Colin Barry

Al Capone (CMC, Wednesday, Week 7)


How did this happen?
Prohibition blurs the lines between legal and illegal. Everyone wants to drink booze, and we made it illegal...
Lack of opportunity for urban poor
Massive population boom in Chicago; government doesn't mature/scale up accordingly
Price war dynamic/cartel instability => violence as enforcement mechanism

Elements of the Capone organization:
U-Form/matrix (regional) structure
Consolidated/formal Board of Directors
Sophisticated segmentation by roles
Personal/family connections
Criminals AND non-criminals
Relies on loyalty and code of values (silence)
Risk management, succession planning

Economics of Capone's empire are not that great
=> ~4% net margins, $30M of police payoffs (half of Chicago police force on Capone's payroll!)
=> Problems with scaling up: geographic expansion still requires paying off local government
Still one of the wealthiest Americans in the late 1920s...