Remarks of Senator John F. Kennedy (Dem. - Mass.)
Universal Notre Dame Night Celebration, Washington, D.C.
Monday Evening, April 29, 1957
…I would like to discuss with you briefly tonight the Senate's investigation of labor racketeering through a Special Committee of which Senator McClellan is the Chairman and of which I am a member. Many have asked me: What is going to come of this investigation? What are your objectives? I would say this investigation has two purposes. The first follows the advice of Woodrow Wilson, who said: "The best thing that you can do with anything that is crooked is to lift it up to where all the people can see that it is crooked - and then it will either straighten itself out or disappear." Our second objective is to determine what Federal legislation or administrative action is necessary to remedy this evil. Permit me to discuss our progress with respect to each of these objectives.
I.
The first objective of the McClellan Committee is to obtain an exact understanding of what constitutes labor racketeering, and to separate these practices of a few dishonest, disreputable men, including hoodlums who invaded the labor movement from the outside and purchased or falsified union charters like so much merchandise, from the legitimate activities of the great mass of union leaders and members. As many of you who are lawyers know, laymen - particularly those already biased - are likely to describe as racketeering legitimate collective bargaining, legal boycotts, and union political activities. Whatever you may think of these activities, they should not be labeled racketeering. Based upon my experience as a member of the Special Senate Committee and 11 years on Congressional labor committees, I suggest that when you see headlines about labor racketeering you keep the following five types of activities in mind:
First - Labor racketeers are those who are using labor organizations, founded originally to protect the worker's welfare, as a front for criminal operations, as a means of organizing vice, gambling, prostitution and other rackets; using union funds to finance and extend these illegal or questionable activities, and to influence or corrupt public officials into permitting them. In Portland, Oregon, for example, vice king Jim Elkins and several of his associates and employees in a variety of rackets were all made Teamsters Union members in good standing, engaging in so-called union activities that would have made Samuel Gompers, founder of the American Federation of Labor, turn in his grave.
Secondly - Labor racketeers are those who are using their positions with a union to practice extortion, shake-downs and bribery; threatening strikes, physical violence or property damage to employers who fail to give them under-the-table payments, personal gifts or other contributions which the union members never see; or securing, to the detriment of their own membership, the waiver of certain labor and health standards set forth in the union's collective bargaining agreement, in return for a large fee going into the racketeer's own pocket. Our Committee's investigation of Mr. Nathan Shefferman, for example, intends to go into the matter of whether there is any connection between his services as a management representative and consultant on labor relations on the one hand, and, on the other hand, as a supplier of funds, services and discount purchases to Dave Beck whose union was involved with his management clients. In a more blatant case in Southern Illinois a short time ago, a contractor for the Atomic Energy Commission was asked for a private contribution of more than one million dollars by a labor racketeer who sabotaged the project for 18 months, and who boasted at his trial: "When I left Chicago I threw away my shovel for a blackjack, and I have been using it effectively ever since. I have carved out an empire."
Third - Labor racketeers are those who are abusing and manipulating for personal gain union pension, welfare and health funds; embezzling welfare funds, receiving kickbacks from employers or insurance brokers; or channeling a monopoly of a union's welfare fund business to personal friends or business associates, without regard to the cost, or to those willing to give them a commission on the side. Teamster leader Frank Brewster, for example, channeled a multi-million dollar monopoly in his union's welfare plans to an insurance broker who also turned out to be Brewster's partner in a stable of race horses, a supposedly equal partnership that was unusually profitable for Mr. Brewster to the tune of $40,000, while his partner lost exactly that amount.
Fourth, and somewhat similarly, labor racketeers are those who are converting union treasuries for their own personal use and profit; financing their investments, hobbies, private affairs and even their homes with dues contributed by members to strengthen their union; and obtaining this money either through questionable loans, so-called gifts, or outright larceny. One Chicago union official, for example, spent $3400 of his members' money on what he called a "good-will" tour of Europe. "To whom were you spreading goodwill?" he was asked. "Myself," came the reply.
