Dillinger, an Indiana native of rural extract, had a hard-knock childhood after his mother died when he was only 3. As a teenager in the 1910s, he was a school-boy terror, and by 1924, he landed in jail under lengthy sentence for his part in a mugging. His partner in the crime, Ed Singleton, sold the 21 year-old Dillinger down the river, bargaining for a light sentence while Dillinger, who was not well represented at trial, got a stiff 10 to 20 years. For the next nine years, most of which was spent at the notoriously vile prison in Michigan City, Dillinger stewed in resentment over what he saw as an unfairly harsh punishment. At the same time, he studied hard at “crime school,” building knowledge and contacts among the hardened crooks surrounding him, including future partners in crime “Handsome” Harry Pierpont, Homer VanMeter, and John “Three Fingered Jack” Hamilton. Finally paroled in May, 1933, Dillinger’s next fifteen months would take him from Indiana farm boy to international celebrity.
Four months after winning his freedom, Dillinger helped smuggle a cache of weapons back to his colleagues in the Michigan City prison, who then used them to break out of the hated facility, where new, untrained guards had been recently installed as a part of a change in gubernatorial administration in Indiana. Just days before the breakout, Dillinger, who had spent the summer using his new-found criminal expertise to lead a bank robbing gang on expeditions in Indiana, Illinois, and Ohio, was captured and sent to jail in Lima, Ohio. His friends Pierpont and Hamilton, newly on the lam from Michigan City, returned the favor by leading a brigade to break Dillinger out, in the process killing the county sheriff, Jess Sarber, who lived in the prison complex (Pierpont would later meet his fate on the electric chair for the murder).
Dillinger and his gang, which included at various times not only the aforementioned Pierpont, VanMeter, and Hamilton, but also other criminal luminaries such as Harry Copeland and Lester “Baby Face Nelson” Gillis, would take a dollar where they could find it, but their primary targets in 1933-34 were banks. Their basic modus operandi was to leave a getaway driver on the street in a fast car, then enter the bank and calmly order everyone to the ground while they loaded up bags with cash. Surrounding themselves with human shields, they would then exit the bank, enter the car, and position their hostages on the sideboards as they drove off, making it extremely difficult for sharpshooting police to take a clear shot. In most of the rural and suburban locales they targeted, the police were armed with pistols, which were no match for the WWI-surplus Thompson submachine guns the Dillinger gang preferred. In addition, the police in these sleepy towns generally drove older model cars that were left in a cloud of dust by Dillinger’s 1933 and 1934 Ford Terraplanes, which could easily hit 80 mph. In those days before in-car radios, the police had little chance to catch up, and could not easily call a roadblock ahead (purportedly, Dillinger avoided banks in Michigan because police there were equipped with radios).
(Pictured: Three poses of John Dillinger. The description accompanying this series in the newspaper read: "The center picture, particularly, is characteristic of the killer's disdain of the law, his sneering, unchanging hate of the public and its institutions.)
Dillinger’s criminal career coincided with the nadir of the Great Depression. During 1933 and 1934, the national unemployment rate soared to over 25%. Real gross domestic product, a measure of the nation’s annual economic output, had fallen for four consecutive years, there of which were by double-digit percentages (by contrast, as of 2008, GDP has only declined in four years out of the last 34). Then, as now, the public recognized the downturn as a monetary phenomenon, and much blame and ire landed at the feet of bankers. Many Americans had suffered the humiliation of losing their homes and businesses to bank repossession, or had been turned down for additional credit, so Dillinger’s focus on banks gave him the aura of a robin hood figure, despite the fact that he spent most of his ill-gotten gains on himself and his girlfriends, not the downtrodden masses queued up at soup kitchens.
But despite his hardscrabble upbringing, his ability to make bankers tremble, and his almost supernatural ability to avoid police capture, it is doubtful Dillinger would have achieved much public acclaim without a particular legislative accomplishment of the New Deal – federal deposit insurance.
