The Year of Fear Read online

  Since the Stock Market Crash of 1929, almost 90 percent of its value had been lost. Much of the nation’s upper class was wiped out. The ripple effects of those losses decimated the middle class and those less fortunate, as well. Average household incomes dropped by a third. Thousands of banks closed. Local and community banks foreclosed on nearly one million homeowners. Business failures and the collapsing real estate market deprived cities and states of tax revenue, which resulted in draconian cuts in the few social services that existed. Municipal workers, police and teachers were laid off or went unpaid. Thousands of schools closed or reduced hours. Millions of students dropped out.

  The gross national product (GNP) had fallen to half its 1929 level. Industrial investment dropped by 90 percent. Automobile production was down nearly 70 percent, as were iron and steel production and nearly every other industry that provided work for Americans. Sixteen million jobs had evaporated. The per capita income was lower than it was in the early 1900s.

  John L. Lewis, head of the United Mine Workers of America, was not engaging in hyperbole when he asserted that the diets of most members of his union had sunk “below domestic animal standards.”

  The national unemployment rate, which was as low as 3 percent before the market crashed, pushed north of 25 percent. For non-farm workers it was almost 40 percent. In many cities it stretched as high as 80 percent. But those numbers masked the reduced hours and trimmed wages of the workers who managed to hang on. Those who couldn’t walked the city streets in a daze looking for work, food or hope. And there just wasn’t any.

  Proud men and women who populated the nation’s cities—from the architects and engineers who designed them to the ironworkers and carpenters who built them—stood in breadlines for hours. Occasionally, they would form up into a mob and attack the food trucks that passed by making their deliveries. At night, a desperate few would organize raids on local grocery stores, kicking in windows and looting them dry before the police could arrive.

  The misery was even greater on the farms and ranches of the Midwest and Plains, where the Great Depression had arrived years earlier. The droughts that started in the late ’20s continued unrelentingly into the ’30s. During the war years, as Europe’s farmland was incinerated and destroyed, American farmers had stepped up, increased production, expanded their acreage and fed the world. After the war ended and the verdant fields in Europe returned, the price of everything produced in America plummeted.

  Overproduction from the war years had stripped much of the land of its fertility. The drought dried it up and it simply began to blow away—slowly at first, but eventually in dust clouds so thick they would choke cattle and blacken the sky at noon. American farm production had dropped 60 percent from 1929 to 1932.

  That was the state of the nation that Roosevelt was elected to rescue: bankrupt, starving, without hope and growing increasingly violent.

  Just months before he was to take office, Roosevelt himself had narrowly escaped an assassin’s bullet. Attending a celebration rally in Miami after returning from a cruise aboard his friend Vincent Astor’s yacht, an assassin fired five times in his direction, fatally wounding Anton Cermak, the mayor of Chicago, who was standing next to him. And while the violence that day was deemed a national disgrace, it was indicative of the kind of nation the President governed. In major cities, particularly Chicago, large, entrenched criminal empires had been established essentially by providing to the citizenry the very things that the government had outlawed: liquor, gambling, prostitution and a small collection of lesser vices. To protect their business operations, these organized crime families set up their own codes, laws and accepted business practices. They hired their own enforcement operators and bribed the local cops to either look the other way or lend a hand for an accepted price.

  In the ’20s and ’30s, law enforcement was primarily a local affair. Law officers were beholden to area politicians, many of whom were beholden to the local mob. The untrained, underfinanced web of law enforcement in 1933 consisted of a mere collection of four thousand county sheriffs, eleven state police forces and a handful of big city operations—all with conflicting degrees of cooperation, political affiliations and corruption. (Currently, there are more than eighteen thousand law enforcement agencies and nearly one million law enforcement officers.) In many towns it was not too much of a stretch to say that the local mob not only ran the criminal activities, but the government and law enforcement, as well.

