What significant early 20th century development truly sparked corrupt organized crime activity in Chicago?
The event from the early 20th century that had the biggest influence on the rise of organized crime in Chicago was the passage of Prohibition and of the Volstead Act that enforced Prohibition. These factors were the most important factors in allowing organized crime to flourish in Chicago as well as in other parts of the country.
With the coming of Prohibition, it became illegal to make, transport, or sell liquor. However, huge numbers of people still wanted to drink. This meant that, if they were to be able to drink, illegal organizations would have to supply the alcohol. This was instrumental in allowing organized crime to arise. The organized crime gangs, like that of Al Capone in Chicago, became much richer and much bigger as they sought to meet the demand for illegal alcohol. This is seen as a major negative impact of Prohibition.
Thus, the best answer for this question is that Prohibition was the early 20th century event that had the most to do with the rise of organized crime in Chicago.