Organized crime payoffs to the U.S. Justice Department — “protection money”, i.e. bootleggers must pay kickbacks to the feds or else the fed will send “untouchables” like Eliot Ness to make things difficult for the bootleggers – began when Harry Daugherty was U.S. Attorney General during the Warren Harding administration. Did Al Capone refuse to make payoffs to the feds for “protection”? (Background: “Tug Of War For Harding’s Soul”, Ersjdamoo’s Blog entry of June 29, 2013)
Al Capone (image, above) has been depicted in a one-dimensional manner in The Untouchables movie and in common history. The true story, however, of Capone has apparently yet to be told. Yes, one perspective, that of Capone as a thug, is valid; but he was three-dimensional and one perspective does not do justice to the truer story.
Most people have little understanding of continual British machinations. They are not aware, for example, that British agents helped stir up trouble in the South, leading to the American Civil War. As recently as 1896, the U.S. was “at a hair’s breadth from actual war with Great Britain over a territorial dispute between Venezuela and British Guiana.”  Prior to U.S. entry into the Great War (World War I), British intelligence worked to manipulate American opinion, for example through the controversial Zimmerman Telegram and the suspicious Lusitania tragedy.
So author Bill Nunes, although providing fascinating background in his book, Illinois Crime, still shows shallow understanding when he dismisses Chicago mayor Big Bill Thompson as an “Anglophobe.” It was Thompson, on-and-off Chicago mayor during the 1920s, who declared, “Keep out of foreign wars and make the King of England keep his nose out of our affairs.” During Big Bill Thompson’s rule, the official language of Illinois was American, not “English.” Thompson “blamed the British for dragging us into World War I” and “criticized the number of pro-British books in the Chicago Public Library.” 
Countering Mayor Thompson was Colonel Robert McCormick. The Colonel published the Chicago Tribune newspaper, which emerged to prominence following bloody turn-of-the-century circulation wars with rival newspapers. Like William Randolph Hearst, McCormick established a propaganda empire, and solidified his immense power by acquiring or establishing “forestlands, paper mills, hydroelectric installations, and shipping companies (all to supply the Tribune with newsprint) as well as radio and television facilities and additional newspapers.”  McCormick, wealthy heir to the Cyrus McCormick and Joseph Medill fortunes, did not like Mayor Thompson’s isolationist stance and easy-going attitudes toward the Chicago underworld.
There is some indication that the Chicago Tribune has been and/or is allied with British interests. Given the “Anglophobia” of Big Bill Thompson, the fierce political battle between the mayor and Colonel McCormick can therefore be seen as an Anglophile vs. Anglophobe war, played out in Chicago during the 1920s. Naturally aligned with Thompson, who considered gambling, prostitution, and “speakeasies” as inevitable, were the Chicago underworld and its chief, Al Capone.
Payoffs To The Feds
President Warren G. Harding, a mulatto who “passed” for white, headed an administration favoring a “return to normalcy” following America’s involvement in the horrific First World War. This meant a tendency to disconnect from foreign entanglements. Unfortunately, Harding’s presidency was corrupt. Although Prohibition was in effect, the president and his pals routinely enjoyed drinking liquor in the White House. Harding was “a regular guy” who didn’t object to “business as usual.” In May of 1930, a book by Gaston Means, a Secret Service employee and “bag man” for Harding’s “Ohio Gang,” was released. The Ohio Gang, according to Means, ran a “protection racket” for bootleggers. In return for cash payoffs handed over to “bag man” Means, the Feds were held in check and the bootleggers’ business was not severely disturbed.  But Means did not mention any payoffs from Capone and the Chicago mob. Did Al Capone dare to say, “Screw you, feds. This is Chicago”?
But it would not be easy for the Feds to retaliate against Johnny Torrio and later Al Capone for “disrespecting” their protection racket. Capone had once worked as a bookkeeper and knew a few things about hiding money from prying eyes. And the Harding administration’s crookedness was leading to implosion, so its protection racket proved to have decaying teeth. Also, in those days before widespread air travel and super-highways, Chicago was effectively far-removed from East Coast power.
Yet for Capone to have “dissed” the Feds could not have been countenanced indefinitely. In the underworld argot, the Feds had a “rep” (reputation) to maintain. If Capone could get away with such disrespect, others might do likewise.
Naturally allied with the federal protection racket crowd was Colonel Robert McCormick. “The enemy of my enemy is my friend.” Capone had “dissed” the feds, thereby making them his enemy. Anglophile McCormick was a bitter enemy of Anglophobe Thompson, who was on friendly terms with Al Capone and the Chicago underworld. So, in the late 1920s, McCormick whispered to president Herbert Hoover that Capone could be nailed by income tax laws.
McCormick’s vigilante gang, “The Secret Six,” had failed to out-muscle Capone. But nitpicking accountants eventually succeeded in toppling the Chicago crime boss. Al Capone dealt strictly in cash and figured he was safe from income tax enforcers. “Capone had been advised by inept lawyers that he didn’t need to file tax returns since his income was derived from illegal activities. Capone agreed it didn’t make sense for the government to try and collect legal taxes on illegal income. Filing such a return, he figured, would violate the Fifth Amendment right not to incriminate one’s self.” 
Because Capone was so skillful about hiding his financial trail, at his trial the IRS (Internal Revenue Service) could not prove the gang chief’s income. So the IRS “called in witness after witness, who described his extravagant lifestyle and reported seeing him carry around huge wads of cash. The government put heavy pressure on the prosecutors and the judge to get a conviction.”  Capone was found guilty, and eventually was exiled to Alcatraz.
Capone was deposed, but this of course did not eradicate the Chicago underworld. Reportedly, Capone’s successor was Murray “The Camel” Humphreys, inventor of the idea of “laundering” dirty money. 
In 1931, a rumor surfaced that Al Capone had been murdered in 1929. Allegedly, Capone had been subsequently impersonated by his half-brother, Giacomo Calabrese, who was “scarred by a plastic surgeon to resemble the dead chieftain.” 
Allegedly, a plot to get Capone (Calabrese?) out of prison was hatched by his friends on the outside. The alleged plot hinged on the March 1, 1932 kidnapping of Charles Lindbergh’s baby and Capone’s offer to track down the kidnappers if he were released from prison. 
Reportedly, Capone wrote memoirs which were eventually published and presumably would shed more light upon the true story of the underworld czar. Rival newspaper to the Chicago Tribune was the Chicago Daily News, whose reporter Howard O’Brien was authorized by Capone to interview him. O’Brien got scared about things Capone had revealed to him, and delayed publication of Capone’s memoirs until after the Chicago crime boss finally died, in 1947. 
And where are these “Capone Memoirs” today? The Google Books section returns “All Things Considered” by Howard O’Brien, published in 1948.
Also presumably containing startling information would be a book by Des Plaines, Illinois bootlegger, Roger “The Terrible” Touhy, reportedly entitled The Stolen Years. Shortly after the book came out, Touhy was assassinated, in 1959, possibly for revealing too much.
——- Notes ——-
 Rothbard, Murray N. Wall Street, Banks, and American Foreign Policy. Center For Libertarian Studies, 1995.
 Nunes, Bill. Illinois Crime. email@example.com 2002
 Encyclopedia Britannica entry, “McCormick, Robert”
 “Ohio Gangster” Time magazine, May 31, 1930
 “No Capone?” Time magazine, May 11, 1931
(A version of the above blog entry first appeared at my old Conspiracy Nation web site on March 12, 2005.)