  The New York Times lamented that “the criminal courts of this nation have become in effect a protection to the criminal through the web of technicalities, objections to evidence, delays, appeals, straw bond, parole, and pardon at the disposal of unscrupulous criminal lawyers.” The 1931 editorial noted that since the declaration of war in 1917, the number of murders associated with the crime wave in the United States was greater than three times the 50,280 deaths caused by World War I. (The murder rate in the ’30s was twice that of contemporary times, and the vast majority went unsolved.)

  The banking collapse and FDR’s pledge to end Prohibition were putting the squeeze on a particular brand of outlaw plying his trade in the middle of the country. These men, who operated in loosely organized small units or on their own, were viewed by the local populace as the direct descendants of the legendary Western outlaws who roamed the West robbing trains, banks and wealthy ranchers. The modern equivalents in the ’20s and ’30s were highwaymen, bootleggers and bank robbers. But the Depression and the impending legalization of liquor sales were wiping out their lucrative businesses. There was little money left in the banks, and there was no money on the road. But there were plenty of wealthy fat cats at the top of the food chain who still had plenty of cash in their pockets and in their vaults. If your business is thievery, you go where the money is. And, in 1933, there were precious few places to raid. But if you could snatch a member of the moneyed class, ransom them off and get away with the cash, you could get rich.

  Out of this state of criminal desperation, the Snatch Racket was born.

  An accelerating scourge of kidnapping was about to envelop the nation, and it had almost no means of combatting it. The bootleggers and bank robbers who operated with virtual impunity out West were well aware that fleeing county and state lines left the local law without the authority to give chase, and that handing off that authority to another county or state was a coordination nightmare. Outlaws, with their fast cars, superior weaponry and the tacit support of the locals, were agonizingly hard to chase and capture. It would be the same for those who turned to kidnapping.

  FDR, who was hatching plans to expand the federal government to combat the Depression, recognized the need to create a national law enforcement arm to combat the rampant criminality that was bleeding the country.

  What Roosevelt wanted was a national force that would be small, well-trained and largely invisible to the public. But, most importantly, it would be beholden to no state or local politician. It would be the law enforcement arm of the federal government. But national police forces were perceived by many as the stuff of dictators and European potentates. In the United States, with its aversion to concentrated federal power and big government, there had been no appetite for one.

  But in the hot summer of 1933, as Roosevelt completed his ambitious first 100 days in office, those big-government fears would begin to abate. An unlikely confluence of criminal events would soon put the need for a national police force on center stage.

  * * *

  George Kelly’s road to criminal notoriety was unlike those of his contemporaries. Most of the other gangster types roving the South and Midwest were the charmless products of tough or impoverished backgrounds. George was the son of well-to-do parents in Memphis, Tennessee. Born George Francis Barnes Jr. on July 18, 1900, he grew up comfortably middle class, attending Catholic schools and getting by on his innate intelligence rather than applying himself to any serious scholastic pursuits. He worked as a caddy at the local country club and, when he wa
s old enough to drive, he began smuggling liquor into the dry state of Tennessee from over the state line in nearby Arkansas.

  George was the product of a loveless marriage. His mother suffered constantly from the inattention of her husband and his distant relationship with his children.

  When George got wind of a rumor that his father was carrying on a relationship with another woman across town, he staked out the house and, when he got evidence of the tryst, he confronted his father by barging into his office the next day. George agreed to keep the information from his mother in exchange for a hefty increase in his allowance and liberal use of the family car.

  George used the car and his cash to expand his liquor-running business. He found willing customers among the members of the country club where he worked, and soon they were setting him up with so many patrons he no longer needed to hump clubs around the course for measly tips. When the enterprising high school entrepreneur would get busted by the local police, his father would dutifully bail him out and use his influence to get the charges dropped.

