The novel continues with Marcus telling stories of the beginning of his association with Jack. Marcus meets Jack for the first time in 1925 at the Kenmore, when Jack and his brother Eddie were running booze from Canada. At the time, buying or selling liquor was illegal under the laws of Prohibition. Marcus overheard Jack raving about Al Jolson at the next table, and butted into the conversation, giving a speech about the greatness of Jolson's talent. Jack was impressed by Marcus's slick talk, and started buying him drinks. The next day he called and told Marcus he was sending him six quarts of Scotch, and asked if Marcus could get him a pistol permit from Albany County, which he did.
This is the only association Marcus has with Jack until Marcus represents Joe Vignola in the Hotsy Totsy case in 1929. Marcus tells a story about what led up to the case, which begins the night Benny Shapiro knocks out Kid Murphy in eight rounds at the Garden. Jack arrives at the Hotsy Totsy, a nightclub on Broadway and Fifty-Fourth, with his current girlfriend, a singer named Elaine Walsh. Herman Zuckman is half owner of the club, and Jack is also half owner. The place is packed and Jack helps the bartenders serve drinks. Vignola, the singing waiter, is sitting in with the band on violin, and Saul Bellow, the silent doorman, sits by the entrance with two pistols in his pockets. Jack and Charlie Filetti, who works with Jack shaking down bucket-shop proprietors (shady stock market dealers), argue over boxing. Around midnight, Jack quits tending bar. Benny shows up, and Jack gives him a big hug.
Billy and Tim Reagan, roughneck Irishmen from the Lower West Side, show up. The Reagan boys were dockworkers before they started loading beer, and eventually took over the ownership of a speakeasy. Billy is not smart, but Tim has brains. Billy orders gin from Vignola, who performs an acrobatic trick with his serving tray. Billy is unimpressed and swears at Vignola. Jack walks over to the Reagan table and tells Billy not to make any trouble. Tim apologizes for him, and invites Jack to have a drink. He introduces Jack to Teddy Carson, who knows some old acquaintances of Jack's from Philadelphia.
Vignola brings Billy a whiskey, as they are out of gin. Billy is annoyed and calls the place a dump. Jack tells him he has a big mouth, and Tim tells him to shut up. Jack proposes a toast to Benny, but Billy calls Benny a "yid" and says that yids make bad fighters. He suggests that Benny is scared of Irishmen because he didn't fight Corrigan. Jack tosses his drink at Billy and lunges at his face with the glass, but Billy grabs his hand and tosses him backward over the chairs. Saul pulls out a pistol, but Tim grabs his arm and wrestles him for the gun. Herman tells the band to play louder while Elaine, Benny, and Vignola seek shelter in the checkroom. Carson shoots Saul in the face. Filetti shoots Billy, grazing his skull, and then shoots Carson. Jack shoots Tim in the stomach, three times in the forehead, and twice in the groin. Billy wakes up to see his brother dead, but Jack knocks him out with the butt of his pistol. Then he and Filetti take off.
Eventually, the Hotsy Totsy shoot-up will be cited as an event that the rest of the New York mob scene uses to define Jack as a crazy, loose cannon. Marcus's telling of the incident, however, suggests that the Reagan boys, Billy Reagan in particular, were the ones who initiated the conflict. Marcus's sympathetic recollection of the scene is not an unbiased one. Marcus was not present at the Hotsy Totsy that night, and has pieced this story together from many sources. The way Marcus tells this story is a microcosm of the way he narrates the entire novel—he paints a sympathetic picture of Jack, relying on a hodgepodge of sources, none of them absolutely reliable.
In this story, as in most of the stories that took place before Marcus met Jack, Eddie is by Jack's side. The brothers are constantly together, which suggests Jack's sense of family loyalty. The Reagans are Irishmen, and Jack is Irish American, but Jack has no reservations about undertaking a brutal, bloody brawl with the Reagans despite their shared heritage. The incident tests Jack's loyalties, even though the Reagan brothers are trouble-hungry bullies. Billy uses a racial slur when he calls Benny a "yid" and suggests that Benny is afraid to fight an Irishman because Benny is Jewish. Jack takes Benny's side, even though religiously and nationally, he would naturally side with the Irishmen. Jack seems to think that loyalty to one's friends is more important than loyalty to bad men with whom one happens to share a background and a religion.