Fifth and finally, labor racketeers are those who are conspiring with employers to use union power to wreck other businessmen and other unions; to prevent, by methods which include strong-arm coercion and violence, other employers from marketing their products or other unions from organizing even within their appropriate jurisdiction. In New York City, the local crime committee found that a trucking union was formed to steer all garbage business to one company headed by an old friend of Frank Costello's, intimidating all other companies and truckers out of the market.
All of these are practices I call labor racketeering. What about management, some have asked. Why isn't your committee investigating improper management practices? The fact is that our committee was primarily established to investigate labor-management racketeering - improper management activities as such are subject for other investigations [?] by other committees except to the extent that they show collusion with labor rackets. Some of the small-time racketeers and others called in our Portland hearing were businessmen, not labor leaders. Mr. Shefferman is a businessman [?] - an so, some of the time, are Dave Beck, Frank Brewster, Jimmy Hoffa, Johnny Dio, Three Fingers Brown, Albert Anastasia, and others, all of whom own factories, trucking lines or other enterprises.
And it is a shocking fact that many employers have collaborated in labor racketeering practices, forcing their competitors out of business, obtaining monopolies for themselves, fighting legitimate union organizations and paying off racketeers in the process. Other employers are honest but timid - fearful of the labor trouble that may result if they refuse to yield to racketeers or if they testify before public authorities.
Thus, the problem of labor racketeering is not one for the Federal Government alone, or even primarily - the responsibility for cleaning up this foul situation is divided also among union members, employers, local government, and the general public.
Union members and honest union leaders should write their own regulations, and do their own policing. Conspiracy, violence, fraud and similar crimes are state and local offenses, not Federal.
But the Federal Government does have a responsibility in many ways. Involved are violations of the anti-trust laws, the Taft-Hartley Act, the Hobbs Anti-Racketeering Act, and the Internal Revenue Code.
II.
This leads me to the second objective sought by our Special Committee - the possible development of a need for new legislation. Such legislation must not be undertaken prematurely or in a spirit of vengeance or prejudice.
Nevertheless it now appears that additional legislation in some areas may be necessary.
As Chairman of the Labor Subcommittee of the Senate Committee on Labor and Public Welfare, I have a special interest in and responsibility for this aspect of the current investigations. Some matters must and should await the completion of the investigation - others, in my opinion, are presently ready for legislative hearings on the basis of information already uncovered by our Special Committee and past investigations.
There are five subjects into which we may inquire in these hearings:
1. The full disclosure of the financial operations of employee health and welfare funds, whether operated by unions, management or jointly.
2. The requirement of minimum standards or safeguards in union trust funds, including adequate reserves, independent audits and bans on collusion and discrimination.
3. The full disclosure of, and possible limitations on, conflicts of interest (transactions in which a union official has a personal or financial interest) in the handling of these trust funds and other union funds.
4. Safeguards to facilitate democratic control by union members of both types of funds (welfare and union treasuries) and their management, including safeguards for those workers arbitrarily excluded from membership, denied participation by the device of trusteeship or penalized for objecting to union policies.
5. Improvement in the apparently inadequate provisions of the Taft-Hartley Act for the reporting to the Government and the membership of all kinds of union funds and financial transactions; and the policing of those reports so that abuses of the type recently disclosed before our Select Committee might be more readily identified and corrected.
Many people have written or spoke to me about this labor racketeering investigation. They consider it to be exciting, and crusading adventure with crime. They are wrong. It is a discouraging, difficult task, taking the Committee into a seamy side of American life and American labor that would be more pleasant to ignore, and stirring hostilities and prejudices that are politically better left dormant. But this is our assignment, and we have accepted it - and with the understanding and assistance of well-informed members of the public like yourself, we shall continue our efforts to bring a little more light and a little more justice to this dark and troubled area on the American scene.