Smuggler Nation (42 page)

Figure 13.4 “Only 2,500 Cases a Day.” Political cartoon shows the flood of alcohol between Windsor and Detroit (Walkerville Publishing).

Bootlegging across the Detroit River initially faced little law enforcement resistance and could operate in broad daylight. But increased U.S. river patrols after 1923 forced smugglers to rely on speedier boats and the cover of darkness. Thousands of boats were seized, but smugglers often simply bought them back at public auctions; some boats were even seized multiple times in the same year. Hundreds of other boats simply vanished from U.S. custody and reappeared on the river as smuggling boats.
⁷⁰

Bootleggers also enjoyed considerable local community support on the U.S. side of the river, so much so that several towns near Detroit situated across from Canadian export docks were openly hostile toward law enforcement. In Hamtramck, the situation got so out of
hand that Michigan Governor Alex Groesbeck deployed state police to take over the city in 1923. Another waterfront town, Ecorse, was described by the
Literary Digest
as “that amazing nest of smugglers, in which even large armed squads of American enforcement officers feel uncomfortable.”
⁷¹

Prohibition enforcement on the Detroit River was a frustrating and thankless job, though it could also be financially rewarding. The pay was low, but bribes were high. A 1929 grand jury disclosed that smugglers spent an average of $2 million annually on corruption to operate along the river, paying off about a hundred border agents who each collected an average of $1,700. Smugglers reportedly could even buy “free nights” on the border.
⁷²

It wasn’t just the smugglers and corrupt law enforcers who were cashing in on the Detroit-Windsor illicit trade boom. The Canadian government took its own official cut and actively encouraged it. Twenty-nine Ontario breweries and sixteen distilleries were granted production licenses in 1920, with some of the largest conveniently located either on or near the border.
⁷³
They were even allowed to store their alcohol at export docks along the river near Windsor.

Canada’s export tax on alcohol made up about 20 percent of total government revenue. In 1929 revenue from the alcohol export tax was double the amount collected in income tax.
⁷⁴
According to Canadian customs records, whiskey exports to the United States in 1928 alone amounted to 1,169,002 gallons (and this does not count, of course, unrecorded exports).
⁷⁵
On top of that, Canada collected duty on British liquor imports, which increased by almost six times between 1918 and 1922. This was just the beginning; imports of British booze increased from 124,546 gallons in the first quarter of 1926 to 560,444 gallons for the same period in 1928.
⁷⁶
And it wasn’t just the British who were reaching the U.S. market via Canada. For example, between 1922 and 1929, the French champagne producer Moet et Chandon increased its exports to Canada more than tenfold—and they plummeted once Prohibition was lifted.
⁷⁷

Despite repeated appeals from Washington, Canadian officials insisted that enforcing Prohibition was entirely a U.S. problem. After all, no laws were being violated until the alcohol entered the United States.
⁷⁸
Frustrated U.S. officials were not the only ones to view Canada
as engaging in state-sponsored smuggling. A July 28, 1929, editorial in the Toronto
Globe
stated: “The situation boils down to this: The Canadian Government is operating in collusion with outlaw American citizens to break United States laws. It is a blunt way of putting it; but is it not the fact?”
⁷⁹

Ottawa became truly concerned about smuggling across the border only when it discovered that rumrunners were also smuggling high-value goods into Canada on their return trips.
⁸⁰
This included evading the more than 40 percent Canadian duty on silk imports. Bowing to U.S. pressure, in 1929 Canada finally shut down the Windsor-area export docks and outlawed alcohol shipments to countries that banned imports. Rumrunners quickly adapted. With river transport less convenient, they turned more to trains, trucks, automobiles, and even airplanes.
⁸¹
Smuggling by car and truck was greatly facilitated by the remarkably well-timed opening of the Ambassador Bridge between Detroit and Windsor in 1929 and the Detroit-Windsor Tunnel in 1930; overstretched U.S. agents simply could not inspect more than a small percentage of the inbound traffic.
⁸²
“In less than three years,” commented Malcolm Bingay of the
Detroit News
, “around $50,000,000 was spent so that people could get back and forth—quickly—between Detroit and our ever-kind liquor-supplied neighbors of Windsor.”
⁸³

Booze also poured across the border via the dozens of roads linking Quebec to Vermont and New York. Most roads had no customs stations, and the stations that did exist were closed at night and minimally patrolled. Route 9, dubbed “Rum Trail,” connected Plattsburgh, New York, to the border. A case of beer bought in Canada for as much as five dollars could be sold in Plattsburgh for ten, and it fetched up to twenty-five dollars in New York City.
⁸⁴

Such high profits in a business with low barriers to entry predictably attracted many fortune seekers.
⁸⁵
Consider the rags-to-riches story of Larry Fay, the New York City cabdriver who quickly realized that it was far more profitable to transport booze than people. Fay bought whiskey for ten dollars a case in Montreal and sold it for eighty dollars a case on his return trip to New York. Reinvesting these profits in his upstart illicit transport business, Fay soon owned several cabs and trucks making runs between Montreal and New York. Bootlegging provided the
start-up capital for Fay’s real business interest: New York nightclubs. At “El Fey,” the first nightclub he opened, heavily watered-down whiskey sold for $1.50 per drink, and “champagne” (actually carbonated cider mixed with alcohol) sold for twenty-five dollars per bottle. After the feds shut it down, Fay opened an even bigger nightclub, the “Club Del Fey” at 247 West 54th Street. Fay’s clientele ranged from wealthy New Yorkers to famous foreign visitors—including members of the British Royal Family.
⁸⁶

Bootleggers also took advantage of the Canadian leak along the northwestern edge of the border. The most famous of all was Roy Olmstead, a cop-turned-smuggler who oversaw a large-scale alcohol shipping and distribution business between Vancouver and Seattle in the early 1920s. He became Seattle’s millionaire “rum king” in just a few years. Olmstead’s fleet of fast boats, powered by Boeing engines, delivered Canadian whiskey throughout the Puget Sound area. Olmstead became a fixture in Seattle social circles, throwing grandiose parties at his Mount Baker mansion. He also established Seattle’s first radio station, which was suspected of using coded messages to facilitate smuggling operations.