The Federal Deposit Insurance Corporation, or FDIC, was created as a part of the Glass-Steagall Act, passed by congress in June, 1933, and implemented as of January 1, 1934. Before FDIC, “runs” were a common feature of the banking system in the United States. When a rumor started that the local bank might be in financial trouble, some depositors would exercise caution by withdrawing cash. The sight of people withdrawing their deposits would further fuel the rumors of financial problems at the bank, leading others to take their money out of the bank. This process could quickly create a vicious circle, by which rumors of distress, which might not even be true initially, created a self-fulfilling prophesy as panic spread among depositors racing to the bank to get their deposits out before the bank’s reserves ran out.
By insuring deposits, FDIC broke the circle. Even if a bank truly was in distress, those withdrawing their deposits late would lose nothing; hence, there was no reason for a rush to withdraw first, no panic, and no bank run. For this reason, bank runs have been exceedingly scarce since 1934. But at the same time FDIC solved the problem of runs, it also created a set of perverse incentives for bankers, who no longer faced the disciplining force of possible financial ruin in making risky loans and other investments. Before FDIC, banks typically kept relatively high levels of reserves – currency on hand – and competed with each other for customers by advertising their high reserves and other conservative practices. After FDIC, there was no reason to hold more reserves than required by law, and most banks today hold less then 5% of depositors’ money in cash. The consequently high level of leverage in the banking system creates instability, and many commentators blame the S&L crisis of the 1980s, as well as the panic of 2008, on excessive risk-taking by bankers.
An additional unintended consequence of federally-mandated deposit insurance was to make depositors essentially indifferent towards robbery. Before FDIC, the robbery of a small town bank could create serious losses for depositors and a major contraction in local credit, but with a federal assurance that depositors could lose nothing, the incentive to protect banks waned and the desire to glorify robbers like Dillinger grew. Some historians believe that many Dillinger gang bank hits were, in fact, inside jobs, with bankers using the famous criminal as a cover-up for their own malfeasance.
While Dillinger’s gang was never afraid to use violence to avoid capture, Dillinger himself was a relative pacifist. The only known case in which he killed anyone was during a January, 1934 robbery at the First National Bank in East Chicago, Indiana, where he machine-gunned a police officer who had shot him during his escape. It was this killing, however, that would eventually come to be closely linked with Dillinger’s own death at the hands of the East Chicago police force.
After the First National Bank job, Dillinger and his crew decamped for Tucson, Arizona, where they tried to lay low until the nationwide manhunt that was following them passed. But it was difficult to disguise these high-rolling gangsters and their big-spending girlfriends in dusty Tucson, and eventually the local police rounded up Dillinger, Pierpont, and several other gang members. Pierpont was shipped back to Ohio to stand trial for the murder of Sheriff Surber during the Lima breakout, while Dillinger ended up in jail at Crown Point, Indiana.
It was at Crown Point where Dillinger made his most famous prison escape, one that would rocket him from a prolific, but regional, bank robber, to international superstardom. On March 3, 1934, prison handyman Sam Cahoon accidentally opened the main cell block door before the prisoners were safely locked back in their cells. Within seconds, Dillinger perceived the opportunity and jumped into action. Out of nowhere, he brandished a pistol, which he shoved into Cahoon’s side, forcing the handyman to assist him as he slowly made his way out of the facility, using the gun to take additional hostages as he went. Highlighting the audacious escape was the fact that, as later revealed, Dillinger’s “pistol” was really a wooden washboard slat, painted black and carved into the shape of a gun barrel.
Overnight, Dillinger became “the man no prison could hold.” But was Dillinger’s escape really so miraculous? Conspiracy theorists have always pointed to the utter unlikelihood of so many stars lining up at once, especially for such a high-profile inmate who should have been under especially high scrutiny. Moreover, Cahoon and other hostages at Crown Point that day swore to their graves that Dillinger’s gun was no fake. In these highly speculative, but fascinating, conspiracy tales, Dillinger was slipped a real pistol (and, possibly, the decoy as well) by corrupt members of the East Chicago police force, who may have visited Dillinger during his initial days at Crown Point, since his most recent robbery had been the First National job in East Chicago.
