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Chapter 1
1. Meyer Lansky
The Racketeer as Chairman of the Board
He was born Maier Suchowljansky in 1902 at Grodno, in a Poland
possessed by Tsarist Russia. As a child he envisioned the United
States as a place of angels, "somewhat like heaven," he would say
much later. When he was ten, his family fled the pogroms directed at
Jews for the land of his dreams. In the Grand Street tenements of the
Lower East Side of Manhattan he found not angels but what he called
his "overpowering memory"-poverty, and still more savage prejudice.
In school, where he excelled, his name was Americanized. Meyer Lansky
was a slight child, smaller than his peers. But he soon acquired a
reputation as a fierce, courageous fighter. One day, as he walked
home with a dish of food for his family, he was stopped by a gang of
older Irish toughs whose leader wielded a knife and ordered him to
take down his pants to show if he was circumcised. Suddenly, the
little boy lunged at his tormentor, shattering the plate into a
weapon, then nearly killing the bigger boy with the jagged china,
though he was almost beaten to death himself by the rest of the gang
before the fight was broken up. Eventually, he would become renowned
for his intelligence rather than his physical strength. Yet no one
who knew him ever doubted that beneath the calm cunning was a reserve
of brutality.
He left school after the eighth grade, to find in the streets and
back alleys of New York his philosophy, his view of America,
ultimately his vocation. He lived in a world dominated by pimps and
prostitutes, protection and extortion, alcohol and narcotics,
legitimate businesses as fronts, corrupt police, and ultimately,
always, the rich and powerful who owned it all but kept their
distance. There was gambling everywhere, fed by the lure of easy
money in a country where the prospects of so many, despite the
promise, remained bleak and uncertain.
A gifted mathematician with an intuitive sense of numbers, he was
naturally drawn to craps games. He was able to calculate the odds in
his head. Lore would have it that he lost only once before he drew an
indelible lesson about gambling and life. "There's no such thing as a
lucky gambler, there are just the winners and losers. The winners are
those who control the game . . . all the rest are suckers," he would
say. "The only man who wins is the boss." He decided that he would be
the boss. He adopted another, grander axiom as well: that crime and
corruption were no mere by-products of the economics and politics of
his adopted country, but rather a cornerstone. That understanding,
too, tilted the odds in his favor.
By 1918, at the close of World War I, Lansky, sixteen, already
commanded his own gang. His main cohort was the most charming and
wildly violent of his childhood friends, another son of immigrants,
Benjamin Siegel, called "Bugsy"-though not to his face-for being
"crazy as a bedbug." Specializing in murder and kidnapping, the Bugs
and Meyer Mob, as they came to be known, provided their services to
the masters of New York vice and crime, and were soon notorious
throughout the city as "the most efficient arm in the business." Like
other criminals then and later, and with epic consequences in the
corruption of both labor and corporate management, they also hired
out their thuggery first to companies, and then to unions-most
decisively the Longshoremen and Teamsters-in the bloody war between
capitalists and workers. Some employers "gave their hoodlums carte
blanche," as one account put it, which they took with "such
enthusiasm that many union organizers were murdered or crippled for
life." Lansky and Siegel would be partners and close, even
affectionate friends for more than a quarter century, and in the end
Lansky would have "no choice," as one journalist quoted him, but to
join in ordering Bugsy's murder.
At a bar mitzvah, Lansky met Arnold Rothstein, the flamboyant gambler
involved in fixing the 1919 World Series, and he soon became
Rothstein's prot?g?. During Prohibition they made a fortune in
bootlegging while dealing in heroin as well. Their collaborators,
competitors, and customers in the criminal traffic, as Lansky later
reminisced, were "the most important people in the country." On a
rainy night in 1927 in southern New England, a gang working for
Lansky hijacked with wanton violence a convoy of Irish whiskey being
smuggled by one of their rival bootleggers, an ambitious Boston
businessman named Joseph P. Kennedy. The theft cost Kennedy "a
fortune," one of the hijackers recalled, as well as the lives of
eleven of his own men, whose widows and relatives then pestered or
blackmailed a seething Kennedy for compensation.
Ruthless with enemies, Lansky was careful, even punctilious, with his
partners and allies. One of his closest and most pivotal associates
was yet another boyhood acquaintance and fellow bootlegger, an
astute, pockmarked Sicilian named Charles "Lucky" Luciano. Their
rapport baffled those who witnessed it, bridging as it did bitter old
divisions between Italians and Jews. "They were more than brothers,
they were like lovers," thought Bugsy Siegel. "They would just look
at each other and you would know that a few minutes later one of them
would say what the other was thinking."
