Provocation was apparently no part of Martin's duties.

As a matter of fact,

he was instructed to avoid any conversation which might lead to any provocative issues. (See p. 6, Mechanic's Instructions, exhibit 5.)

Part of Martin's duties was to cultivate the other employees personally and to be with them outside of working hours as well as in the shop. (See exhibit 5, p. 8).

All letters or other communications received from the Pinkerton agency Martin was instructed to initial and return. (See exhibit 8).

Martin received his regular earnings for the work he performed at the shop, and in addition he received a salary direct from the Pinkertons, which amounted to $60 a month. He also submitted to the Pinkertons every month an account of any expenses incurred in the prosecution of his activities. (See several exhibits on this.) After his exposure at Fruehauf, Shoemack came to his home and insisted on the burning of all documents concerning his espionage activities. Among the documents burned were reports he had submitted. The sample reports in Shoemack's handwriting (exhibit 6) and a few other documents which somehow escaped being burned are submitted herewith.

MARTIN'S METHODS AT THE WURLITZER

The difference in Martin's operations at the Wurlitzer Co. from those at the Fruehauf may be explained by the La Follette investigation. The main differences are summarized below.

At the Wurlitzer Co. Martin submitted only a weekly report, according to instructions by Johnson. These reports were submitted directly to Johnson or Parker at their homes rather than to the Pinkertons. Martin apparently dictated these reports to his wife, who took them down in longhand in a notebook. One of these notebooks is submitted herewith as exhibit 23.

Martin again received his regular earnings from the company, but instead of receiving an additional salary from the Pinkertons, he received a flat total salary of first $200 and then $250 a month from the Wurlitzer Co. The difference between the agreed salary and the amount paid him for earnings was paid him in cash by Johnson or Parker.

Although Martin contacted the company directly, the Pinkertons still kept very close check on his movements. McGinley came to his home with various instructions about once a month, and Martin was given definitely to understand that he was still subject to orders from McGinley. McGinley continued coming to Martin's home after the date of Pinkerton's order No. 105. The Wurlitzer employee most interested in unions was one William Gabel. In addition to receiving complete reports on what Gabel did and said, Parker at one time offered Martin a bonus if he could frame Gabel on some charge which would merit his dismissal. McGinley, however, vetoed this idea and nothing came of it.

The only address Martin left at Detroit was post-office box 2088, Detroit. (See exhibit 13.) This was a box maintained by the Pinkertons. Any mail for Martin which arrived addressed to that box number was forwarded by the Pinkertons to a box number in Buffalo. Martin believes this was box No. 62, Buffalo.

After Martin left the Wurlitzer Co., McGinley came to his home and advised the burning of all documents relating to his activities at the Wurlitzer. Copies of reports were again burned and Martin was reprimanded for making them in the first place. Exhibit 23 somehow escaped the fire.

Report submitted by

MAY 16, 1938.

WILLIAM S. GORDON,
Attorney, Ninth Region.

Senator LA FOLLETTE. I also offer for the record a report made by Ralph D. Winstead, member of the staff of the subcommittee of the Committee on Education and Labor under Senate Resolution 266, entitled "Committee Investigator's Report on Present Status of Various Detective Agencies, Some of Which Have Engaged Extensively in Labor Espionage or Strikebreaking, and the Opinions of Executives of Such Agencies Regarding the Proposed Oppresive Labor Practices Act of 1939,' S. 1970."

(The report is as follows:)

SCOPE AND PURPOSE OF THIS INQUIRY

For the purpose of informing the Senate subcommittee of the Committee on Education and Labor, holding hearings on S. 1970, of the present status of various representative, large to small detective agencies, small independent operators of strikebreaking jobs, and independent under-cover operatives, the offices or hang-outs of 13 such agencies and individuals in Cleveland, Pittsburgh, and Philadelphia were visited and interviews arranged by an investigator of the subcommittee functioning under Senate Resolution 266. These visits and interviews took place variously between May 2 and May 24, 1939. The agencies and persons so interviewed were all cited in the records of the subcommittee under Senate Resolution 266 as to conduct of, or participation in, labor spying or strikebreaking or strike guard work.

