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Meet America's first drug dealer: Arnold Rothstein's wild, real-life 1920s "Sopranos" story

The modern drug war started with Arnold Rothstein, a criminal master so feared he managed to rig the World Series


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Johann Hari
March 2, 2015 2:30AM (UTC)
Excerpted from "Chasing the Scream: The First and Last Days of the War on Drugs"

As I dug deeper, I realized there was a hole in the story of the start of the drug war—a large and cavernous one. It is possible to piece together how this all began through the eyes of the cops, the doctors, and the addicts. But as I read on, I found they were all obsessed with a fourth force—the new army of drug dealers that was emerging all around them. I wanted to know their stories, and how they saw the world. But drug dealers don’t keep records. There is no National Heroin Dealers’ Archive to consult. For a long time, no matter how hard I looked, it seemed that this was a tale that could never be retrieved. Their memories died with the people who knew them, and they are all gone now.

But then I found out there was one exception. The first man to really see the potential of drug dealing in America was a gangster named Arnold Rothstein—and I slowly realized it was possible to piece him back together in quite a lot of detail. He was so egotistical he actually invited journalists to write about him—and he was so powerful he didn’t worry about the police reading it. He owned them. There have been a number of biographies written of him, and even more important, I found out that after he died, his wife wrote a detailed memoir of her life with him, explaining exactly what he was like, in lush novelistic detail.

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There was only one problem. Every copy of his wife’s memoir seemed to have disappeared. Even the copy at the New York Public Library had vanished sometime in the 1970s. I eventually tracked down what seems to be the only remaining copy, in the Library of Congress, so I sat there in the shadow of the Senate and tried to reconstruct him piece by piece. This is the story I found—of how Arnold taught the world to deal drugs.

*

In the mid-1920s, Arnold Rothstein would stand on a street corner by the flickering neon crush of Times Square, waiting for someone—anyone—who owed him money to walk by.

The streets of the city were thick with people in hock to Rothstein, and—like Anslinger—he could make people afraid just by looking at them. At first glance, though, it was harder to see why. He was 5 feet 7, pale and baby-faced, with small, feminine hands. He never fidgeted, or drank, or raised a fist. He refused even to chew gum. He was sober and smart to the last thread of his perfectly tailored suits, but everybody in New York City knew that Rothstein could have you killed just by snapping his fingers—and that he had bought so many NYPD cops and politicians that he would never be punished for it.

Rothstein’s wife, a Broadway chorus girl named Carolyn, had a habit of driving past, and she would call out to him. But she, too, was afraid. Later, she would write:

Often on my way home in a car, I would have myself driven slowly up Broadway, past Forty-seventh to Fiftieth street. It might be a cold night, or a rainy one. Or it might be snowing. But more often than not, Arnold would be there. I would ask him to come home. He would shake his head and say: “I’m waiting to see someone to collect from” . . . He would stay out in all kinds of weather to collect small sums, even amounts as low as fifty dollars. Yet, he might have made thousands that same day. The amounts, it always seemed to me, were not what counted so much with Arnold, as the percentages. He was playing with chips, and the chips must show a profit.

It was the height of the Jazz Age, and Arnold Rothstein was the most feared man in New York City. After he had shaken down enough cash from people for the day, he would sit until long after dawn in Lindy’s, a café in the throng of Times Square, and orchestrate his network of fraud, theft and extortion. At the tables around him were the members of the Manhattan underworld and overworld huddled together: actors and songwriters, boxers and their managers, columnists and Communists, cops and criminals. Carolyn said it was like a “water hole in the jungle where beasts of prey and their natural enemies gather under a very real, but invisible, flag of truce for refreshment.”

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On one of these nights, at a table nearby, two men were writing a musical whose main characters were based on Arnold and Carolyn; they were going to call it "Guys and Dolls." The musical would be funny. Arnold, though, was not; when he laughed, everybody thought it was strangely artificial. “I learned that when he laughed the laughter was a surface demonstration, a combination of the movement of face muscles synchronized with a sound, counterfeiting, but not partaking of, hilarity,” Carolyn recalled years later.

But to us, Arnold matters most for just one reason. He was about to be handed the biggest black market in history.