Lending some mild credence to these theories is the fact that the East Chicago police department in those days was notoriously corrupt. Situated just across the state line from the south side of Chicago, the town of East Chicago was an ideal spot for vice operations, and had for years been home to a myriad of gambling, prostitution, and (during Prohibition) booze operations. These resorts operated under protection from the East Chicago city government and police, who received a cut of the profits. In 1929, indictments were handed down against the mayor, police chief, and many other city officials for participation in this graft, and the top figures in the pay-for-play scheme served two years in prison, after a circus-like trial in which one of the prosecution’s chief witnesses, an East Chicago police officer turned state’s witness, was murdered. Among those who served time was East Chicago chief of detectives Martin Zarkovich, who would later play a critical role in the death of John Dillinger.
Another curious fact is that, just a month before Dillinger’s death on May 24, 1934, two other East Chicago police officers, Martin O’Brien and Lloyd Mulvihill, were found dead in their service vehicle. Most historians blame members of the Dillinger gang, and while some members of the gang were certainly capable of such violence, there was never evidence tying any of them to O’Brien and Mulvihill; conspiracists insist that the two policemen knew too much about the relationship between Dillinger and the East Chicago force, and met their fate at the hands of their fellow officers.
While these facts add up to make the theory that East Chicago officers helped Dillinger break out of Crown Point (perhaps in return for some of his loot) at least plausible, the case must be considered suggestive and circumstantial at best.
In any case, after the breakout, Dillinger rejoined VanMeter, Baby Face Nelson, and John Hamilton in St. Paul, Minnesota, where they continued their reign of terror. Later the gang spent time in upper Wisconsin, narrowly avoiding capture at the hands of the newly-formed Division of Investigation (forerunner of the FBI) in a botched police raid. By June, 1934, Dillinger was back in Chicago. His face was as recognizable as any movie star’s, and five states plus the federal government had put a total $15,000 bounty on his head. Even Dillinger realized his crime spree couldn’t go on much longer. Biding his time, he disguised himself by dying his hair black, wearing a moustache, and sporting gold-rimmed glasses, and began slowly, tentatively, venturing out onto the streets of Chicago. He also underwent primitive plastic surgery to change his facial features, and took acid treatments on his fingertips to make his prints unidentifiable.
The disguise seemed to work well, but Dillinger nevertheless made plans to escape to Mexico. Here and there, he and his gang would reunite to hit a bank, but generally Dillinger kept a low profile during the summer of 1934, building his cash holdings and preparing for a trip south of the border, which was to depart on July 23. During the meantime, though, he began enjoying the Chicago nightlife, posing as “Jim Lawrence,” a fun-loving Chicago Board of Trade employee.
One night, he found himself at the Barrel of Fun nightclub on Wilson Ave., between Elston and Cicero Aves. Introducing himself as Jim Lawrence, he asked for and received the telephone number of a dark-eyed brunette named Polly Rita Keele (nee Hamilton). At the time, Polly was living with a friend and former employer, Anna Sage, in an apartment building on Halsted, just north of Fullerton.
(Pictured: Polly Keele)
Keele and Sage had become acquainted while both lived in Northwest Indiana, and Sage was operating a brothel where Keele sometimes worked. Polly, who had run away from home in Fargo, North Dakota, at age 13, wound up at Anna Sage’s “People’s Hotel”, a house of ill-repute in Gary. There, she met her husband, Roy Keele, a Gary police officer, and they married in 1929. By the spring of 1933, however, the couple was divorced and Polly sought out her old employer, who had by that time moved into Chicago. It’s possible that Anna Sage knew Dillinger from her Lake County days, and set up the meeting with Polly at the Barrel of Fun, or it may be that the encounter between Polly and Dillinger was by chance, and Polly introduced her new beau to her landlady at some point later. In any case, Dillinger and Polly Keele became lovers and were frequently at Anna Sage’s house, with some reports indicating that Dillinger even lived there himself during some parts of the summer of 1934.
