-Caveat Lector-
an excerpt from:
The Breaking of a President 1974 - The Nixon Connection
Marvin Miller, Compiler
Therapy Productions, Inc.©1975
LCCCN 7481547
--[5]--
PROHIBITION: CRIME BECOMES VERY BIG BUSINESS
During the Prohibition period in the United States from 1920 to 1933, the
gangs of America grew extraordinarily rich in their own name. This wealth
eventually permitted them to become the master of the corrupt politician
instead of the slave. While it is still running ahead of our chronology to
speak now of the Prohibition era bootleggers who later became major
contributors to the political campaigns of Richard Nixon, the change in the
relation of the American criminal to politician can be seen in Chicago gang
leader Al Capone making a contribution in 1926 of $260,000 to the Chicago
mayoralty campaign of Big Bill Thompson. Capone could well afford this amount
because profits from the Chicago rackets then were estimated at $6,000,000
per week. Nationally, Prohibition was said to have resulted in a $10,000,000
daily illegal profit. But just six years prior to his large bribe to the
future mayor of Chicago, Capone had the reputation of almost always being
broke and having to ask for advances from his then crime bosses, Big Jim
Colisimo and John Torrio.
Colisimo and Torrio were not exactly poor men before Prohibition. Controlling
only a small portion of Chicago's prostitution and white slave rackets,
Torrio was making at least $100,000 a year. His much wealthier boss and
uncle, Big Jim, who had advanced himself through the corrupt Chicago
equivalent of Tammany Hall, sported diamonds on his tie-pin, suspenders,
watch-fob and garters. His famous restaurant, frequented by such notables as
Enrico Caruso, Flo Ziegfeld and George Cohan, was backed up by a string of
saloons and brothels. This empire started when Colisimo married Victoria
Morosco, the madame of four old frame brothels on Chicago's "Bedbug Row." Two
or the brothels charged $1 while the other two charged $2 per customer, the
same girls often being rotated by Colisimo from house to house regardless of
price.
While this seems to be small business, a Chicago police investigation a full
decade before Prohibition reported the existence of 1020 brothels in Chicago
employing 4000 prostitutes, while many more walked the streets. The gross
income of the prostitutes was estimated at $30,000,000 annually, of which
half went to pay off the police and politicians. And besides prostitution,
there was widespread gambling, a developing wire service for the bookmakers
taking bets on the horse races, and other sources of income available for
those functioning outside the law, including labor racketeering.
A PROFIT OF $246,000
However, Prohibition was to prove far more profitable than prostitution and
white slavery, which were on their way out anyway by 1920 because of
increased law enforcement. A few simple figures will illustrate the enormous
financial changes brought about by Prohibition. One railroad box of raw
alcohol containing 120 fifty gallon drums would cost a bootlegger $3270 at
prevailing rates. There would also be the cost of bribes to make the
transaction appear as if the alcohol were going to be legally used for hair
tonic or some such product. (We are assuming here that the box-car was not
hijacked). When the bootlegger would dilute this alcohol three or more times
and flavor it for the palate of the consumer, the sale value of the original
120 drums might now be as much as $250,000. Obviously, the bootlegger could
afford to lay out a considerable amount of money for bribes and
transportation of the contraband without substantially cutting into his
profit of $246,000 on a small investment.
Prohibition went into effect on midnight, January 16, 1920. Someone noted
that the first illegal drink was sold one minute later. Whether or not this
comment was accurate, it is known that in Chicago within an hour after the
law became effective, six masked gunmen broke into two railroad freight cars
and stole $100,000 worth of whisky marked "For Medicinal Use Only." That same
night in Chicago, another group stole four barrels of whisky from a bonded
warehouse, while a third gang hijacked a truck carrying whisky.
LANSKY THE MECHANIC
And where was Meyer Lansky? In 1921 Lansky was a young auto mechanic changing
the appearance of stolen cars so they could be used by bootleggers, jazzing
them up to run faster than police cars, and building into them the additional
storage space needed by the bootleggers. Typically adapting himself to the
new conditions, Lansky was soon to hire mechanics to do the physical work, as
well as hoodlums to steal the cars. After this expansion, he was to link up
with his friend Bugsy Siegel to form the famous Bugs and Meyer Mob to use his
cars and hired guns to safely transport and guard the booze.
