Saturday, January 01, 2011

A Place Where Republicans Once Ruled and Partied

Nelson Johnson. Boardwalk Empire: The Birth, High Times, and Corruption of Atlantic City. Medford, N.J.: Plexus Publishing Inc., Medford Press, 2010 (copyright 2002),

The Lenni Lenape sold their rights to South New Jersey for finished goods. Further Island at that time consisted only of descendants of Jeremiah Leeds under Jonathan Pitney arrived. The Leeds descendants called the island Absecon Island.

Jonathan Pitney, a Democrat, successfully had a new county, Atlantic, created from part of Gloucester County, which was mostly Republican. Pitney was the first Chairman of the Atlantic County government.

Pitney decided Absecon Island could be a health resort for rich people. He opened a resort. Absecon Island, or Atlantic City, New Jersey, thus was created as a beach health resort for rich visitors. It became a working class vacation destination where glitz attracted their fantasies and improper behavior was mostly overlooked as a mean to attract more tourists.

Pitney began asking the legislature to build a rail line serving the island. Business owner Samuel Richards realized he could profit from this proposed rail line for his glass and iron operations. A rail line was built from Camden to Atlantic City. In 1874, almost half a million rode the train to Atlantic City.

An amusement pier was constructed. A second train to Atlantic City made it an attractive and accessible destination for middle class visitors. A third train with a low fare connected Philadelphia to Atlantic City. End of the season rents were lowered for African American visitors.

The first three piers built did not last through the winter storms. A better fourth pier lasted.

Cape May was the vacation destination for the rich and celebrities. Atlantic City was thrilled when President Ulysses Grant vacationed in Atlantic City. It is noted Grant celebrated there by drinking heavily, which he was known to do.

May African American employees in Atlantic City were not treated well. Some African American hotel workers went on strike because their meals were horrendous.

In 1865, there were 100,000 African American skilled tradesmen and 20,000 skilled Caucasian workers in Southern states. Though their freedom was won, few then would hire an African American tradesmen, either due to racism or fear of reprisals, especially if a Caucasian was not hired instead. By 1890, there were few African American tradesmen. This lacking was reflected in New Jersey. In 1903, there were only 83 African Americans employed in New Jersey in industrial position, and these were mostly janitors. 87% African Americans worked in agriculture or personal services. In Atlantic City, many resorts, merchants, and amusement owners hired African Americans at low wages.

In 1905, there were 9,000 African Americans living in Atlantic City, making it the Northern city with the highest proportion of African Americans. This led to some racial tensions, as a few decades earlier New Jersey had been the Northern state where a majority of voters voted and Lincoln and some leaders such as former Governor Rodman Price advocated for New Jersey joining the Confederacy. When Lincoln signed the Emancipation Proclamation, New Jersey Governor Joel Parker denounced it and the legislature passed a law disallowing Negroes from living in New Jersey.

African Americans who first moved to Atlantic City lived in crowded, dirt floor shacks. The African American tuberculosis rate was four times that of Caucasians. The African American infant mortality rate was twice that of Caucasians. The presence of so many law wage employees was used by the tourist industry to exploit great profits.

Many African Americans were active in church activities. These were placed where they could speak freely and participate in a hierarchy of important positions. A Mason’s Hall was a meeting place for several secret societies such as the Good Samaritans and True Reformers, who also created insurance and business opportunities, as well as Elks and Prince Hall Masons, who did charity work.

An amusement house, Fitzgerald’s Auditorium, later renamed Club Harlem, was created primarily for African American audiences. It became a popular nightclub that could hold over 2,000 people. The African American community soon had its own businesses, theaters, restaurants, funeral homes, etc.

African Americans received health care in a back room in City Hall until 1899. They were then served in a Blacks only ward in the public hospital.

Philadelphia factories were hot places, especially in summer. Atlantic City became a popular getaway for Philadelphia factory workers seeking a beach, alcohol, gambling, and sex with prostitutes.

Governor John Fort, elected in 1907, sought to end illegal activities in Atlantic City. Atlantic City Prosecutor Clarence Goldenberg could not find any illegal activities but pledged to look into any evidence brought to him. Every Grand Jury he called found no need for any indictments. The Grand Jurors were personally selected by Sheriff Smith Johnson,. Most Grand Jurors had income resulting from criminal activities. Governor Fort threatened to impose martial law over Atlantic City. The city leaders ignored the threat. The Governor considered the issue but never acted.