Although many locals—including the mayor and many of his former associates in law enforcement—hobnobbed with Olmstead, the feds targeted him, resorting to previously illegal wiretapping (including taped conversations between Olmstead and corrupt cops discussing illicit business transactions) to build their case. In 1926 Olmstead was tried for “conspiracy to possess, transport and import intoxicating liquors” and given a four-year jail term. The case made history: it was the first time a judge allowed phone wiretapping as evidence in a trial. The hugely controversial verdict was appealed all the way to the Supreme Court, which ruled in favor of the prosecution by a five-four vote—a decision that was not overturned until 1967.
⁸⁷

Ultimately, those who made the biggest profits from the Prohibition-induced smuggling boom were not the bootleggers but the big distillers. The stock value of Canada’s four largest liquor producers more than tripled.
⁸⁸
As the bootlegger and racketeer Moe Dalitz noted later, “I did nothing more than the head of Seagram’s, than the head of G&W [Gooderham and Worts], the head of Canadian Club. They assembled all this merchandise for runners to bring it across.”
⁸⁹

Leading the list of Canadian liquor magnates who made enormous profits from Prohibition was Samuel Bronfman. At the start of Prohibition his company allegedly imported some 300,000 gallons of American whiskey, significantly watered it down, and then shipped it back to the United States through smuggling channels. He also reportedly imported thousands of barrels of alcohol from Scotland, added coloring and water, and illicitly exported it to America. By the end of the first year of Prohibition, his company was moving nearly sixty-four thousand gallons of spirits across the border every month. Bronfman also dominated much of the St. Pierre transit trade. In 1928, already one of the wealthiest men in Canada, he bought Seagram and turned it into a global player in liquor distribution.
⁹⁰

The Prohibition Hangover

If World War I was the crucial context that gave birth to Prohibition, the Great Depression was the crucial context that killed it off. The great need for tax revenue in desperately hard times ultimately trumped America’s waning enthusiasm for Prohibition. The Anti-Saloon League had promised that Prohibition would cleanse and purify the nation. Instead, an increasingly weary public and skeptical media came to blame Prohibition for poisoning the nation by fueling corruption, violence, and lawlessness. Although no one saw it coming—a constitutional amendment, after all, had never been repealed before—in the end Prohibition was discarded as easily as it had been imposed. Even Mormon Utah signed on for repeal.

Though America’s failed Prohibition experiment was relatively short-lived, it left a long-lasting legacy. As James Morone puts it, in just thirteen years Prohibition rewrote “American federalism, criminal justice, the courts, civil liberties, crime-fighting, crime families, and national attitudes.”
⁹¹
Thanks to Prohibition, the idea that crime was a federal matter requiring federal policing became more deeply embedded and institutionalized, and it helped to lay the groundwork for the subsequent expansion of the Federal Bureau of Investigation.
⁹²
Prohibition even changed the way we speak. New slang terms were invented and popularized, many of which have lived on: “big shot,” “big time,” “bump off,” “taken for a ride,” “frame,” “muscle in,” “run
around,” “grand” (thousand dollars), “powder room” (bathroom for women at speakeasies).
⁹³

Law enforcement was bruised and battered during the Prohibition years but came away from the experience greatly empowered. Consider, for example, the radical rewriting of search-and-seizure rules. The proliferation of the automobile in America—from only three million in 1916 to more than twenty-six million in 1930—provided new opportunities for smuggling, but it also prompted law enforcement to test the limits of Fourth Amendment protections. In
Carroll v. United States
(1925) the Supreme Court ruled that a warrant was no longer required to search a vehicle so long as there is a “reasonable and probable cause for believing that the automobile has contraband liquor therein which is being illegally transported.”
⁹⁴

The same thing happened with the spread of the telephone. It facilitated coordination of smuggling but also gave law enforcement new surveillance opportunities. The Supreme Court decision in the Olmstead smuggling case, noted earlier, granted the police sweeping wiretapping powers for the first time, powers that would not be curtailed for four decades. It is striking that the 1910 version of the
Cyclopedia of Law and Practice
devotes only fifteen pages to the issue of search and seizure, but in the 1932 version it runs 114 pages.
⁹⁵

The law enforcement infrastructure and legal precedents created by Prohibition would stay in place long after repeal—retooled and refocused on other policing concerns, including other mind-altering substances. Indeed, Harry Anslinger, the assistant prohibition commissioner, became the first commissioner of the Federal Bureau of Narcotics. And as we’ll see in the next chapter, even though alcohol prohibition lasted little more than a decade, drug prohibition would not only persist but also escalate for more than a century. It offers a glimpse of what the short-lived experiment in alcohol prohibition could have looked like if it had been globalized rather than repealed. But compared to alcohol, drugs such as heroin and cocaine were much more compact, portable, durable, and concealable—making them even more difficult to suppress and prompting even more expansive and invasive policing.

PART V
INTO THE MODERN AGE