MANHATTAN IS AN ISLAND of neighborhoods, little worlds with a separate look and feel of their own, and Arnold Rothstein knew how to make money in each. Times Square. The Upper West Side. The Lower East Side. Wall Street. Fourteenth Street. Harlem.
The Garment District.
There was much to buy and sell in the Garment District. Protection. Suits. Coats. Dresses. Furs. Cops. Judges. And Arnold Rothstein excelled at merchandising the latter two commodities, excelled at bringing together New Yorkers of much influence and little conscience.
The garment industry was decades old, but still seemed new and unformed, waiting for organization and order. Competition was fierce, and management battled for every advantage. Garment shops battled each other for orders and customers. Management battled labor, and labor battled itself.
Industry working conditions were often abysmal. Factories were filthy, unhealthy, unsafe. Wives and mothers often worked at home, sewing garments and earning as little as four or five cents per hour. Women working in factories were frequently charged for the needles and lockers they used, the electricity their machines ran on, the very chairs they sat on-all at a profit to the owners. The advent of the "task" system, known today as "piecework," only aggravated alreadyfrayed labor-management relations.
In the years before World War I, labor "peace" ended. In November 1909, 20,000 female shirtwaist workers, in the "Uprising of the 20,000," went on strike in New York. Aided by sympathetic society women, they obtained some modest concessions, including free supplies, better sanitary conditions, a fifty-two-hour week. Then, in July 1910, 60,000 male cloakmakers followed their lead. On March 25, 1911, a fire at Greenwich Village's Triangle Shirtwaist Company (one of the firms whose labor policies triggered the "Uprising of 20,000") took the lives of 146 workers trapped in its unsafe Washington Square factory. The tragedy triggered national outrage and led to the passage of three dozen state labor laws. New unions, such as the Fur Workers National Union and the Amalgamated Clothing Workers of America sprang into existence.
Violence accompanied change. It wasn't mere freelance, spontaneous violence. Garment-industry labor and management hired gangsters like Monk Eastman, Jack Zelig, Kid Twist, Pincus "Pinchy" Paul, and "Joe the Greaser" Rosenzweig to threaten, beat or, if necessary, kill their opposition. Ideology obsessed the Lower East Side, as arguments raged in every coffee house and tenement on the merits of socialism, anarchism, Zionism, or any number of isms and subisms. But most labor goons were practical and nonpartisan. Whoever paid, they worked for. Whoever didn't, they blackjacked. Not surprisingly, Arnold Rothstein was present at the very creation of garmenttrade mob influence.
In 1914 police arrested Benjamin "Dopey Benny" Fein, a Big Jack Zelig protege now employing his muscle for organized labor, on extortion charges. Fein's union employers turned to Rothstein for bail. A. R. told them to let Fein rot. Rothstein had his reasons. He had his own thugs who could replace Benny. And he could please his friends in Mayor John Purroy Mitchell's new administration by sacrificing this prounion hoodlum.
The union obeyed A. R.'s bidding, though Fein had been loyal to labor. ("My heart lay with the workers.") In 1912 one garment industry boss offered Fein $15,000 to work management's side of a strike, cracking labor heads. "He put fifteen $1,000 bills in front of me," Fein recalled, "and I said to him, `No, sir, I won't take it.' I said ... `I don't double cross my friends.' "
But Fein was also expensive. He demanded $12 per day for himself (his chief rival, "Joe the Greaser" Rosenzweig, received just $8) and $7.50 for each of his men. He also insisted on insurance for any on-the-job accidents. Unionists, who desired such benefits for themselves, proved less than enthusiastic about protecting their own "employees."
Benny remained in the Tombs for months. In February 1915 he finally had enough. Now suspicious that the unions had not only connived in his continuing incarceration, but in entrapping him in the first place, Fein cut a deal with Manhattan District Attorney Charles Albert Perkins (Charles Whitman's handpicked successor) to provide information about the violent methods his union patrons employed. Perkins summoned A. R. for questioning about financing these labor thugs-and let him go. A. R. got away, but Perkins indicted eleven hoodlums (including a number of "strong arm women" employed by Fein to terrorize female workers) along with twenty-three officials of the United Hebrew Trades. Rothstein-who would not provide bail for Fein-now provided bail for all.