Lansky's share of the enormous criminal wealth and influence to come
out of Prohibition in the early thirties would be deployed shrewdly.
He branched out into prostitution, narcotics, and other vice and
corruption nationwide. But his hallmark was always gambling. "Carpet
joints," as the ubiquitous illegal casinos of the era were called,
run by his profit-sharing partners-proconsuls like the English killer
Owney Madden, who controlled organized crime's provincial capital of
Hot Springs, Arkansas-were discreetly tucked away and protected by
bribed officials in dozens of towns and cities all over the United
States. Still, Lansky's American roadhouses were almost trivial
compared to the lavish casinos he would build in Cuba in league with
a dictatorial regime.
For Luciano and other gangsters, Lansky was the preeminent investment
banker and broker, a classic manager and financier of a growing
multiethnic confederation of legal and illegal enterprises throughout
the nation. He organized crime along corporate hierarchical lines,
delineated authority and responsibility, holdings and subsidiaries,
and, most important, meticulously distributed shares of profits and
proceeds, bonuses and perquisites. There would always be separate and
distinct provinces of what came to be called most accurately the
Syndicate-feudal baronies defined by ethnic group, specialty, assets,
or geography, that ruled their own territorial bases and colonies,
coexisting warily with the others, distrusting, jockeying, waiting,
always conscious of power. It was part of Lansky's clarity of vision
to see how they might be arrayed to mutual advantage despite their
unsurrendered sovereignty and mutual suspicion. He recognized how
much the country-in the grip of Wall Street financial houses and
powerful local banks, industrial giants in steel, automobiles,
mining, and manufacturing, the growing power of labor unions, the
entrenched political machines from rural courthouses to city halls of
the largest urban centers-was already ruled by the interaction of de
facto gangs in business and politics, as in crime. A faction unto
himself, after all, he would never subdue or eliminate the boundaries
and barons. Over the rest of the century their domains would only
grow. In business, he preferred to own men more than property,
especially public officials whose complicity was essential. He did
not, like most of his associates, merely bribe politicians or
policemen, but worked a more subtle, lasting venality, bringing them
in as partners.
Americanizing corruption as never before, Lansky extended it into a
truly national network and ethic of government and business, a shadow
system. His Syndicate came to bribe or otherwise compromise, and thus
to possess, their own politicians, to corrupt and control their own
labor unions and companies, to hire their own intelligence services
and lawyers, to influence banks with their massive deposits. But it
was Lansky who gave their expedient alliance a historic cohesion,
wealth, and power. Already by the thirties their shared apportioned
profits were in the tens of millions of dollars, equivalent to the
nation's largest industries.
The wiry adolescent Lansky had grown into a small, unprepossessing
man. He was barely five feet four inches tall, weighing less than 140
pounds. By his late thirties, he was the father of three in a
colorless and arranged first marriage. With a pleasant open face,
limpid brown eyes, and neatly combed dark hair, he resembled nothing
so much as the earnest accountant or banker that in a sense he had
become. Save for white-on-white silk shirts and the largest
collection of bow ties in the country, he exhibited none of the
coarse ostentation or pretensions of his colleagues. His private life
was discreetly modest. At home he spent most of his time in a
wood-paneled den and library lined with popular encyclopedias. Able
to recite from memory the Gettysburg Address and long passages from
The Merchant of Venice, he was an avid reader, a regular subscriber
to the Book-of-the-Month Club, ever conscious of his lack of formal
education. His personal hero, he confided to a few friends, was
another figure of similar physical size and historic imprint,
Napoleon Bonaparte.
Above all, he was a political man. Like most denizens of his world,
he was insistently patriotic, and generally conservative if not
reactionary in the usual political terms, with an understandable
distaste even for reformers, let alone social revolutionaries-though
he always seemed to understand, long before more educated men, that
ideology and conviction in American politics commonly have a price.
Like his successors over the rest of the twentieth century who
learned the lesson well, he would be an inveterate contributor to
Democratic politicians at all levels. Lansky paid "handsomely"-legal
scholar and sociologist William Chambliss recorded his secret cash
contributions-into the presidential campaigns of Al Smith in 1928,
Franklin Roosevelt in 1932, Harry Truman in 1948, Lyndon Johnson in
1960 and 1964, and Hubert Humphrey in 1968, as well as the races of
senators, congressmen, governors, mayors, and councilmen. At a
Democratic National Convention in the 1930s he met the amply corrupt
Louisiana senator Huey Long, whose partnership opened the South to
the alliance, and for whom Lansky opened what would be one of the
first foreign bank accounts for corrupt American politicians.
