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In 1923, with speakeasies running in a thousand Manhattan basements, Frank Costello threw his bankroll into the rum trade. It was an enormous and complex business which involved the systematic bribery of thousands of policemen, the timed dispatching of speedboats and trucks, the direction of sales and bookkeeping staffs, the printing of fake labels, the operation of cutting plants and the purchase of fortunes in whisky. To the tough hoodlums who were its soldiers, it was also extremely hazardous.
Nobody shot at Frank Costello, and he fired no shots himself; he had long since quit packing a gun. He was a big shot from the start—a fixer, conniver, ship operator and financier—who did his work in an office at 405 Lexington Avenue, made business trips to Montreal to buy liquor from Canadian and European exporters, took enormous risks and made enormous profits. He also kept himself so shadowy and unobtrusive a figure that when U.S. Attorney Emory Buckner made a desperate but unsuccessful effort to smash the liquor racket, Costello was erroneously charged with being an accomplice rather than a competitor of Rum King Big Bill Dwyer.
But he was recognized and respected among the barons of the underworld. He became an intimate of Arnold Rothstein, the great gambler and criminal banker; he gained the esteem and affection of Tammany Swagman Jimmy Hines. When Al Capone and the other big men of gangland met in the famous Atlantic City peace conference of 1929, Frank Costello took a leading part in calling for cartels in the 'rackets instead of armed competition—a role which gained him the title of "The Prime Minister of the Underworld."
Kastel & Costello. Long before prohibition was over Rumrunner Costello began transferring his interest and rum profits to safer fields. In 1928 he formed a lasting partnership with Dandy Phil Kastel, a dapper little enterpriser who had whetted 'his wits as manager of a Montreal restaurant and operator of a Manhattan bucket shop. Costello and Kastel formed the Tru-Mint Novelty Corp. and gave the enthusiastic New York public a chance to play slot machines. He told Kastel: "If a guy named Hershey could make all that dough on a 5¢ candy bar, maybe there's an angle here."
Costello also "laid off" bets with big bookies and kept a finger in real estate. After repeal, with financial backing from William Helis, the "Golden Greek" (who demanded 20,000 cases of choice Scotch for security), Costello and Kastel bought control of Britain's Whiteley Distillery, producers of House of Lords and King's Ransom Scotch. The board of directors agreed to pay Costello £5,000 ($24,400) a year simply for "frequenting first-class hotels and restaurants and asking to be supplied with the company's brands." But the slot machines were Costello's gold mine.
Between 1928 and 1934 the Tru-Mint Corp. and its subsidiaries operated as many as 5,000 machines. In some cases they were equipped with little ladders to help the kiddies plunk in their nickels. The machines were protected from the police through an injunction against seizure. They were protected from rival hoodlums by a private police force, whose efficiency is reflected by this report from the company files:
Date 12-4-33
Machine No. 295632
1544 Second Avenue