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

The problem with opium was, that although the stuff was still legal, it was taxed very heavily. That meant smuggling the stuff in without paying the tax was tantamount to stealing money from the government.

When Dunbar smuggled a Chinese guy into the country to work, that was illegal, but nobody cared; it was a big country, and there was lots of work to be done. But when Dunbar smuggled a barrel of opium into the country, the government lost thousands of dollars in tax revenue.

Most likely, Lotan didn’t know about the opium until his partner’s steamships started getting raided. Reading between the lines (criminals tend not to leave very complete records) it appears that opium was Nat Blum’s idea. In any case, Blum did most of the day-to-day management of the opium operations. The idea was that the drugs would be rolled off the deck of the steamship in a lonely stretch of the Willamette River, before they reached the port, and would be retrieved by some of Blum’s cronies later on.

Those cronies — guys like Bunco Kelley and Bob Garthorn, not to mention Nat Blum himself — would be the biggest weakness in the plan, at least when it came to the opium. Put simply, they were just super incompetent. They lost nearly as much opium to theft, accident, and seizure as they brought in. And they brought a lot in — this was an industrial-scale operation, probably totaling well over five tons of product.

By November 1893, the jig was just about up. One of the Merchants Steamship Company’s two steamers had been seized by the federal government in Astoria, and the federal prosecutor in Portland was asking a grand jury to return indictments against Lotan, along with Dunbar and Blum and a number of their underworld cronies. Seid Back, the most prominent Chinese businessman in Portland, was also on the hook.

The ensuing trial held Portland spellbound. But Lotan hadn’t much need to worry. The roster of court officers at this trial reads like an excerpt from the Arlington Club directory. Lotan was represented by future Senator Charles W. Fulton. Joseph Simon himself (remember him?) came back home from his cushy Washington D.C. position on the Republican National Committee to represent another defendant. Perhaps most outrageously, federal prosecutor John Gearin — who had just been appointed by President Grover Cleveland as special prosecutor for opium frauds — was, in the case of this particular opium fraud, on the side of the defense.

Also, the judge was one of Simon’s former law partners, and the jury foreman was fellow Arlington Club member Charles Ladd.

So the trial ended with a hung jury. The word on the street was that the vote was 11 to 1; jury foreman Ladd had refused to vote to convict his friend. A new trial would have to be scheduled.

The process dragged on for a couple of years. Dunbar fled to China before he could be indicted. Blum, on the witness stand, got so “creative” in his testimony that by the end of the second trial, no one believed him anymore. Eventually, Blum disappeared and the whole thing just sort of faded away.

As historian MacColl writes, “Lotan, supported throughout the ordeal by his Establishment and Arlington Club comrades, survived with his reputation more or less intact.”

It has to be noted, though, that Lotan didn’t stay president of the Oregon Republican Party for long after his indictment came down. No political party, even one as dominant as the GOP was in 1890s Oregon, can risk too much of that kind of publicity.

So, that’s the end of the story as far as James Lotan was concerned. But you may be wondering about my admittedly clickbaity introduction to this story. How, exactly, could a sleazy, venal crook like James Lotan be credited with saving the world from the Nazi menace and/or global thermonuclear destruction?

Those of you who are familiar with the story of Yosuke Matsuoka, the young Japanese lad who grew up on the Portland waterfront and afterward became the most important Imperial Japanese diplomat of the 20th century, know exactly where I’m going with this.

Yosuke Matsuoka was the son of a failed shipping magnate in Japan who came to the U.S. to try to mend his family’s fortunes for his widowed mother. He came to Vancouver when he was 12. There he met Dunbar, who was processing another cohort of Chinese laborers to be smuggled into Portland.

Dunbar sort of informally adopted the gregarious young lad and brought him home to serve as a companion for his 14-year-old son, Lambert.

So young Yosuke grew up in the Dunbar home, kind of like the character of Hadji in the old Jonny Quest cartoons.

He grew up surrounded by all the players from top to bottom of what had to be the biggest and most well-connected drug-smuggling operation in American history. When he returned to Japan after graduating from the University of Oregon, he believed he knew America as well as he knew Japan ... based on having lived there for half his life.

Of course, his experience of America was basically from the perspective of a regional organized-crime family, like the Corleones in The Godfather.

As a top-ranking Japanese diplomat, Matsuoka always thought of Americans as being like the waterfront toughs and cowboy capitalists he palled around with in the 1890s — guys who respected guts and strength.

This is why, in 1940, Matsuoka worked so hard to ally Imperial Japan and Nazi Germany. He figured being an official ally of the most powerful country in Europe would give Japan the strength and credibility to stand up to the U.S.

The result was the Tripartite Pact, which turned Japan into an Axis power. After that, Japan was a tripwire that the Roosevelt Administration could tug on to get the U.S. into the war with Nazi Germany. Which, of course, is exactly what happened (whether the tugging was incidental or deliberate).

So, here’s the sequence: Dunbar starts smuggling operations — which leads to Dunbar meeting Matsuoka and adopting him — which leads to Matsuoka getting a very wrong impression of America and Americans — which leads to Matsuoka bringing Japan into an alliance with Nazi Germany — which leads to Pearl Harbor and World War II — which leads to Hiroshima and Nagasaki — which leads to the leaders and warlords of the entire world having seen with their own eyes what nuclear war looks like, before they’re ever entrusted with the power to unleash it.

But that whole sequence of events could never have happened without James Lotan, the small-time political crook, looking around to see who might be able to help him make some quick dirty money, and reaching out to his recently widowed friend William Dunbar.

(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.