1954, after years of resisting Madame Sun’s demands, Lawrence acknowledged that the fight to save Marble Hall was over. He agreed to “donate” the property to Madame Sun Yat-sen and her children’s fund. Madame Sun said she wouldn’t need any of the staff or furnishings that the mansion came with. The Communists put the Kadoories’ furniture into storage and charged the Kadoories far more in storage fees than their belongings were worth.
• Horace and Lawrence Kadoorie, declared an Australian publisher after meeting them, were the two most effective anti-Communists Asia had produced.
• Lawrence called himself the last Victorian. He had been born in 1899, in the final years of Victoria’s reign. He shared with the Victorians the optimism of empire—that he knew what was best for Hong Kong and for the Chinese. Colonialism might have been in retreat and discredited— ... Lawrence was formal and courtly; he often came across as paternalistic and arrogant. Colonialism suited him. “There is no doubt that Hong Kong is run by an elite; it is,” Lawrence declared. “I believe in this elite, and I think it’s far better than Western democracy.”
• By the 1970s Hong Kong’s per capita income was ten times higher than China’s. It had the fifth-busiest port in the world; if it were a country, it would rank twenty-fifth globally among trading economies.
• China now faced a stark reality. It didn’t have enough power to run all the factories it planned to build. The phone call from Beijing opened a door for Lawrence. In February 1974, he held a secret meeting with the British governor of Hong Kong, Sir Murray MacLehose. He unveiled his plan. The Kadoories, who had first come to China on steamships and brought electricity to the rural New Territories, would now bring China into the nuclear age.
• Fueled by this growing anti-Semitism, the Bank of the Middle East demanded that Lawrence—the prominent Jewish businessman—be removed from the board of their new owners.
• Genuine or not, the gravestone showed that someone in the Chinese government, even during the Cultural Revolution, and certainly now under Deng Xiaoping, cared enough to preserve the Kadoorie grave, believing that the connection with the Kadoories was worth preserving as well.
• In meetings with the American secretary of state Henry Kissinger, the Chinese raised the possibility of buying American antitank weapons. Kissinger said that was impossible. But he pointed out that another country had had great success in defeating Soviet-made tanks—Israel, which had defeated the Arabs and their Russian tanks repeatedly in wars in the Middle East in 1967 and again in 1973... Over the next decades, Israel became one of the top arms suppliers to China, and China became Israel’s biggest trading partner in Asia.
• History in China is fungible. When I first visited Shanghai, historians could talk about the “lost tribe” of Kaifeng Jews who settled in China a thousand years ago and kept some Jewish traditions alive—but not about the Sassoons and the Kadoories and their more recent and more transformative impact on Shanghai. Capitalism, in 1979, was still a forbidden topic. Forty years later, you could talk about Victor Sassoon and the Kadoories, but not about the Kaifeng Jews; the Chinese were cracking down on religion.