(July 2, 2018) Provided below is free copy of the first chapter of The Devil’s Town: Hot Springs During the Gangster Era. The sample version excludes footnotes that are available in the physical or Kindle versions at amazon.com.
The history of Hot Springs, Arkansas during the gangster era is a story of a town at war with itself in a conflict between illusion and reality.
Typical among the notorious visitors from the mid-1930s to mid-1950s was Meyer Lansky. He’d arrive with his oldest and crippled son, Buddy, who was born with spina bifida in 1930. Buddy took thermal baths at Levi Hospital in waters supplied by the forty-seven hot springs flowing from the lower slopes of 400-foot Hot Springs Mountain on the east side of the community’s tiny downtown along Central Avenue. The springs released the water at a consistent 143° Fahrenheit, which a National Park Service reservoir cooled to 100° and piped to the bathhouses operating under strict government license. Although the hydrotherapy didn’t cure Buddy, he welcomed it because he felt more nearly able-bodied when floating in pools of water. Meyer sometimes also took the spa, but he more often had fun in other ways. He liked horseback riding, golf and the readily available amusement of watching others gamble.
Except for a brief thoroughbred season at nearby Oaklawn Park, gambling was officially illegal in the town. In fact, it had been outlawed in the entire state since at least the adoption of the state’s current constitution in 1874. Nonetheless, until 1967 illegal gambling often flourished in Hot Springs, which the state’s religious elements sometimes referred to as The Devil’s Town. As late as 1964 a New York Timesinvestigative journalist described it at the largest illegal gambling center in the country. To be sure, Las Vegas was bigger but gambling was legal in Nevada.
At times Hot Springs gambling was limited to private clubs whose members furtively included the guests of leading hotels, or covertly carried on in the backrooms of pool halls and tobacco shops. At other times it was brazen with neon lighted casinos and sidewalk loudspeakers announcing horse race results from all across America. Much depended upon a combination of who was mayor of the town and who was governor of the state.
Neither Hot Springs nor Lansky let the law stand in the way of earning a living or having a good time. Games of chance had been popular in the town since at least the 1870s when Civil War veterans with persistent injuries travelled to the area for the palliative effects of the warm waters. Visitor growth accelerated after the federal government built a military hospital in 1887. Not until 1889 did a Norwegian immigrant living in Pittsburgh, Pennsylvania invent an economical hot water storage tank. Prior to that, natural flowing hot springs were a rare luxury.
The living standards of the residents gradually became dependent upon the earnings that gambling provided, which government authorities were bribed to ignore. By the 1930s eight illicit clubs functioned under the informal authority of gambling czar William Jacobs who operated the two largest ones, the Belvedere and the Southern Club. His insistence upon unrigged gaming put Hot Springs in good repute among America’s high rollers, who sometimes referred to the town by the nickname, “Bubbles.”
Shortly after arriving in New York in 1911 as a nine-year-old Jewish immigrant, Lansky quickly learned that he did not enjoy gambling. After realizing that he could not consistently win games of chance when he took to the streets to match pennies and shoot dice for nickels and dimes, the boy vowed he would not trust his future to luck. Instead he would make his own luck by arranging his affairs in a way that made winning inevitable, even at times when others assumed he was gambling.
Thereafter, he increasingly drifted toward a life of crime. By his mid teens he was part of a gang headed by Charles “Lucky” Luciano, who had the common sense to admit talented non-Italians into his clique. How Charles gained the “Lucky” nickname is unclear, but it happened sometime while he was still in his twenties. It may have resulted from his habitual gambling, or it may have been a mispronunciation of his original Italian surname, Lucania. Finally, it could have stemmed from the fact that he unexpectedly survived several Mob-related assaults.
Shortly after the federal Volstead Act launched thirteen years of enforcement against the recreational use of alcoholic beverages in 1920, Lansky joined with fellow Jewish gangster Benjamin “Bugsy” Siegel to form the Bug and Meyer Mob. At the tender ages of fifteen and nineteen respectively, the two became hired killers for various New York and New Jersey bootlegging gangs.
