Prohibition: Thirteen Years That Changed America (20 page)

Another “untouchable,” Sam Collins, the Kentucky Prohibition director, was also on Remus’s track. His agents had, by chance, arrested two runners from a Chicago saloon after their cargo of whiskey spilled into the street after a car crash. They too agreed to cooperate, and admitted it had come from Death Valley Farm.

Morgan and Collins got together. Since they had no jurisdiction outside their own states, they knew they would have to get the Cincinnati Bureau to issue a search warrant, and to do that they would have to trick their corrupt Cincinnati colleagues into cooperating with them. Once more, luck was on their side. Although Remus invariably insisted on cash payments so that his involvement could not be traced, he had made an exception for Goldman, who had paid for his consignment in part with a $250 check to Conners. By oversight, after Goldman’s arrest, it had not been canceled, so here was invaluable proof.

Morgan and Collins, and their teams, came quietly and unannounced to Cincinnati and set up headquarters in the Sinton Hotel. They called their Cincinnati colleague, Robert E. Flora, and asked him to join them without telling him the reason for their presence. Only when Flora showed up was he told that the purpose of their visit was a raid on Death Valley Farm. After studying the evidence, he had no
alternative but to issue a search warrant. Virtually under house arrest himself and unable to make a telephone call (Morgan and Collins were well aware that the Cincinnati Prohibition Bureau would tip Remus off if given the chance), Flora was compelled to go along with them on the raid.

The raiders used unmarked cars that Sunday noon, and did not have to use force, as the men at the gate assumed they were customers. Once inside, they showed their search warrant, and quickly discovered the cellars, the bottling plant, and hundreds of gallons of whiskey.

Conners and Gehrum had been to the races the day before, and did not show up at Death Valley Farm until late that Sunday afternoon. The search was still in progress. Conners pretended he was simply “looking for a friend,” and he and Gehrum left in a hurry. They immediately drove to the Remus mansion to tell him of the raid.

With his extensive network of contacts, Remus had in fact heard rumors that a strange Prohibition agent was in town, but was not too concerned. Gehrum had told him there were hardly any stocks of liquor inside the farm. He had lied, it was later revealed, because he had some of his own customers lined up and wanted to make a profit on the side. Nevertheless, Remus sent a messenger down to the farm early on Sunday morning, to collect some money. The messenger was told to be sure and tell the men on duty to clear out all of the liquor, because there were strange men in town. The messenger forgot to relay the message.

Remus’s first reaction, on hearing of the raid in progress, was to mount an armed expedition and rout the raiders with guns. A weeping Imogene begged him not to (“I know you’ll be killed! Then what will I do?”). Remus arranged bail for those on the farm who had been arrested. Three weeks later, Conners and Remus were themselves arraigned. In May of 1922, Remus, Conners, and eleven of his staff went on trial, and were found guilty. Remus received a two-year jail sentence, and the maximum $10,000 fine. Conners and the others got sentences ranging from one year to eighteen months and fines ranging from $5,000 to $10,000. All appealed to a higher court and were allowed further bail until the next hearing.

Remus was still not overly worried, convinced that the protection money he had spent would prevent any of them from ever going to jail. “When you have Washington fixed,” he told Anderson, “you don’t need to go below.” Even with Death Valley Farm closed, his five other
halfway houses — in Reading and Hamilton, Pennsylvania; Glendale, California; Buffalo, New York; and New York City — were doing well. He carried on business almost as usual, if on a slightly smaller scale. But his extraordinary luck had deserted him, and with Smith’s suicide, he had lost his expensive link to Daugherty. The Supreme Court refused to consider his case, and in January of 1924, all appeals exhausted, Remus, Conners, and his eleven subordinates began their jail sentences in Atlanta.

Remus was engaged in another major operation during the time he remained free on appeal: he had become part of a St. Louis and Indianapolis syndicate that had bought the Jack Daniel’s distillery. His partners, prominent local politicians and state officials, including a congressman and the St. Louis director of Internal Revenue, assured him that their stature and influence guaranteed them all full immunity.