Daily political decisions then were made by a triumvirate of three leaders, U.S. Rep. John Gardner, County Sheriff Smith Johnson, and County Clerk Louis Scott. Louis Kuehnle, a hotel manager, was Scott’s main aide.

New Jersey had a low prohibiting a Sheriff form winning immediate reelection. Johnson swapped being Sheriff and Deputy Sheriff from 1890 to 1908 with Sam Kirby. Sheriff fees for summonses and other matters were personal income for Johnson. New Jersey law then eliminated the fees and set the Sheriff’s salary at $3,500 annually. Kuehnle pressured the businesses they protected to make up the difference. Other protection money was used to fund the Republican Party organization. Business owners paid the money as the preferred profits over honest government.

Atlantic City grew due to creating access to rail transportation, investors from nearby New York and Philadelphia who produced hotels and boardinghouses, the availability of low wage labor to fill tourist industry jobs, and full time residents who wanted the tourism money enough to not insist on cracking down on arresting the tourists who engaged in illegal activities. This required understandings between Atlantic City’s governing officials and the organized criminals who operated the illegal activities.

Louis “The Commodore” Kuehnle was the first political boss of Atlantic City during the 1890s and 1900s. Extortion from gambling parlors, bars, and brothels fed the local Republican Party while local officials allowed these vices to operate without public interference. Woodrow Wilson was elected New Jersey Governor as a Democrat in 1910. Governor Wilson helped get the state to have Kuehnle convicted and imprisoned. Kuehnle picked Nucky Johnson to take power after him.

U.S. Senator William Sewell was a major political leader in South Jersey. Many urban Atlantic City voters were dependant on the Kuehnle organization and most rural voters were Republican leaning farmers. African Americans were mostly members of the party of Lincoln. There were very few Democrats in South Jersey.

The Kuehnle organization brought African American voters to the polls and gave each $2 for voting. Before getting the $2, the voter had to produce a carbon paper placed under the ballot which showed the voter had voted as instructed. Many earned extra income by voting additional times.

When Wilson was elected Governor in 1910, Democrats also won majorities in both legislative houses. It is noted Wilson won even though the Republican opponent to Wilson had more votes in Atlantic City than there were registered voters.

The legislature held hearings on Atlantic City election law violations. It was determined that 3000 Atlantic City votes were illegal. Further, Democrats who challenged election fraud on election were drugged. Noting County Prosecutor Clarence Goldenberg was part of the Atlantic City political organization, the legislature created a law allowing the Attorney General to investigate and prosecute. Realizing the Kuehnle organization controlled the grand jury process, Governor Wilson appointed Samuel Kalish as a Judge. Judge Kalish used a law to create an rare legal committee that appointed grand jurors. This grand jury indicted 120, including Kuehnle, Sheriff Johnson, Mayor George Carmany, the building and health inspectors, etc. The local trials resulted in most being acquitted.

In 1909, Kuehnle helped award a water project to a dummy bidder. There were $300,000 in extra costs that Kuehnle approved in his authority as Water Commissioner. Kuehnle was indicted and convicted for this action. Nucky Johnson, Sheriff Johnson’s son, took control of the political organization. Johnson allowed Kuehnle to become City Commission, which he held from 1920 until his death in 1934.

Enoch “Nucky” Johnson was a Republican Party leader in Atlantic City who gained much influence during Prohibition (1920-33). He was a maker of deals that included organized crime.

Johnson integrated organized criminals into the Republican Party organization. The two entities became one. Johnson’s powers continued until Prohibition ended. The new Democratic President Franklin Roosevelt, boosted by the journalism of William Randolph Hearst, prompted the FBI to investigate Atlantic City. They spent five years on this investigation and convicted Johnson, who was then imprisoned from 1941 to 1945.

Nucky Johnson reportedly earned $500,000 of untaxed illegal income annually. He lived lavishly and held many parties with local police officers assisting him. Nucky tipped well and gave money to panhandlers, as he knew their votes counted. Nucky had been named Republican County Secretary by Kuehnle. The Secretary was powerful as the Secretary determined who was eligible to vote at meetings as well as when meetings were held and what the agenda was. Nucky was also County Treasurer for 30 years.

Protection payments from vice operations continued paying for Republican Party operations under Nucky Johnson. Johnson made the payments mandatory. Those who didn’t pay were put out of business.

