INVESTIGATION OF IMPROPER ACTIVITIES IN THE LABOR OR MANAGEMENT FIELD TUESDAY, JULY 8, 1958 UNITED STATES SENATE, SELECT COMMITTEE ON IMPROPER ACTIVITIES Washington, D. C. The select committee met at 10 a. m., pursuant to Senate Resolution 74, agreed to January 30, 1957, in the caucus room, Senate Office Building, Senator John L. McClellan (chairman of the select committee) presiding. Present: Senator John L. McClellan, Democrat, Arkansas; Senator Frank Church, Democrat, Idaho; Senator Carl T. Curtis, Republican, Nebraska. Also present: Robert F. Kennedy, chief counsel; John J. McGovern, assistant counsel; La Vern J. Duffy, investigator; James P. Kelly, investigator; James Mundie, investigator; Ruth Young Watt, chief clerk. The CHAIRMAN. The committee will be in order. (Members of the committee present at the opening of the session were: Senators McClellan, Church, and Curtis.) The CHAIRMAN. The Chair will make a brief opening statement. Today we are beginning an investigation into the labor-management affairs of the restaurant industry in Chicago, Ill. We expect to inquire into. (1) Whether groups of employers banned together for the purposes of destroying legitimate unionization. (2) Whether collusive deals were made between dishonest management and dishonest union officials. (3) Whether gangsters or hoodlums were employed by an association of employers to keep out unionization or to handle their labor relations. (4) Whether certain union officials have been or are presently in the control of the criminal syndicate in Chicago. During these hearings, which will run probably for 2 weeks, we expect to develop the fact that, in arrangements of the types mentioned above, the needs and interests of the employees are completely ignored. Unions exist for the purpose of helping and assisting the employees or workers. However, where union officials ignore their trust and become interested only in money, where you have employers interested only in keeping down their costs, no matter what may be the hardship that they impose on their employees, you have a situation that is a perversion of the whole idea of proper and legitimate labor-management relations. Such situations need to be exposed and, where possible, Congress must act to insure that they do not continue. I would like to say that throughout this whole investigation we have had the complete cooperation and invaluable assistance of Mayor Richard Daly of the city of Chicago. As in New York, where District Attorney Frank Hogan and Police Commissioner Stephen Kennedy were of such assistance, in Chicago Mayor Daly and those under him have been of great help in furnishing to the committee background information and other assistance in its investigation. The committee is very grateful, for without this aid the investigation would have been far more difficult. I want to emphasize the value of assistance given the committee from time to time by local officials. Where they cooperate with us we are able to get the information and follow up leads and develop the facts much easier than where they are indifferent to our labors and to our mission, or where they provide some passive resistance to our efforts. It is always gratifying when we have that cooperation from local authorities who are responsible for law enforcement in their areas. All right, Mr. Kennedy, will you call the first witness? Mr. KENNEDY. Mr. Virgil Peterson, Mr. Chairman, who is the operating director of the Chicago Crime Commission. The CHAIRMAN. Will you be sworn, please? Do you solemnly swear that the evidence, given before this Senate select committee, shall be the truth, the whole truth, and nothing but the truth, so help you God? Mr. PETERSON. I do. TESTIMONY OF VIRGIL W. PETERSON The CHAIRMAN. Mr. Peterson, state your name, and your place of residence, and your profession or occupation. Mr. PETERSON. My name is Virgil W. Peterson, I am the operating director of the Chicago Crime Commission, 79 West Monroe, Chicago. The CHAIRMAN. Thank you. How long have you been in that position? Mr. PETERSON. Since April 1, 1942, a little over 16 years. The CHAIRMAN. You waive counsel, of course, Mr. Peterson? The CHAIRMAN. Thank you. The Chair overlooked asking, and I apologize for not asking any other member of the committee if they had any comment. Senator CURTIS. I have no comment, Mr. Chairman. Mr. KENNEDY. Mr. Chairman, in the course of the investigation that we have been making in Chicago, we have had great assistance also from Mr. Peterson, who is