1920 (20 page)

Ponzi, starting last October or November with hardly a “shoe-string,” to so speak, is today rated as worth
$8,500,000—purchaser of business blocks, trust companies, estates, and motor cars. His investors—and they run the gamut of society, rich men and women, poor men and women, unknown and prominent—have seen their money doubled, trebled, quadrupled.

“The story went on merrily from there,” writes Mitchell Zuckoff, “liberally and generously recounting the Horatio Alger version of [Ponzi's] life.” As for poor Joseph Daniels, even though the story was supposed to be about him and the victimization he claimed to have suffered, he was not even mentioned in the article, his name appearing not so much as a single time—making him feel even more victimized than before. The reporter had, according to his lights, stumbled across a much better story than a small-stakes lawsuit from an undoubtedly jealous plaintiff. He had, rather, found an immigrant who had in turn found the American dream, a poor boy from Italy who had scrambled through almost two decades of insulting employment now amassing a fortune for both himself and those who had believed in him.

Profits were tumbling over profits. There was no apparent end in sight. According to one account, people begged him to take their money, inundated him with it; “Ponzi literally couldn't bank it fast enough. It was packed into shoe boxes and stuffed in desk drawers. In April he took in $120,000 … and in July over $6 million.” Most of the money was legitimately, if precariously, invested. The remainder, save for $100,000, was spent on a rich man's necessities: house and furnishings, car and clothes. The $100,000 was a gift to an orphanage.

As of June 1920, Charles Ponzi was America's financial wizard nonpareil. But the year had more than six months to go; and, as Ponzi had already discovered, a lot of money can change hands in a short period of time.

I
SSUES OF LEGITIMACY AND ETHICS
aside, there seemed no end of ways to make money in the United States in 1920. And by the time the Securities Exchange Company had reached its apogee of profit-making, bootleggers (a term that had originated in the colonial era when it referred to a man's hiding a flask in the long leather sides of his footwear) had figured out how to soar to an apogee of their own. They, however, would remain at their peak much longer than Ponzi, and the damage they inflicted would affect far more people.

What they did, simply put, was to increase their customer base. Prohibition was the greatest seller's market in American history, and the purveyors of illegal alcohol not only began to reach a class of drinker they had never reached before; they provided him with a kind of product he had never consumed before, one with a much better profit yield than the top-shelf liquor that went to top-shelf customers for top-shelf prices.

Eventually, this kind of alcohol and the increased revenue it brought would lead to violence. In 1920, though, the wide-scale killing associated
with such mobsters as Al Capone, Dutch Schultz, Bugs Moran, and others was still a year or two away. It would not start in earnest until organized crime had had more time to organize its bootlegging activities; for fiefdoms to be established, which sometimes required importing hired guns from other cities to enforce boundaries; and for even greater greed to inspire the merger of fiefdoms under the control of a Capone, a Schultz, a Moran, all of whom spent much time in the twenties in murderous competition with one another.

A different kind of violence, though, one that did not involve revolvers, machine guns, and speeding getaway cars, had begun to occur in earnest in 1920, and for a while relatively few people knew about it: the victims, in this case, were not newsworthy and they did not die in spectacular fashion. Rather, these were men and women who drank the toxically doctored alcohol that now seemed to control the market, and far more of these lost souls would die during the reign of the Eighteenth Amendment than the crooks who were later portrayed in movies and TV shows. It was the ultimate tragedy of the ultimate in legalized folly.

PROPORTIONATELY, THERE WERE NOT THAT
many high-class speakeasies. There were not that many individuals with enough money to patronize them, or to buy the same quality liquor for private use. Nor were there that many individuals with the time, money, and energy to brew or distill their own alcoholic beverages. But there were countless millions of others during Prohibition who were just as desperate, if not more so, to satisfy their thirsts: alcoholics, or close to it; penniless, or close to it. These were the people who patronized the kind of speaks that Wayne Wheeler tried to evoke by calling his group the Anti-Saloon League, speaks that have been described as having “a Hogarthian degradation” to them.

Then there were the people who bought their liquor by the bottle, or even the glass, from equally ragged men who prowled the sidewalks after dark. These were the people who begged for change on street corners during the day, and then, when darkness came, sought out their suppliers, their “pushers,” and turned over their earnings for as much booze as they could stomach. They were putting their health and even their
lives at stake. They did not always know it. As statistics show, they did not always care.

The number of arrests for drunkenness and disorderly conduct in the United States during Prohibition increased 41 percent compared to figures before January 16, 1920.

The number of arrests for drunken driving went up 81 percent.

Homicides, assaults, and batteries climbed 13 percent.

The population of federal prisons was up an unprecedented 366 percent and included, among others, both customers and vendors of alcoholic beverages.

And federal expenditures on penal institutions of all sorts soared a thousand percent!

What it all meant was that the downtrodden had quickly become much more valued customers to organized crime than the elite. Unlike the latter, the downtrodden were everywhere, quantity over quality; and because what we would today call the “street person” often had sorrows of one sort or another to drown because he was unemployed or poorly employed or luckless in love or even mentally ill, he was often thirstier than the man of means and the woman at his side. The bootleggers who made the kind of liquor sold to these people knew that their beverage did not have to meet the same kind of standards required by the sophisticated tippler. Some of them jokingly referred to the booze they manufactured for the low-end market as “rotgut.” But it was not a joke: it was an accurate description of the effect of the bottle's contents.