Unionists accused the new district attorney of participating in a gigantic "capitalist class" effort to "crush labor and its organizations." When Perkins brought the first seven unionists to trial, defense attorney Morris Hillquit turned their plight into a crusade for social justice. All won acquittal. Before the hapless Perkins could try the rest of the accused, he was defeated in the November 1915 municipal elections. His successor, Edward Swann-elected with strong needle-trade union support-abandoned the remaining indictments.
The entire episode proved messier than Rothstein envisioned, but still he emerged profitably. Fein abandoned labor racketeering (going into garment manufacturing), and A. R. began inserting his own men into the vacuum left by Fein's network. A. R. wasn't about to lead these new troops into battle personally. That wasn't his style-and he had more interesting activities, anyway. He placed "Little Augie" Orgen, formerly Fein's henchman, in charge of labor racketeering. Orgen shared little of Benny's old working-class sympathies, strong arming alternately for labor and management-sometimes even during the same strike.
Orgen (and by extension Rothstein) was also an equal-opportunity employer. Previous city gangs had been largely ethnic-all Irish, Jewish, or Italian. Orgen employed fellow Jews such as Louis "Lepke" Buchalter and Jacob "Gurrah" Shapiro, but also Irish (the Diamond brothers, Legs and Eddie), and Italians (Lucky Luciano) as his goons. More impressive than the polyglot nature of his workforce, however, was its sheer viciousness, resolve, and talent.
Most thugs involved in strong-arming labor or management, saw themselves as just that: thugs. But not A. R. He maintained an air of detached respectability in even the most nefarious enterprises. In 1922, he raised this skill to its apogee. The arbitration movement was gaining a certain vogue in America, and, if Rothstein had been anything in his career, he had been an arbitrator. So when he noticed an organization called the Arbitration Society of America taking shape, he saw it might contain a rather large niche for himself.
The ASA possessed national prestige, numbering among its supporters Sears, Roebuck president Julius Rosenwald, former United States Senator James Aloysius O'Gorman (D-NY), and numerous New York business leaders. Before finding a permanent home for its operations, however, it received A. R.'s offer of free space at his 45-47 West 57th Street office building. For good measure, he enclosed a $500 check for his ASA dues. A. R. modestly suggested the building could even be renamed the "Arbitration Society Building"or, more amusingly (for a Rothstein-owned property), "The Hall of Justice."
Nineteen twenty-six saw Arnold Rothstein play pivotal roles in two major garment-district strikes. Their story originated years before, half a world away. In 1917, V. I. Lenin took power in Russia, fueling hopes of world revolution. Communist governments briefly ruled Hungary and Bavaria. Strikes swept Western Europe and the United States. There was no need for compromise. No need to waste time infiltrating like-minded groups to further the Revolution. Worker and peasant rule seemed at hand.
In the spring of 1920, however, Lenin reevaluated his position. His treatise Left-Wing Communism: An Infantile Disorder derided those thought it unnecessary to infiltrate bourgeois institutions. When the Red Army met defeat at Warsaw in August 1920, it only validated his opinions. The Bolsheviks hoped their conquest of Poland would begin an easy westward march through Europe. But when the Poles humiliated the Red Army, Lenin realized that worldwide Communist rule wasn't about to happen soon. He changed tactics.
Moscow ordered its fledgling American Communist Party to infiltrate the union movement. Party operatives, such as party General Secretary Charles E Ruthenberg, Russian-born Maurice L. Malkin, and Italian-born Eneo Sormenti, began organizing New York's unions, with emphasis on the Garment District. Like unionists and bosses before them, they turned to hired muscle for help. Their early henchmen included Little Augie Pisano (ne Anthony Carfano) and Legs Diamond. Among unions coveted by the Party was the Fur Workers, and in late 1924 the Party hired the firm of Goodman & Snitkin. The attorneys offered highly practical advice: See Arnold Rothstein.
Maurice Malkin attended the Communist Party's leaders' first meeting with A. R.:
Rothstein promised to loan the Communist Party $1,775,000 at a rate of interest exceeding 25 percent. Repayment of the loan was guaranteed by Amtorg, the Russian-American Trading Corporation, which had recently opened offices on lower Broadway.