The older and smarter Lansky assumed leadership. As the duo gradually hired other executioners they gathered a reputation for dependability and skill in their nefarious work. Their rates, however, grew increasingly expensive until they were cut-in as junior partners with some of the biggest bootleggers in the New York area where Luciano had meanwhile climbed into the upper echelon of the Sicilian Mafia.
When the two top 1920s Sicilian bosses went to war against each other, the younger Luciano foresaw that he must overthrow them both. Their belligerent personalities and refusals to cooperate with non-Sicilian mobsters were likely to lead to endless inter-Mob warfare and deny all gangs the shared benefits of cooperation. His ally Lansky, for example, appreciated that coordinated methods of bribing the police could benefit all Mob groups.
Luciano and Lansky also anticipated opportunities in other types of rackets whereas the older Sicilian bosses were chiefly interested in continuing to dominate the bootlegging business. The prejudice of the incumbent leaders against inter-Mob cooperation caused steady losses to all the gangs as each band occasionally hijacked the beer and liquor shipments of the others in a zero-sum attempt to acquire free—meaning stolen—inventory.
In 1931 Luciano hired Bugsy Siegel, who recruited three other gunmen, and the four executed one of the older Sicilian bosses. The other incumbent immediately sensed Lucky’s ambition to assume overall command and engaged another gunman to pre-emptively murder both Luciano and Lansky. Moments before the killer was to pull the trigger, however, four of Lansky’s gunmen murdered the assassin’s client thereby leaving the killer with no reason to execute Luciano and Lansky.
Lucky became the new boss in the early 1930s and transformed the two previously rival organizations into the American Mafia. Although Sicilians would dominate the resultant structure, cooperation with non-Italian gangs was no longer forbidden. In 1931 Lucky invited the major Mafia families to a Chicago assembly in order to organize an oversight commission, which was to function like a Mobsters’ version of the Supreme Court. Each family became a commission member, entitled to a single vote. Territorial and other disputes were to be settled by majority votes. The five New York families had the biggest influence because no other city had more than a single family represented on the commission.
Luciano was too shrewd to appoint himself as boss-of-bosses. He wanted to avoid making himself vulnerable to the type of revolt and assassination plot that he had led against the older predecessors. Instead he became a quasi-administrator for the commission, which operated like a rule-making cabinet as well as a Supreme Court. Other Mafia members, however, generally realized that Luciano was basically the “greatest among equals.”
Mafia membership required a lifelong commitment and a code of silence toward outsiders. Although cooperation with Jewish, Irish, and other gangs had become permissible, only men with two Italian parents were formally accepted into the families. Anticipating the repeal of Prohibition in 1933, the national Mafia syndicate took control of prostitution, narcotics, gambling, loan-sharking and the labor rackets. Only marginally profitably activities were leftover for independent outlaws.
At the urging of Luciano-Lansky allies like Frank Costello, the Mafia families began systematically bribing government authorities to protect Mob interests in the early 1930s. Costello gained control of ten out of sixteen district leaders of New York City’s Tammany Hall Democratic political machine. Luciano and Costello even accompanied the Tammany delegation to the 1932 Democratic presidential convention. While Luciano initially put his support behind former New York governor Al Smith who had been the 1928 presidential nominee, Costello later convinced him to back the eventual winner, Franklin D. Roosevelt.
Luciano’s American Mafia also formed a new internal enforcement agency as a successor to the Bug and Meyer Mob. The new centralized agency (Murder Inc.) could send executioners anywhere. They had less chance of getting caught than local operatives because the local police had difficulty identifying a motive when killers swooped in from out of town and quickly vanished afterward.