  George fled his home life the way most middle-class kids do, by going off to college. Even though he’d dropped out of high school, he managed to pass the college entrance exam and enrolled at Mississippi A&M (now Mississippi State University) as a probationary student. But he spent most of his time and money on the co-eds he charmed and the parties they attended. By the beginning of his second semester, he’d run up some 55 demerits—which he famously tried to reduce by climbing to the top of the school’s flagpole to fix a broken pulley. Ultimately, he dropped out and returned to Memphis and the business he’d started, which would later expand to great profit when the Volstead Act brought in the Prohibition era in 1919.

  Back in the gentleman bootlegging business, he set his sights on the beautiful daughter of a wealthy businessman, Geneva Ramsey. But Ramsey’s father, George, was well aware of the young lothario’s reputation, criminal and otherwise, and he forbade his daughter from seeing him. He sent her away to boarding school when George persisted in his romantic pursuits.

  Eventually, they eloped and got married in Mississippi, assisted by none other than the governor’s daughter, whom Geneva had met while at school.

  On their return, Ramsey relented and took George into the family with reluctant acceptance that eventually grew into genuine affection. He gave him a job at his construction company and George worked with great enthusiasm, adopting Ramsey as the “father I never had.” The couple had two kids, and Ramsey was naturally taken with his grandchildren, just as he was with his new assistant. But tragedy struck in 1925, when a dynamite charge exploded prematurely and killed Ramsey. His widow, Della, was forced to sell the company, and she generously set George up in various businesses, from selling cars to goat farming, but George was not the businessman that his father-in-law had been and he failed at all of them.

  Eventually, George returned to the life of a bootlegger, wearing fashionable suits and snap-brimmed fedoras as he hauled his liquor in fast cars with his golf clubs cohabitating with the contraband in the trunk. Geneva hated the new life with George, gone so frequently, alternately getting chased by police or rivals and ending up in jail in all sorts of places. When she’d had enough, she took the kids and left him.

  With Geneva gone, George took off for the wilds of Kansas City, an open city for criminality of all measures and styles. He changed his name to George Ramsey Kelly, using Ramsey as his middle name in deference to his departed father-in-law. He got serious about the business of bootlegging, which was growing increasingly profitable as the Prohibition era dragged on.

  He was arrested a number of times in connection with his criminal exploits. In Santa Fe on March 14, 1927, in Tulsa on July 24 and then again in Tulsa in January 1928. But bootlegging in the rural Southwest was a well-tolerated crime, and if the right people were paid off and the right protection acquired, the penalties were light from the local authorities. But he made the foolish mistake of getting caught selling liquor on an Indian reservation, a minor crime, but because it was on federal land, it was a federal offense. On January 13, 1928, he was convicted and sent to Leavenworth Federal Penitentiary, where he was thrown in with a bunch of hard cases with long rap sheets—the type of men who really did belong there. It was there he would meet the people who would change his life forever, most notably a tight group of professional bank robbers: Francis “Jimmy” Keating, Tommy Holden and the legendary Frank “Jelly” Nash.

  Kelly used his math and accounting skills to work his way into a cushy job in the prison’s records office. With access to all of the inmates’ personal statistics and fingerprints, Kelly was able to expertly fabricate fake IDs for Keating and Holden that allowed them to walk out with a work crew of less notorious inmates assigned to farm labor. Once out, they ditched the work crew, changed into civilian clothing and simply walked away. (Nash, the wily veteran, didn’t need any help. He walked out in a similar fashion a short time later.) The three had told Kelly that if he was looking for work once he got on the outside, he should come by the Green Lantern tavern in St. Paul, Minnesota, and look them up. When Kelly was released two years later on good behavior, he was tougher, smarter and had a whole cadre of experienced criminal pals he was looking to reconnect with. And he knew exactly where to find them.