It was while he was in jail that this syndicate not only tricked him out of any return on his investment but behaved so ineptly that they would later be arrested, charged, and convicted. Against Remus’s advice, instead of paying expensive intermediaries for withdrawal permits, and proceeding by stealth, a few cases at a time, they simply emptied the Jack Daniel’s distillery of its 31,000 gallons of whiskey, replacing the barrels with water and wood alcohol. Then they committed what Remus regarded as the most unpardonable crime of all: before selling the Jack Daniel’s whiskey to private customers, they watered it down — to such an extent that the purchasers demanded their money back. The case went against them, and the sensational trial that followed (Remus was originally slated to be a prosecution witness) was probably triggered by furious customers in high places.

Remus’s departure from Cincinnati to an Atlanta jail was one of the highlights of the social season. Remus, in pearl-gray suit, spats, and diamond tiepin, and Imogene by his side, turned the trip into yet another party. Accompanied by federal marshals (whom he treated like honored guests), Imogene, George, Conners, and the eleven other sentenced men boarded a specially hired luxury railroad car, hitched to the regular Atlanta train. On board was a specially hired chef. Waiters served gourmet meals. On his arrival, knowing he would have to wear prison garb, Remus presented the porter with his silk shirts and reporters and photographers were on hand to interview the “Bootleg King.” Remus told them he hoped to lose weight in prison.

By this time he had put his affairs in order. Imogene got a huge check to cover all expenses for the next two years. Remus also gave her power of attorney, so that she could run his business for him while he was in jail. That was to prove his biggest mistake — and the cause of even greater problems.

Coast Guard to Long Island fisherman: “See you tonight, Charlie.”
Fisherman to Coast Guard: “Not if I can help it!”
¹

W
hile George Remus was taking advantage of loopholes in the Volstead Act to build his bootlegging empire, others, more adventurously, became smugglers — and folk heroes. The very history of the United States gave them considerable legitimacy: as lawyers constantly reminded the courts, John Hancock, a founder of the Republic and one of the signatories of the Declaration of Independence, had himself been a smuggler, openly defying the British and their hated Stamp Act at the start of the Revolutionary War. He soon became the rumrunners’ patron saint. Lawyers also used to compare their clients to those heroes who had patriotically challenged the pre-Civil War Fugitive Slave Act, smuggling runaway slaves out of the South and into Canada.

In actual fact, importing liquor into America during Prohibition involved more than rum-running. It required considerable complex advance planning, usually in more than one continent, in a pre-satellite era when transatlantic communications were far more easy to monitor. Just as present-day drug traffickers constitute only part of a sophisticated organization with international ramifications — involving networks of farmers, middlemen, and money launderers from as far away
as Afghanistan, Lebanon, Myanmar (ex-Burma), and Pakistan — so the rumrunners, from 1920 onward, were only bit players in a series of complicated, often European-based, operations.

But the forerunners of today’s drug barons and money launderers were not underworld figures but respectable merchant banks and brokerage houses in Paris, London, Bremen, Hamburg, and Kiel, with equally respectable commission agents in Africa, Canada, Latin America, the West Indies, and the French islands of St. Pierre and Miquelon, off the Canadian coast, where liquor was exceptionally cheap (a quart of gin cost 25 cents, rum 50 cents a gallon, and a bottle of champagne $1 ). Prohibition would give St. Pierre and Miquelon a level of prosperity that is still remembered there with nostalgia. They are the one place in the world where their benefactor, Al Capone, even at this remove in time, remains a hero. Many of the houses still standing there are made out of the wooden cases the champagne bottles originally came in.

Increasingly, U.S. diplomats abroad were enlisted in the war against bootleggers — so much so that they began complaining that they were spending more time on anti-bootlegging activities than on their regular duties. Washington received a constant stream of information from U.S. consulates around the world relaying details of suspect ships’ departures, cargoes, and probable destinations. A report from the U.S. Consulate in Copenhagen is typical of many. “The German steamer
Apis
has sailed from Copenhagen with 437,000 liters of liquor,” it informed the State Department in 1923. The cargo was “falsely billed as destined for Africa but the intent is to smuggle the cargo into the United States.” The reluctance of America’s allies to help stamp out the liquor traffic caused diplomatic rifts similar to those that would later plague America’s relations with her Latin American partners over drugs.

