Gangsters of the Prohibition era

Identification: Criminals who profited by meeting the popular demand for illegal alcoholic beverages

Date: 1920s through the early 1930s

Significance: Criminal organizations replaced the unruly street gangs of the past

During the early decades of the twentieth century Congress passed much reform legislation. The 1910 Mann Act was designed to stop the movement of prostitutes across state lines. The 1914 Harrison Narcotics Act outlawed such drugs as opium, heroin, and morphine. These acts were followed by the Eighteenth Amendment and the Volstead Act, which created Prohibition by making most alcohol illegal. Prohibition laws were ineffective in practice and unintentionally led to unprecedented profits for criminals. The wide-scale illegal distribution of alcohol demanded abilities beyond those of common, disorganized urban criminals, and highly organized gangs with powerful leaders arose to capitalize on the potential to gain great power. Just as the Prohibition legislation was, in part, a reaction to new technology—first telegraphs and trains, later telephones and automobiles—that freed crime from narrow urban limits, so gangsters needed new skills to take advantage of this technology.

Urban Gangs

Criminal gangs developed as cities grew. Most gangs were ethnic, uniting young people from slums such as New York’s Five Points or Chicago’s Bloody Maxwell. Gangs terrorized their neighborhoods, killed opponents, and battled each other for territory. Relying more on muscle than intelligence, they nonetheless established complex and corrupt relationships with politicians, police officers, and, later, businessmen and some labor unions. Politicians hired gang thugs to intimidate voters, steal ballot boxes, and otherwise influence elections. In turn, to avoid arrest, gangs often paid protection money to politicians and police. By the end of the nineteenth century labor unions and business leaders alike hired gang members to interfere in labor disputes. Under increasingly complex conditions, a new kind of leadership developed. Monk Eastman and Paul Kelly in New York and Jim Colosimo in Chicago were transitional figures between the unruly gang activities of earlier days and the organized crime of the Prohibition era.

The New Criminals

The four Prohibition-era leaders with the most lasting influence on American culture were Arnold Rothstein, Johnny Torrio, Meyer Lansky, and Al Capone. They had in common an unusual degree of organizational and administrative ability. Commentators during their time and later repeatedly remarked that these men could have succeeded in any business. Rothstein was an excellent mathematician; Al Capone briefly worked as a bookkeeper. To market illegal alcohol these abilities were greatly beneficial. Effective leaders, the most powerful gang bosses directly or indirectly coordinated the work of thousands of employees, including operators of illegal breweries and distilleries, attorneys, accountants, truck drivers, warehouse workers, and sailors. Some maintained their own fleets of ships and trucks. They maintained relationships with the politicians, police, judges, police officers, and Prohibition agents who were on their payrolls. They established affiliations with gangs in other cities, such as the Purple Gang in Detroit and Egan’s Rats in St. Louis. They crossed ethnic, racial, and geographical lines.

Rothstein was the dominant New York figure at the beginning of Prohibition. Operating from Lindy’s Restaurant in New York’s Times Square, he was a gambler, a fixer, and a banker as well as part owner of Harlem’s famous Cotton Club. He mediated territorial battles among other gangsters. With Prohibition, he established a system for the importing of high-quality alcohol. Realizing that narcotics were easier to smuggle than liquor, he used his delivery system to found the modern international narcotics trade. Among those he mentored was Meyer Lansky. After Rothstein’s 1928 murder, Frank Costello of the Unione Siciliana became the most powerful figure in New York.

In Chicago, Torrio, a graduate of New York’s Five Points gang, assisted Colosimo until the latter’s murder in 1920, probably authorized by Torrio. Colosimo had been unwilling to enter the illegal liquor business. With Colosimo’s murder, Torrio expanded the empire that Capone was to inherit, establishing power in Indiana and Illinois cities near Chicago. Torrio invented roadhouses, rural drinking spots accessible only to those with automobiles. In 1925, Capone took over when Torrio, after an attempt on his life, retired to Italy. Capone’s reign was brief and bloody, but his flair for public relations, his flamboyant style, and his ability to manipulate the media caused him to capture the popular imagination. He would become a household name symbolizing the perceived wealth, glamor, and danger of the gangster lifestyle.

Lansky, who began in bootlegging, chartered his own ships to import liquor and bragged about his highly successful shipping industry. He later used his wealth to fund gambling operations from Saratoga Springs, New York, to Las Vegas, Nevada, and Havana, Cuba. Like Rothstein, he tried to teach his men, sometimes successfully, to talk, look, and behave like members of legitimate corporate culture. He did not allow flashy clothes or public brawls. At the same time, understanding the legitimate corporate culture, he offered high payment and rewarded good work with bonuses.