acknowledged I think throughout the United States as one of the foremost authorities in the field we are inquiring into. We have called Mr. Peterson to give some background information regarding some of the individuals in whom we have an interest. I would like to start out by asking Mr. Peterson if he has any information indicating that the old Capone group out of Chicago was interested in moving into any of the labor unions or into legitimate business during the 1920's and 1930's. Of course, Mr. Chairman, this is a continuation of what we were inquiring into last week when we asked similar questions of other individuals from other sections of the country. Mr. PETERSON. Definitely, we have such information. Mr. KENNEDY. When did it start, Mr. Peterson? Mr. PETERSON. A number of years ago. For example, in 1940 the crime commission at that time, together with other officials of the Chicago Association of Commerce and the employers' association, went to the mayor of the city of Chicago at that time, Edward J. Kelly, and also to the State's attorney and advised them or we urged them to take action to prevent this infiltration of notorious Capone hoodlums into the labor field. Following a conference that we had at that time and I say "we," I was not with the commission at that time, but our president, Mr. Kohn, was. Mr. KENNEDY. How long have you been with the commission? Mr. PETERSON. Since 1942, and this was in 1940, the time I am speaking of. Mr. KENNEDY. Your testimony is based on the records of the crime commission? Mr. PETERSON. Yes, sir. Mr. KENNEDY. What had you been doing prior to the time you came with the commission? Mr. PETERSON. Prior to that time I was with the FBI from 1930 until 1942. In a short time, and only a few days later, the Chicago police then conducted raids on certain unions that it considered dominated by Frank Nitti and the Capone gang. Mr. KENNEDY. Who is Frank Nitti, and how do you spell his name? Mr. PETERSON. N-i-t-t-i. He was the successor to Al Capone as the leader of the Capone syndicate or gang in Chicago. Mr. KENNEDY. Was he also known as "The Enforcer"? Mr. PETERSON. Frank "The Enforcer" Nitti. Mr. KENNEDY. What does that term mean, "The Enforcer"? Mr. PETERSON. I think it is rather self-explanatory. He was a vicious hoodlum and he enforced demands through violence and that sort of thing. Mr. KENNEDY. Was he known as "The Enforcer" for the Capone mob? Mr. PETERSON. Yes, and he was commonly known as Frank "The Enforcer" Nitti, that is right. Mr. KENNEDY. And the Chicago Police Department then moved in on some of the unions that they believed were dominated and controlled by people and individuals such as Frank Nitti, is that right? Mr. PETERSON. Yes, and in fact on August 12, 1940, the Chicago police raided the headquarters of local 593 of the Hotel, Apartment Employees and Miscellaneous Workers Union at 10 North Wells Street, in Chicago. They seized 2 officers, or 3 officers at the union headquarters who were James Blakely, then secretary-treasurer of local 593, and a pal of Danny Stanton, a well-known Capone gangster, and in fact Blakely is still secretary-treasurer of local 593 and a vice president of the international union. Mr. KENNEDY. That is B-l-a-k-e-l-y? 21243-58-pt. 33- -2 Mr. PETERSON. Yes, and they also seized a man by the name of John Lardino, a business agent of that union, who also was very close to a number of Capone hoodlums, and another business agent by the name of Mike Mikley. A writ of habeas corpus was filed in connection with the seizure of the records and arrests of those individuals on that occasion, and Police Officer Frank O. Sullivan in return to the writ stated that these men were wanted in connection with an investigation then being conducted by the Chicago Police Department into labor terrorism in Chicago. Mr. KENNEDY. Now, you stated earlier that Blakely was a friend of Danny Stanton? Mr. PETERSON. Yes. Mr. KENNEDY. Who was Danny Stanton? Mr. PETERSON. Danny Stanton was a notorious Capone gangster, and he was engaged in gambling activities, particularly on the South Side, and he was also considered a power in a number of the unions in Chicago. He was later killed in gang warfare. Mr. KENNEDY. When was he killed? Mr. PETERSON. May 12, 1943. I think I can give you the exact date. Mr. KENNEDY. It was 1943? Mr. PETERSON. It was May 5, 1943, and he was slain in a tavern at 6500 South May Street. Mr. KENNEDY. Now, prior to that, there had been some information indicating that the Capone groups were