Covering his bets, he also passed cash through an intermediary to the
1944 Republican presidential campaign of onetime New York
"gangbuster" Thomas Dewey, and backed a few GOP candidates over the
years, though generally preferring, and thus flourishing under,
Democrats. Beneath the surface, Lansky knew, Dewey was a classic
example of the American prosecutor and politician who exploited the
public fear of criminals but in the end did remarkably little about
crime, a prosecutor who convicted a few big names while imprisoning
mostly street-level small fry, leaving the Syndicate and the system
that fed it undiminished. "You can't help liking Mr. Dewey," a shrewd
New York socialite would say of the man in an epigram that captured
his real record as well, "until you get to know him."
Lansky's practical politics were plain. Applying the wisdom acquired
on the Lower East Side and in the national underworld he came to
dominate, he was unyielding and merciless with those who challenged
or cheated him. But he would be very different from many of his
predecessors and successors, in legitimate business as in crime, who
overreached. Monopolistic greed, he believed, led to blood or
headlines, rupturing society's usual apathy, arousing if only for a
moment a spasm of reform that was bad for everyone's profits. He
welcomed his competitors-the more corruption the better; the more
people compromised, the more collusion, acceptance, and resignation,
the less danger of change. Nowhere was this strategy more decisive
than in his convoluted relations with his supposed enemy but often de
facto ally, the government of the United States.
Those closest to Lansky would claim that he accomplished the supreme
blackmail in the thirties, obtaining photographs of homosexual acts
by J. Edgar Hoover, the increasingly powerful and celebrated director
of the Federal Bureau of Investigation. The pictures were said to
hold at bay this most formidable of potential adversaries. But the
racketeer and the bureaucrat also had mutual friends, backers, and
associates, among them prominent businessmen like Lewis Rosenstiel of
Schenley Industries or developer Del Webb, or groups, like the
American Jewish League Against Communism, that shared the right-wing
politics the gangster and G-man had in common. Whether by crude
blackmail or the more subtle influence of their common circle, over
the decades Lansky enjoyed almost singular immunity from serious FBI
pursuit; "Lansky and the Bureau chief in a symbiotic relationship,
each protecting the other," University of California scholar Peter
Dale Scott would write of the suborning.
But sexual compromising, mutual friendships, or ideology only began
the collusion. In 1937, Lansky arranged for the FBI and the Federal
Bureau of Narcotics (FBN) to make the highly publicized arrest of one
of his associates, drug trafficker Louis "Lepke" Buchalter. The
betrayal at once removed a Lansky rival, gratified Hoover and FBN
director Harry Anslinger in their mutual obsession with popular
image, and further compromised federal law enforcement, which was
growing ever more dependent on informers and double agents for its
successes.
Then, at the outset of World War II, U.S. Naval Intelligence and the
nation's new espionage agency, the Office of Strategic Services
(OSS), enlisted Lansky and the Syndicate in a historic collaboration,
the top-secret Operation Underworld, in which government agents
employed mobsters and their labor goons in a campaign of coercion and
bribery ostensibly to prevent sabotage and quell uncontrolled leftist
unions on New York docks. The "dirty little secret of Operation
Underworld," as a former White House official put it, "was that the
United States Government needed Meyer Lansky and organized crime to
force an industrial peace and a policing of sabotage on the wharves
and in the warehouses. The government turned to him because hiring
thugs was what government and business had been doing for a long time
to control workers, and because it could conceive little other choice
in the system at hand."
Working conditions on the docks, as in much of the economy, remained
harsh, and the struggle between management and labor violent and
unpredictable. Industrial amity was one of the many myths of World
War II. The early 1940s would see more than 14,000 strikes involving
nearly 7 million workers nationwide, far more than any comparable
period in the country's history. The secret little war on the
waterfront was a major step beyond the Buchalter betrayal, which had
redounded to the advantage of both criminals and bureaucrats, and was
another mark of the self-reinforcing, almost complementary
accommodation and exploitation emerging so widely out of the
nineteen-twenties and -thirties. Beyond public relations or displays
like Hoover's or Dewey's, federal and state law enforcement at this
time remained widely inept, if not corrupt.
Excerpted from The Money and the Power by
Sally Denton and Roger Morris. Excerpted by
permission of Knopf,
a division of Random House LLC. All rights reserved. No part of this excerpt
may be reproduced or reprinted without permission in writing from the publisher.
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