Rothstein (28 page)

Inevitably, reaction came. Progressive Era reformers did indeed accomplish everything the textbooks credit them with: battling bigcity bosses, regulating rapacious monopolies, restricting child labor, taking the first halting steps toward worker safety and consumer health. That was but part of their agenda. They also targeted what we gingerly call “private morality,” but what they dared call “vice.”

In Manhattan, the crackdown started with prostitution. In February 1892, the Reverend Charles H. Parkhurst, minister of the Madison Square Presbyterian Church, delivered a sermon that shocked his congregation, alleging ties between brothels, police, and Tammany itself (“that lying, perjured, rum-soaked, libidinous lot”). Summoned by a grand jury to prove his allegations, he suddenly realized he possessed no actual evidence-and was laughed out of the room. To gather this evidence, he then conducted an elaborate personal undercover investigation of the city’s underworld: the worst whorehouses, its most dangerous saloons. Soon he had proof, and the city listened. Eventually, even Tammany listened. When in 1902, prim, churchgoing Charles F. Murphy succeeded venal Richard Croker as head of the machine, Murphy ended its reliance on white-slave trade payoffs. Prostitution didn’t end. It just moved from ornate brothels to hotel rooms and street corners. But its heyday was past.

The process repeated itself with gambling. In New York State, a series of laws crippled the racetracks; by 1911, they had been shuttered. The real blow fell to Manhattan’s gambling industry with Beansy Rosenthal’s murder. Again, as with prostitution and the tracks, the ornate, wide-open gambling houses shut down, replaced with floating games of chance.

Which left the saloon. The institution possessed its benefits, serving as a community focal point and a welcoming post for immigrants, but it harbored society’s worst elements: gamblers, whores, thugs, ward politicians, petty-and often not so petty-criminals. Temperance and prohibitionist sentiment simmered nationally for decades, but never gained much ground. Then, just before World War I, the prohibition movement accelerated, augmented not just by the spirit of the times, but by an efficient political infrastructure. Older antialcohol groups such as the Women’s Christian Temperance Union found themselves joined by the aggressive new Anti-Saloon League, an organization that combined grassroots fervor, a powerful publishing program, and hardball lobbying and politicking. Liquor interests dug in their heels, refusing to acknowledge their sins, to cleanse the corner saloon. In short order, they lost everything. In January 1920, the Eighteenth Amendment to the United States Constitution banned the “the manufacture, sale, or transportation of intoxicating liquors” within the national borders. Prohibition was here to stayfor thirteen years.

The Eighteenth Amendment did not create organized criminal gangs, crooked cops, or venal politicians, but it provided them with fantastically lucrative opportunities-as it did for Arnold Rothstein. Some say A. R. was once again merely a Big Bankroll, who by mag nitude of nerve and cash attracted opportunities like a magnet, adding his own special skills to the process, but reactive nonetheless.

They are wrong.

Most biographical treatments provide the following story. As Prohibition began, two low-level hoodlums, Waxey Gordon (ne Irving Wexler) and Big Maxey Greenberg, needed Arnold to fund their purchase of a supply of Canadian liquor. Gordon, basically a Lower East Side thug, was a former pickpocket, Benny Fein strong-arm man, and dope peddler of little charm and less education. Maxey Greenberg hailed from St. Louis, where he worked for William “Jellyroll” Egan’s “Egan’s Rats,” primarily a union-busting outfit. In 1917 Greenberg had received ten years for grand larceny, but in 1919 Egan employed his political connections to weasel a presidential pardon for Greenberg. Maxey, however, soon departed for Detroit, conveniently located across the river from Windsor, Ontario and Canada’s virtually limitless amounts of high-quality liquor. Greenberg needed $175,000 to start his rumrunning network. Neither he nor his new friend Waxey Gordon possessed $175,000.

Waxey had worked for Rothstein in labor racketeering. In October 1919, Gordon arranged a meeting with A. R. on a Central Park bench. Gordon and Greenberg knew Rothstein’s interest rates would be steep, but also knew of no one else who could bankroll their operation.

A. R. certainly had the money, his fortune recently augmented from fixing a World Series. He also had a counterproposal. He demanded every piece of property Greenberg owned as collateral and further insisted that Maxey write a massive life insurance policy on himself with A. R.‘s firm. That was just the beginning. A. R. would become senior partner in their enterprise-and, above all, he didn’t want anything routed through greedy Canadian middlemen. The booze would be purchased outright in Great Britain, and shipped directly to the States. A. R. hated middlemen; they only skimmed away his profits.