Nucky Johnson and Hudson County Democratic leader Frank Hague realized it was important that state leaders not interfere with their local organizations. They created a bipartisan alliance to see that reformers would not be elected to state offices.

Woodrow Wilson was elected President. His morality movement helped to amend the Constitution to prohibit selling alcohol. The era of Prohibition helped organized crime gain influence through profits from selling illegal alcohol. Atlantic City taverns already had a long history of selling alcohol illegally on Sundays. They just expanded to selling illegally all seven days. Little changed in Atlantic City except that it was the only place where alcohol was openly sold in restaurants, grocery stores, drug stores, hotels, bars, and farmer’s markets whereas as it sold in hidden places elsewhere in the nation. There are several recorded instances of Atlantic City police and prosecutors charged by Federal authorities with attempts to violate Prohibition laws.

Atlantic City built a convention center in 1929 for $15 million. This may have seemed extravagant for a city with only 65,000 yet city leaders knew it would bring in more tourism.

The 1924 election between former Mayor Harry Bacharach and incumbent Mayor Edward Bader divided the city. Nucky Johnson was close to both. Johnson decided to back the incumbent. Johnson convinced the Democrats to back Bader in return for slating a Democrat on the city for City Commisison. The Democrat that was slated, though, turned out to be a Republican Harry Headly, who switched to the Democratic Party in order to be slated. There were many fights at the polls. Over 1,000 voters will illegally cast by Philadelphians brought in to vote. Bader was elected. Headley was later replaced by a Republican, William Casey.

In 1925, Atlantic City had 1,200 hotels and boardinghouses with 400,000 capacity, 96 trains arriving in summer and 65 in winter, a seven mile Boardwalk, 21 theaters, five ocean piers, two seaplane airports, and one land airport. Atlantic City also hosted the Miss America Pageant.

Nucky Johnson interviewed everyone before hiring them for a county or city job. Thus, all public employees owed their jobs to him. In return, they were expected to contribute from 1% to 7% of their salaries to Johnson’s Republican Party organization. In addition, employees were given lists of voters to get to the polls. Even if the person was out of town or dead, the employee had to see they voted. Often it meant the employee voted for them.

Nucky Johnson also controlled the awarding of public contracts.

Johnson got Frank Hague’s help again in the 1928 primary. Hage helped get about 22,000 Democrats in Hudson County to vote for Johnson’s candidates in the Republican Primary. Johnson’s candidates, Morgan Larson for Governor and Hamilton Kean for U.S. Senator, both won. Kean paid Johnson $200,000 for election operations.

A reform group, the Committee of One Hundred, formed to fight corruption. They witnessed corrupt practices and gave affidavits of the corruption to Atlantic County Prosecutor Lousi Repetto. Repetto decided the affidavits weren’t enough evidence. The Committee of One Hundred went to Common Pleas Judge William Smathers, who had been supported by Johnson to become a judge, who declined to get involved. They next went to State Attorney General E.L Katzenbach, who also declined to do anything. They next went to state Supreme Court Justice Luther Campbell who similarly did nothing.

Meyer Lansky, a New York organized crime figure, decided an interstate criminal syndicate would help all organized crime organizations. One was created with him, Lucky Luciano in New York, Bugsy Siegel in New York, Nucky Johnson, Joe Adonis in Brooklyn, Longie Zwillme and Willie Moretti in Long Island and northern New Jersey, King Solomon in New England, and Harry “Nig” Rosen in Philadelphia. This “Seven Group” protected 22 organized crime organizations cross the eastern United States. Agreements were made to stop fighting and killing each other and to increase profits for all. Agreements were included with mobsters from Chicago, Detroit, and Kansas City.

Johnson was kidnapped by Tony “The Stinger” Cugino, a South Philadelphia hit man. Nig Rosen negotiated a $100,000 ransom and Johnson was released. Johnson rewarded Rosen with some Atlantic City numbers rackets and an Atlantic City casino. Some theorize Rosen was behind the kidnapping to win Johnson’s friendship.

The Depression hurt the tourist industry nationwide, including Atlantic City. The repeal of Prohibition hurt Atlantic City as tourists now could instead stay home and drink.