As Hank Messick astutely points out in his biography of Meyer Lansky, the
automobile helped to revolutionize crime, and it was typical that the young
Lansky was on the spot and helping to visualize future developments. With an
automobile, the criminal was able to travel farther and so was the customer
of a gambling joint or brothel. It was no longer necessary for both to be
within walking distance of each other, and the criminal establishments were
able to make themselves fewer and plusher. By 1923 Johnny Torrio was able to
pioneer a new innovation based on the new technology: taking over the
easily-controlled Chicago suburb of Cicero for racketeering and, thereby,
insulating himself from reform administrations in Chicago. And as roads
became better, cars faster, and airplanes more common there was the
development of regional vice centers in such locations as Hot Springs
(Arkansas), Newport (Kentucky), Las Vegas and Miami Beach. After World War
II, the use of jet aircraft made possible international gambling and vice
resorts in Europe, Cuba and the Bahamas, as well as many smaller Caribbean
locations.
FOUR PHASES OF BOOTLEGGING
Prohibition produced four distinct phases of the criminal organization of
bootleggers. When the Prohibition law first came into effect, there were
thousands of cases and barrels of top-grade whisky stored in bonded
warehouses for medicinal purposes and export outside the United States.
Several types of raw alcohol were also stored in warehouses for medicinal or
laboratory use, and for the manufacture of hair tonics, cosmetics, perfume,
anti-freeze and export. The first stage of Prohibition era operations
consisted of the criminal elements obtaining the contents of these
warehouses. This was most easily done by bribing a government official to
issue a "Permit for Withdrawal," certifying that the whisky would be exported
or the alcohol used for legitimate, non-beverage purposes. Very early in this
history of Prohibition, Congressman John Langley of Kentucky and the then
Acting Commissioner of Internal Revenue, Millard West, were indicted for
having obtained 4000 cases of bonded whisky from warehouses by illegal use of
these permits.
When the Treasury Department officials responsible for supervising the
legitimate use of "Permits for Withdrawal" became weary of the many printers
turning out forged permits by the hundreds, a presumably fool-proof system
was set up whereby each warehouse on receipt of a permit would wire the State
Prohibition Director for confirmation of their authenticity. However, in an
example of the ingenuity of criminals, one large bootlegger bribed a girl
working in the New York Prohibition Director's office. She would
automatically authenticate any forged permit for her bootlegger friend,
instead of doing her governmental duty. This racket went undetected for a
long time.
The wholesale corruption of government officials during Prohibition was not
taken very seriously by the general public, who had quickly learned that
President Harding, immediately on taking office in 1920, had established his
own "Official" bootlegger in Washington, Elias Mortimer, and that alcoholic
beverages were being served in the White House despite the new law. However,
the ordinary citizen didn't criticize the President for drinking; it was the
Prohibition law itself be held in contempt.
Another way to obtain Permits for Withdrawal was for the bootlegger to
organize wholesale drug companies or to buy the legal distilleries and their
warehouses. A lawyer with pharmaceutical training named George Remus followed
this course and subsequently sold $70,000,000 worth of bonded whisky
illegally in the United States during one two-year period. He would pay from
$50,000 to $325,000 for each drug company he purchased, and be admitted
spending $20,000,000 in bribes. Until his indictment and conviction, Remus
lived in a million-dollar mansion complete with gold doorknobs and bathroom
fixtures.
HOME STILLS
With cooperation from the federal and state officials who held out their
hands for bribes, the supply of whisky and alcohol in bonded warehouses was
soon depleted. The emphasis of the bootleggers then turned to the manufacture
of alcoholic beverages in hundreds of thousands of small stills. Since
Italians traditionally produced wine at home, the Mafia families became very
much involved in the homebrewing of beer and distillation of booze. The Mafia
would supply the copper tubing, the raw materials, protection from police
interference, as well as market the product. One result of the Prohibition
period was that the Italian gangs began to supplant the Irish gangs.
The production of home rot-gut, however, couldn't satisfy the demand,
particularly in such large metropolitan areas as New York City. The home
stills also lacked the quality control necessary for flavor as good as
commercial production and, very importantly, the consumer of home-made booze
was likely to be poisoned. The third stage of bootlegging, therefore, was the
illegal importation of liquor, either from Canada or England. The fourth
stage was the construction of huge underground distilleries and breweries,
which were planned to continue as illegal and unlicensed operations even
after Prohibition was repealed, on the basis that the non-taxed liquor they
produced could sell much cheaper than legally produced, taxed liquor.
HOW TO HIDE A BREWERY
Brewing beer was a very profitable activity throughout Prohibition, but it
represented special problems. The cost of a barrel of beer to the bootlegger
was approximately four dollars, and then the barrel could be sold for fifty
dollars to the saloon-keeper, often a partner of the bootlegger. However,
brewing beer requires vast quantities of malt, hops, and barrels or bottles.
Also, to make a product which didn't have the terrible taste of most
home-brew, a commercial brewery operation was needed, and this is an activity
spread out over an entire city block or two.