America’s neighbors all profited from Prohibition — to the extent that European shippers of gin, whiskey and champagne began shipping stocks previously sent directly to the United States to convenient relay stations such as Mexico, Canada, and St. Pierre and Miquelon. Export records from the famous French champagne firm Moet et Chandon show that its champagne consignments to Canada increased more than tenfold from 1922 to 1929. After the end of Prohibition, exports to Canada dropped dramatically.
²

The Bahamas became a privileged halfway house — the Medellin of the Prohibition era. Sir Harry Cordeaux, governor of the Bahamas, in a speech in Montreal in 1921, openly acknowledged that “the healthy condition of the island’s finances is largely due to its liquor traffic” — so much so that 250,000 pounds were spent on harbor improvements. In the House of Commons, some teetotaling Scottish MPs criticized the British government’s passivity. W. G. A. Ormsby-Gore, Colonial Office under-secretary, told the House that “practically the whole of the large increase in imports of wine and spirits into the Bahamas last year [1922] was due to Prohibition in America.” Asked whether, “for the sake of friendship with America,” these colonies could be rationed, Ormsby-Gore was brutally frank. “No,” he said, for the traffic “would only go to Haiti or some other convenient island belonging to another nation.”

To the law enforcers’ fury, many prominent Americans openly aided, abetted, and praised the lawbreakers. Prohibition had only been in force eighteen months when Democratic Senator Owen Stanley broke into song on the floor of the Senate, reading into the Congressional Record the popular “Song of the Moonshiners” (to the tune of “My Country, ‘Tis of Thee”):

My country, ‘tis of thee,
Land of grape juice and tea,
Of thee I sing.
Land where we all have tried
To break the laws and lied!
From every mountain-side
The bootlegs spring. . . .

Roy A. Haynes, the first Prohibition commissioner, wrote, in his book
Prohibition Inside Out,
³
that “rum and narcotics smuggling, evasion of the immigration laws, and diamond smuggling run hand in hand,” but that liquor was by far the most lucrative cargo. Over fifty ships of 5,000 tons and over operated out of the Bahamas in 1922, “the shippers of their lawless fleets drawn chiefly from the scum of the American waterfronts.” As would be the case later with narcotics, some investments were virtually risk-free, on a “forward buying” credit plan. “If the runner is known, the local liquor importer will trust you for as
many cases as you care to gamble on at $5 a case. You pay him the cost price per case until the vessel returns with the money — one of them cleared $200,000 in a few months.”

Investors found as many ways of circumventing the law at sea as Remus did on land, and the methods used were strikingly similar to those used by embargo-evading arms dealers today. A Bahamian shipping owner got clearance to ship liquor to a fictitious British, Canadian, or French port. If apprehended within territorial waters, reduced in 1923 from twelve miles to three, the ship’s captain simply claimed this was merely an innocent voyage between two foreign ports. After disposing of the cargo, he entered a U.S. port for clearance “on ballast,” to refuel, pick up a legitimate cargo, and go on his way.

Because the U.S. Coast Guard had the right to board and search suspect vessels flying the American flag, even on the high seas, there was a rush to switch to flags of convenience — a standard procedure to get around the law. “A British merchant institutes libel proceedings against a certain (American) yacht owner who has defaulted on stores or debt, and claims he can’t pay. His boat is sold. The British merchant buys it. It is now a British ship, rum-running with the same crew.” Once at sea, it also became common practice to alter ships’ names after a few round trips, to confuse the Coast Guard.

After the 1929 Wall Street crash, bootleggers had a huge choice of luxury yachts — the former toys of once-wealthy speculators. As Sally Rand, later the famous “fan dancer” star, recalled,