moving into some unions? Mr. PETERSON. Oh, yes. Mr. KENNEDY. They had in 1929 and 1930 moved in on some of the teamsters locals, had they not? Mr. PETERSON. And the building trades unions, and as a matter of fact in the building trades there were special grand juries and investigations in the early 1920's, and in fact during those times there were a number of prosecutions at that time. As I recall the former president of the Chicago Crime Commission, Frank Lesh, was a special prosecutor in connection with some of those cases. Mr. KENNEDY. There had been a number of killings of union officials? Mr. PETERSON. Yes. Senator CURTIS. Excuse me, but I would like to ask a question right there. Why do these hoodlums-some of them are gangsters and murderers and gamblers and extortionists and all sorts of bad actors-why did they select unions as the field of exploitation? Mr. PETERSON. Well, when they are able to dominate a particular union, it is, as I think will be shown in these hearings, a tremendously lucrative operation for the hoodlums themselves. Senator CURTIS. By "lucrative," where do they get their money? Mr. PETERSON. The dues from the employees, and, as a matter of fact, during the period that Mr. Kennedy was inquiring about, in the 1920's, for example, in the building trades, they weren't interested in the welfare of the employees, of course, but they had these contracts with penalty clauses in them if they didn't complete the contract by a certain time. Well, a racketeer would go to a contractor and say in substance, "Well, if you give me $20,000 or $30,000 or $50,000, we won't call a strike; and if you don't give me the $50,000 we will call a strike." A number of the racketeers made tremendous incomes during that period through those means. Senator CURTIS. In other words, it appealed to them as a lucrative proposition first to get their hands on the treasury of the union because of the checkoff and the compulsion that men must pay to continue to work, and another source of income was that it gave them an opportunity for extortion and blackmail and that sort of thing. Mr. PETERSON. That is right. And there have been instances that I don't think you are going into this morning-take in the jukebox field, where controlling a union enables monopolistic practices on the part of those with whom they may be in collusion. Senator CURTIS. I think one of the most important things brought out by this committee in the months of its work has been that the laws of our land are such in reference to unions that it invites hoodlums and the wrong sort of people to come in. The law permits unions to be run from the top. We have seen that over and over again. The law does nothing about the grievances of individual union members so far as, by and large, getting any relief through court action. The law grants a certain cloak of respectability and immunities to unions both as a matter of law and as a matter of practice. The unions' practice of blocking a sidewalk or street goes unnoticed and it puts a weapon in the hand of the wrong type of people to harass, intimidate, and extort, and slow up, and do those other things. We have the helpless situation of union members and their inability to withdraw from the union without losing their job. I think that we are going to have to strive for those laws that will free the union member and no longer make it profitable for hoodlums to get in. That is all. I am sorry for the interruption, Mr. Chairman, and that is all I have at this time. The CHAIRMAN. All right, we will proceed. (At this point, the following members were present: Senators McClellan, Church, and Curtis.) Mr. KENNEDY. You stated that Blakely was a good friend of Danny Stanton, and he was arrested, and also Mr. John Lardino. Can you give us any more of the background of some of these individuals, for instance Mr. Blakely? Mr. PETERSON. Yes. Mr. KENNEDY. Was he tied in with any of the other of the Capone group? Mr. PETERSON. Well, his principal connections at that time were, as I understand it, with Danny Stanton. You asked for background information. We have an observer's report from 1930, relating to an indictment returned against Danny Stanton for carrying concealed weapons. In that particular case, a police officer, William Drewry, who has since been killed, testified that at 2 p. m. on December 16, 1929, he saw Danny Stanton and James Blakely on the northeast corner of Randolph and Clark Streets; he arrested them. He went over to Danny Stanton, and in his overcoat |