Joseph Kennedy and the N.Y. Underworld during Prohibition

from unpublished Ms. on Kennedy and Prohibition Era

By Ellen NicKenzie Lawson Ph.D. (© 2020)

Owney Madden, Joseph Bonanno, Frank Costello, and the Lower East Side’s Lansky-Siegel gang all claimed to have ties with Joseph Kennedy, father of the future U.S. President, during Prohibition. The Kennedys have consistently maintained that ‘the patriarch’ was neither a smuggler nor a bootlegger, and so has David Nasaw, Kennedy’s most recent biographer — neither in New England, where he lived until the eighth year of Prohibition, nor in metropolitan New York, where he lived and worked thereafter.

Madden, who owned Harlem’s famous Cotton Club in the 1920s, claimed that Kennedy’s liquor was served there. But who was Madden? He was an Irish immigrant by way of England, serving a sentence for manslaughter  in Sing Sing prison until the fourth year of Prohibition. After his release, he hijacked liquor trucks belonging to West Side smuggler and bootlegger “Big Bill” Dwyer until Dwyer took him on as a partner in the Phoenix Brewery on West 26th ,the largest illegal brewery in Manhattan, with annual profits in the millions. Madden used those profits to buy night clubs, and his brewery, fittingly enough, introduced a new drink, “Madden’s No.1,” whichbecame the best-selling beer in New York City at the time. Forced to return to prison in the early 1930s for violating probation, Madden settled in Hot Springs, Arkansas, after his release, where he ran a gambling retreat. In the early 1960s, Attorney General Robert Kennedy’s campaign against crime included a focus on Hot Springs, which declined as a gambling mecca as Las Vegas surpassed it.

Well after Prohibition, Madden claimed to his Arkansas attorney that he sold Kennedy’s liquor in his Manhattan nightclubs. But he might possibly have confused the Boston-born Kennedy with an unknown liquor businessman named Daniel Joseph Kennedy, who went by his middle name. This Joseph Kennedy developed Kennedy’s Jazz Cocktails and,most popular, Kennedy’s Silk Hat Cocktails. These drinks were produced in Canada and smuggled to the U.S. by Joseph Kennedy Limited, a Canadian company based in Vancouver, British Columbia, founded by D. Joseph Kennedy.

Photo credit Jason Vanderhill
Photo credit Jason Vanderhill

Born in the American Midwest, this Canadian Kennedy lived in New York City at the turn of the century and became a liquor buyer in Europe for Nathan Straus, co-owner of Macy’s. After moving to Canada prior to World War I, he developed his cocktail lines and founded his company in the early 1920s. He sold the company a few years later to the Reifel brothers of Vancouver, who owned a large distillery and brewery. Circa 1927, the Canadian government accused Joseph Kennedy Limited of smuggling liquor to the U.S. in bottles with forged U.S. Revenue stamps and forced the company into dissolution by the early 1930s.[1]

If Madden confused the Bostonian/New Yorker with the Canadian producer/smuggler, he was not the only one to make this mistake. In the 1990s, the producers of Arts & Entertainment, an American television show,“discovered” a photo of the Joseph Kennedy Warehouse in Vancouver while doing research for a show on Prohibition. They jumped to the conclusion this photo was the long-sought proof that the Boston patriarch was a smuggler/bootlegger, ignoring the fact that Vancouver was 3000 miles from the East Coast. Others followed this lead, including a scholar writing a book about the Canadian underworld, and a reporter writing a book about the Chicago mob.[2]

Joseph “Bananas” Bonanno, the Sicilian-born mafioso active in New York, also claimed to know Kennedy during Prohibition. Bonanno became a crime family leader in the final years of Prohibition. In his autobiography, he included a page entitled “Two Joes,” showing two juxtaposed photographs of dapper businessmen in the 1920s: Bonanno and Joseph P. Kennedy. But the text itself shows Bonanno had no personal connection then. He was relying on an underworld rumor that Kennedy smuggled liquor to Long Island. Bonanno’s son, Bill, was born in the early 1930s and too young to remember Prohibition. Nevertheless in the son’s autobiography, he claims his father knew Kennedy during Prohibition and that Kennedy landed liquor at Sag Harbor on Long Island. The younger Bonanno also claimed his father met with Kennedy in Arizona during the 1950s when he visited to recruit support for his son’s presidential run.