Mob kingpins insisted that Murder Inc.’s services could only be engaged by partners in the American Mafia and even then only for purposes of executing condemned members. Contracts against outsiders were forbidden. As shall be explained in chapter three, the infamous Dutch Schultz would be executed specifically because he intended to disobey that rule. Costello—the role model for Marlon Brando’s Don Corleone character in The Godfather— emphasized that murdering non-gangsters would undermine the police and the corrupted government protection that he had worked so painstakingly to secure. Murder, Inc. slayings required a unanimous vote of the top leaders such as Luciano, Lansky, and Costello. Jews were often deliberately selected as the contract killers in order to insulate Italian mobsters from direct culpability.
Murder, Inc. killed a hundred or more victims before the organization unraveled in the 1940s when one member turned state’s evidence. The “canary” told Brooklyn district attorney William O’ Dwyer that he could provide details on eighty-five murders. Eventually eight mobsters went to the electric chair and fifty to prison. While interrogations were still in progress, however, the snitch “went out the window” from an upper floor of a New York hotel room despite a heavy police guard. Lansky later remarked that Costello paid a $100,000 bribe to demonstrate that “the canary who could sing couldn’t fly.
The police guards were never convicted of a crime, partly because O’ Dwyer testified on their behalf. Instead, they were demoted from plainclothesmen to uniformed cops. Although O’ Dwyer said that his prosecution against the most notorious Murder, Inc. suspects went out the window with “the canary,” he gained enough favorable publicity to be elected New York City mayor in 1945.
Four years later, however, he denounced an investigation into Brooklyn police corruption by the borough’s new district attorney who was a political enemy. After nineteen police were indicted O’ Dwyer resigned as mayor. President Truman gave him a face-saving appointment as Ambassador to Mexico where O’ Dwyer said he was going to “fight communism.”
Although Hot Springs had long been a wide-open town it became an increasingly attractive haven to big-time mobsters like those mentioned above after Owney Madden moved there in 1934. The forty-three year old Madden had first built a gangster reputation in New York. After his father died, the boy immigrated to New York from Liverpool, England in 1903. Upon arriving in Manhattan at age twelve he lived with his mom and siblings in the Hell’s Kitchen neighborhood along the west side of mid-town. He soon joined a local gang, became an expert mugger and was earning $200 a day before he was out of his teens.
Hollywood star George Raft was one of his childhood buddies and based his gangster film portrayals on Madden’s mannerisms. Owney likely committed his first murder at age seventeen and killed four more men by the time he was twenty-three. He was prompted to make one killing in 1910 merely because the victim had tried to date one of Madden’s girlfriends. Although the slaying took place aboard a public trolley among many witnesses, police could not persuade anyone to testify afterward, despite catching Owney in a daring rooftop chase.
When he reached age twenty in 1912 a rival gang tried to kill him. Despite absorbing eleven bullets he survived. He refused, however, to identify his attackers to the police. “It’s nobody’s business but mine,” he said. Instead his own gang retaliated and killed six of the assailants before Owney was even released from the hospital.
During his outpatient convalescence, however, a competitor within his own gang tried to assume control by arguing that Owney was permanently crippled and therefore unsuited for leadership. Although Owney later arranged for hired killers to murder his rival, three witnesses who knew of the pact violated their oaths of silence. As a result Owney was convicted of manslaughter and given a ten-to-twenty year prison sentence. He remained in New York’s Sing-Sing prison for about a decade until released on probation in 1923 when he was thirty-one years old.
At the height of Prohibition he formed a new gang and went into bootlegging. Prohibition revolutionized crime because it was exceptionally profitable. Future Mafia boss Joseph Bonanno, who immigrated into America during the era, marveled, “When I first got into bootlegging, I thought it was too good to be true. I didn’t consider it wrong. It seemed fairly safe and the police didn’t bother you.”
For large sectors of the public, violating the Volstead Act evolved into a type of sport. New York Governor Al Smith served liquor at public receptions. New York City mayor Jimmy Walker seldom arrived in his office before noon because he spent most nights carousing at speakeasies. Since the national law was unpopular, some states adopted weak regulations that permitted their state police to avoid enforcing federal prohibition. New York state was among them.