A RULE OF THUMB FOR
the unscrupulous bootlegger was that one bottle of good whiskey could be “cut” into five bottles of rotgut.

Most often, the cutting was done in the middle of the night, in plants that were set up in warehouses or storage facilities that looked deserted, and therefore not suspicious. The tools of the cutter's trade were water, flavorings, and alcohol. The water increased the quantities of beverage; the flavorings restored the diluted mixture to something approximating its original taste; and the alcohol replaced the lost pizzazz. …
[S]cotch, for example, after being watered, might be restored with caramel, prune juice, or creosote, and then spiked back up again with industrial alcohol.

There are few ingredients more dangerous to the workings of a person's internal organs than industrial alcohol. That it had to be manufactured, though, was never disputed, even by Wayne Wheeler, as it was a necessary ingredient in products that were themselves necessary, like cleaning agents, insecticides, and explosives for military use in battle and civilian use in construction. For this reason, an exemption was granted to those firms that manufactured industrial alcohol; they could continue to do so despite the Eighteenth Amendment.

But the Anti-Saloon League, which monitored even the smallest details of Prohibition, was especially wary in this case. “It did not quarrel with the exemption,” I wrote in
The Spirits of America
, “but fearful of its misuse, insisted that industrial alcohol be made into an even more deadly compound by requiring that manufacturers add methanol, or wood alcohol, to it. This, reasoned the league in public statements, would ensure that no one, no matter how crazed, would use the product as a beverage base.”

That the people who drank industrial alcohol, unaware they were doing so, would also be unaware of the addition of methanol seems not to have occurred to Wheeler and his fellow moralists. With a mantle of rectitude draped over his conscience and worn as proudly as a minister's raiments, Wheeler was as indifferent to the life or death of his fellow man as were the crooks who catered to their thirsts. “The person who drinks this industrial alcohol is a deliberate suicide,” Wheeler declared, and to one who might have pointed out that a person didn't
know
he was drinking industrial alcohol, Wheeler would have been unmoved. A person might not have known what specific poison he was ingesting, but he knew he was drinking alcohol of some sort, and that was against the law. It was justification enough for the suffering or death of the customer. According to author Stewart H. Holbrook, Wheeler's attitude “seemed a notice that the [Woman's] Christian Temperance [Union] of Miss Frances Willard had lost out and that an Old Testament God of savage determination had taken over the business in characteristic style.”

Even more extreme, and viciously inhumane, than Wheeler, was the comment of one John Roach Straton. Told that a doctor in Indiana had ordered small doses of whiskey to be given to close relatives of the state's governor and attorney general, whose deaths were imminent, he replied, “They should have permitted the member of their family to die, and have died themselves, rather than violate their oaths of office.” By profession, John Roach Straton was a minister.

The variety of lethal or near-lethal ingredients that found their way into beverages during Prohibition was a tribute to the perverse creativity of perverse human beings, criminals who made certain that none of the people who bought from them knew precisely what it was they were drinking, or what form of interior demolition it would leave behind. It might not be industrial alcohol that they used as a base, for its legitimate uses sometimes depleted supplies for the nefarious ends of gangsters. In that case, they might have to resort to rubbing alcohol, engine fuels, brake fluids, kerosene, nicotine, shellac, sulfuric acid, formaldehyde, camphor, chloral hydrate, benzol, ether, and even perfume and hair tonic as bases—it made no difference. All were gut-rotters to one extent or another.

They might even add antifreeze to their product. “Bootleggers claimed it was a flavorful additive,” I discovered, “especially when it had been newly drained from an automobile radiator, because the pieces of rust in it gave the solution a rich, full body.”

And, of course, the same pieces of rust would provide the recommended daily amount of iron.

In the shabby Hell's Kitchen neighborhood of New York were establishments that sold a beverage called smoke, “a no-frills mixture of raw alcohol and water. … At ten cents a slug, most folks could obliterate themselves and still get change for a quarter. Other New Yorkers bought jellied cooking alcohol and squeezed it through a rag to produce a liquid that they either guzzled down themselves or sold to the unsuspecting. Perhaps this is what gave Russian soldiers the idea, many years later, to satisfy their own satanic urges by draining brake fluid from their tanks, filtering it through some kind of fabric, and chugging down the remainder straight.”

In Philadelphia, a favorite thirst-quencher was Soda Pop Moon, sold in innocent-looking soft drink bottles and comprised mainly of rubbing
alcohol. A Chicago favorite was Yack Yack Bourbon, which contained virtually no bourbon at all—but rather large portions of iodine. The undiscerning in Kansas City, Missouri, ingested Sweet Whiskey, a wholesome name but “a distillation of alcohol combined with nitric and sulfuric acids that soon destroyed the kidneys.” And an Atlanta woman, arrested for public drunkenness, had been brought to her sorry state by the almost inconceivable combination of mothballs and gasoline. “She just liked to drink, she explained, liked to get a different take on reality, and this was the best she could do during Prohibition. Was it her fault that safer beverages were so much harder to find these days, and so much more expensive?”