The best is enemy of the good.
The profoundest truths are paradoxical.
Thursday, September 3, 2015
Trump Family Fortune Began With Booze And Prostitution
Donald Trump's Grandfather Friedrich Trump (Drumpf)
Booze Peddler and Whoremonger
The Man Who Made Trump Who He Is
How Grandpa Friedrich, who amassed the first Trump fortune by peddling booze and "sporting ladies," explains The Donald.
One hundred and thirty years ago, in 1885, Friedrich Trump stepped off a boat in lower Manhattan with a single suitcase. Only sixteen years old, he had left a note for his widowed mother on the kitchen table back in Kallstadt, a village in southwestern Germany, and slipped off in the middle of the night. He didn’t want to work in the family vineyard or get a job as a barber, the profession for which he’d been trained. He wanted to become rich, and America was the place to do it.
Friedrich wasted no time, and he did it by pushing the behavioral boundaries of his time, much as his grandson Donald would a century later. By the early 1890s, Friedrich had learned English; morphed from a skinny teenager into an adult man with a handlebar moustache; become a naturalized U.S. citizen, an easy matter at a time when there were no immigration quotas (much less debates about “birthright”); changed the spelling of his name to the more American-sounding Frederick; and made his way to Seattle, a wide-open city filled with single, rootless newcomers who’d arrived expecting to make their fortunes but found themselves facing the same uncertain economic prospects they’d wanted to leave behind. A quick study, Trump headed for a prime location, the city’s red-light district, known as the Lava Beds. There he leased a tiny storefront restaurant named the Poodle Dog, which had a kitchen and a bar and advertised “private rooms for ladies”–code for prostitutes. It would allow the resourceful Trump, who renamed it the Dairy Restaurant, to offer the restless, frustrated public some right-now satisfaction in the form of food, booze and easily available sex.
Today the media are busily looking for clues as to what makes Donald Trump, this brash billionaire with the blond comb-over, tick. Was it an Oedipal thing with his father? Sibling rivalries? His mother’s divided attention? Military school?
The short answer is that each of the above played a role. But as I found when I wrote a book about Donald, his father, and his grandfather, what has defined the current candidate for president more than anything else is a family culture of doing whatever it takes to come out on top and never giving up. As I retraced the route taken by his immigrant grandfather, an epic journey that started in Kallstadt and went all the way to the Yukon gold fields, I saw that he was carving a path not just for himself but for generations of Trumps to come. A century later, Donald would use basically the same MO as Friedrich—nabbing the best locations and offering customers an almost cartoon-like version of their heart’s desire—to become a billionaire.
Friedrich Trump's Seattle restaurant flourished, but he kept his ears open—another aspect of the Trump family MO. In 1894, he heard that John D. Rockefeller, the wealthiest man in the world, was bankrolling a mining operation in a small town north of Seattle named Monte Cristo. Without delay, Trump scoped out the best location there, secured it by filing a bogus mineral claim, built a hotel on the parcel even though it didn’t actually belong to him, and began giving the customers, once again, exactly what they wanted: plenty to eat, lots to drink and of course women.
When Monte Cristo proved slow to deliver on its promise, Rockefeller publicly reiterated his support while secretly arranging an exit. In the summer of 1897, Trump also decided to cash out and return to Seattle—making him, along with Rockefeller, one of the few investors in Monte Cristo to end up winners rather than losers.
The reason for Trump’s departure was that steamers filled with Yukon gold had pulled into Puget Sound. Overnight, hordes of what were known as stampeders began heading north to the Yukon, hauling their picks and shovels on a perilous journey by foot across snow-covered mountain passes. But Trump had no intention of either hauling or digging. Instead he opened trailside restaurants—creating his own private gold rush by mining the would-be miners.
In the New Arctic Restaurant and Hotel, which he opened in the raw new town of Bennett in May 1898, he again offered “private boxes” for ladies, facilities that included not only a bed, but a scale for weighing the gold dust used to pay for services. It was the best restaurant in town, one newspaper reported at the time, but added that it “would not advise respectable women to go there to sleep as they are liable to hear that which would be repugnant to their feelings and uttered, too, by the depraved of their own sex.” By June 1900, he was living in White Horse, a Yukon outpost at the end of the newly built railroad but hundreds of miles south of the gold fields, and he was the proprietor of yet another eatery, the Arctic Restaurant. Once again, he had chosen a prime location, across the street from the railroad depot; once again he had built on land for which he did not have a valid legal claim; and once again he was deploying the Trump formula of giving customers still in search of their first nugget something they could enjoy on the spot—a bar, gambling facilities and separate areas, curtained off with dark velvet, for what were known as “sporting ladies.”
Trump didn’t know it, but the burst of prosperity in White Horse would be short-lived. Gold deposits in the Yukon were already played out, and the next round of stampeders would head west to newly discovered gold fields in Alaska.
But Trump did know that he was facing a more immediate and urgent problem—what was known at that time as “propriety” but today would be termed “political correctness.” In the spring of 1901, the North West Mounted Police superintendent who oversaw White Horse announced a plan to suppress gambling and liquor sales and to banish “the scarlet women” from the center of town.
Trump didn’t wait to find out whether the Arctic Restaurant could survive such a blow. Like many in the midst of a gold rush, he had made money; more rare, he had hung onto it. After selling off his interests, he left town with a hefty nest egg—once again emerging a winner from a situation where there would be no end of losers.