Frank Costello, another famous Mafioso leader and Prohibition-era New York gangster, got in on the act, too. Born Francesco Catiglia in Calabria, Italy, Costello joined Bill Dwyer’s West Side smuggling syndicate in the early 1920s. When Dwyer was convicted and jailed in the mid-1920s, Costello and Joseph Reinfeld (the latter operating a bootleg gang out of Northern New Jersey with Abner “Longy” Zwillman), took over the operation. Reinfeld bought liquor in Europe and monitored its delivery to warehouses in St. Pierre, off Newfoundland, in vessels owned by the syndicate. Then the liquor was shipped to Rum Row, off Nantucket and eastern Long Island, or smuggled directly into New York harbor. Costello bribed federal and city authorities so the liquor could be safely landed. The old Fulton Fish market on the East River, which at night had vacant docks and parking for delivery trucks, was one such location. After Prohibition, Costello started a slot machine business in New York City, until Mayor LaGuardia threw the machines into the river, and Costello moved his operation to Louisiana. By 1949, Costello was running the Mob and, and both Newsweek and Time ran cover stories on him, leading to the Kefauver hearings in Congress on crime which started the next year. In the late 1950s, Costello relinquished power to Vito Genovese following an attempt on his life. In 1973, as he lay dying in a New York hospital, The New York Times ran a blockbuster story with the claim that he made Kennedy rich during Prohibition. Costello died a few weeks later without giving any more details, but earlier had told Peter Maas, the author planning to write his biography, that he helped Kennedy ship liquor into the country. Given the fact that the Costello-Reinfeld syndicate controlled the largest ship-smuggling venture on the East Coast during Prohibition, this claim carried more weight.

But Costello’s lawyer of thirty years, George Wolf, debunked this claim in the biography he later published of his client, saying Costello liked to brag about associations with important legitimate figures outside the underworld. Wolf recalled a closed hearing in the 1940s before the New York State Liquor Commission when it was investigating whether Costello had left the liquor business as previously ordered. Costello was asked to name his business partners in a liquor import company he once owned. He named one “Joe Kennedy,” which surprised the commission’s lawyer — who knew Kennedy as the very recent U.S. Ambassador to Great Britain. He asked Costello to clarify, but Wolf intervened and asked his client if he meant Ambassador Kennedy? Costello said no. Who then? Costello said an old bootlegger in Toronto whom he had known for twenty-five years. After the hearing, Wolf advised Costello to stop dragging in big names, pointing out that Costello could have been sued if this had been a public hearing.

Stephen Smith, husband of Jean Kennedy, Joseph’s youngest daughter, and the Kennedy family spokesman, responded to Costello’s deathbed claim at the time saying there were no records showing any relationship among his father-in-law’s business papers, and that he had he never heard that Kennedy knew the gangster. On the other hand, Gore Vidal, Jackie Kennedy’s step-brother, who never liked the patriarch, wrote in his memoirs later about the rumor that Kennedy and Costello lunched together in New York City during the 1950s. Peter Maas also believed Costello’s dying boast to be true.

It could well have been. After Prohibition, Kennedy and Costello were both in the legitimate whiskey import liquor business, until Costello was forced out. In fact, both imported scotch whiskey. Kennedy founded Somerset Limited the month before Prohibition was repealed in December 1933, but his business papers, now at the Kennedy Library in Boston, are sparse for that fall. Kennedy never denied that he had government permits to import medicinal liquor then, and this liquor, if sold right after repeal, would have been highly profitable to him. His new company could not yet have had a shipping or distribution system in place, and it would have made good business sense to arrange to ship with the Costello-Reinfeld syndicate, either from Europe or St. Pierre’s or Rum Row. Such a shipment would have been entirely legal.

