Wartime Shanghai: A Tycoon Triumphs Over the Emporer

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The Chinese were no strangers to war when the first bombs fell on Pearl Harbor in December 1941. For almost a decade they had been battling the Japanese for control of their own country. Using Chinese resistance to their move to take over Manchuria as a pretext, the Japanese attacked Shanghai in January 1932. For three months warring parties fought one another for control of the city. Known as the “Paris of the East,” Shanghai was a financial powerhouse coveted by both sides.

Stuck in the middle of the bloody battle for mastery of the city was the International Settlement, an enclave of Western businessmen and diplomats that operated as a world apart. Within the settlement — and at the center of the business world of Shanghai — was Victor Sassoon, a wealthy bon vivant who worked tirelessly to protect Western interests in the Orient and rescue European Jews while looking out for his own considerable financial holdings in the city.

Sassoon was heir to a fabulous fortune and a prominent member of a great commercial dynasty. The Sassoons were Sephardic Jews who originally came from Baghdad. David Sassoon, Victor’s great-grandfather, had abandoned the Middle East in favor of London, and within a generation or two the Sassoons, like the Rothschilds before them, had become members of the British establishment with a far-flung mercantile empire.

It was Victor’s grandfather who broke away from the main family business and set up his own concern, E.D. Sassoon and Co. Hardworking and occasionally ruthless, the Sassoons established branch offices in Bombay and Shanghai. Cotton and opium were the twin pillars of their success in the early days, with fully one-fifth of the highly addictive drug consumed in China arriving on boats operated by the Sassoons.

Victor Sassoon was born on December 30, 1881, in Naples, where his parents had stopped while en route to India. Raised and educated in England, Sassoon was British to the core.

Upon reaching adulthood Victor was sent out to Bombay and Shanghai to learn the family trade. While there, the fledgling merchant prince gained a well-deserved reputation as a ladies’ man, pursuing horses, women and wealth with equal passion. When Britain found itself at war in 1914, the deeply patriotic Sassoon volunteered for the Royal Flying Corps. His aviation career was cut short, however, by a crippling accident. In constant pain for the rest of his life, the tycoon walked with the help of two silver-handled canes.

Sassoon returned to Bombay and became a prominent member of the textile industry and a leading light in horse-racing circles. He once remarked, “There is only one race greater than the Jews and that is the Derby.” When his father died in 1924 he inherited the family title and fortune. Henceforth he would be Sir Victor Sassoon. But India was restive in the 1920s and taxes were discouragingly high. Patriotic but pragmatic, Sir Victor decided to take advantage of the opportunities emerging in the East and moved his operations lock, stock and barrel to Shanghai.

Sassoon found the social and business atmosphere there congenial. Labor was cheap, taxes were low and foreigners enjoyed many privileges. At first the Shanghai business community did not know quite what to make of Sir Victor. He was less a businessman than a financial wizard, magically transforming the face of the city in less than a decade. Thanks to Sir Victor’s vision and money, Shanghai soon had the tallest buildings outside the United States. Across from Suzhou Creek, he built Embankment House, the largest building on the China coast, with a frontage of a quarter mile. More would follow, including Hamilton House (a big apartment hotel), Cathay Mansions and Grosvenor House, as well as a multitude of Chinese residences, shops, theaters and offices. By the mid-1930s, Sassoon was the top realtor in Shanghai, if not in all China.

Sir Victor’s crowning achievement, however, was the Cathay Hotel/Sassoon House. The hotel was at the entrance of Nanking Road, the “Mayfair” of the city and its commercial center. The property was close to the Bund, Shanghai’s all-important waterfront district. The first four floors housed offices, a shopping arcade and two banks. The third floor was occupied by E.D. Sassoon and Co., where Sassoon managed his empire. The rest of the structure was the hotel.

The Cathay was an instant success and a legend in its own time. Its severe yet elegant ferroconcrete facade, topped by a green pyramid roof, became the very symbol of the economic boom in 1930s Shanghai. It was an art deco masterpiece, its lobby sheathed in marble, its luxury and service unsurpassed.

