The Great Casino Bubble

Here is an excerpt from the classic book ‘Pearl Trader’. Louis Kornitzer is of a different generation but brilliant. I am always captivated by his humor and wisdom + style and experience + the unique way he connects with the people in the gem trade. No matter how many times you read the book, you still want to read it again because you have experienced something new—a new total internal reflection.

Louis Kornitzer writes:

For one year, eight months and some indefinite number of days, I had nothing but inward praise and more tangible gratitude for my room and table boy, Tang Tai Ling.

Tang Tai Ling had so far displayed scrupulous honesty, for he never so much as nibbled at my sweetmeats, sampled my cigars or cigarettes, or allowed his finger to stray towards my small change.

But one day I began to wonder whether a twisted nose in an ashen pockmarked, though, curiously ascetic, face, was not meant as a danger signal for the unwary. I began to suspect from various trifling signs that he was well on the way to become intimately acquainted with the inside of the safe in my bedroom; and from then onward I systematically changed the combination lock once a month in the stillness of night. But for all that he bore me no grudge, I felt sure. On the contrary, I suspected that I had greatly risen in his esteem.

In the absence of definite proof of his intentions I censured myself, however, for allowing the shadow of my suspicion to fall upon him; and I was rather glad than otherwise when events proved that I had not in thought been unjust to him, and extreme danger forced him to lift the mask which hid—I hate to say it—a thief.

It happened like this.

The rooms next to mine were occupied by an American newly arrived in the colony, a self-styled doctor of medicine and, as it turned out, a thoroughgoing quack. The fellow was a heavy drinker, and one night when he had taken on a rather heavy mixed cargo of liquor he forgot to lock his bedroom door before tumbling into bed, boots and all. In the morning, consequently, there was a great commotion; his wallet, containing a big wad of money, had vanished.

The hotel management should then with propriety have remembered that for the last fifteen years, at intervals of from nine months to a year, successive occupants of that room and of the adjoining apartments, which were under Tang Tai Ling’s especial care, had been laid under contribution. But jealous of the reputation of the house, they maintained that since the whole of their staff, from bookkeeper to kitchen scullion, had been in their employ for a decade and a half, the doctor must have lost his wallet outside.

The American, however, was sure he knew better. He insisted upon going into the matter. And so, after a few days of strenuous effort, he prevailed upon a reluctant Public Security Department to dispatch its minions to the hotel.

I was not on the spot when they arrived, but I heard them come. The European and Chinese detectives presented themselves with the noise and clatter of a cavalry detachment. From the porch of my ground floor window I listened to the hubhub, and knew that down there in the basement the whole of the staff were being ordered by the management to line up in the yard to be questioned; and that then their quarters would be searched if the police should think it necessary.

In a moment, however, my door opened and Tang Tai Ling, who should have been downstairs with the others, slid into the room with a jug and glasses in his hands. Outwardly calm, he was as pale as death, and his agitation was betrayed by his nervously twitching fingers as he set the tray upon the table.

From the corner of my eye I saw him go to my wardrobe, open it, draw from under his belt a small bundle and toss it among my linen. Not a word did he say to me. I asked no questions. I did not care to investigate, or to find out anything that might compel me to act the informer. There was nothing to be said, and he crept out as silently as he had come in.

When half an hour later he re-entered my room, Tang Tai Ling was as self-possessed as ever, and with the utmost brazenness busied himself with my socks, which he declared needed overhauling. He took away a goodly bundle of them for the house-amah to see and with them, I felt, went the American’s bank roll.

If Tang Tai Ling had been obsequious before, he was henceforth a father to me, and I read that in his eyes which reproved me for still continuing to change the safe combination at regular intervals. Dared he have spoken he would have said, “No need for that now, master. Give me a chance to prove that I am grateful to you for saving my face.”

As for the American quack doctor, he fled the colony within a month or so of these events. The cause of his flight was an illegal operation which claimed the life of a young woman, so my sympathy stayed with the get-rich-quick Chinaman.

Tang Tai Ling had made good use of his years of service in Hong Kong, for in Macao, the Portuguese colony on the China coast near by, he owned a great deal of house property and some shops which members of his family ran for him. He was a good husband, I was told, to three wives, a devoted father to a numerous progeny and a doting grandsire to two sturdy Portuguese half castes.

In a manner it was to him that I was indebted for some pleasant day dreams, for he was the first cause of what I might well call “The Great Casino Bubble”. He brought me advance information of the intended sale by the Macao Government of the ancient block of buildings known as “Boa Vista” with a magnificent site, overlooking the sea, belonging to it. The property had in the course of years been let to many tenants and had latterly been used as an hotel. But the last tenants, at any rate, had found it difficult to make a living and pay the rent which the government demanded. Twentieth century hotel guests cannot be comforted with fourteenth century cheer.

And now “Boa Vista” and its grounds were for sale once more. Already invaded by the germ of a great idea, I made careful inquiries about the place. I became convinced that if one were to make extensive alternations, the buildings could be turned into a modern attractive hotel, of which the Portuguese Colony stood in great need. I pondered over the idea for a long time, and the longer I thought the greater became my ambition. It occurred to me that a casino and hotel combined might prove a still more profitable proposition—if one could work it.