Earlier that fall, in 1933, the number of applications for medicinal import permits had spun out of control.  FDR personally intervened to stop the process, while allowing existing permits to be honored. He believed that Americans did not want the underworld to profit using these permits to bring in medicinal liquor and resell them after repeal. So the underworld would have been eager to help Kennedy, because he had legitimate medicinal permits. They might even have bought the liquor from him once it landed and used their existing distribution system to sell it.

Costello, recalling this to Maas forty years after repeal, probably did not qualify the liquor he claimed to bring in for Kennedy as legal or as medicinal, because it was a distinction he did not usually make. It would also have detracted from the power of his bombshell news. But shouldn’t Maas have known of the distinction? Shouldn’t the others writing about Kennedy and the underworld have known the distinction as well? What Costello claimed could been both true and legal. An English source who later claimed Kennedy was a smuggler did not make the distinction either, because the English had no such distinction.

The most interesting Kennedy-underworld claim relates to a hijacking of a whiskey shipment supposedly owned by him; a deadly affair in which ten men guarding the shipment were killed and one hijacker later died from wounds. Two different underworld biographies, published long after Kennedy’s death, mention this hijacking. One is a biography of Meyer Lansky and the other a biography of Abner “Longy” Zwillman. The source for the former is Joe “Doc” Stacher, a member of Lansky’s gang interviewed at the end of his life in Israel by reporters. The Zwillman book was written by a New Jersey reporter overly fond of his subject. Both books agree the hijacking was done by the Lansky-Siegel gang.

Lansky, known as the “Mob’s Accountant,” was instrumental in developing the National Crime Syndicate at the end of Prohibition, along with Charles “Lucky” Luciano. Born Meier Suchowlanski in the Russian section of Poland, Lansky was a teenager at the start of the 1920s. He and fellow teenager Benjamin Siegel hijacked liquor on the Lower East Side before joining up with Luciano’s gang in Little Italy. Eventually the Lansky-Luciano syndicate operated from midtown Manhattan, and after Prohibition, Lansky developed an international gambling empire.

Kennedy researchers have been unable to find newspaper reports of a deadly 1920s hijacking in New England which left ten dead. Given the number, this ought to have been major news, suggesting the dead were disposed of quietly, possibly in a staged drowning incident. Kennedy’s surviving papers contain nothing about the event. His financial information was kept with records of the family bank, Columbia Trust, where he and his father were the major shareholders, and where he was chairman of the board in the 1920s. But detailed bank records for this decade have not survived. Otherwise one could search them for details on a whiskey shipment and for insurance claims from families of the murdered guards.[3]

Existing bank records do show that at the start of Prohibition the bank owned over fifty barrels of whiskey and rum under “Accounts Receivable.” These were stored in warehouses in Massachusetts, Pennsylvania, and Illinois. They were probably legally bought from Patrick Kennedy, the bank’s president, after he was forced to close his Boston liquor import business, due to Prohibition, and unable to sell the insufficiently aged barrels at the last minute. During Prohibition, they could be legally sold to drug companies as medicinal alcohol, or to chemical companies for industrial use. Any shipment of the barrels, once sufficiently aged, would have been within or from New England, or to New England from the Midwest. Such a shipment could have been hijacked.

Also, in the middle of Prohibition, the Kennedy bank acquired 800 barrels of whiskey stored in the Quincy Cold Storage Warehouse on Boston harbor. While surviving bank records do not mention this whiskey, it is mentioned in a letter written to Joseph Kennedy by a Fitzgerald in-law in 1933. The writer reminds Kennedy of the sale he arranged in 1925; he claimed no one else was able to sell these barrels, undoubtedly because they had been smuggled into Boston. Fitzgerald, an uncle of Kennedy’s wife, ran a speakeasy behind a drugstore on Rowe’s wharf in Boston harbor until 1925. He would have known about smuggled liquor where others would not.