With Sage, however, Dillinger’s luck had finally run out. He did not know that the reason Anna Sage was in Chicago was that, as a convicted proprietor of a house of prostitution and a foreign national, she was facing the threat of deportation back to her native Romania. Thus, she was looking for opportunities to redeem herself in front of immigration authorities at the very moment that Uncle Sam’s most wanted man walked into her life. Dillinger also did not know that one of Anna Sage’s boyfriends during her time in Northwest Indiana was East Chicago chief of detectives, Martin Zarkovich.
Arriving in the U.S. in 1909, Anna Sage and her husband, Mike Chiolak separated in the late 1910s, and by the early 1920s, Anna Sage was one of Northwest Indiana’s top madams. A patrol officer at the time, Zarkovich, who was married with children at the time, became a frequent visitor, and the affair with Sage was cited by his wife in divorce proceedings shortly after. A flashy dresser, fellow officers referred to Zarkovich as the "police sheik", and after his divorce, he was able to quickly advance in the East Chicago police hierarchy. During the 1920s, Zarkovich's power kept the police heat off of Sage’s properties, but after he went to jail in the graft case mentioned earlier, Anna Sage was convicted four times for running disorderly houses. When he was released from prison, Zarkovich managed to get his old job back, and did his best to erase the damage, helping Sage to receive two pardons from Indiana governor Harry Leslie, but immigration authorities pressed their case against her due to the other two convictions, causing her to flee into Chicago.
(Pictured: Anna Sage with her son, Steve Chiolak)
During June and July, John Dillinger and Polly Keele frequently double-dated with Anna Sage’s adult son, Steve Chiolak, and his girlfriend. Chiolak later described the fun times with “Jim Lawrence”, which included many summer evenings at the movies: “If he was the man they said he was, he was an all around fellow. He didn’t act tough and he didn’t talk tough. He didn’t drink hard liquor either; just mild gin fizzes.”
Chiolak did notice scars on his new friend’s face, ones that seemed out of place for a sober securities trader, but felt it wasn’t his place to ask. “I don’t like to ask a guy about his face. I’d get mad if some one asked me about mine,” he told reporters later.
While it’s unclear whether Chiolak was truly unaware that Jim Lawrence was really Public Enemy #1, Anna Sage either was already aware of it, or quickly figured it out after he started hanging around her house. She contacted her old friend from East Chicago, Det. Zarkovich, and the two arranged a meeting with the Division of Investigation’s top G-man in Chicago, Melvin Purvis. Later, when Sage continued to face deportation proceedings after the death of Dillinger, she told reporters:
I was told that I could stay. The men who wanted Dillinger so bad told me it would be a small thing to stop my going away. When it was first suggested that I help in getting Dillinger, I said I was not interested in rewards – all I wanted was permission to stay in this country. Shouldn’t the government keep its promises, when I believed them?Purvis, Zarkovich, and Sage arranged for a take-down a few days later, on the evening of July 22, 1934, when Dillinger, girlfriend Polly Keele, and Sage were all planning to attend a movie. It hadn’t yet been determined precisely which movie or which theater, but a signal was agreed upon: if the destination was to be the Biograph Theater, just behind Sage’s home, she would wear no hat; if Dillinger decided to take the women to the Marboro Theater on the Westside, Sage’s head would be covered.
(Pictured: Martin Zarkovich of the East Chicago police force)
Just after 8:00 p.m. on the evening of the July 22, John Dillinger and the two women left the house. Dillinger sported a white silk shirt, gray linen trousers, and a straw hat, but as it had been a hot day, he decided against wearing a coat, which would have helped conceal the pistol he always carried with him. Instead, he tucked the gun into his belt, where it was slightly more difficult to retrieve. As they left the house, Anna Sage, who wore a white blouse and an orange skirt, stopped the trio and asked Dillinger if they were going to be traveling far for the movie that night. If so, she needed to take her hat.
No, Dillinger said, we won’t be going far. Sage left her hat at home, and the team of police officers staking out the Sage home on Halsted signaled Purvis with the news: Dillinger’s last stand would be at the Biograph.