Newspaper published William Randolph Hearst was a frequent visitor to Atlantic City where he dated a women that Nucky Johnson was also interested in. Hearst and his newspapers took revenge by writing about Johnson’s corruption. Hearst was also reportedly convinced the Roosevelt Administration to look into Johnson. In 1936, both the FBI and IRS began looking into the corruption. Undercover agents documented the operations.

Nucky Johnson always filed tax returns listing his$6,000 County Treasurer salary and $30,000 in commissions. He knew commissions of $30,000or less did not need to be itemized. Thus, if anyone found an illegal payment, he could claim it was in the amount in commissions.

The FBI raided Atlantic City brothels and arrested 200. Since many of the prostitutes crossed state lines to work in Atlantic City, the federal White Slavery Law/Mann Act was broken. Among those arrested were Undersheriff Ray Born and Loue Kessel, who was Johnson’s bodyguard. All the prostitutes refused to cooperate with the FBI.

The FBI found and convicted contractors for paying bribes for their Atlantic City contracts. Yet none of the contractors would testify against Johnson. The FBI threatened Judge Joe Corio over $60,000 in unreported legal fees Johnson had arranged for him from a railroad contract. Corio at first refused to cooperate but later accepted immunity to testify against Johnson and others. Ciori had received the money to avoid a tax payment. In return, Corio gave part of the money to others and kept $15,200. None of this money went to Johnson.

The FBI indicted numbers organizers and people engaged in contract kickbacks. Those indicted all accepted their indictments and citations without testifying against Johnson. 13 numbers bankers were imprisoned and threatened with more charges and more jail time. Several finally agreed to testify against Johnson. One, Ralph Weloff, testified he paid at least $1,200 weekly for five years in protection payments to Johnson.

In 1941, several prospective jurors for Johnson’s trail admitted they had been offered bribes to acquit Johnson.

At Johnson’s trail, his defense was that the kickbacks were legitimate campaign contributions from constituents who wanted gambling legalized. Johnson was found guilty and sentenced to ten years in prison and fined $20,000. He served four years. He never sought to regain power while offering advice when it was requested. He died in1948.

Mayor Thomas Taggert and Assemblyman Frank Farley fought to take over the power that Johnson left. Taggart had been a police recorded, a position of fixing cases for ward leaders by making the payer recordings showing that charges were dropped.

Farley lined up support. Taggart sought to be Public Safety Director to lead the police in addition to being Mayor. He raided some gambling establishments. The gamblers thus opposed Taggart gaining more power. Farley supporters let it be known that Taggart was a homosexual. A Republican War Board formed to remove Taggart as Mayor. They decided instead to strip Taggart of political power and allow him to be a figurehead Mayor.

Frank “Hap” Farley was the next political boss with two key associates, Freeholders Board Clerk Jimmy Boyd and real estate broker Herman “Stumpy” Orman. Boyd was the “political hatchet man” and Orman enforced collecting protection money from organized crime operators who was then used for funding their local political organization.

Farey was elected State Senator which gave him statewide influence. He served over a quarter century before losing to a Democrat in 1971. Farley missed only three legislative sessions in his 34 year legislative career, each time due to being hospitalized. For the first 20 years, he spent every Monday representing from six to eight constituent problems pro bono who had Motor Vehicle problems.

Farley led the Senate Republican Caucus. He insisted that no legislation reach the Senate floor until 11 Republican Senators supported it and if Farley did not object to it.

Once Farley wanted to create a Municipal Improvement Tax so Atlantic City could have a 5% sales tax on retail sales, restaurant food and drink, hotel rooms, and entertainment. Farley didn’t have enough Republican votes to pass the tax. He made a deal with Frank Hague for votes from Hudson County Democratic Senators in return for killing bills Hague opposed that the Governor wanted. This tax remains.

The tourism industry declined during World War II. Atlantic City was helped by the U.S. Army using its hotels and convention center as a Basic Training Center for Army Air Corps. Gambling was shut down as the military didn’t want troops losing their money.

The police began cracking down on gambling operations in 1951. Farley was upset but couldn’t stop it. The U.S. Senate held hearings on racketeering and Atlantic City was part of their investigations.
Sheriff Jimmy Cormack stopped approving patronage positions from the Republican Party. Carmack formed a Fusion opposition ticket to Farley’s slate in 1952. The campaign exposed payoffs on insurance and vending contracts. It was also revealed $100,000 in legal fees were actually $21,000 to lawyers with the rest paid back to Farley and 11 others. Farley had Nucky Johnson campaign in the African American community where he remained popular. The Farley ticket won in 49 of 64 precincts and defeated the entire Fusion ticket.