Eight hundred barrels, at 42 gallons each, would be a half-million half-pints of whiskey. They could have been shipped and sold as medicinal liquor — an entirely legal shipment — or sold to night clubs like Madden’s as bootlegged liquor. If a few hundred barrels were shipped, such a shipment would have been an obvious target for hijackers. Until now, these barrels owned by the Kennedy bank had been lost to history, probably because scholar Doris Kearns Goodwin reported in her book on the Fitzgerald and Kennedy families that this was a case of 800 bottles instead of 800 barrels.

Many books dealing with the Kennedy assassinations insist the family had ties with the underworld through Joseph’s money in the primary and/or national presidential election of 1960. Some books accept the underworld view that these ties dated to Prohibition. Kennedy began his legitimate import business at the end of Prohibition and remained in the liquor industry for ten years. This post-repeal industry was dominated by ex-smugglers and ex-bootleggers, by men like Zwillman, Renfield, Costello, and even Rosenstiel of Schenleys, and Bronfman of Seagrams, both rumored to have smuggled and bootlegged. Kennedy sold Somerset in 1946 after one of his Midwest salesman was shot in Chicago and before his oldest surviving son, John, entered his first Democratic primary for Congress in Boston. A recent, scholarly biography of Joseph Kennedy makes no mention of the people who bought Somerset from Kennedy. But the buyers were New Yorkers Abner Zwillman and Joseph Renfield (changing his name from Reinfeld), former smugglers and bootleggers. Joseph Kennedy may have been tarred with the brush of Prohibition illegitimacy simply because he was making money in an unsavory post-repeal industry dominated by smugglers and bootleggers.

Daniel Okrent, in his book Last Call, observed that while Al Capone was number one in the public imagination for Prohibition, Joseph Kennedy came next. Yet Okrent maintains that Kennedy was neither a bootlegger nor a smuggler, citing lack of documentation. The document cited here, showing the Kennedy bank’s ownership of whiskey barrels in 1921 and its purchase of 800 barrels in 1925, were unavailable to Okrent and the public until 2013.

Had John F. Kennedy never been elected President, with substantial campaigns funds provided by his multi-millionaire father, it is doubtful Americans would continue to care if the family patriarch bootlegged or smuggled during Prohibition. It is even doubtful Kennedy would rank second behind Capone.

Maybe Madden bootlegged Kennedy liquor in his clubs, but maybe it was liquor from Canadian firm of Joseph Kennedy Limited. Clearly Bonanno did not know Kennedy during Prohibition, but wished he had! Costello quite possibly did help make Kennedy richer in the final months of Prohibition by facilitating shipment of medicinal liquor to Sag Harbor, which Kennedy had a right to import under coveted permits granted by the federal government. As for the hijacking of Kennedy whiskey by the Lansky gang, that remains a possibility, given the fact the Kennedy bank owned barrels of pre-Prohibition whiskey as well as 800 barrels of smuggled whiskey, but must remain a mystery.[4]

 Ellen Lawson is the author of Smugglers, Bootleggers, and Scofflaws: Prohibition and New York City.


[1] See Jason Vanderhill, “The Daniel Joseph Kennedy Story,” in Vancouver Confidential ed., John Belshar (Vancouver: Anvil Press, 2014), 39-58.

[2] Stephen Schneider, Iced: Organized Crime in Canada (Wiley and Sons, 2009) and Guy Russo, The Outfit (New York: Bloomsbury, 2001).

[3] A chapter “Deadly Hijacking,” in Some Truth: Joseph P. Kennedy and the Prohibition Era, the author’s unpublished manuscript, which explores two incidents in 1920s New England with ten dead, which might account for the disposal of bodies from a deadly hijacking.

[4] Vanderhill, “Daniel Joseph Kennedy Story,” 39-58.