The group assembled to take down Public Enemy #1 included ten federal agents, plus four East Chicago officers, including Martin Zarkovich, who had gotten the tip from Sage. The deal worked out was that, after Dillinger was killed or in custody, the East Chicago team would receive the $15,000 reward money, while the feds, who were ineligible for the monetary prizes, would get all of the glory and publicity. They truly needed it, as the fledgling Division of Investigation, headed by J. Edgar Hoover, had gained a reputation for bumbling during their long and fruitless quest to end Dillinger’s crime spree.
Walking arm-in-arm, Dillinger, Keele, and Sage walked down the alley between Halsted and Lincoln Ave., and headed up the block and into the Biograph Theater, where they sat down to enjoy “Manhattan Melodrama,” a gangster film starring Clark Gable.
The Biograph, which was built in 1914, advertised itself as the “best ventilated theater in Chicago,” a feature the value of which would not have been lost on Chicago audiences, who couldn't forget the Iroquois Theater disaster a decade before, in which poor ventilation led to the deaths of hundreds. When it opened, the Biograph was one of the city’s first film venues, offering an augmented orchestra and large pipe organ to accompany silent pictures. By 1934, of course, “talkies” had arrived, as had air conditioning, and the Biograph’s cool environs were perfect for a hot summer evening. Even before Dillinger’s famous date with death there, the Biograph had been subject to various crooks, including a bookie running a handbook there, which was raided in February, 1933, and a smash-and-grab robber named George Genovese, who specialized in ripping off theater ticket counters; Genovese was finally caught after robbing the Biograph in March, 1933.
While Dillinger enjoyed the movie, Purvis wandered up and down the aisles of the theater, looking for the man whose name would forever after be linked with his. Unable to locate Dillinger in the dark, he waited impatiently in the theater lobby for the two hours duration of the film. The theater’s management, unaware that a major police operation was underway, became suspicious of the plain-clothes officers lingering in and around the building, and telephoned the Sheffield Ave. police station. When Chicago police arrived on the scene, the federal agents and East Chicago officers had to inform them of the plan to avoid being hauled back to the stationhouse.
Finally, at 10:40 p.m., John Dillinger walked out of the Biograph, with Polly and Anna on either side, and turned south on Lincoln, likely heading back to Sage’s apartment. The next building to the south of the theater was a tavern called the Goetz Country Club, and Melvin Purvis stood directly in front of it. Dillinger and Purvis’s eyes met, but Dillinger’s showed no sense of recognition that a setup was underway. As Purvis later described it, “It was a good job the surgeon did, but I knew him the minute I saw him. You couldn’t miss if you had studied that face as much as I have.”
Dillinger continued walking passing the Goetz until he was in front of the next building to the south, a National Tea Company retail store. At that moment, Purvis lit his cigarette, a signal to his team of officers that now was the time to strike. Again, Purvis describes the action:
“He saw me give a signal to my men to close in. He became alarmed, reached into a belt and was drawing the .38 caliber pistol he carried concealed when two of the agents let him have it. Dillinger was lying prone before he was able to get the gun out and I took it from him.”In the mouth of the alley south of the National Tea Store, Dillinger fell to the ground, hit twice in the chest and once in the back of the neck. Of the three bullets, two ricocheted and hit bystanders: Etta Natalsky, mother-in-law of the owner of the Goetz tavern, and Theresa Paulus, a theater-goer. Neither was seriously injured, but Dillinger was fatally shot. Crowds turned and gasped, and word spread quickly that the man lying in the pool of blood on Lincoln Ave. was the world’s most famous criminal.
In statements to reporters, Purvis claimed Dillinger had attended the movie alone, per his agreement with the East Chicago police that all credit for the take-down would go to the feds, but witnesses consistently mentioned two women, including one whose bright orange skirt, under the harsh lights from the theater marquis, appeared red. Hence, the newspapers began searching for the famous “Lady in Red,” Anna Sage.