Possessing no alternative, Greenberg and Gordon agreed. Rothstein had planned everything. He even had his own purchasing agent, Harry Mather, a Lower East Side native now lying low in England to avoid bucketshop charges. Mather bought 20,000 cases of scotch and hired a freighter to ship them across the Atlantic.

Off the eastern Long Island coast, a small flotilla of speedboats sped the booze to shore. A waiting convoy of trucks (guarded by Legs Diamond and his brother Eddie) hauled it to the city. Such operations required the acquiescence of Coast Guardsmen, state troopers, and Suffolk and Nassau County Police. Yet all transpired flawlessly, returning fabulous profits to the new partnership.

Ten shipments arrived uneventfully. The Coast Guard prepared to intercept the eleventh. Aware of their plan, Rothstein ordered the ship to Cuba, where he still sold his cargo profitably. But the experience (and the potential loss of a massive investment) unnerved him.

The above is all true-except for abandoning rumrunning and losing his nerve. A. R. never really left the business. He merely surrendered daily oversight of the operation. He still drew sizable profits from the trade. Before Greenberg and Gordon ever dared think of approaching A. R., Rothstein had already developed the entire scenario in his own mind-and assembled a smart, tough team of young hoodlums to implement it, men who would change the world of organized crime forever.

Eighteen-year-old Meyer Lansky (born Maier Suchowljansky in Grodno, Poland) was a young man on the way up, a petty Lower East Side gambler who graduated quickly to labor racketeering. The 5′5″ Lansky-“Little Man”-and Rothstein first met in Brooklyn, in either 1919 or 1920, at the bar mitzvah of the son of a mutual friend. Rothstein invited Lansky to dine with him in Manhattan. The opportunity made Lansky nervous. He was little more than an unexperienced punk. A. R. was the biggest man in town. If Meyer knew what Arnold had in mind for him, he would have been even more nervous.

Indeed, Rothstein liked what he saw in Lansky, but he must have heard a great deal about the “Little Man” before that meeting. He also had to know about Lansky’s budding organization. Otherwise, Arnold would never have proposed what he did: that Meyer Lansky and his associates, Lucky Luciano (Charlie Lucania), Ben “Bugsy” Siegel, Dutch Schultz (Arthur Flegenheimer), Abner “Longie” Zwillman, Charley Adonis, Vito Genovese, Carlo Gambino, and Albert Anastasia, would assist him in assembling the biggest liquorsmuggling ring in the history of the world.

Lansky’s group was what A. R. needed: young, smart, flexible. Older gang leaders, the “Moustache Petes” like Joe Masseria and Salvatore Maranzano, were too set in their ways. The Italians wouldn’t work with the Jews. The Jews distrusted the Italians. The Sicilians shunned the Neapolitans. But these kids-and they were kidslooked beyond nationalities to the talent inside, just like Arnold. If a dollar could be made, they’d make it, and they were young enough to be molded in A. R.‘s own image.

“We sat talking for six hours,” Lansky remembered decades later. “It was a big surprise to me, Rothstein told me quite frankly that he picked me because I was ambitious and `hungry.’

“But I felt I had nothing to lose. He knew I was working with Charlie Lucania-as he was still known-and that we could call upon our friends, the mixture of Jews and Italians who were loyal to us.”

Rothstein liked Lansky and took time to explain how they would collaborate not only in the short term, but in the years to come, and how if his gang was smart it could make more money than they could ever dream of:

There’s going to be a growing demand for good whiskey in the United States. And when I say good whiskey that is exactly what I mean. I’m not talking about the rotgut rubbish your Italian friends are busy making in their chamber pots right now on the Lower East Side. That’s O.K. for the poor creatures who don’t know any better.

I’m talking about the best Scotch whiskey from Britain. There’s a fortune to be made from importing the stuff into the United States. I don’t mean just the odd dozen cases or partial shipment now and then. Prohibition is going to last a long time and then one day it’ll be abandoned. But it’s going to be with us for quite a while, that’s for sure. I can see that more and more people are going to ignore the law, and they’re going to pay anything you ask to get their hands on good-quality liquor. I know what I’m talking about, because as you know I mix with society people who have money. It’s going to be the chic thing to have good whiskey when you have guests. The rich will vie with one another to be lavish with the Scotch. That’s where our opportunity is-to provide them with all the liquor they can possibly pass on to their guests or guzzle themselves. And we can make a fortune meeting this need.

