It happened at an important meet of mob leaders in the mid-1920s before the syndicate was formed. In the midst of serious discussions of criminal matters, Dutch Schultz, one of the flakiest of the big gang leaders, couldn't resist sticking it to Joe Adonis, a gangster always vain and proud of his good looks and star quality. Schultz, at the time, had the flu and had been ordered by his doctor to stay in bed, but he showed up at the meet.
When Adonis dropped a cute remark in the discussion, Schultz, looking to top him, suddenly pounced on him with a hammerlock and breathed right in his face, saying, "Now, you fucking star, you have my germs." As it happened Adonis did indeed catch Dutch's flu, and for a week, his voice hoarse, he kept telephoning Lucky Luciano to see that Schultz stayed out of his way. It was hardly a matter of epic import, but it illustrates the problems the world of organized crime would face with the unpredictable, "unorganizable" Dutchman.
If organized crime connotes anything it is that the rackets have to operate by some universally accepted rules. For Schultz there were no rules—other than those he liked or made. Those who broke his rules ended up dead; not only was he the flakiest of the bosses, he was also the most cold-blooded. In the end, he had to be "blown away" himself because he threatened the delicate balance between the syndicate and the authorities, and organized crime demands a certain respect for law and order.
Schultz, whose real name was Arthur Flegenheimer, was born in the Bronx, New York City. He had a minor record until the 1920s when he blossomed out as one of the many protégés of early criminal mastermind Arnold Rothstein. Schultz soon ran a gang that took over much of the beer trade in the Bronx.
He was already flaky but also tough and mean, and he actually may have had a keener sense for potential sources of new racket revenues than even Meyer Lansky and Lucky Luciano. It is difficult now to determine whether it was Lansky or Schultz who first saw the enormous potential offered by penny-ante numbers in Harlem.
In any event it was Schultz who moved in aggressively on the independent black operators there and with unremitting violence turned them into his agents in a new multimillion-dollar racket. Through a mathematical genius named Otto "Abbadabba" Berman, he figured out a way to doctor the results of the numbers game so that the smallest possible payout was made.
Not even his own gangsters liked or respected Schultz, but they did fear him. His payroll for torpedoes and the like was probably the lowest in the city, and he flew into a rage whenever a gunman asked him for a raise. Only Abbadabba got really big bucks, $10,000 a week.
Berman had to threaten to take his mathematical skills to other mobsters unless he got the money. If he had left, Schultz doubtlessly would have exterminated him, but that would hardly have solved the problem of a huge drop in income, so the Dutchman turned magnanimous and paid him.
Mobsters looked down on Schultz. A dapper dan Schultz was not. Luciano once told an interviewer in disdain, "The guy had a couple of million bucks and he dressed like a pig." Schultz himself told an interviewer, "I think only queers wear silk shirts. I never bought one in my life. A guy's a sucker to spend fifteen or twenty dollars on a shirt. Hell, a guy can get a good one for two bucks!"
Luciano also said of Schultz: "... he worried about spending two cents for a newspaper. That was his big spending, buying the papers so's he could read about himself."
Schultz actually was an avid newspaper reader. He allowed he had taken the name of Dutch Schultz because "it was short enough to fit in the headlines. If I'd kept the name of Flegenheimer, nobody would have heard of me." Schultz could as well go bananas over what was written about him. He once verbally laced into New York Times crime reporter Meyer Berger because he had described him in a story as a "pushover for a blonde."
"What kind of language," the gangster raged, "is that to use in the New York Times?"
Actually, Schultz wasn't all that offended. There was only one way to do that. His notorious "mouthpiece," Dixie Davis, later said of him: "You can insult Arthur's girl, spit in his face, push him around—and he'll laugh. But don't steal a dollar from his accounts. If you do, you're dead."
Among those who are most popularly thought to have done so (and died for it) was the homicidal Legs Diamond. Having survived several murder attempts by Schultz and other mobsters, he became known as the clay pigeon of the underworld. When he was finally put to sleep permanently, in a bed in an upstate hotel room, Schultz commented: "Just another punk caught with his hands in my pockets."
Schultz fought a no-quarters war with Vincent "Mad Dog" Coll, a former underling who sought to feed his ambitions by taking over part of Schultz's empire. On February 8, 1932, Coll found himself trapped in a telephone booth by men generally held to have been Schultz machine gunners.
Wiping out Coll gave Schultz an added measure of prestige in the syndicate, and no one else gave serious thought to knocking him off, although certainly Lucky Luciano and Meyer Lansky wanted to take over his beer and policy rackets. In addition, they knew Schultz was too erratic and sooner or later would jeopardize them all. But Uncle Sam seemed to come to the rescue by indicting Schultz for income tax evasion.
While Schultz was out of circulation awaiting trial, the other syndicate members moved to take over his rackets, with Lansky and Longy Zwillman in New Jersey getting cooperation from Schultz's right-hand man, Bo Weinberg. Then in a shattering development, Schultz beat the rap and came back to claim his empire. All the syndicate men could do was claim they were minding the store.
Schultz squinted at them, indicating that sooner or later he'd settle that score, but his immediate attention fell on Bo Weinberg, who he suspected as being the traitor within his ranks. Weinberg disappeared. One story holds that Schultz killed him with his bare hands, another that he put a bullet in his head, and still a third that he had Bo fitted with a "cement overcoat" and heaved into the Hudson River while still alive. Schultz was capable of any of the above.
There is an excellent chance that war would have broken out shortly between Schultz and Luciano, Lansky, Zwillman and others, but again the law interfered, this time in the form of special prosecutor Thomas E. Dewey, who in his war on vice and racketeering had turned his main focus on Schultz in 1935. All around, Schultz saw his operations stunted and his revenues decreased. He knew only one answer to that: Kill Dewey.
Schultz went to the national board of the syndicate with his demand that Dewey be assassinated. The mobsters were all shocked except for the kill-crazy Albert Anastasia who saw merit in Schultz's idea, totally unmindful of the heat to be generated in the murder of a prosecutor. Even Anastasia backed off when he realized the implications. Schultz's request was dismissed.
He stormed out of the meeting, warning defiantly: "I still say he ought to be hit. And if nobody else is gonna do it, I'm gonna hit him myself."
His attitude sealed his fate. The boys voted a quick contract on him, with Anastasia backing the idea.
On October 23, 1935, Schultz, Abbadabba Berman and two enforcers, Lulu Rosenkrantz and Abe Landau, were having a business meeting and meal at one of Schultz's favorite hangouts, the Palace Chop House and Tavern in Newark, New Jersey. Schultz got up from the table and went to the men's room.
While he was there, two gunmen entered the Palace. Their technique was picture perfect. One of them checked the men's room on the way in, and seeing a man at a urinal, shot him. This was to prevent the killers from later being surprised from behind. Then they shot the three Schultz men at the table.
It was then that the hit men discovered that Schultz was not at the table. Remembering the man in the john, they found it was Schultz. The gunman who had done all the shooting, Charles "the Bug" Workman, paused long enough to clean out the money from Schultz's pockets and fled. Amazingly Schultz was able to stagger to a table where he fell unconscious.
Schultz lived a couple more days in the hospital but did not name his killers, instead talking mostly gibberish with considerable mysterious mumblings about all the money he had hidden.
Eventually Workman was convicted in the Schultz rubout and did 23 years in prison. He never said who had ordered the Dutchman killed. The Bug probably didn't even know such details.