Celebrities stayed there, including comedian Charlie Chaplin and playwright Noel Coward, who worked on Private Lives while recuperating from the flu. The Cathay and its owner were already renowned when the Japanese first attacked Shanghai in January 1932. The hotel was close enough to the warring armies to provide staff and visitors alike with a view of the action. Stray bullets whizzed by, and the hotel’s outside walls were peppered and gouged with shrapnel. With typical aplomb, Sassoon described his precarious location near the fighting as the “front row of the stalls.”

On one occasion Sassoon limped to the front of the hotel, intending to film the action. Suddenly a bullet passed perilously close to his head, crashing into a nearby window. A Chinese soldier had fired on the tycoon, apparently thinking he was a Japanese sniper. When the Chinese general in charge heard of the close call experienced by one of Shanghai’s most influential denizens, he sent an aide over to express his profound regrets and assurances that the guilty party would be punished. Not to be outdone, the Japanese offered their apologies as well for the shrapnel damage they inflicted on the “Honorable Cathay.” Sir Victor, with typical aplomb, downplayed the incident. “On the whole,” he recalled, “everything was most gentlemanly.”

Outnumbered and outgunned, the Chinese fought on for as long as they could, but were eventually driven out, and the Japanese took control of much of the city. Only the International Settlement remained inviolate — at least for the moment. Shanghai rejoiced and rebuilt. By 1935 the city was once again experiencing a real estate boom, and Sassoon continued to lead the way.

Beneath the cool, optimistic surface, however, Sir Victor was a very worried man. He had invested millions of pounds in Shanghai, and if the Japanese took over he might lose the empire it had taken a century for his ancestors to build.

The boom time, however, was underway just as the international situation deteriorated. Adolf Hitler had come to power in 1933, and Germany’s Jews were beginning to get a taste of what their future would be like in the Nazi state. As persecution mounted, thousands began to emigrate. Many countries shut their doors, but not Shanghai, which had no passport requirements and seemed to offer the refugees a safe haven.

Sir Victor Sassoon and other wealthy Shanghai Jews, such as Ellis Hayim and Horace Kadoorie, did what they could to help. Sassoon paid for soup kitchens and schools, and donated Embankment House to provide shelter. He also gave money to ensure that Jewish refugee children would have an ample supply of milk. When a Jewish doctor treating a polio patient asked for a state-of-the-art iron lung, Sir Victor provided him with the first such device in Asia. The tycoon gave orders that it be made available for any hospital, Chinese or European, that needed it.

Business was interrupted once again in the summer of 1937. Using the fabricated abduction of a Japanese soldier at the Marco Polo Bridge near Peking as a pretext to invade, the emperor’s officers reacted with force. The Second Sino-Japanese war was on, and China would not see peace for years. Given its importance and the riches it contained, Shanghai was once again the scene of intense fighting.

Around 4:30 on the afternoon of August 13, 1937 — “Bloody Saturday” — Chinese bombers tried to drop their payloads on the light cruiser Idzumo. Two bombs fell from the sky, even as crowds of civilians cheered. One fell on the roof of the Palace Hotel, Cathay’s neighbor across the Nanking Road, reducing it to a crown of flames. But it was the second bomb that created the most carnage. It glanced off the Cathay’s walls and detonated in the packed street.

Lucien Ovadia, Sir Victor’s cousin and one of his right-hand men, was in his office when the bombs struck. It was a hot day and he had two windows open. The force of the blast hurled him across the room like a rag doll. Recovering, he hurried downstairs to assess the damage. Much of the elegant glass had been shattered, but the building was intact and the hotel up and running within hours.

Just outside, the situation was quite different. Cars burned fiercely, the passenger seats filled with blackened corpses. Hundreds of bodies lay strewn about — many of them dismembered beyond recognition. It was said that pieces of human flesh spattered the Cathay’s walls up to the fifth and sixth floors.

Whole districts were laid waste in the subsequent fighting as Chinese troops bravely battled the invaders. Generalissimo Chiang Kai-shek, supreme leader of the Republic of China, upped the ante by sending in his crack 87th and 88th divisions, but after three months of stubborn resistance, the Chinese were at last forced to give way, and Chiang ordered a fighting withdrawal into the vast Chinese interior. The Japanese army quickly moved in to claim its prize, seizing assets and carrying away anything of value.

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