The Manhattan Beer War started when Frank Costello began to rise in power in the “Combine” which before, was ruled mostly by Irish gangsters who supplied the city with beer for years. As the Luciano clan moved in on territories and forced Black, Jewish and Italian gangs under their umbrella of control, they became stronger and more powerful. They eventually controlled close to all of New York’s beer and alcohol business as well as a profitable trade in heroin.
They imported large quantities, with the help of Arnold “The Brain” Rothstein, who some have said they later had eliminated to take over his lucrative alcohol and gambling revenues. Rothstein, at this time, continued to play both sides of this war, hedging his bet in case one side or the other triumphed. He had all the cards at this time and had lucrative gambling and smuggling operations as well as the political connections many mobsters needed to avoid prosecution. The combine grew in power and things went ok for a while, but when Costello was later tapped to take over for Big Bill Dwyer; who was arrested for trying to bribe a coast guard official, it rubbed some people like Mad Dog Coll and Vannie Higgins the wrong way.
Higgins was the powerful Brooklyn boss of the Combine. Coll was a former Dutch Schulz enforcer who Dutch dismissed because of his volatile nature. Higgins operated out of Bay Ridge for years and he completely controlled the area’s alcohol import and sale and made a fortune for the combine and himself. Coll decided to team up with Higgins along with Legs Diamond and Little “Augie Pasano” Carfano, to fight against Dutch Schulz, Owney “The Killer” Madden of gophers gang fame, and Costello and Luciano. The Manhattan Beer War lasted over two years with much bloodshed on both sides. There was also a labor war going on for control of the rackets involving Lepke Buchalter, the Luciano Crew, and the Carfano/Diamond crew as well.
A lot was at stake, both the unions and control of them and the New York City beer rackets. In 1928, Arnold Rothstein was murdered for welching on a gambling debt, some say he was taken out by Lansky and Luciano, but the murder was never solved. The beer war began to bring too much attention to the mafia and they wanted it settled once and for all. The Costello/Madden partnership was forced apart. Costello had in fact been, for a time, one of the upper echelons of the Irish Mob.
After the forced separation by both the Syndicate and Irish Mafia, Madden went on to rule the Hells Kitchen area of NYC, and Costello was given a substantial portion of Rothstein’s empire to run for the Syndicate. Costello rose to great power in the Mafia, he was also called to testify in the famous “Kefauver Hearings” in the fifties. He was one of the biggest mafia bosses of his generation. Mad Dog Coll would later be killed by Owney Madden, payback for his attempts on his life.
Schulz would later be taken out by Luciano and Lansky for not backing off of his idea to kill the popular mafia hunter Thomas Dewey. Dewey would later bring down Lepke Buchalter and hound many others like Luciano who he sent away for 30 years initially. Little Augie would be whacked in 1959. Owney ‘The Killer” Madden would go on to open the Cotton Club and expand the racing wire out west and make another fortune.
The Manhattan beer war was another example of how much was at stake during prohibition. Harlem streets would also ring with the sound of gunfire and explosions again, as the Dutch Schulz gang and Lucky Luciano and Lansky, strove for control of the lucrative Harlem numbers rackets. Those profitable rackets were run by Madame Stephanie St. Claire and her loyal partner Bumpy Johnson and would not be given up without a fight.