Once the idea of an up-to-date casino had taken hold of me, I began to elaborate on the original scheme, till within a few days of its conception I could already see in my mind’s eye the Monte Carlo of the Far East, with myself in the role of M. Blanc. All the conditions likely to make for success appeared to be present: the position of the place was analogous, topographically, to that of Monte Carlo, the climate salubrious, the vegetation luxuriant, the scenery beautiful. There was a romantic bit of history attached to the place, sufficient of Old Portugal left to attract tourists. But in the addition to all these advantages, the nearness to two of the wealthiest Chinese provinces—Kwangsi and Kwantung—and Macao’s equidistance from Hong Kong and Canton promised to make it the Mecca of all gamblers in that part of the world, as well as a haven for those merely desiring rest and a change of scene.

I was privately informed that the Macao government was only too anxious to stop the opium traffic altogether, if some other equally productive means of revenue could be found. Everything seemed propitious. I studied the matter from all angles, and could find no snag in it. Here was a grand opportunity for organizing something really big. I amused myself by working out the whole thing in all its aspects, down to the minutest detail. And almost unawares I soon found myself in Macao.

I knew by this time a sufficiently large number of wealthy Chinese in Hong Kong, Canton and North China who, I was sure, would give the proposition their financial backing, and had sufficient faith and confidence in me to leave the organizing in my hands. I spoke to an engineer and architect friend of mine, and described to him what I had in mind, and then sent him to survey the estate and existing buildings. He reported favorably upon the site, and produced some remarkably fine drawings of elevations—were now something to impress my Chinese backers, I thought, as well as the municipal councilors of Macao who would have the last word.

There were to be an amusement pier, pleasure boats and a ferry service to the neighboring coast, a hydro with gymnasium, thermal baths and swimming pools, a casino containing rooms for chemin de fer, roulette, fan-tan, and petits chevaux, billiard tables and dance halls. The hotel was to have 250 bedrooms, each with its own bathroom, American fashion, and was to be constructed so that one could build on twice that number of rooms without interfering with the symmetry of the structure. Yes—I had my dreams!

A special feature was to be the outer gallery encircling the spoke-like wings of the main building, where as many small shops were to be installed as there were trades in the city, and where no two traders in the same commodity were to be allowed space. Ample provision for garages and repair shops were also included in the plans.

The scheme, financially, provided that in return for the concession the Government of Macao was to receive from the casino company a percentage of its net profits for thirty years, part of which was to go to the municipality of Macao to be utilized for the improvement of roads and lighting, and the clearing of slum areas; while the policing of the casino area was to be undertaken by the company, and all minor officials and labor were to be recruited from the local population. At the end of thirty years the whole of the estate and buildings were to become the exclusive property of the government.

Three million dollars was my estimate for the cost of this undertaking, and the authorized capital of the company I intended to be five million, of which my Chinese financiers were willing to find between them one a half million and give an assurance that they could raise as much again from their own circle of friends.

There was thus no need for me to worry about the money side of the scheme. Therefore, as soon as possible, I arranged for an interview with His Excellency, the Governor of Macao, to whom I submitted my proposals. Although he was pleased with it, so he gave me to understand, he remained diplomatically non-committal. But a week later our negotiations with the municipality started, to whom His Excellency had referred the matter with his recommendations that they were to consider it favorably.

Now the fun started. In those early hectic days, when I was still under the hot spell of my vision, many Portuguese officials began to discover that a visit to Hong Kong on business connected with the ‘great scheme’ assured free entertainment over long weekends for themselves and their ladies. Details had to be discussed, of course, and they argued, no doubt, that they might as well be discussed in comfort at Hong Kong Hotel as in stuffy Government offices at Macao.

One is prepared for that sort of thing in the Far East. I had more or less expected something of the kind. Moreover, you can’t entertain too lavishly folk who appreciate your genius and tell you to your face how they admire you, and how ready they are to promote your interests. I was not surprised when some of my Portuguese well-wishers informed me that they found it difficult to cooperate with me officially while little private worries were pressing so heavily upon them. Courteously they hinted that since they had honored me with their confidence I could surely do no less than relieve them of their most pressing burdens of debt, so that they might the better be able to devote their undivided attention to the furthering of my business. After all, is the want of a few hundred dollars to be allowed to interfere with your co-worker’s peace of mind?

It soon leaked out in the Portuguese Colony that I was not only a man of extraordinary enterprise, but also as different as chalk from cheese from those stuck-up inaccessible Britishers in Hong Kong—in fact, that I was muy simpatico and so generous. How I wished they hadn’t spread such lies! More and more officials came to see me, and their wives and daughters who came with them, of course, were so very charming! They had heard, these ladies, that I dabbled in diamonds too, ‘just for fun’—they said—and would I mind very much if they asked me to value for them their own diamond jewelry? Of course, they knew they weren’t really first class stones, but then father was only a Government official, and Portugal but a poor country. Still they adored diamonds, and some day—who knows?—if it wasn’t too much to hope when the Senor’s dream of Monte Carlo in Macao had become a reality and he was rolling in millions, he might perchance remember his humble friends, the wives and daughters of the Portuguese officials, who had made it possible for his dream to come true. In the meantime, if he had some teeny-weeny little stones that no one wanted—?