I want to set up a sound business for importing and distributing Scotch. It is illegal, of course, and will require running risks, but I don’t think you mind that. I have the contacts to buy the stuff. I know the Scottish distillers and they know me. I’ve played poker with them. I’ve taken a lot of money from them. We’re very good friends and there’s no problem there. Would you like to discuss this with your Italian friends and let me know? But we have to move quickly. Other people are going to get on the bandwagon….

I will travel to London and Edinburgh and other major European cities and see the Scotch distillers. I’ll lay out hard cash and ask them to deliver their top-quality whiskey to us. We’ll have crews we can trust and ships to bring it across the Atlantic. The total cargo will be the Scotch I will buy from the distillers. We’ll avoid running risks by unloading the cargo at sea and taking delivery outside the American three-mile limit. We’ll have to hire or buy a fleet of small fast speedboats and that type of thing, so the cargo can he distributed at night to special places we’ll set up on the coast. Either they can let us have the whiskey on the ocean that way, or we can take delivery from one of the nearby Caribbean islands-Cuba may be a good place. It will be your job to smuggle the Scotch into the United States and then distribute it.

A. R.‘s exposition as to the why of rumrunning required no profound insights. His view of how revealed the mind of a shrewd busi nessman, attuned to branding, customer satisfaction, and long-term profitability:

But first I want to lay down an important principle, and this is something I want to be very clear about: We must maintain a reputation for having only the very best whiskey. There are two ways of making money out of this, as I see it. There’s the quick and rather stupid way-we could get cheap rotgut whiskey or open the cases and bottles we import, dilute it, and mix it with the cheap stuff being produced over here. We could certainly make very high profits for a while that way. But we would simply get a reputation like your pal Masseria as being merchants of cheap, disgusting booze which might even kill people. We’d have only the lowest kind of clientele. I want to go for the society people, because that’s where the big money is.

Rothstein’s formula began working like a charm, bringing immense riches not only to himself, but to Lansky and his coterie of young hoodlums. The basic ideas of the venture paralleled of running at any first-class gambling house: The business is lucrative enough without having to cheat, so don’t. Treat customers with respect and they will return. Comport yourself with class and you attract clients with class-and the more class they possess, the more money they have. And the more money they arrive with, the more money you will depart with.

Rothstein certainly enjoyed such profitable company, but just as at Jack’s, he also took pleasure in the relatively cultured and amusing. Sam Bloom, of Chicago’s 20th Ward, was a member of Al Capone’s outfit specializing in running booze from the Bahamas to Charleston, South Carolina. Eventually, he appeared in Manhattan, attempting to develop relations with New York mob interests. Bloom, a relatively cultured and well-read fellow (at least by mob standards), hit it off reasonably well with A. R. When he found a wealthy Scotsman ripe for fleecing, Bloom secured Rothstein’s cooperation, and the two Americans staged a fixed highstakes poker game, at first, letting the Scot win a few hands, but eventually taking him for $50,000 apiece. Afterward, Bloom took time to commiserate with his victim (you never know, after all, when you might need a sucker again), learning that he owned the majority of the distillery producing King’s Ransom Scotch. King’s Ransom was decent stuff, twelve-year-old full-bodied whiskey, the brand of hooch Bloom could safely dilute with cheaper stuff.

Bloom thought this an excellent opportunity to secure exclusive American importing rights to King’s Ransom and approached Rothstein, Lansky, and Luciano with the idea. They weren’t interested in adulterating any merchandise, but they were looking ahead, intrigued by the opportunity for exclusive rights to King’s Ransom even after Prohibition. They agreed to advance a $100,000 deposit for their new partnership.

The Scotsman agreed. After all, $100,000 was what he had just lost. And to show what a gentleman he was, Bloom insisted that he receive no receipt in return. This relationship would be strictly one of honor.

And so it went. A. R. and Bloom even allowed their new partner to win back a wee bit more of his money in card games, and for a while boatloads of aged Scotch traveled safely from Glasgow to Lansky’s agents: Enoch “Nucky” Johnson in Atlantic City and Charles “King” Solomon in Boston. Then-one night-a huge shipment disappeared near Boston.