*

Nobody could understand how Arnold got this way. His father—who had witnessed his toddler son standing over his sleeping brother with a knife—was one of the most beloved men in Manhattan’s Jewish community. Avraham Rothstein’s family had fled vicious anti-Jewish mobs in Russia for the Lower East Side in the 1880s; Avraham started out sewing caps, then worked his way up in the garment trade and eventually became a wealthy cotton goods dealer. If you had a problem in the Orthodox Jewish community, you’d come to him, and he would adjudicate: he was so scrupulously fair they called him “Abe the Just.”

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They would call his son a lot of things, but never “just.”

Even as a small boy, Arnold had one marked quality beyond his coldness: an astonishing ability with mathematics. He could manipulate numbers and odds in a way that startled people. From the age of twelve, he knew that his father wouldn’t dream of carrying cash from the setting of the sun on Friday night to the end of the Sabbath the next day, so Arnold stole the money from his wallet, played craps, and won so often and so big he could always replace the cash without anyone’s noticing. By the time he ran away from home at seventeen to be a traveling salesman, Arnold knew he could crack card games better than anyone else.

He was starting to regard himself as a superman, far above the dumb herd, explaining later: “There are two million fools to one brainy man.” He was the brainy man, and he was going to get his due from the fools.

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And the Brain—as he now insisted on being called—soon discovered the greatest truth of gambling: the only way to win every time is to own the casino. So he set up a series of underground gambling dens across New York City, and when they got busted, one after another, he invented the “floating” craps game: a never-ending craps shoot that skipped from shadowy venue to dusky basement across the island. He carried the cash on him, up to a hundred thousand dollars at a time, and he obsessively counted the money, by hand, again and again. He had a tactile relationship with cash. The crinkle of banknotes was his music and his muse. He took no pleasure from the games themselves, only the end result; even after years spent at racetracks, he couldn’t tell one horse from another. He knew only their statistics, and the cash that would whir his way at the end.

No matter how much money he had, Rothstein always believed he was behind and had to find a way to make more. When he first met his future wife, Carolyn, at a friend’s party, he said he was a sporting man. “I thought that a sporting man was one who hunted and shot,” she wrote. “It wasn’t until later that I learned all a sporting man hunted was a victim with money, and all he shot was craps.” On the night of their wedding, he told her he would need to pawn her engagement ring to free up funds, and she handed it over without complaining.

He guarded his money without a smile. One day, a gambler Rothstein knew called him long distance. He said was broke and desperately needed five hundred dollars to get back to New York and back in the game.

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“I can’t hear you,” Arnold said into the phone. The gambler kept repeating his request. “I can’t hear you,” Arnold repeated. The caller fiddled with his phone until the operator interrupted:

“But Mr. Rothstein, I can hear him distinctly,” she said.

“All right,” Arnold replied, “then you give it to him,” and hung up.

He was used to rigging bets. “I knew my limitations when I was fifteen years old, and since that time I never played any game with a man I knew I couldn’t beat,” he said. At the racetrack, he would pay jockeys to throw the race, and gradually, year by year, he took this to a higher level. The bets got bigger and his winnings got more improbable, until he finally reached the biggest, most watched, most adrenaline-soaked game in America: the World Series. Fifty million Americans were listening in 1919 when, against all the odds and every prediction, the Cincinnati Reds beat the far-and-away favorites, the White Sox. Long after the gasps were silent and the stadium was full only of echoes, the reason emerged: Rothstein had paid eight White Sox players to throw the match. All eight players were charged with fraud—and all were mysteriously acquitted.

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In accounts of Arnold’s story, I found that word appearing again and again: “mysteriously.”

A man like Arnold Rothstein would always have been able to ferret out some criminal opportunity, but Arnold was handed two of the largest industries in America, tax-free. He immediately spotted that the prohibition of booze and drugs was the biggest lottery win for gangsters in history. There will always be large numbers of people who want to get drunk or high, and if they can’t do it legally, they will do it illegally.

“Prohibition is going to last a long time and then one day it’ll be abandoned,” Rothstein told his associates. “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 we can make a fortune meeting this need.”

Under prohibition, dealers were starting to discover, you can sell whatever crap you want: Who’s going to complain to the police that they were poisoned by your illicit booze? Outbreaks of mass alcohol poisoning spread across America: in one incident alone, five hundred people were permanently crippled in Wichita, Kansas. But the market for illegal alcohol would live on for thirteen years, and then Franklin Roosevelt—desperate for new sources of tax revenue—would make it legal again in 1933. The greater gift, Rothstein saw, was in the market for drugs. They, surely, would stay banned far into the future.

