So the end of Prohibition made little difference to the gangs. They had diversified into other businesses – such as drugs, gambling and labour racketeering. Luciano’s friend Louis Buchalter – known simply as Lepke – dominated the garment industry. Frank Costello was the gambling boss, with a sideline in gem smuggling. Luciano had by this time decided that the future lay in the drug trade, although he owned brothels all over the country.
The chief problem remained inter-gang rivalry. Capone’s arrest had taught the New Yorkers that it was unwise to arouse public protest by conducting feuds in the streets. The point was driven home at a meeting in the latter half of 1932, chaired by gangland’s respected elder statesman, Johnny Torrio. All New York’s leading gangsters were invited: Costello, Joe Adonis, Lepke, Longy Zwillman, Bugsy Siegel, Meyer Lansky and Dutch Schultz. Luciano was in the chair. Torrio pointed out that when Prohibition was repealed, politicians would cease to depend on the gangsters for alcohol, and the gangster would cease to be regarded as a social benefactor. They would lose valuable ‘contacts’. Therefore, they should decide in advance to stick together. Inter-gang warfare must cease, and to achieve this, the gang leaders must keep in close contact, like the board of a public corporation… After Torrio and Luciano had put the case, resistance melted. In effect, the gangs were forming a cartel, and the strength of one was the strength of all. By 1934, the advantages of this mutual-protection society were so obvious that gangs from all over the country suggested joining. A meeting was called in Kansas City; gangsters from Kansas City, Chicago (the Capone gang), Cleveland (the Mayfield mob) and Detroit (the Purple gang) attended, together with delegates from Boston, Miami, New Orleans, Baltimore, St Paul and St Louis. Luciano and Meyer Lansky – known, because of his stature, as ‘The Little Man’ – were the organisers. The result of this meeting was the formation of the Syndicate – sometimes known as Murder Incorporated.
Whenever a body is found in the gutter or a doorway today, it is still more or less casually dismissed by press and public as the result of differences of mob opinion, just as it was in the trigger-happy twenties. It doesn’t work that way any more. Not one top boss in the underworld has been slain since 1934 unless the execution has been sanctioned, approved, and in fact directed, by the gang lords of the nation.
From Murder Incorporated by former District Attorney Burton B. Turkus and Sid Feder, 1951.
Dutch Schultz was one of the first to fall foul of the new Syndicate. Now Prohibition was over, Schultz ran a highly profitable form of racing lottery called the numbers racket. He was an eccentric individualist who was never much liked by his fellow gangsters, and Luciano deplored his bad manners. On one occasion, Luciano called a meeting of gangsters at his flat, and provided girls for the entertainment of his guests. Schultz was so taken with one of them that he hauled her into the bedroom before the meeting began, and shouted his own occasional contributions through the open door. When he emerged he tossed a hundred dollars at Luciano, saying ‘That’s for the girl,’ and went out.
When the Federal authorities decided that Schultz was open to charges of income tax evasion, his lawyers succeeded in having his trial moved to Syracuse, in upstate New York. Schultz moved there, mixed in local society, became involved in charitable activities, and, according to one historian, hired a public relations firm to improve his image. The result was that the jury acquitted him. But during his absence from New York, Lepke had moved in on Schultz’s profitable numbers business in Harlem; Schultz’s chief lieutenant, Bo Weinberg, was persuaded that his boss would be spending a long time in jail and agreed to work for new masters. But Schultz did return, and Weinberg was mysteriously stabbed to death. Schultz was embittered about the loss of his rackets, but recognised that he stood no chance against the rest of the Syndicate. He decided to bide his time.