Farley’s slate had minor opposition in 1956 and no opposition in 1960.
The local Democratic Party was run by Farley’s people. The one person, one vote Supreme Court decision hurt Farley as it diminished his power statewide. In addition, African American voters became increasingly Democratic, which further lessened Farley’s political strength.

In 1964, the Democratic National Convention was held in Atlantic City. Hotels and restaurants raised their rates. Delegates complaining of being exploited became national news, which harmed the city’s reputation.

Marvie Perskie formed a Democratic Party slate in 1965. The slate included Leo Clark, an ex-FBI agent, running against Farley. Farley won by his closest election in 28 years. The state Supreme Court redistricted the Senate to Farley’s favor. Farley won reelection more easily in 1967.

Joe McGahn, a Democrat, was elected to City Council in 1966 and then was elected Mayor in 1968 by a 2 to 1 margin in a city with very few registered Democrats. Farley then lost reelection for State Senator by a 3 to 2 margin.

Dick Jackson became Mayor in 1967. He was considered one of the most effective Mayors even though he was convicted of extortion in 1972. Jackson refused to testify against Farley in a deal where he could have avoided imprisonment. After leaving prison, Jackson continued to be well respected in Atlantic City.

Atlantic City deteriorated during the 1970s. Many middle class residents left to avoid the decay which only sped further deterioration. Tourist income was $70 million in 1950 and $40 million in 1974. Many hotels closed as hotel rooms shrunk from almost 200,000 to almost 100,000. During the offseason when tourists were around, which was nine months every year, Atlantic City had an unemployment rate of around 25%. A movement to save Atlantic City by legalizing casino gambling began. Hap Farley had been opposed to the idea for fear it would bring more Federal scrutiny of Atlantic City corruption. With Farley’s defeat, the movement grew.

It would take statewide voter approval of a Constitutional amendment to permit casino gambling. Governor Brendan Byrne, a former Superior Court Judge and prosecutor known as someone organized crime couldn’t buy, spoke favorably of the idea. To attempt to win statewide approval, the referendum allowed gambling anywhere where both the municipality and the county approved it in referendums. It was further proposed the state would own and operate the casinos to keep out organized crime. Further, the casinos would operate from 8 pm to 4 am, would not sell alcohol, and betting on credit would not be allowed.

Pro-gambling forces outspent anti-gambling forces by 20 to 1. Yet, it was defeated by a large margin.

A second referendum effort happened. This time, it was realized many voters didn’t like the possibility of gambling across the state. This effort limited gambling to Atlantic City. The funds raised by the state for gambling would pay property taxes and utility bills of New Jersey senior citizens and handicapped. This referendum was held in 1976 when a larger turnout of voters were voting for President. This also meant a fewer percentage of voters concerned about local issues, and thus more apt to be opposed to gambling, would be voting. In addition, the pro-gambling side saw an increase in the number of people giving over $5,000 to the effort go from 8 in 1974 to 33 in 1976. The referendum passed.

Resorts International immediately began seeking to build a casino. Family members of leading politicians were hired as their attorneys.

The legislature passed a casino friendly Casino Control Act. Gambling on credit and alcohol, including free alcohol, were permitted. Casinos could be open 18 hours on weekdays and 20 hours on weekends.

The Casino Commission tool 16 months to investigate Resorts International without deciding whether to grant them the first casino license. The legislature gave them a six month, renewable for another 90 days, temporary license. This casino had gross winning of $134 million in 220 days in 1978 and $232 million in 1979, making it the most profitable casino anywhere in the world.

When the investigation was completed, the investigators recommended denying a permanent license. The investigation found criminal elements were involved in Resorts International’s overall operations. The Commisison, though, unanimously voted to grant a permanent license.

Mike Matthews was elected Mayor by 200 votes in a 1982 runoff election. Election fraud was charged. Matthews took a $10,000 bribe from an undercover FBI agent. He was convicted but refused to resign as Mayor. He was removed from office in a recall election.

New Jersey has strong standards for casinos. While mobsters found ways to enter casino operations, they were kept from controlling casinos. The new generation of casino owners are mostly wealthy investors like Steve Wynn and Donald Trump.


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