As China flexes its muscles in Hong Kong and Ladakh, there is a tale that connects England, Bombay and Shanghai through one family - of creation and loss of wealth in China.

A short story.

In 1800s, a wealthy Baghdadi Jew settled in Bombay. Enterprising as he was, he had interests in trading cotton, opium (dont judge) and others in India, China and eventually in the UK.
Mumbaikars may know the name David Sassoon and Punekars would have heard surname.

The family was so promient and so wealthy that it was tied in matrimony to Rothschild. Sassoon name had left an indelible mark in Bombay for the good.

Cut to Opium Wars, the British were victorious and this opened China to British merchants. India, being the crown jewel at this time and Bombay, being the center of business, the Sassoons found the business in China lucrative and started trading with China.

Then, as today, Shanghai was a prosperous town. Because of the geography and because of Yangtze river, Shanghai had been home to many foreigners even in 1800s.

Shanghai was the obvious choice for this family of merchants to base.

David Sassoon's sons laid the foundation for the family's growth in Shanghai.

Elias David Sassoon, the second son came to Shanghai at an interesting time when the overall business atmosphere in the city was picking up and there were many British merchants.

In addition their own trade, the shrewd businessman also financed other ship owners, opium traders and merchants in Canton.

Moving into Hong Kong, he thought the city was overcrowded and too much competiton. Businessman didnt see the profit there and decided not to base in Hong Kong, a British Territory.

Business was booming that Sassoons bought a steamship, a great deal at that time and also had many warehouses in Shanghai.

The business that based in Shanghai had been built to cover Hong Kong, Shanghai, Canton and Japan, yes Japan.

You talk of globalisaition? Well even at that time one of the Sassoon brothers wrote:
"I hope next month to have good news on the price of cotton because there are financial profits resulting from the War in America"

- the war being American Civil War.

Imagine.

The family found that financial development was less in Shanghai and not enough Banks or Bankers who can fund their needs.
What did they do?
Hong Kong and Shanghai Bank's original board member was one of the Sassoons.

They were eight brothers and after David Sassoon, obviously, egos clashed and family split with Elias Sassoon going solo in Shanghai. His family was known as 'New Sassoon.'

Backward integration: We talk of Reliance's backward integration today. What did the Sassoon's do?

They went straight to Opium farmers in India rather than going through agents and got a better deal. And this margin, they used in China to sell.

Smart.

Technology: They invested in Telegraph (a big deal) and in all of Asia, they were one of the first to use Telegraph - brothers sending messages to brothers. Why?

To communicate on market intelligence, especially price of opium. If it went down, hold the stock. Else, sell.

All this wealth brought them close to British Royalty and even close to future King Edward. Churchill was so annoyed that he asked: "Will he sell his horses and scatter his Jews, or will Reuben Sassoon be enshrined among the crown jewels and other regalia?"

We cut few years and move to another charismatic character "Ellice Victor Sassoon." His Shanghai connection was not destined. He was basically the Bombay lad who visited Shanghai for business.

1920s were years of turmoil in China and also years of immense political drama. Chiang Kai Shek was fighting various things including a form of Communism and won.

Victor was considered, a playboy.

It is at this time that workers in India were demanding higher wages in cotton/textile mills and Gandhi's homespun cotton movement was picking up.

At the same time Japan's commerce increased with China and they were aggressively building factories.

Victor took the mantle of Sassoon in Bombay. Yes, despite all in Shanghai, Bombay was still their HQ.

He played in currency for a while hedging and moving money around and making quite a lot with moving money around India, Hong Kong and Britain.

Victor was vary of Mahatma Gandhi and what the freedom movement would bring in. Will it be socialism or will there be abject hate towards foreigners? There were so many questions brewing in Bombay at that time.

Now contrast Shanghai:

A rebellion had been put down by Chiang and there was no nationalistic fervor in Shanghai. And the foreigners' settlements had special benefits.

It appears Bombay vs Shanghai for business is a century old debate.

The chaos of Independence movement against calmness of Shanghai.

The uncertainty of Bombay vs peaceful business in Shanghai.

Workers trouble in Bombau vs tax concesssion in Shanghai.

Victor liquidated his business in Bombay and moved to Shanghai.