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At first the street peddlers had controlled the trade, and they got their supply in one of two ways: by staging heists of legal opiates as they were delivered to hospitals, or by ordering in bulk from legal suppliers in Mexico or Canada under fake company names. In 1922, Congress cracked down on this. Rothstein saw that these small-time crooks were missing the bigger opportunity anyway: this, he concluded, was a task for industrial manufacturing and industrial-scale smuggling. He sent his men to buy in bulk in Europe, where factories could still legally make heroin, shipped it over, and then distributed it to street sellers across New York and beyond.

For his system to work, Rothstein had to invent the modern drug gang. There had been gangs in New York City for generations, but they were small-time hoodlums who spent most of their energy beating each other up. Arnold’s gangs were as disciplined as military units, and he made sure they had only one passion: the bottom line. That is how, by the mid-1920s, Rothstein and his new species of New York gang controlled the entire trade in heroin and cocaine on the Eastern seaboard of the United States.

*

We need to freeze the frame here for a moment, as Arnold stands by Times Square in the afternoon of the Jazz Age, looking for people who owe him money. At this moment, the heroin clinics are being shut down by the Federal Bureau of Narcotics across the United States. This is a hinge point in history. It is the moment when the control of drugs is transferred to the most dangerous people. As the result of the Harrison Act and its subsequent hard-line interpretation by Harry’s bureau, it is passing from Henry Smith Williams and his colleagues to Arnold Rothstein and his thugs. It wasn’t by the law of nature. It was by political decree.

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*

When it came to addicts, Rothstein was as repulsed as Anslinger. The day he found one of his associates sucking on an opium pipe, he threw him out. But it’s not hard to see why Arnold stuck with his new trade. The World newspaper reported: “For every $1000 spent in purchasing opium, smuggling it into the country and dispensing it, those at the top of the pyramid collect $6,000 or more in profit.” Arnold soon discovered that when you control the massive revenue offered by the drug industry, individual police and politicians are easy to buy. His profit margins were so vast he could outbid the salaries cops earned from the state. “The police,” a journalist wrote in 1929, “were as gracious to him as they were to a police commissioner.” This is why every time Arnold Rothstein was caught committing violence, the charges “mysteriously” vanished.

Arnold tamed the police with an approach that, years later, would be distilled by his successors, the Mexican drug cartels, into a single elegant phrase: plato o plomo. Silver or lead. Take our bribe, or take a bullet. Every now and then, there would be a police officer who refused to accept these ground rules. When two detectives, John Walsh and Josh McLaughlin, broke into one of Rothstein’s illegal dens one night, he shot at them, suspecting they were robbers. The judge dismissed the case. A journalist asked: What’s “a little pistol practice with policemen as targets” when you are Arnold Rothstein?

He did to law enforcement what he did to the World Series: he turned it into a performance the watching public believed was real, when it was in fact a puppet show. Enough of the players on the field worked for him to guarantee his success every time.

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But no matter how rich he got, he lived exactly the same, eating at Lindy’s late into every night. There was only one luxury he allowed himself. He paid a dentist to remove every one of his teeth, and insert shiny white ones in their place.

*

At some point, Arnold began to kill. This is where the camera lens of history becomes misted up and it gets harder to see what really happened. For obvious reasons, nobody recorded the names and details of Arnold’s victims. We can only infer that they existed through hints here and there. Everyone—even hardcore gangsters—was terrified of him; we know you don’t get that reputation only through wisecracks. There is only one of Rothstein’s likely victims whose name is traceable now. The biographer David Pietrusza was able to dig it up—and that is because the victim was the third richest man in the world.

One day, Arnold met in a hotel on East Forty-Second Street with Captain Alfred Lowenstein, a financier so rich that when the Germans seized Belgium during World War One, Lowenstein reputedly offered to buy it back with his own cash. With Rothstein, the captain signed the biggest drug deal in history up to that point, a plan to mass-market a range of opiates to a growing new market. Soon after making the pact, he got on his private plane and flew to Europe.

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When the plane landed, Captain Lowenstein was not on board. The staff said he had gone to the toilet and not come back. The New York Times reported that “it was practically impossible to open such a door if the plane were flying at ordinary cruising speed.” Presumably, whatever Rothstein got in the deal up front, he kept.

