World War II

During World War II all of Sydney’s established vice trades flourished. Sydney was just emerging from the decade of the Depression, markedly worse there than in other Australian cities, when it experienced the shock of unprecedented affluence during World War II. As rear-area base and chief recreation area for several hundred thousand U.S. soldiers, Sydney experienced a sudden surge in demand for sly grog, hotel accommodation, restaurant services, gambling facilities, prostitution and female escorts. The near explosive growth in the city’s camp-follower economy during the war provided ideal conditions for a resurgence of syndicated vice and the milieu that managed it. Paralleling the rise of the vice trades, Sydney developed a blackmarket for a wide range of rationed items and ration cards themselves. The combination of camp-follower and blackmarket economies spawned a new generation of professional criminals.

As Allied troops crowded into Sydney, a large population of club hostesses, escorts, streetwalkers and brothel employees gathered to service their needs. From the outset of the war, the military was presented with considerable problems in protecting the troops from the thugs, thieves and pickpockets who followed in the prostitutes’ wake. As early as July 1940 the military placed the Empire Club on George Street, a known sly grog shop, out of bounds to Australian troops. But even in the early months of the war there were intimations of declining standards of police conduct. During the court hearing for patrons arrested in the police raid on the Reflections Club, defence counsel alleged that information leading to the raid had been given to police by the club’s rival, the owner of the Ziegfied Cafe. Periodic police raids in city hotels during the war years revealed that most were being used by prostitutes or professional escorts to entertain their American clientele. A police sweep of the York Hotel, King Street in January 1944, for example, uncovered four U.S. servicemen in various states of undress with Australian women. Among the streetwalkers of Kings Cross were a number of professional pickpockets and thieves who lured American GIs to a rented room, pinched their wallets, and then fled.

To impose order on a potentially unruly situation, U.S. military police co-operated with brothel operators in the Palmer Street area to conduct the trade in a business-like manner. Several houses near the Tradesman’s Arms Hotel in Palmer Street were set aside for American black troops and military police were detailed to keep the street-side queues moving in a properly martial manner. Local brothel keepers enjoyed unprecedented prosperity and Tilly Devine emerged from the war a wealthy woman. Although military and police maintained regular patrols, petty standover men earned income by robbing and threatening Allied servicemen wandering the brothel zone. The boom in prostitution brought with it an epidemic of venereal disease and created a major public health problem. In May 1943, for example, the N.S.W. police assigned six extra policewomen to the vice squad to combat ‘an alarming increase in VD’. Some months later Australian and American Army officers met with N.S.W. police to develop control measures before VD caused ‘more suffering and casualties among the civilian population than bullets cause among the services’.


The war greatly expanded Sydney’s illegal economic sector by creating a vast black market in a wide range of basic commodities. In late 1943 the Commonwealth declared war on Sydney’s black-market, issuing summonses to merchants guilty of overpricing and arresting a number of ‘unemployed’ men, many of whom were taxi drivers unable to secure parts or petrol, for selling liquor to servicemen. In 1945 police accelerated their campaign in concert with Customs which formed a special squad to curtail cargo thefts and black-market retail trading. The major police success in the anti-black-market campaign occurred in February 1945 when investigators arrested nine people involved in the distribution of forged clothing coupons. The key figure in the ring was Richard Gabriel Reilly, thirty-five, ‘electrician’, later renowned in the 1960s as the ‘king of baccarat’ and the Sydney criminal with the closest ties to the N.S.W. police and Labor Party. From his ‘control depot’ at Roslyn Road in Elizabeth Bay, Reilly managed a distribution operation of ‘impressive dimensions’, collecting forged and illegally obtained coupons and marketing them to retailers through a network of salesmen. Police seized 250 clothing coupons and £632 in Reilly’s wallet, more than two years’ wages for an ordinary ‘electrician’.

Another important blackmarket commodity was sly grog, a trade now greatly expanded and far more profitable than in prewar years. Although tolerated by licensing police, the dimensions of the sly grog business had been limited in the depressed 1930s because few consumers could afford the more expensive after-hours alcohol. During the war, however, demand for alcohol after 6 p.m. rose sharply. Full employment and unlimited overtime revived working-class affluence, and the highly paid American troops passing through Sydney created an unprecedented ‘tourist’ demand. While demand increased, beer production declined — forcing the government to adopt a ration system and creating ideal conditions for blackmarket operators. With the outbreak of war, breweries were forced to impose a 40 per cent cut in beer provided to local distributors in order to supply the troopships and military canteens. From March 1942 to March 1946, the government imposed a quota system to allocate scarce beer supplies and the amount of beer sold in New South Wales declined steadily — from 38 million gallons in 1942 to only 32.9 in 1944. An indication of the actual demand was provided in 1948 when local distribution returned to normal and New South Wales drinkers consumed 52 million gallons. Similarly, the Commonwealth government prohibited import of Scotch whisky at the outset of war and from 1943 onward allowed imports of only 40 per cent of the 1938-40 figures. Distributors were forced to supply customers from existing prewar stocks and then work with wholly inadequate import quotas.