Returning to the conspiracy theories mentioned earlier, some speculate that if caught alive, Dillinger might have revealed the corruption within the East Chicago department, and hence, Zarkovich and his fellow officers always intended to kill, not capture, him. Confirming this aspect of the theory, a Chicago police officer who was near the scene at the time of the shooting told a reporter:
…[O]ne of the [federal] agents told him after it was over that he was among the luckiest of men. “When we got the signal, you were close to Dillinger,” said the agent. “You looked like Dillinger and I was about to shoot you when the other fellows let loose and killed the right man.”The crumpled form of John Dillinger was rushed to Alexian Brothers Hospital, but he died on the way. When the ambulance arrived at the hospital, it was refused admittance on the grounds that the body was already dead. Four officers accompanying the medics stood on the grass in front of the hospital, surrounding Dillinger’s body, until the deputy coroner arrived and approved its removal to the county morgue. While Dillinger had taken in over $300,000 in cash from his bank robberies during the previous 15 months, at his decease, only $7.70 was found on his person – either because he had spent the rest on the trip to Mexico he was planning to begin the following day, or, as some suspect, because the officers who accompanied Dillinger to the hospital helped themselves to his loot. Dillinger also wore a ruby ring, given to him by Polly Keele, and a pocket watch with an inset photo of her.
(Pictured: Headline and story in the July 23, 1934 Chicago Tribune)
Dillinger’s death led above the fold in newspapers around the globe, and when the coroner’s inquest ended, his body was put on public display at the morgue, where thousands of curiosity-seekers filed past to get a look at the man no prison could hold. As Dillinger biographer Dary Matera put it:
To get an indication of Dillinger’s comparative fame today, imagine Charles Manson – after committing his mass murder, Helter Skelter atrocity in California – getting arrested, escaping prison, killing a second batch of Hollywood celebrities, getting arrested again, escaping again, killing a third and fourth gaggle of celebrities, then being gunned down on the streets of Los Angeles by the FBI. And after all that, having Manson’s bullet-riddled body put on public display for tens of thousands of people to parade by.Dillinger’s life and death meant changes in the way many police departments operated, with upgrades to faster cars and better equipment, including in-car radios, following his crime spree. It also meant a much stronger role for the federal government in policing – Congress approved the right of federal officers to make arrests during the time Dillinger was on the loose. It is not a stretch to say that the modern FBI owes much of its power to John Dillinger.
After Dillinger’s death, Polly Keele left the city and hid out at her family home in Fargo, later returning to Chicago and working in hotel hospitality until her death in 1969. Dillinger’s fellow gang members John Hamilton, Homer VanMeter, and Baby Face Nelson were soon gunned down in separate incidents by federal agents (Hamilton, in fact, was already dead). Melvin Purvis faced intense jealousy from J. Edgar Hoover for taking so much of the credit for Dillinger’s end, and he quit the Division of Investigation in 1935, intending to write his memoirs. He lived until 1960, when he committed suicide, apparently over poor health.
After the shooting, Anna Sage ran back to her apartment, changed clothes, and returned to the scene of the crime, blending in with the growing crowd. She was able to avoid deportation for two years, and during that time ran a beauty parlor at Fullerton and Orchard. However, when Purvis left his position in 1935, there was no one left to fulfill the promise he had made to Sage, and in 1936, she was deported back to Romania, where she remained until her death in 1947. Her only consolation was $5,000 she received from the reward money, though she would much rather have had a U.S. visa.
Martin Zarkovich, who also received a sizable portion of the reward money, was promoted in the East Chicago police department, eventually making chief in 1947. Just three years later, however, he was again indicted for graft associated with casinos operating openly in Northwest Indiana under his protection. Demoted from the chief position, he retired in the late 1950s and died in 1969.
The Biograph Theater continued operation as a movie theater until 2004, frequently showing “Manhattan Melodrama”, the film Dillinger saw the night of his death, particularly on the anniversary of the incident. For the last five years, the Biograph has offered live theater instead of movies.
The spot in the alley where Dillinger was shot is pictured below. The building that housed the Goetz Country Club still stands (it appears to be abandonded); the National Tea Company building is gone, replaced by a Qdoba restaurant.