As I pieced together Arnold’s story in the shadow of the Capitol, I kept thinking of all the dry sociology studies I had been reading about the drug war—and they began to make sense. They explain that when a popular product is criminalized, it does not disappear. Instead, criminals start to control the supply and sale of the product. They have to get it into the country, transport it to where it’s wanted, and sell it on the street. At every stage, their product is vulnerable. If somebody comes along and steals it, they can’t go to the police or the courts to get it back. So they can only defend their property one way: by violence.

But you don’t want to be having a shoot-out every day—that’s no way to run a business. So you have to establish a reputation: a reputation for being terrifying. People must believe that you are so violent and brutal that they are too afraid to even try to pick a fight with you. You can only establish that reputation with attention-grabbing acts of brutality.

The American sociologist Philippe Bourgois would give this process a name: “a culture of terror.” But the first person to notice and begin to articulate this dynamic was a half-drunk, nicotine-encrusted tabloid journalist, Donald Henderson Clarke, whose beat was to hang out in bars, from Midtown to the Bowery, with Rothstein and his fellow thugs.

It is hard, he wrote, to convey “the fear with which Rothstein was regarded. Get in bad with a Police Commissioner, or a District Attorney, or a Governor, or anyone like that and you could figure out with a fair degree of certainty what might happen to you on the basis of what you had done. Get in bad with Arnold Rothstein, and all the figuring in the world wouldn’t get you anywhere. It’s true that nothing might happen to you but Fear. But that’s an awful calamity to come upon any man.”

Arnold’s men sprayed bullets across the city with the cheerful abandon of wedding guests tossing confetti. One of his chief henchmen, Jack “Legs” Diamond, was on the receiving end of so much return fire he was nicknamed “the human ammunition dump for the underworld.” But Rothstein and his men seemed always to come out on top, and as a result, nobody dared to cross them. One day, Arnold was on the subway when some anonymous pickpocket silently stole his pearl stickpin, the only personal adornment he had ever loved. Over dinner, with his mirthless laugh, he explained to some other gangsters how he’d been robbed: “Me, the wiseguy. What do you think of that?”

The next day, a package arrived at his house. It contained the stickpin and a note reading, “The guy who took it didn’t know who you were.”

*

While Arnold spread his terror, his wife, Carolyn, was virtually a prisoner in his house. He forbade her from going out after 6:00 p.m., or to be contacted by anyone. He said it was because the police were constantly watching. He controlled everything about her: he ordered her not to bob her hair, saying she would “lose all dignity” if she did. At night, she recalled in her memoir, she would sit up listening to the roulette wheel from the underground gambling parlor her husband ran across the street. She could figure out if the house was winning by listening to whether the croupier was speedily raking in the chips or more slowly counting them out.

As she waited up for him, the fragment of a memory from years ago kept coming back to Carolyn. When she was a dancer, she had cha-cha’d all over the country in a comedy show called "The Chorus Lady." Once, on a train chugging through Pennsylvania—or maybe Kansas, she forgot the precise location—she had seen a long lazy row of country houses lit only by the flickering kerosene lamps inside. She tried to picture the lives of the people inside: calm and cool and safe.

Arnold came home every morning around five or six and immediately indulged his only addiction: glugging quarts of milk and eating trays of cakes in a frenzy. A giant leather screen hung in front of the windows to block the light. He woke at three in the afternoon and always groaned the same thing: “I don’t feel well.” He had a headache, or indigestion—his repressed way, perhaps, of dealing with what he must have known: that he could be killed at any moment.

He always promised Carolyn he would get out once he had enough, but she slowly realized there would never be enough for him. Besides, if he let go of the reins of violence for even a moment, he would be killed by the Rothstein wannabes jostling in the alleys of Broadway. Any sign of weakness would mean a bullet in an alleyway. “It’s too late. I can’t do it,” he told her. “I’ve gotten into it, and I can’t get out of it.”

He had always been freakishly fearless. One day, a gunman shoved a revolver into his stomach and demanded he hand over five hundred dollars. “When you get five hundred dollars out of me you’ll need it to pay your funeral expenses with,” he said. “Now think that over.” Yet beginning around 1926, something happened to Rothstein, and for the first time in his life, he seemed afraid. He was told that there was a serious threat to his life, and not long after, a man roughly the same height and appearance as Rothstein left his building. He was met by two gun-toting men who told him to get into their car. It was only after they had taken the man several blocks that they cursed: “We got the wrong man.”

One night not long after that, Arnold woke Carolyn up, ashen-faced.