The quota system, 6 p.m. closing regulation, and short liquor supplies combined to create a thriving wartime market for sly grog. In late 1943, for example, police charged the licensee of the Went-worth Hotel for involvement in an illegal liquor network selling whisky at astronomical prices of £4 or £6 a bottle with profits totalling an estimated £30,000. As a 1951 royal commission later discovered, the sly grog trade was based on diversion of supplies from licensed outlets to illegal venues where it could be sold at the black-market rates.

In the midst of the sly grog boom and periodic police suppression campaigns, established dealers were forced out of business and a number of new operations appeared. Phil Jeffs’ 400 Club was closed by military order in October 1942, and Kate Leigh was sentenced to six months for illegal liquor transactions in March 1943. Many of the wartime operators catered to the American GIs, providing not only illegal liquor but venues for dates or solicitation. American servicemen who went drinking after hours at Ziegfield’s Club in King Street could usually find working prostitutes available. One of the newcomers to the sly grog trade was allegedly Dr Reginald S. Jones, a Macquarie Street surgeon, who used his yacht to host harbour drinking parties for American servicemen in partnership with well-known Sydney underworld personalities. At the sensational trial of four criminals charged with the attempted murder of Dr Jones in early 1945, the family chauffer testified that the doctor had stocked sixty cases of liquor on the yacht. The doctor’s wife said that her husband was in partnership with the well-known criminal Donald Day, and other witnesses alleged that his associates included Frederick ‘Chow’ Hayes and Richard G. Reilly. The doctor’s alleged partner, Donald ‘Duck’ Day was the prominent sly grog trader recently killed in Surry Hills.


The new clubs catering to the American troops concentrated in Kings Cross, making the area a byword among U.S. soldiers serving in the South Pacific. Among the newly-opened venues was the Roosevelt Club at 32 Orwell Street in Kings Cross. Operated [later] by Abraham Gilbert Saffron, then in his early twenties and in partnership with his long-time associate Hilton G. Kincaid, the club was closed in late 1943 by order of Mr Justice Maxwell who later described it as ‘the most notorious and disreputable nightclub in the city’. Saffron moved his operations north to Newcastle where he acquired a bookmaker’s licence from the Newcastle Jockey Club and became licensee of the Newcastle Hotel.


The city’s wartime prosperity financed a sudden upsurge in illegal and legal gambling. Beginning in 1942 as U.S. troops began arriving in Australia, and continuing until early 1947 when returned Australian servicemen had exhausted their back pay, the wartime gambling boom saw an expansion of existing games and the introduction of some new forms, the most important of which was baccarat. As the boom came to end in 1947, the Sunday Telegraph interviewed a paddock bookmaker who reported: I’m holding a third of the money I did twelve months ago, and there’s no sucker money in it either. Black market and baccarat operators threw thousands round the ring during the war and just after it as though they wanted to get rid of it. They have slowed down and they are back on their right betting level.’ An official of the Randwick leger Bookmakers’ Association said: ‘During the war most punters’ wages were loaded with overtime. As a result they bet bigger than usual.’

As the war drew to close, the Reverend Alan Walker conducted a survey of legal betting which showed an enormous increase during the war years. Bookmakers’ turnover at New South Wales racecourses had more than doubled from £13.4 million in 1939 to £28.5 million in 1944. Totalisator statistics had shown a parallel increase, rising from £1.3 million in 1934 to £4.7 million in 1944. State lottery drawings had shown increased subscriptions as well, up from £2.2 million in 1942 to £3.2 million in 1944. Although he had no precise statistics on ‘the vast illegal gambling business’, Walker noted that police had arrested 6,561 persons for illegal betting in 1944, a sixfold increase over 1939 when only 1,031 people were arrested on similar offences.

During the war Commonwealth and State governments regarded all gambling, legal and illegal, as an unnecessary drain on the war mobilization effort and introduced measures to reduce its scale. While Victoria armed its State police with new powers in 1942 under a revised Betting Bill and South Australia banned all horse racing during 1942-3, New South Wales reduced the number of weekly race meetings from four to one making Saturday the sole racing day. The Federal government announced restrictions on interstate racing broadcasts in February 1942 with the aim of reducing SP operations. Canberra calculated Australia’s illegal betting turnover at £15 million per annum, and estimated that there were 100 SP bookmakers in Sydney with race-day turnovers in excess of £200 and another 250 SPs averaging £50 per race meeting, equivalent to a total of £2 million in annual holdings. Despite these restrictions Sydney’s SP networks do not appear to have been adversely affected. Betters simply plunged their stakes on the one weekly meeting. While ordinary citizens found it impossible to get new telephone connections because of wartime austerity, SP bookmakers managed to obtain illegal connections for the six or so telephones they each needed to cope with the Saturday rush.