Rothstein also agreed to put us in touch with police officials and Magistrates who were on his regular payroll. As the Communist organizer of the strike we planned, I became the paymaster for these corrupt cops and judges who were to look the other way when the rough stuff started.
We were particularly eager to secure the aid, or at least the neutrality, of police in the areas where the fur industry was located (the Mercer Street, Fifth, West 30th and 47th Street stations). We received the assurance of many police that they would not take action against our gang. In cases where newspaper publicity might make booking a necessity, we had the assurance of the Magistrates that charges would be quietly disposed of.
Whether A. R. felt sympathetic to his new clients, we'll never know. If he had any consideration for working people in general, we'll never know. To Arnold Rothstein, everything was a business. "Rothstein was no Communist," said Malkin. "He was charging us a high rate of interest and he was in it for what he could make out of it."
Five thousand members of the Communist-led International Fur Workers Union struck in February 1926. The union's playbook echoed Rothstein's: bribe as many cops and judges as you could. Malkin revealed that $100,000 went to the police, and "between $45,000 and $50,000 was paid to [Detective] Johnny Broderick, head of the Industrial Squad."
Non-Communists in the union movement weren't blind to Rothstein's involvement with their Marxist-Leninist enemies. American Federation of Labor Vice President Matthew Woll wrote Mayor Walker:
It is a common rumor, if not an understanding throughout the fur district, that "police protection" has been assured the Communist leaders and sympathizers. It is said that nearly ten days before the beginning of the present reign of terror, one Arnold Rothstein, said to be a famous or infamous gambler, had been the means of fixing the police in behalf of the Communists.
Walker did nothing to investigate charges of police payoffs, nothing to investigate Tammany's friend Arnold Rothstein.
As the fur strike ended, another major work stoppage in the garment center erupted, as cloak and suit workers represented by the International Ladies' Garment Workers' Union (ILGWU), a union riven into strong Communist and socialist factions, struck. Internal union politics aside, however, the hard line that employers in labor relations took made a strike inevitable. Governor Alfred E. Smith appointed a blue-ribbon commission headed by prominent attorney George Gordon Battle (namesake of Watergate figure G. Gordon Liddy) to mediate. When management reluctantly accepted the commission's terms, a stoppage appeared avoidable. ILGWU's Communist faction, however, forced a strike, not merely to gain further wage-and-hour concessions but to solidify power within the union against their socialist rivals.
The ILGWU's walkout is numbered among the most disastrous in American labor history, not only due to the pointless hardship the strike inflicted on workers or the industry itself, but because of the massive gang violence it ignited. Management hired Legs Diamond. Labor turned to Jacob "Little Augie" Orgen. When Dopey Benny Fein abandoned racketeering Augie had vied with another up-andcoming hoodlum, Nathan "Kid Dropper" Kaplan, for leadership in the field. By August 1923 Dropper was ready to call it quits and leave New York. He never got the chance. Surrounded by three-dozen police, including Captain Cornelius Willemse, the Kid walked out of the Essex Market Courthouse and boarded a taxi to take to him to Penn Station. Willemse advised Kaplan to leave town and the rackets as soon as possible. Nobody paid attention to an inoffensive-looking member of the Orgen gang, seventeen-year-old Louis Kushner (ne Louis Cohen), elbowing his way through the police cordon. Kushner fired five shots through the cab's open window (one sailed through Willemse's straw hat), killing the Kid on the spot. "Well, I got that guy," grinned Kushner. "Now gimme a cigarette."
You needed a scorecard to follow 1920s labor racketeering. Actually, there was perfect order-controlled by Arnold Rothstein. Leftwing journalist and labor historian Benjamin Stolberg described the situation:
Questionable characters of all sorts muscled into the strike by the simple device of joining the Communist bandwagon. All a cheap little racketeer had to do was to become an enthusiastic red pro tem, and he would be welcomed and trusted as a col laborator by the Communist party functionaries who were really running the strike. What was worse, these functionaries siphoned off thousands of dollars of union funds into the party coffers.
