On 9 February 1942, the interned French ocean liner SS Normandie caught fire and capsized off of Pier 88 in Manhattan. The Normandie, recently rechristened the USS Lafayette, was in the process of being converted into a troop ship that could carry an entire infantry division’s worth of men (15,514 in 1942). The fire was almost certainly an accident, even though mob boss Albert Anastasia claimed credit (to enhance his reputation and send a message to the govt not to interfere with the waterfront rackets. He regretted it later.). Despite, or maybe in light of Anastasia’s claim, the Office of Naval Intelligence (ONI) suspected Nazi sympathizers, maybe even Nazi saboteurs.

In early 1942 New York, this was not an unreasonable assumption. Just after Pearl Harbor, the FBI had broken up the Duquesne Spy Ring and arrested 33 German spies in New York after two years of investigations. That there were some that escaped capture was considered a given. Furthermore, America’s largest immigrant community in 1942 were German Americans; New York City was a stronghold of the influential German American Bund, essentially the American branch of Hitler’s National Socialists. Also, U boats were literally torpedoing merchant ships within sight of the Statue of Liberty. It was suspected that they were receiving information from the dockworkers (true, until the Duquesne Spy Ring was broken up) and that the U boats were receiving fuel and supplies from fishing boats (Not true, the Americans were just unaware of the Type IX U-boats true range) On top of all that, New York’s docks, shipping, and fishing industries were controlled by the Teamster, Longshoreman, and Seafood Worker’s Unions. All of whom were dominated by the Jewish, Italian, Sicilian, and Irish Mafias. None of these were seen as particularly friendly to America’s wartime interests, and would greatly profit from chaos on the waterfront.

The Mafia’s control of these critical wartime requirements greatly concerned Naval Intelligence. Black marketeering and corruption were on the rise, if only because of the increased amount of wartime goods and supplies moving through New York. Also, union strikes in New York reached an all-time high in early 1941 (while the Soviet Union was a defacto German ally) and was still a serious problem. Anastasia’s claim of credit was seen as further proof that the immigrant communities would at best encourage the sabotage, and at worst actively participate. Although Ireland was technically neutral in the Second World War, their hatred of Great Britain was legendary, and tacit Irish support for German operations in the Atlantic was not unheard of. Most disconcertingly, Mussolini’s Italy was Hitler’s closest ally. There were twenty years of ties between the Italian Mafia in Italy, the northern branches of which Mussolini used to gain power, and the Italian mobs in New York. The Sicilian and Southern Italian Mafia were a different story, but who the hell in the US Navy knew the differences between the Italian and Sicilian mobs? The various mafia organizations needed to be brought on America’s Team, or eliminated by those that were. But where to start? When Naval Intelligence approached the longshoremen about the Normandie fire, no one would say a word, and they were quietly “escorted” from the Manhattan docks.

After speaking with New York district attorneys, the question wasn’t “where”, but “with whom”. They recommended the Jewish Mob, who had ties to all the others through their lock on the gambling racket. More importantly, they had a fierce reputation of street fighting with the German American Bund and regularly broke up Bund marches, rallies, and meetings. Of all the Mafioso in New York, they had the least ties to Italy or love of Germany. So Naval Intelligence contacted Meyer Lansky.

Lansky was a Jewish immigrant from Eastern Europe, and he came to America in 1911 after the Russian pogroms. He was a slight, well dressed, bookish man who could pass for an accountant in any New York City firm. He was also a ruthless killer, and The Bund Nemesis. He was the undisputed boss of Jewish organized crime, and the most feared enforcer of the “Syndicate”. The Syndicate was the unofficial organization that kept the Italian “Five Families”, and the various other ethnic mafias working in their own areas and own specialties, and generally not killing each other. Violence was bad for business. Lansky was the perfect man to contact.

Lansky assured the ONI that although the immigrant communities were from countries generally hostile to the US, they embraced their new homeland for the most part, and disdained Nazi Germany and Fascist Italy. They would refrain from active sabotage. However issues arose when ONI asked for the mafia members to report unusual activity, stop strikes, limit black marketeering, and even accept federal agents into the unions to keep an eye on things. Lansky was skeptical: mafia members, of any ethnicity, were anti authoritarians in the best of times, and would need some incentives for that level of support, and compensation for the consummate loss of profit.
The ONI made them an offer they couldn’t refuse: Cooperate or Washington will declare them a national security threat. Once that happened the FBI and an infantry division will descend upon New York and “kill them all”. (The Big Red One was passing through NYC at the time… Anyway, legend has it the threat came from FDR himself, whcih is not much of a stretch. Remember FDR was also the guy that had no problems rounding up every Japanese American in the country and putting them in concentr… err… “internment” camps.)

Lansky naturally agreed, “out of patriotism”, of course. Anyway, he had no problems with working against the Germans, if only for their treatment of Europe’s Jewish population. Also, once he explained the terms of the “agreement” to his fellow childhood friends, “Bugsy” Siegal and “Socks” Lansa, the ONI would eventually have no problems with the Italian and Sicilian controlled teamsters, longshoremen, or fishermen (with whom the ONI wanted to place agents to spot U boats). Lansky recruited Irish enforcer John “Cockeye” Dunn and his thugs to roam the waterfront. In Lansky’s words, “I gave Cockeye the orders. Go down to the piers and find out who is loyal and who is not loyal. You have to see that there are no strikes and that the job is done quickly when military stuff is loaded. And we have to make sure everybody keeps his mouth shut about troop movements. That means going into bars to make sure the crews and longshoremen don’t start sounding off when they get drunk”.

However, Lansky had no influence over the Irish mob on the West (Hudson) docks and rail yards, the surrounding Hells’ Kitchen slums, nor the Brooklyn Docks. They were run by Albert Anastasia, the same guy who “torched the Normandie”. The Irish had the biggest problem with authority. The “’G-Men’ really would need an infantry division”, and turn lower New York into a battleground, before the Irish submitted to federal authority. There was only one man who could convince Anastasia to cooperate: the Emperor of Vice in New York – “Lucky” Luciano.

Lucky Luciano owned the New York underworld, even from the maximum security prison at Dannemora, where he was serving a fifty year sentence. Luciano got the Irish on board under three conditions: His cooperation be kept secret, as he was an Italian citizen and if he was deported, Mussolini would have him killed. His sentence is commuted. And finally that he is moved to a nicer prison. The Navy agreed and Luciano was transported to the minimum security prison at Great Meadows. (He was eventually freed in 1946 and deported to Italy after being incarcerated for just 9 ½ years.)

Once the Navy had Luciano’s blessing, the Mafia were their enforcers. “There was peace on the waterfront. It was kept with rough methods. But that’s what the Navy asked us to do and that’s what the Navy got.”

Operation Underworld ran for the rest of the war, and was kept secret until 1977.