As the New South Wales illegal bookmaking business expanded to unprecedented proportions in early 1945, the State government launched a new campaign to curb its growth. Compelled by national security regulations to reveal the addresses of ‘silent phones’ whose traffic patterns indicated SP operations, the PMG supplied N.S.W. police with listings of suspected illegal bookmakers’ phones, and the police raided their premises. In February 1945 police arrested suspected bookmaker James F. Cook, fifty-one, a wharf labourer and retired horse trainer, in Hay Street near the fruit markets and seized books which reveal the inflated scope of wartime betting. Instead of the typical 5s. or £1 bets of prewar years, Cook’s books showed a weekly total of 62 bets amounting to £3,221, and ranging from 10 shillings to £200, many of which were for £40 each way. Within two weeks N.S.W. police arrested 120 SP bookmakers, causing a general panic in the betting fraternity and forcing many SP phone networks to refuse bets temporarily. Turnover revived in the following months, however, as police efforts slackened and wartime broadcasting restrictions were lifted. In July 1945 N.S.W. police reported that the resumption of Melbourne racing broadcasts had augmented SP volume by an estimated 50 per cent and reduced racecourse attendance by a quarter. SP operators were working out of rented city offices with four to eight telephones per room. Confronted with the vast SP turnover, the State Labor government considered legalizing and licensing SP shops — a proposal that was sharply criticized by the AJC and N.S.W. police, and eventually rejected.

Betting on horses was but one part of the wartime gambling boom. While two-up games flourished on the fringes of Australian military camps, fan tan revived in Sydney’s Chinatown. Perhaps the most important and lasting innovation in Sydney was the establishment of baccarat schools. Introduced in Melbourne in 1939 by Henry Stokes, the city’s baccarat school attracted a wealthy clientele and was earning an estimated annual profit of £156,000 by 1944. Imitating the Melbourne school, a young milieu entrepreneur named Sidney Kelly opened Sydney’s first baccarat game in mid-1944. A veteran of the razor gang wars, Kelly apparently encountered some difficulties and brought Phil Jeffs out of retirement to help him. The profits were evidently considerable, and the baccarat operators became Sydney’s most affluent racecourse gamblers. N.S.W. Police Commissioner W.J. McKay told the press in August 1944 of his ‘determination that this evil racket would not gain a grip in this state’. Police launched a series of raids, and in August, for example, arrested nineteen men at 206 Pitt Street, six of whom were known for gambling and sly grog offences. Kelly continued to operate the baccarat school until his death in 1948. With nightly profits in excess of £1,000, Kelly was evidently able to purchase adequate police protection. Raided for the only time in his baccarat career in April 1947, he told the police as they broke into his Kings Cross premises: ‘You have made a fool of yourself. We are only playing rummy — I had a ring from Darlinghurst [Police Station] about 11.30 p.m. to say that you were out’.

Australia’s war-related rationing systems continued for over a decade: the actual process of troop mobilization and demobilization lasted nearly seven years, and various quota restrictions on basic commodities lasted several years more. During the wartime decade the illicit sector of the Sydney economy became so large that it left a permanent imprint on the city’s social fabric. Generally free from systematic corruption in the 1930s, the N.S.W. police emerged from the war seriously compromised and became increasingly incapable of controlling organized crime. Of equal importance, the city’s expanded illicit sector produced a new generation of milieu personalities.


Typical of the rising generation within the Sydney underworld was the early career of Frederick James ‘Paddles’ Anderson. Visiting Melbourne in June 1940, Anderson, then twenty-five, became involved in an argument with Melbourne personality John C. Abrahams. In the ensuing altercation Abrahams was killed. Tried for murder several months later, Anderson was found innocent and returned to Sydney. During the following months Anderson’s frequent charges before Sydney magistrates earned him a certain tabloid notoriety. Describing himself as a machinist with residence at Surry Hills, Anderson was charged within three days with being in a house ‘frequented by thieves’; with ‘having demanded money with menace from a bookmaker’ and ‘having assaulted the bagman’; and with consorting with known criminals at a house in William Street, East Sydney.

[Anderson became a major Sydney crime figure, according to some the city’s most powerful from the 1950s to the 1970s. His name is scarcely known to the general public.]

from Drug Traffic by Alfred McCoy