  * * *

  The Green Lantern was a major clearinghouse for underworld activities of all sorts run by an Orthodox Jew named Harry “Dutch” Sawyer, who had St. Paul’s notoriously corrupt police department in his pocket. At the Green Lantern, Dutch could put you together with big-time criminal gangs who might be in need of an additional player for a bank heist, burglary, safecracking, shakedown, extortion or whatever other kind of racket you were into. If things didn’t go as planned, he could lead you to a friendly auto body repair shop where they wouldn’t ask questions about the bullet holes in the fender or the shattered back window. If you needed to arm up, he could get you the kind of weapon you desired. Suffer an unfortunate injury on the job? He could get you the best treatment from a skilled, no-questions-asked member of the medical profession. In need of female companionship? He could arrange that, too. And if you needed to unload some marked bills, government bonds or any other hard-to-fence item, he could get you the best rate going.

  In 1930, the Green Lantern was a very popular spot. Dutch arranged for employees at the Prohibition-crippled Schmidt Brewery to provide him with beer through a tunnel system. St. Paul Police Chief Tom Brown drank at the bar and worked his various “business deals” with Dutch. In the areas of the country bordered by Chicago, St. Louis, Kansas City and the Canadian border, there were few significant criminal activities that didn’t have a connection to the Green Lantern. It was “big time,” but you needed an entrée to get in. And when George got out of prison, he had one.

  Dutch was running what was commonly referred to around St. Paul as the “O’Connor System.” From the turn of the century to 1920, Police Chief John O’Connor ran the crime and law enforcement operations of St. Paul. O’Connor was both a law enforcement officer and a criminal enforcer. He was known as the “Smiling Peacemaker,” both for his Irish charm and his ability to keep trouble out of his town by accommodating and protecting those who would ply their trades outside of it. The equation was simple; it didn’t matter what kind of criminal you were, you were protected in St. Paul as long as you didn’t commit any crimes within the city limits. It was a system that worked well for the banks and citizens of the city. The city fathers were happy to live in ignorant bliss and enjoy the crime-free environs of their proud state capital.

  On the other side of the river, in Minneapolis, a similar system was run by a tall, affable Irishman named Edward G. “Big Ed” Morgan. It was a perverted form of law enforcement, but it worked particularly well, as long as you lived in the Twin Cities. However, once you got outside the city limits, the countryside was ravaged by the criminals that the O’Connor System protected.

  By the early ’30s, fully 20 percent o
f the bank robberies in the nation occurred within an easy drive of St. Paul. In 1933 alone, forty-three bank robberies had drained $1.4 million from regional coffers (approximately $20 million in contemporary value). The pillaging teams that formed at the Green Lantern hit small community banks in little towns virtually unknown to the rest of the nation: Hugo, Sandstone, Elk River, Cushing, Savage, Shakopee and on and on. They hit the banks in neighboring North and South Dakota, as well. The county sheriffs and amateur guards hired by the local banks were unprepared and ill-equipped for the marauding robbers who would swoop in carrying machine guns, sawed-off shotguns and pistols stuck in their belts. And even if they were lucky enough to have a squad car, they would be left in the dust as gangsters sped away in fast Cadillacs and Packards, back to the safety and comfort of St. Paul.

  This was the fraternity Kelly was able to join with Keating and Holden and Nash as his sponsors. He would begin his on-the-job training almost immediately after leaving prison from the guys who were the very best in the business. Nash was the old-timer with a criminal résumé that stretched back more than a decade. Nash was part of the team that robbed the Katy Limited on August 20, 1923—the last successful horseback-mounted train robbery in American history. Nash’s charm and erudition were noted by the Associated Press when reporting on the robbery: “Four men under the leadership of a suave outlaw, who chatted amiably with his victims about the merits of a certain well-known political writer and discussed current questions of the day, held up the Missouri, Kansas & Texas train 123 southbound near Okesa, Okla., early today and robbed the express and mail cars of packages,” the story noted.

  Nash had spent so much time in prison libraries that he’d become something of a Shakespeare scholar, quoting liberally from his works for comic effect when the time was right—jokes that went right over the heads of his thuggish compadres. When he walked out of Leavenworth, he’d taken the library’s copy of the Bard’s collected works with him.