Consequently, enforcement fell to the Treasury Department’s Prohibition Bureau. But it became a laughing stock because politically appointed flunkies, incompetents and corrupt administrators staffed it. Owney thrived in such an environment. Among his partners was Joseph P. Kennedy, the father of future President John Kennedy. In order to maximize profits, Owney produced his own beer brand, Madden’s Number One. It cost about $5 dollars a barrel to make but sold to speakeasies for $36.
Madden also operated a outwardly legitimate coal delivery and laundering businesses as well as Harlem’s famous Cotton Club where jazz greats like Duke Ellington performed and Lena Horne joined the chorus line at age 16. Despite being English, Owney moved as an equal in Mafia circles that included Italians like Costello and Luciano as well as Jews such Lansky, and Siegel. When one young trigger-happy hoodlum tried to muscle in on his rum-running business in 1932, Owney occupied him on a telephone conversation while the interloper was in a phone a booth. During the lengthy talk, Owney had the booth’s location call-traced and sent hired killers to gun down his enemy.
The murder happened at a bad time for Owney because his probation board had been accumulating evidence that he was failing to give up his wicked ways. The board threatened deportation or re-imprisonment. Simultaneously, Prohibition was ending and the Italians were taking control of the remaining rackets. Since the easy pickings of the Prohibition Era in New York were over, Madden was casting about for new business lines that would not conflict with the plans of the Italians who dominated the Mafia at the time.
Professional boxing promotion was an early example of his diversifying efforts where he gained early success. In one case he backed the six-foot-seven-inch Primo Carnera who won the 1933 World Heavyweight Championship title. But Carnera was overrated and Owney may have helped him win his title by reason of a series of fixed fights in which some of the losers were paid to let him win. Nonetheless, Owney also had relationships with other famous fighters such as Max Baer and Rocky Marciano who became lifelong friends.
About a year before his probation board began questioning Owney about suspected parole violations, he took his first trip to Hot Springs in 1932. At the time, Las Vegas and Miami were practically wastelands. In contrast, Hot Springs was a wide-open town with a reputation for welcoming visiting mobsters as long as they behaved peacefully. Since Madden’s body also still carried five of the eleven bullets he took in 1912, he may have also sought relief in the thermal waters. Contemporary mobster Dutch Schultz recommended that he visit the spa and make a point of meeting the young lady who worked at a gift shop near the town’s prime hotel, the Arlington.
Madden pulled up in an impressive Duesenberg and parked in front of thirty-year-old Agnes Demby’s shop. From Agnes’s viewpoint behind the counter the grand convertible filled both picture windows. After the well-dressed driver entered the shop, Agnes told another clerk that she would attend to the new customer. Owney looked around and talked with her as he gradually bought an increasing number of items. By the time he was finished he had spent about a thousand dollars, which was a huge amount given in the depths of the Great Depression. Thus, he felt justified in asking Agnes on a dinner date. But she modestly declined and went home where she lived with her widowed dad who was the town’s postmaster.
Since her father was not at home when Agnes arrived, she grew bored and walked over to the Arlington lobby where she found Owney sitting and talking with another guy. She walked up to the pair and asked Owney if he’d still like to have dinner. The generous mobster gave her a broad smile and said that he’d love to.
Madden stayed for two more weeks and spent most of his time with Agnes. The more familiar he became with Agnes and Hot Springs the more he envisioned a promising future for the two of them as well as the town. Agnes would become the love of his life and Hot Springs held potential to become his miniature New York with no rival big-time gangsters in permanent residence.
Later that year Agnes visited him in New York and Owney reciprocated by returning afterward for a second Hot Springs visit. But the parole board continued to bedevil him. Evidently, somebody—he never learned whom—wanted him returned to Sing Sing. During one hearing an inspector informed the board that Madden had been arrested 140 times but only convicted once, which was the 1912 manslaughter case. FBI director J. Edgar Hoover jumped on the bandwagon merely because he was annoyed after a newspaper had photographed Madden while his own agents had never been able to do so, despite Hoover’s orders.