However, Schultz was too much of an individualist to be able to escape notice. New York’s new mayor, Fiorello La Guardia, had announced that he would make war on the racketeers, and was photographed smashing up gaming machines with a sledge hammer. For the time being, Schultz was safe, since the District Attorney, William C. Dodge, had received large contributions from Schultz to his election campaign. But when a grand jury investigating the numbers racket realised that the D.A. was actively impeding the investigation, they demanded his removal, and a formidable young lawyer named Thomas E. Dewey was appointed in his place. It was Dewey who, in his previous role as Federal Attorney, had indicted Schultz for income tax evasion. Schultz’s reaction to his appointment as District Attorney was manic rage. He proceeded to arrange for Dewey’s assassination. One of his gunmen began to watch Dewey’s movements, and established that he made a habit of calling at a local drug store every morning to use the telephone while his two bodyguards waited outside. The Syndicate heard of the proposed killing and summoned Schultz to a meeting. Lepke pointed out that the murder of the District Attorney would create precisely the sort of unwelcome public outcry that they all wished to avoid. Schultz’s arguments were overruled. Dewey must be allowed to live.
Schultz declined to accept the verdict. And it soon came to the notice of the Syndicate that he was still observing Dewey’s movements, with the obvious intention of presenting the Syndicate with a fait accompli. And when their information network established that Dewey had less than two days to live, they decided to act. Schultz had moved to Newark, New Jersey, and ate his meals in the Palace Chophouse. On the night of 23 October 1935, Schultz and his aides were in a backroom of the Chophouse, having a business meeting. Schultz went out to the men’s lavatory. The Syndicate killer, ‘Charlie the Bug’ Workman, strolled into the Chophouse, walked into the lavatory and saw Schultz bent over the washbasin. Assuming him to be a bodyguard, Workman drew his gun and shot him in the back. Then he went back to the bar to wait for Schultz – a bar that had suddenly emptied at the sound of the shot. It was some time before it dawned on Workman that the man in the toilet – who had seemed vaguely familiar – was the man he was hired to kill.
Schultz was not dead; he spent twenty-four hours babbling in delirium before he died in hospital. It was many years before Dewey learned how close he had been to death.
The Schultz assassination caused very nearly as much of a scandal as the killing of Dewey might have done. One of the things Schultz revealed in his final delirium was that the man responsible was ‘the boss himself. Dewey began looking for Luciano. He was in Arkansas, but as soon as his whereabouts was known, Dewey demanded his extradition. He began a round-up of the brothel madames who now worked for the Syndicate; many of them had been independent before Luciano obliged them to become his employees, and were delighted to talk. Torrio was also arrested, and charged with income tax evasion. Luciano was charged on ninety counts of extortion, and his bail was set at $350,000. Torrio went to prison for two and a half years. Luciano received a term of from thirty to fifty years. Realising that many of those who had testified against him would be in danger of their lives, the judge warned that if any of these witnesses was harmed in the future, he would instruct that Luciano and his fellow defendants should spend the maximum term in jail without parole.
It looked, then, as if law and order had won after all. Dewey certainly thought so. What he did not realise was that the crime syndicate now spread across the country and could operate just as smoothly without Luciano. Small operators were forced out of business and their rackets taken over by the Syndicate. If a murder was necessary, a hired gunman arrived from out of town, killed him with quiet efficiency, and left town the moment the job was done. Burton Turkus estimates that about a thousand murders were committed by ‘Murder Incorporated’ in the first five years of its existence. The fee for a killing ranged from a thousand to five thousand dollars. (Pittsburgh Phil, one of the best known contract killers, is believed to have murdered five hundred persons between 1930 and 1940.) In most cases, the corpses were never found – they were dumped in swamps or rivers.
The law learned about the existence of Murder Incorporated in 1940. A prisoner named Harry Rudolph sent for Turkus – then assistant District Attorney – and told him that he had been present when another gangster was killed in 1933; the killers included a much-wanted killer named Abe Reles, known as ‘Kid Twist’. Reles was so confident that the law was unable to touch him that he gave himself up the moment he heard the police wanted to talk to him. Then, when he found out that Harry Rudolph had ‘fingered’ him for the gang murder, he realised his mistake. The D.A.’s office was determined to put as many gangsters behind bars as possible, and judges were co-operative. With the evidence against him, Reles knew it meant the electric chair.
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