Surrounding and sometimes opposing these men were a galaxy of other criminal figures whose volatile, violent natures and shifting allegiances often generated more headlines than did any leaders except Capone. They included Charles "Lucky" Luciano, Ben "Bugsy" Siegel, "Dutch" Schultz (born Arthur Flegenheimer), Louis "Lepke" Buchalter, Albert Anastasia, Irving "Waxey" Gordon, Owen "Owney" Madden, Frankie Uale (or Yale or Ioele), and John Thomas "Legs" Diamond, among many others. In Chicago, Dean ("Dion") O’Banion was a major figure whose 1924 murder triggered the gang wars of the 1920s. Those operating in Chicago and New York City dominated headlines, but similar gang behavior occurred in cities across the United States. As profits increased, so did violence.

Gangsters and the Law

Law-enforcement authorities using traditional methods were overwhelmed. Corruption of police, politicians, and Prohibition officers was widespread; gangsters bragged that they controlled police departments. Many people, including officials and jury panel members, opposed the banning of alcohol, especially in urban centers. As speakeasies sprang up for the sale of illegal alcohol, the gangster became a public figure. In New York by 1927, an estimated thirty thousand speakeasies were in business. There, gangsters mingled with the elite of show business, government, and the arts. Beginning in 1923, some states simply refused to allocate resources to fight alcohol violations; the rebellion began in New York and included New Jersey, Montana, Nevada, and Wisconsin. This placed the burden of enforcement on understaffed, undertrained, underpaid, and often corrupt federal agents, while bootleggers delivered liquor to congressmen and President Warren G. Harding served liquor in the private quarters of the White House.

Even with limited enforcement, violations overwhelmed the criminal justice system. As early as 1920 Americans consumed an estimated 25 million gallons of illegal liquor. That year, about thirty illegal breweries were operating in Chicago alone. Chicago gangsters were supplying beer to more than twenty thousand outlets. In 1928, Mabel Willebrandt, deputy attorney general in charge of Prohibition and once a strong speaker in favor of Prohibition, resigned her post. In 1929, she published a book, The Inside of Prohibition. Claiming that it was impossible to prevent importation of vast amounts of liquor, she reported that, in 1924 alone, federal courts were swamped, with more than twenty-two thousand liquor cases pending at the end of that fiscal year.

In an attempt to control alcohol-related crime the federal government used new technology. The technique of wiretapping became legal for law enforcement. In Seattle, where Prohibition had been law since 1916, Roy Olmstead, a young police lieutenant and millionaire bootlegger, was caught in 1920. His trial judge allowed what had formerly been illegal wiretapping evidence. The Supreme Court, in Olmstead v. United States (1928), upheld the legality of this evidence.

Federal income tax laws offered another new way to trap criminals. After the Supreme Court decision in United States v. Sullivan (1927), gangsters had to file income tax reports, even on illegal income. The court refused to permit gangsters to plead the Fifth Amendment against self-incrimination in order to protect themselves against evasion charges. The Internal Revenue Service had authority to investigate these men for income tax evasion. By tracking expenditures, Internal Revenue Service agents proved that vast sums of money had passed through the hands of Capone and others.

Aftermath

Even after the repeal of Prohibition by the Twenty-First Amendment in 1933 organized crime networks remained in place, often transitioning to illegal drug trafficking, and gang bosses remained wealthy and powerful. In the Great Depression that followed the 1929 stock market crash, banks failed across the United States; gangsters, however, could provide the sums that legitimate businesses and organizations needed. The new, organized gangs were not destroyed by loss of a leader; as in industry, a new executive officer could promptly step into the vacated place. Thus, Prohibition-era gang activities had far-reaching consequences.

Bibliography

Asbury, Herbert. The Gangs of New York: An Informal History of the Underworld. New York: Thunder’s Mouth Press, 2001. Print.

Behr, Edward. Prohibition: Thirteen Years That Changed America. New York: Arcade, 1996. Print.

Downey, Patrick. Gangster City: The History of the New York Underworld 1900-1935. Fort Lee, N.J.: Barricade Books, 2004. Print.

Keefe, Rose. Guns and Roses: The Untold Story of Dean O’Banion, Chicago’s Big Shot Before Al Capone. Nashville, Tenn.: Cumberland House, 2003. Print.

Lacey, Robert. Little Big Man: Meyer Lansky and the Gangster Life. New York: Little, Brown, 1991. Print.

Pietrusza, David. Rothstein: The Life, Times, and Murder of the Criminal Genius Who Fixed the 1919 World Series. New York: Carroll & Graf, 2003. Print.

Reppetto, Thomas. American Mafia: A History of Its Rise to Power. New York: Henry Holt, 2004. Print.