Small-time political crook James Lotan became West Coast's opium king

One of the most significant events in the history of the world took place in 1892, when a corrupt political hack named James Lotan managed to land a cushy government job as the head of the customs inspection service for the Port of Portland.

Believe it or not, Lotan’s landing that job led directly to Pearl Harbor and eventually Hiroshima and Nagasaki, and indirectly to the defeat of Nazi Germany in Europe.

Not bad for a small-time white-collar criminal in a tiny backwater seaport town on the far side of the world, eh?

I realize you may be a bit skeptical of this claim. Bear with me while I unpack it and prove it to you, along with the strong possibility that most of us owe our lives and the continued existence of human civilization to James Lotan and the sleazy little band of well-heeled drug smugglers and human traffickers who worked with and for him, on the Portland waterfront in the early 1890s.

James Lotan was, writes legendary Portland historian E. Kimbark MacColl, “a maverick businessman-politician” and the half-owner of the Stark Street Ferry. He was a low-level member of the Portland political elite, but he must have been a fantastic networker because by about 1890 he had worked his way up to the position of President of the Oregon Republican Party.

Lotan had started his rise to prominence a couple of decades earlier as a shop foreman at the Oregon Iron Works, a Portland manufacturing plant that specialized in steam engines and boilers. At some point, he connected with state Senator Joseph Simon, who was the head of one of Portland’s two major Republican political factions. (The other was U.S. Senator John M. Hipple, who served in the Senate under the alias “John H. Mitchell,” which he adopted years earlier while hiding from law enforcement after embezzling $4,000 from his employer.)

By working as a fixer and odd-jobs man for Simon, Lotan worked his way to prominence, rising within the Republican Party with the fortunes of his faction. He was rewarded with a series of federal political-patronage positions — Portland Inspector of Shipping and Machinery, Boiler Inspector, and finally Customs Collector.

Along the way, his fortunes having risen nicely, he was able to join the exclusive Arlington Club and purchase a half-interest in the Stark Street Ferry.

By the time this happened, though, he had switched sides and was now an avid Mitchell man.

All these things came together with marvelous serendipity in about 1892 when Simon left the state to join the Republican National Committee in Washington. Into the power vacuum, Lotan rushed, becoming the president of the Oregon Republican Party, with broad agenda-setting power over what got done in Salem.

He was just in time to start putting the brakes on all the pesky bridge-building projects that the city of Portland had been working on. Naturally, as part-owner of the ferry that they would be replacing, he didn’t think they should be built ... not, at least, unless he and his partners were, um, fairly compensated for it.

He was well on his way to losing this fight when the city came to the state Legislature to request bonding authority to build the Bull Run water project. Lotan wasn’t a Legislator himself, but he was in a position to set party priorities, and he told the city he’d be glad to put their request right at the top of the priority list and help them get the bridges done ... if they’d agree to buy his ramshackle, dilapidated, obsolete ferry from him for $50,000 ($1.75 million in modern money, not bad for a boat on a rope!).

The Portland mayor and City Council members raged, but there was little they could do. The city needed the Legislature to approve the bonds, the Legislature was Republican, and Lotan, as head of the GOP, was in a position to lean on folks to keep the city’s request from reaching the floor.

In the end, they talked him down to $40,000 — for a ferry that probably was worth less than $1,500 as it sat.

But Lotan was not depending just on this little blackmail scheme to make him rich. Remember that plum government job he landed in 1892? Customs Collector for the Port of Portland? That was his golden ticket.

You see, “Customs Collector” was what the top local job in the customs department was called. Lotan was the big boss, the one person responsible for making sure nobody was smuggling anything through the Port of Portland. Stuff like, oh, I don’t know ... shiploads of illegal immigrants, steamer trunks packed with illegal drugs, things like that.

This meant, of course, that James Lotan was in the best position of anyone in Portland to go into the illegal immigrant-and-drugs business.

Which he promptly did by reaching out to a business friend, a recently widowed Scot named William Dunbar, probably through the Arlington Club.

The two of them soon had a good working plan, and it did look like a good one. Dunbar was the owner of Turner Flouring Mills as well as a wholesale grocery business called Dunbar Produce and Grocery. He also co-owned the Merchants Steamship Company, a shipping firm with a fleet of two full-size blue-water steamships.

The Merchants Steamship vessels were then busy hauling Turner Mills wheat and flour across the Pacific Ocean to China — Dunbar was the guy who opened that trade line for Oregon. But the ships were coming back from China in ballast, which bothered Dunbar a lot. Like a stereotypical Scot, he hated the waste of those empty journeys.

So the plan became to fill those empty steamships up with people — Chinese workers, who each paid a steep price for the chance to be smuggled into the U.S. to work on labor gangs.

This scheme made both Dunbar and Lotan a lot of money and probably would have kept on doing so if Dunbar had not gotten greedy and decided to go into opium smuggling as well.

Well, Dunbar probably wasn’t the one who decided to start smuggling opium. Most likely that innovation came from Dunbar’s business partner, the co-owner of Merchants Steamship — a flamboyant, morally flexible cigar merchant named Nat Blum.

(Sources: Merchants, Money, and Power, a book by E. Kimbark MacColl published by Georgian Press in 1988; Agony of Choice: Matsuoka Yosuke and the Rise and Fall of the Japanese Empire, a book by David J. Lu published in 2002 by Lexington Books; archives of Portland Morning Oregonian and Portland Daily Telegraph, 1893)

Finn J.D. John teaches at Oregon State University and writes about odd tidbits of Oregon history. His most recent book, Bad Ideas and Horrible People of Old Oregon was published by Ouragan House early this year. To contact him or suggest a topic: [email protected] or 541-357-2222.

Continued Next Week