Would it delight you to have me confess that I ever believed that pretty speeches, pretty cars and pretty stones are perfectly suited to each other? Would you have me say more, so that you might with justice bestow upon me the honorable letters M.U.G?

So, everything went swimmingly, and as fast as official business can be transacted anywhere. Of course there were vexatious delays, vexatious only, I was told because I, a mere impulsive merchant, did not realize that Government business—at least Portuguese Government business—was not transacted on common mercantile lines. The explanation satisfied me for a while. I was still green.

I cannot recall a single instance of downright graft in connection with that grandly-conceived scheme. No one ever came up to me and said, “Unless you pay me so many thousand dollars I am going to oppose you in Council!” No one every threatened to frustrate my plans unless I handed over so much of my prospective profits—in advance. My gifts were freely bestowed to cement friendships of which I stood in need, and they were bestowed to cement friendships of which I stood in need, and they were bestowed without compulsion. It was only when my well-wishers increased out of all proportions even to the grandeur of my scheme that I first began to fear for its ultimate success.

My company had not been formed. It still existed partly in my imagination and partly on paper, backed by promises contingent upon being able to secure the approval of the Macao municipality and, of course, the subsequent sanction of the authorities in Lisbon. Hence there were no funds available for ‘preliminaries’ save those which came from my own pocket. Was it to be wondered at, therefore, that after six months of entertaining and free-will offerings I felt put out when one of the brightest dignitary—reminded me of a Portuguese proverb to the effect that he who rides on a well-grassed axle rides in comfort?

I judged that the axle had been, if anything, smothered in grease, and yet I was not riding in comfort. And I told him as much, quite bluntly. Upon mature reflection he therefore decided that the best interests of the colony would not be served by his sponsoring of my scheme: rank treason to my great cause and to me, his dear ‘amigo’. Such faithlessness should not go unpunished, and he would have deserved that I record his name here and now; if I retain it is only because of sweet Carmencita, his daughter.

Other councilors followed the traitor’s lead—some on the principle that all new things should be banned, and others just because the Governor of the Colony himself was greatly in favor of my proposals. Opposition grew like a snowball, almost overnight. My friends, their wives and daughters, came to see me no more.

Meanwhile in Hong Kong my scheme was also meeting with great opposition from those in the British Colony who thought that if roulette in luxurious surroundings were substituted for fan-tan in squalid, stuffy, unwholeseome rooms, the British youth of Hong Kong would surely got to the dogs. The British authorities, therefore, were also dead against me and did their best to break the scheme.

But above all, I had one most powerful and hitherto unsuspected opponent who had been against me from the start. This was the man behind the opium monopoly in Macao. I had said in my prospectus that there would be no further need for the ugly opium traffic in Portuguese possession as a source of revenue if my scheme were accepted. Naturally he was not going to lie down under this and see his source of income taken away from beneath his very nose. I like a fool had completely left him out of my calculations, and now, using his enormous influence and dipping freely into his long purse, he countered me at every step. He was the decisive factor behind my failure—for failure I could now see it was. While the documents were still preparing in Macao and a first report was already on its way to the Portuguese capital, I had already decided to abandon my plans. The dice were too heavily loaded against what would have been at any time a hazardous project.

And so after coming thus far my scheme was dropped, and with it all my glittering dreams of another and even more exotic Monte Carlo. It was only then that I actually met Li, the opium monopolist who had so contributed to wreck my plans. The jeweler in Hong Kong with whom he dealt had not been able to supply eight matched diamonds of hazel-nut size, and he had been told that he might find them with me. I did not disappoint him, and from then on Li became a regular visitor at my office once a week or so.

He was a strange volcanic type. The manner of his buying was like this: he would come through the door like a whirlwind, refuse to be seated since he really should not have come as he was so terribly busy. He would then say, ‘Anything good in diamonds—not too dear?’

When I had spread before him what I thought might tempt him, he would turn the stones over with a toothpick and say, “How much?’ To whatever price I mentioned he would say, ‘Too dear!’ walk to the door, there make a half-turn and add, ‘No less?’ come back to the table, pick up the stones, wrap them in any piece of paper that was handy and, with a ‘Send me the account’, disappear. Next time he would bring the check to cover the amount of his last purchase, and buy again ‘on tick’. These purchases ran into twenty, thirty and forty thousand dollars a time, and I could not imagine what he did with all the diamonds be bought. Well—I found out at last. He gave them all away. Many of the Hong Kong, Canton and Macao official’s wives sported gorgeous diamond earrings and diamonds rings. No wonder my friend Li could pull off deals that few other men could handle!

He tumbled one day to the fact that his purveyor of diamonds was the same man who had spoken so disparagingly of the opium traffic on which he himself was battening. He came and gave me a lecture, saying at the same time that if I had enlisted his cooperation he would have come in on the scheme. With his aid, I am sure all difficulties would have vanished. But it was too late. The opportune moment had gone; and it rests still with some future speculator to make my dream reality.