“I’ve just had a terrible experience,” he said. He had arrived at their apartment building and tried the door, but it was locked. “I rang the bell and knew it was sounding because I could hear it. Then I saw the elevator man lying on the couch. I thought he was bound and gagged.” Arnold ran several blocks to find a policeman—but when they returned, the door opened easily. Nothing was wrong.

Everything was in its place, except Arnold’s nerve. He was losing it.

In 1927, a car he used was found riddled with machine gun bullets as it waited for him outside the Hotel Fairfield on West Seventy-Second Street. Not long after that, Carolyn asked for a divorce. He knew what was coming—and so, in the end, it did. Arnold Rothstein was forty-seven years old when he staggered into the service entrance of the Park Central Hotel on Fifty-Sixth Street at 10:50 p.m. on November 5, 1928. The Brain had taken a bullet to the gut.

“Get me a taxi,” he said. When the cops came instead and asked who did it, he mumbled: “If I live, I’ll tend to it; if I die, the gang will.”

It took him more than a day to die, in a hospital in Bedford-Stuyvesant in Brooklyn. As he lay there semicomatose, his lawyer and his mistress, a twenty-seven-year-old chorus girl (another one) named Inez Norton, “guided” his hand to write a new will. They thought they would inherit a fortune, but in fact, once his endless shuffling of money was picked apart, it turned out Arnold’s massive running debts exceeded his assets, and his lawyer and mistress got nothing. As it happened, Rothstein had taken out a fresh life $50,000 insurance policy the Saturday before. The check hadn’t reached the company: the payment was never made.

The police didn’t want to investigate the murder—they didn’t want to lift the lid and unleash on themselves all the criminal and official forces swirling around Rothstein’s corpse. “It was as if no one, lawman or criminal wanted to be close to this murder in any way,” Rothstein’s biographer, Nick Tosches, wrote. Eventually, a rival gambler named George McManus was charged with the murder, but he was acquitted by the jury. From then, Tosches says, “until today, the mystery has grown. Speculation has run and roamed wildly in a desire to identify not only the hand that pulled the trigger, but also the interplay of hidden forces that controlled the hand.”

It was only a year after I first learned about this, on the streets of the deadliest city in the world, Ciudad Juárez, that I realized the significance of that moment.

This was the bullet at the birth of drug prohibition, and nobody knows where it came from, even now. It is like the bullet that claimed the Archduke Ferdinand at the start of the First World War: the first shot in a global massacre.

Rothstein’s domination of the East Coast drug trade shattered as that trigger was pulled—from that moment on, drug dealers would be engaged in a constant conflict to control the distribution of drugs.

The drug war analyst Charles Bowden says there are in reality two drug wars going on: there is the war on drugs, where the state wages war on the users and addicts, and then there is the war for drugs, where the criminals fight each other to control the trade.

The war for drugs was launched in earnest in the Park Central Hotel in Manhattan as Arnold Rothstein lay bleeding.

There would be many more bullets, but I was going to learn on my journey that Arnold Rothstein has not yet died. Every time he is killed, a harder and more vicious version of him emerges to fill the space provided by prohibition for a global criminal industry. Arnold Rothstein is the start of a lineup of criminals that runs through the Crips and the Bloods and Pablo Escobar to Chapo Guzman—each more vicious because he was strong enough to kill the last. As Harry Anslinger wrote in 1961: “One group rose to power over the corpses of another.” It is Darwinian evolution armed with a machine gun and a baggie of crack.

And I was going to see that, like Rothstein, Harry Anslinger is reincarnated in ever-tougher forms, too. Before this war is over, his successors were going to be deploying gunships along the coasts of America, imprisoning more people than any other society in human history, and spraying poisons from the air across foreign countries thousands of miles away from home to kill their drug crops. The key players in the war continue to be either Anslingers or Rothsteins—the prohibitionist and the gangster, locked together in a tango unto the far horizon. The policy of prohibition summoned these characters into existence, because it needs them. So long as it lives, they live.

The scream that tore through Harry Anslinger, the bullet that tore through Arnold Rothstein, and the laws that tore through Edward Williams’s medical practice—they are part of all our lives, whether we have a direct relationship to illegal drugs or not.

Excerpted from "Chasing the Scream: The First and Last Days of the War on Drugs" by Johann Hari. Published by Bloomsbury. Copyright © 2015 by Johann Hari. Reprinted with permission of the publisher. All rights reserved.


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