In a bid to project a hard-on-crime image New York Governor and presidential hopeful, Franklin Roosevelt, put his weight behind the parole board. An investigative committee of the legislature had discovered problems not only with Madden, but also with other notables, including New York City Mayor Jimmy Walker. Only days before the Democratic presidential nominating convention, however, Roosevelt passed the basket of hot potatoes to the conflicted Mayor Walker.
Gangsters Lansky and, as noted, Luciano and Costello attended the convention as power brokers for the Tammany machine. According to Madden biographer Graham Nown, the likely candidates could not gain the Democratic Party nomination without assuring Mayor Walker and his pals, including Owney, that the legal pressures against them would be lifted. When Luciano told Al Smith that Tammany had decided to back Roosevelt, Smith replied, “Charlie, Frank Roosevelt will break his word to you.”
Smith was right. Once Roosevelt got the nomination Walker was forced to resign and everything fell apart for Owney. The parole board used a technicality to order him back to jail. His chauffer drove him to Sing Sing where a guard on duty initially doubted the unescorted Owney’s identity and refused to admit him. But by sundown July 7, 1932 Madden was back in a prison cell. In November the board ruled that he must serve twelve months, which meant that he would have to wait a year before he could restart life with Agnes.
Since Prohibition had been abolished before he was released in July 1933 Madden turned his attention to the gambling rackets. Gambling casinos were illegal nearly everywhere in America but—as they did for the Prohibition Era speakeasies—authorities often winked at them. When stating his opinion about the desirability of peaceably dividing the illegal gambling territories among the various Mafia families instead of fighting over them, the influential Lansky told other Mafia leaders that the country was big enough for everyone to have a piece of the action without fighting one another.
Nonetheless, Lansky preferred that casino owners be men he knew personally. Except for his uncertain parole status, it looked like Owney could turn Hot Springs into his little corner of the game. Unfortunately, his parole required that he not leave New York State. After mysterious negotiations, however, his parole was eventually transferred to Hot Springs, conditional to his remaining in Arkansas. Thus, he could not easily continue as a boxing promoter.
Outsiders have never known why the New York parole board reversed its attitude toward Madden. Even after he was released from prison in 1933, investigations revealed probable corruption in his outwardly legitimate coal supply business. Board members may have been bribed, or they might just simply have decided that Madden was small potatoes after the end of Prohibition. According to biographer Nown, boss Frank Costello’s everybody-gets-his-share leadership principle probably played a role.
One of Owney’s future Hot Springs confidants, attorney Q. Byrum Hurst, said that the process involved many months of negotiation and included participants who were among America’s most prominent leaders. Nobody else has ever explained much about how Owney’s probation troubles ended. One parole commissioner, however, indicated that he approved Owney’s transfer to Hot Springs partly because the gangster was ill. He also half-humorously suggested that he was happy to get Owney out of town so that the police would not need to hunt him down if there were new unexplained gangster murders in New York.
During the summer of 1934 Mob leaders met privately at New York’s Waldorf Astoria hotel to divide up the rackets controlled by Dutch Schultz who, they assumed, would soon be headed to jail for income tax evasion. During the meeting, Lansky awarded Miami’s Tropical Park horse race track to Owney and told him that he could also be the Mob’s representative in Hot Springs.
Owney married Agnes in November 1935 at a private ceremony in nearby Sheridan, Arkansas. The wedding site resulted from Agnes’s vanity. If they had been married in Garland County, where Hot Springs was the county seat, the local newspapers would have reported the ages of the husband and wife as shown on the marriage certificate. Agnes was a few years older than she publicly admitted. The couple would live in Hot Springs for the rest of their lives. The marriage ended at Owney’s death in 1965. Agnes never remarried and lived until 1991 when she died at age 90.