Seldom in the history of American labor has a strike been so incompetently, wastefully, and irresponsibly conducted. Scabbing was rampant. The employers, as usual in those days, had their full complements of gangsters, and the joint Board [the Communists] fought back with professional gorillas. The employers hired the Legs Diamond gang and the Communists hired Little Augie, the Brooklyn mobster. Later it was discovered that both gangsters were working for Arnold Rothstein, czar of the New York underworld.
So, just as Arnold Rothstein fixed roulette wheels or a World Series, he now fixed a strike. As he toyed with the faith of 50 million baseball fans, he now toyed with the fate of 50,000 garment workers. Ten weeks passed without progress. The union nursed second thoughts. They approached Abraham Rothstein, respected in the industry by both labor and management, to mediate a solution. A. R.'s father realized that if Governor Smith's blue-ribbon commission couldn't prevent a strike, a humble cotton merchant couldn't end one. "Abe the just" suggested they approach a large and respected garment manufacturer. This individual listened to their story and confessed that he, too, could do little to help. Moreover, he advised them that they had approached the wrong Rothstein: They should talk to A. R.
The left wing came full circle, asking the man who had bankrolled this catastrophe to find a way out of it. A. R. agreed to help. First, he ordered Legs Diamond to quit working for the bosses. The union then dismissed Augie Orgen. Diamond went quietly; Orgen wouldn't-until he received a call from Arnold.
Rothstein now brought labor and management together and hammered out a settlement. It might have held, but the union's Communist and socialist factions again vied to demonstrate their toughness and "class consciousness." They'd fight to the last worker. The strike dragged on for a total of twenty-eight weeks. Fifty thousand workers achieved virtually nothing for their lost wages. The union itself spent $3.5 million, with only $1.5 million expended on strike benefits. Huge amounts were unaccounted for, including half of its $250,000 picket fund. Presumably, some went to crooked police and to thugs like Diamond and Orgen.
When the strike ended, Legs and Eddie Diamond become Orgen's bodyguards. But peace remained elusive. Rothstein knew the old yenta-goon days were passe. It made far more sense to infiltrate the garment-trade unions and enjoy a continuing (and marginally less violent and less conspicuous) operation. Orgen didn't get it. He was content to simply beat people up for pay. But two Orgen henchmen, Lepke Buchalter and Gurrah Shapiro, did understand and began challenging his leadership.
Lepke and Gurrah possessed an incredibly vicious ruthlessness. Gurrah was a Neanderthal. Yet both had a certain animal cunning that put unions and bosses under their command. Lepke, for example, recommended to Meyer Lansky and Lucky Luciano that they cooperate to provide package deals to garment manufacturersprotection plus discounted, high-quality Scotch for them to offer to thirsty out-of-town buyers for the wholesale and retail trade. From there, it was but a small step to high-interest loans to the same manufacturers-loans that eventually gave the goons substantial control of the industry.
Rothstein still remained reluctant to break with Orgen and the Diamonds, and even appeared to intervene in their favor-though he risked antagonizing the rising stars of labor rackets in the process. In 1927 vicious Lepke protege Hyman "Curly" Holtz seized control of Local 102 of the International Brotherhood of Painters, a union centered in the Flatbush area of Brooklyn. When the IBP struck, the employers' association used Rothstein to hire-for $50,000-the "John T. Nolan Agency" to combat the strikers. The agency consisted of three principals-A. R.'s bodyguard Fats Walsh, Legs Diamond (his real name was "John T. Nolan"), and Little Augie Orgen.
For months both sides fought it out. Events climaxed on 8:30 P.M. on Saturday, October 15, 1927 as Orgen and Diamond strolled down crowded Delancey Street on the Lower East Side. Suddenly a car pulled up. From inside, Buchalter, Shapiro, and Holtz opened fire with machine guns. Twelve slugs, including one through the right temple, hit Orgen. He died instantly. He was twenty-five.
Diamond took bullets in the leg and arm. He survived, but didn't dare identify his assailants. ("Don't ask me nothing.") When Legs emerged from Bellevue Hospital, he contacted Lepke Buchalter, telling him he wanted no trouble and no part of the garment racket.
Lepke and Gurrah could have it all.