A year later, on a visit to his mother in Kallstadt, he became engaged to the girl next door, Elizabeth Christ, who had been only five when he left for America. After they wed, Trump brought her to New York and started over, working as a barber and a hotel and restaurant manager while keeping an eye out for the next big thing. But she was desperately homesick, and in 1894 he and Elizabeth returned with their new baby girl to Kallstadt—and to the reckoning he had never expected to face. The problem was that he’d left when he was too young to do military service, which was compulsory, and he was returning only a few months after his thirty-fifth birthday, which made him too old to serve. Fortunately, there was a solution at hand—or so it seemed. First he would deposit his savings—80,000 marks, a stupendous sum at the time and worth a still-handsome $582,000 today—in the village treasury; then, swearing that he had never intended to cut out on the military but simply to support his mother and describing himself as “a man who avoids bars” and leads “a quiet life,” he would petition to be allowed to stay and to regain his German citizenship.
It was a power play—his grandson Donald would call it “using leverage”—and the mayor and town council, keen to keep this wealthy hometown boy and his future taxes in Kallstadt, were eager to add their endorsement. But despite their efforts, the regional authorities refused to let Trump off the hook. Unlike his grandson, who would become too big to fail in business and, more recently, to ignore in politics, Friedrich Trump was not big enough to get away with being a draft-dodger. He and his wife, then pregnant with Fred, Donald’s father, would not be allowed to resume their German citizenship and it would not be extended to their daughter; instead, they were deported—the same fate that Donald would like to impose on undocumented immigrants in the U.S. today.
It was a heavy blow, but Frederick Trump was not about to give up. This was merely a setback; he was a winner, not a loser. He had come to America to be rich, and he would hold to that dream. Over the next few years, he cut hair and managed restaurants and hotels, all the while keeping his eye out for the main chance. By 1910, he’d found it: Queens, an underdeveloped borough with considerable promise. After moving his family there, he opened an office and bought a handful of properties. Had things gone as he expected, he might have been the first Trump to become a real estate titan; instead, he died in 1918, during the Spanish Influenza epidemic, leaving it to his son Fred, 12, to take the embryonic Trump real estate empire to the next level.
At first glance, Fred seemed to be the anti-Frederick. A methodical man—his youngest son, Robert, called him “a plow horse”—Fred held his head down, tended to the details, and kept his nose to the grindstone 24/7.
But he had not forgotten the lessons handed down by his father. Always stay alert; always think creatively, otherwise known as stretching the truth, as Frederick himself had done in Monte Cristo and White Horse and in his efforts at repatriation; and never give up.
Accordingly, during the Great Depression, when Fred Trump’s construction business tanked, he put everything on hold, took a job running a grocery store, and kept his eye on what was going on around him. When he learned of court hearings over what to do with the assets of a local mortgage company, he didn’t hesitate to present himself as a prosperous real estate executive. It was a flat-out lie—but it would set him on the path to becoming one of the largest developers in Brooklyn and Queens.
Later on, when government-backed mortgage guarantees and tax abatements allowed him to construct thousands of housing units, Fred widened his profit margin by adroit use of gaping loopholes in government regulations. Thus, for example, when building apartments financed through the Federal Housing Authority after World War II, he exploited regulations that paid him by the room rather than by the unit, turning out a high proportion of small one-bedrooms and studios rather than the roomy three and four bedroom apartments families needed and FHA architects had intended.
Like his father, he focused not on customers’ long-term goals but on what they wanted right now. Many were returning GIs seeking a roof over their head during a nation-wide housing shortage, and the apartments were rented immediately.
In the mid-50s, when he was building apartments financed by New York state, Fred Trump found more loopholes. He set up shell equipment companies and then rented bulldozers and dump trucks from them at inflated prices; he overestimated the cost of construction and pocketed the difference when he came in remarkably far under budget; and when called to account before a state commission, he made the case that his huge profits were not unethical because that was what he was good at and it was the way it should be.
In the 1970s, when Donald came into the family business, these same lessons from his grandfather and father would provide the template for everything he did. He gave his customers not what they thought they wanted but what they actually wanted, buildings that were big and brassy, full of mirrors and shiny surfaces. Known for being hands-on with every construction project, he cut costs on Trump Tower by using undocumented Polish demolition workers who were paid an under-the-table $5 an hour and slept on the building site, but he later testified in court that he hadn’t noticed them. When construction was stalled on his first Atlantic City casino, he misrepresented this state of affairs to visiting executives from his partner on the project, Holiday Inns, by directing bulldozer drivers to dig pointless holes and pile up dirt—a subterfuge he later bragged about in his first book, The Art Of The Deal. He kept going through setbacks—divorces, corporate bankruptcies and projects that seemed to have run into stone walls—always spinning a positive scenario in which he was coming out on top and everyone else was left in the dust.
And regardless of the circumstances, he insisted that he was a winner, everyone else was a loser, end of story. Whether such a binary approach can carry him through a campaign, with its incessant demand for responses to a wide range of issues, remains to be seen. But as he goes forward, he will be drawing on the tenacious, envelope-pushing legacy of his grandfather. His sister Maryanne, a federal judge in northern New Jersey once summarized it for me. No matter what was going on, she said, her father always told her what he had learned from Friedrich: “You can do it if you try.”