The journey to pinnacle of richness began in the Bund. The bund still exists and his buildings still exist. When I lived in Shanghai, Bund was all that defined China: old on one side and modern on the other.

It is on this place, he built one of the most famous hotels in all of the world: Cathay. The hotel was so modern in construction and outlook that it employed the best from the world.
It was this hotel that transformed Shanghai's real estate. Success of this hotel changed Shanghai

It became the go-to hotel to the many and dwarfed other establishments. Success of this hotel ensured that Victor built other properties - Metropole, Grosvenor House, Embankment House, Cathay Mansions, and Hamilton House.
He even bought off few properties from others.

The rise and rise of Victor made him friends with Chiang Kai Shek, the then strongman in China. He was fighting Mao and needed Victor and his connections to keep businessmen happy. Afterall, fighting needs money.

Oh Money and War!

In 1934, as US was buying silver for top dollar, Victor and other businessmen sold Silver holdings to the US and this dried the Chinese bond market. When this flow of money stopped, how do you fight Mao?

Long March to Yenan had begun.

A Italy born British Jew with Bombay base and life may have unwittingly contributed to the ascension of Communism in China.

Chiang didnt stop. He nationalised banks and controlled silver. In effect, he almost emptied Victor of his liquidity.

His real estate needed Shanghai to be well and the fighting between two camps in China didnt help. He had the money but he couldnt move it.

1937: Japan attacks Beijing. And Victor was in India. The World War II has begun in Asia. Europe wouldn't acknowledge it for two more years.

Shanghai's international settlement was made a safe zone by foreign troops but.....

Japan was in Nanjing. Even today, this story is told and retold in Chinese schools, colleges, histrory books and private conversations. The Nanjing Massacre was brutal.

https://en.wikipedia.org/wiki/Nanjing_Massacre

One of the Japanese newspapers allegedly quoted that in additional to British Ambassador, one man was enemy to Japanese interest: Victor Sassoon.

Things were going belly up.

There is a long story Jews in Shanghai escaping persecution and what role Sassoons played in it. Shanghai's Jewish connection is a fascinating piece of history with one Japanese anti-semitic officer thinking about 'Jewish problem.'

(Never forget that hate kills)

Let's skip the WWII part and just the years after the war and before Mao.

Americans liberated Shanghai but they handed over the control to Chiang Kai Shek, yes the same person who had technically confiscated silver before the war.

Chiang on one side and there was Mao on the other side moving in and trying to establish or liberate China from what he saw as China's enemies. (all of Twitter wont be enough to tell that fascinating history of few years)

The post war Chinese attitude towards foreigners was hostile and especially in Shanghai where the foreigners were wealthy and ordinary Chinese were poor.

The ingredient for Mao's victory was already present in China's most business friendly city - class struggle.

War had ravaged Shanghai. (How Shanghai was defended is another story of grit, bravery and sacrifice.)

With this, Victor's prime properties and businesses were ravaged.

Victor tried to liquidate his Shanghai enterprise, the second liquidation after Bombay. But it was not successful. There were no buyers and he couldnt get the cash out.
The hotels were dilapitated and you cant sell in secret.

His Chinese Ivory collection's catalogue came in three volume, yes, three volume. Imagine the wealth that had been lost. https://www.aucklandmuseum.com/collection/object/am_library-catalogq40-51244

"The Chinese don’t like foreigners and they never have. They’ll do business with us but only to the extent that it suits their purpose." - Victor said to a journalist.

Look at the prescient judgment of a man who built and lost everything in Shanghai. It is true even today.

In 1948, Victor left Shanghai.
In 1949, People's Republic of China was established by Mao.

The communist state did all it could - increase taxes, make claims, increased wages and everything.

Victor's and others' businesses were as good as lost. The communist China made sure to that. Busineses couldnt survive demands and taxes and notices and outright harassment.

Cathay Hotel is now Peace Hotel, Shanghai.

The bund is no bund without Sassoon legacy.

Shanghai's real estate and its prominence in business map helped enormusly by Sassoon.

"I gave up India and China gave me up"

- Victor Sassoon, 3rd Baronet of Bombay.

(End)

Economist writes the same story now https://twitter.com/TheEconomist/status/1279361671677575171?s=20