The bootleggers got around this problem by means of the fact that the
Prohibition laws permitted the production of near-beer with a very low
alcoholic content. But near-beer (which the consumer didn't want) can't be
made without first producing real beer. This gave the criminal gangs a way
around the law. They would buy up old breweries which were closed or which
were already in the production of near-beer. Then they would set up elaborate
pipelines, often running through the sewer systems for half a mile or more,
to transport hundreds of thousands of gallons of illegal real beer to garages
or falsely marked industrial buildings used as bottling and barreling plants.
This was so there would be legal pretext for the strongly flavored smoke
pouring out of the very obvious brewery chimneys, and the rare citizen
complaint would be met by a bribed police or city official with the answer
that the brewery was producing legal near-beer around the clock.
Since a typical brewery could make between three and seven thousand barrels
of beer a week, the profits on the basic $4 per barrel cost could easily
range from $138,000 to $322,000 per week. And, in a manner suggesting the
relations later to be established between criminals and banks, when Treasury
Department agents would try to investigate the huge cash-flow of the
criminals illegally producing beer, they would often run into barriers at the
banks where the deposits of non-declared income were made. Most of these
banks were completely dependent on the deposits made by criminals,
particularly after the 1929 Depression started. To accommodate the criminals,
the bankers would destroy records, perjure themselves, and permit deposits to
be made into accounts with false names. When the Treasury agents tried to
check the bank accounts of brewery suppliers, trucking concerns, or the real
estate companies which arranged for the criminals to operate the breweries
the agents would often encounter false accounting systems maintained by the
presumably honest businessmen who feared the guns of the hoodlums as much as
they dreaded the loss of their profits.
THE POWER OF WOMEN
The 18th (Prohibition) Amendment to the U.S. Constitution and the 19th
Amendment giving women the right to vote both came into effect in 1920 as a
result of the idealism of women. Alcohol was blamed for the failure of
marriage as an institution; for the oppression of women; for poverty,
disease, crime, insanity and degeneracy. Many Southerners also were "dry"
because Prohibition was supposed to help "keep the Negroes in order." But
just as it was the power of women which passed the 18th Amendment, it was the
women emancipated by the 19th Amendment who joined their husbands in breaking
the Prohibition laws.
pps 266-269
=====
captions from pix
Al Capone (left) took the opportunities provided him by the Prohibition law
of 1920 to become head of a Chicago criminal army numbering over 1000 men. An
office of 25 bookkeepers headed by Jake ("Greasy Thumb") Guzik kept track of
Capone's illegal ventures. Capone's personal income was estimated by
government investigators to be in excess of $2,000,000 per week. The man at
the right is unidentified.
Big Jim Colisimo, Chicago crime lord of prostitution, was murdered in March
1920 by his own associates because Colisimo wanted to limit his bootlegging
activities to supplying his own saloons and brothels. After a $50,000
gangland funeral, attended by judges, policemen, pimps, opera stars and
actors, Johnny Torrio, and At Capone took over Colisimo's crime organization
and transformed it into a disciplined, modern gang involved in extensive
bootlegging activities.
Gaston B. Means used his friendship with President Harding, U.S. Attorney
General Harry Daugherty, Bureau of Investigation Director William J. Burns,
and Assistant Director J. Edgar Hoover to get liquor held in bonded
warehouses illegally released to bootleggers. Means claimed that the bribes
he was receiving for providing "Permits for Withdrawal" were being shared
equally by Director Burns, Attorney General Daugherty, the Republican
Campaign Committee and himself.
George Remus, ex-Chicago lawyer who turned to bootlegging and made a fortune
estimated at $20,000,000, died in 1952 at the age of 78.
Carrie Nation, once married to an alcoholic, used to break up saloons with
her hatchet as part of her one-woman crusade against the Demon Rum. After her
death a sizeable still was discovered on her father's old farm in Missouri.
Rep. Andrew J. Volstead pushed the Prohibition Amendment through Congress in
1919. Prohibition became effective on January 16, 1920, and was repealed
December 5, 1933. In his history of Prohibition, Herbert Asbury commented:
"The American people ... had expected to be greeted, when the great day came,
by a covey of angels bearing gifts of peace, happiness, prosperity and
salvation, which they had been assured would be theirs when the rum demon had
been scotched. Instead they were met by a horde of bootleggers, moonshiners,
rum-runners, hijackers, gangsters, racketeers, trigger-men, venal judges,
corrupt police, crooked politicians, and speakeasy operators, all bearing the
twin symbols of the 18th Amendment-the tommy-gun and the poisoned cup."
Customs employees are seen here confiscating $75,000 worth of smuggled liquor
from the private yacht Edith, after the ship was captured in New York harbor
by the Coast Guard on December 18, 1930. As a British schooner with $200,000
worth of contraband had been seized in the harbor just the day before, it was
feared at the time that New York would be short of liquor for the Christmas
holidays.
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