It was thought desirable to determine if such agencies or persons were still in business with facilities available for resumption, continuation, or expansion of labor spying or strikebreaking activities. Also interviews were undertaken to determine what effect the exposure of labor spying and strikebreaking work had had on the volume of business and to secure expressions of opinion on the proposed bill S. 1970, the Oppressed Labor Practices Act of 1939. Subcommittee's investigator reports on the results of his inquiry among the larger detective agencies that operate on an interstate basis

Persons interviewed: W. Boone Groves, vice president, Railway Audit & Inspection Co., who also is an executive of the subsidiary Pennsylvania Industrial Service Co. and the Central Industrial Service Co., Inc., and whose office is at suite 1607, Gulf Building, Pittsburgh, Pa. Also: L. D. Rice, general manager of the Railway Audit & Inspection Co., and an executive in that corporation's subsidiaries, whose offices are at 714-718 Harrison Building, Philadelphia, Pa. The Railway Audit & Inspection Co. and its subsidiaries, the Pennsylvania Industrial Service Co. and the Central Industrial Service, Inc., the subcommittee's investigation revealed, were among the most active detective agencies engaging in labor espionage and providing strikebreaking services, having 12 regional offices covering the eastern half of the United States. Since the Railway Audit & Inspection Co. defied the legal authority of the subcommittee, destroyed subpenaed documents, and refused to appear and testify, the information gathered about the activities of these organizations was never complete. Partial information secured related to espionage or strikebreaking services supplied to 165 clients and the employment of 313 under-cover operatives.*

On May 2 Mr. W. B. Groves was interviewed at a suite of offices at 1607 Gulf Building, on the door of which suite was the name of the Central Industrial Service Co. It was apparent that the Central Industrial Service Co. and the Railway Audit & Inspection Co., together with their affiliates and subsidiaries, were still in business in the Pittsburgh area, and that the office and other facilities were available for the continuation or expansion of the espionage and strikebreaking business should the opportunity arise.

Mr. Groves was found engaged in checking through a pile of labor and other newspapers and magazines on his desk. In response to inquiry he stated that business was very slow and that there was hardly enough to keep the organization occupied and motioned to his own activities. Mr. Groves stated that he had seen a copy of the Oppressive Labor Practices Act of 1939 and thought that the provisions in the bill might stop strikebreaking. He said, "We were never interested in that work and never did any of it." He added, "Conditions today are very difficult for our organization. I believe the day of under-cover work on union activity is over. Under present conditions, I ask you what good does it do a manufacturer to know whether this employee or that one belongs to the C. I. O. or to the A. F. of L.? The employers can't do anything about it if they find out."

Groves stated his opinions on the possible effect of the bill in stopping labor spying. He said, "It may stop the responsible agencies which have their

1 See pp. 1 to 176, pt. 1; pp. 5233 to 5399, pt. 15-A; subcommittee reports "Industrial Espionage" and "Strikebreaking Services."

2 See exhibit 32, p. 246, pt. 1.

3 See pp. 14 and 21. Subcommittee report, Industrial Espionage.

names on the door. However, some employers want to know what goes on in their own organizations, and they will buy under-cover services. When the demand is there you can rest assured that the demand will be satisfied. Your bill will make a situation just as existed during prohibition: with a demand for such services, a supply of these services will be made available by bootleggers if any law attempts to stop it."

Mr. L. D. Rice, general manager of the Railway Audit & Inspection Co., was interviewed at the extensive offices of that organization in suite 714-18, Harrison Building, on May 23. Mr. Rice stated he had not read the proposed Oppressive Labor Practices Act of 1939. After discussing its various features, Rice stated that it was his opinion that the section of the bill prohibiting reporting on union activities would not affect the detective agencies' business in the Philadelphia district very much. He said: "The La Follette committee's investigation, the operation of the Wagner Act, and the completion of union organization in so many plants has destroyed the market for that sort of service." Mr. Rice stated that the Railway Audit & Inspection Co. doesn't take on that sort of work and never undertook to do strikebreaking. When questioned on this matter, Mr. Rice professed to be ignorant of the activities of the subsidiary corporations such as the Pennsylvania Industrial Service Co.

He stated: "Our business today consists largely of checking on street railways and steam lines to discover thefts and report on irregularities in service." Rice stated that practically all of the Railway Audit & Inspection Co. clients had applauded this agency's action in defying the legal authority of the subcommittee and the action taken to resist compliance with the subpena served on his organization.

Mr. Rice explained that the current business of the Railway Audit & Inspection Co. had considerably declined over its previous years, since prospective clients were fearful that the use of operatives might be discovered. He cited a case in which he said thefts were occurring on the premises of a prospective client. The employees of this client, he said, were 100-percent union organized. Rice said: "To check these thefts and discover the thieves, it is necessary to put an operative into the union. Otherwise he could not work in the premises of the prospective client. We cannot get the employer to agree to put one of our operatives in the union in order to get the necessary information because he is afraid that the discovery of our operative will discredit his company and stir up antagonism and resentment within the union." This situation, Mr. Rice declared, was due to the work of the Senate subcommittee, enforcement of the Wagner Act, and the agitation that had been carried on amongst union men against spies.

Mr. Rice stated that the passage of the bill might have a detrimental effect in providing work for operatives in plants that were engaged in the manufacture of war materials. He said: "That work would be lost to us unless the present situation is cleared up. During the last war," he said, "we had as many as 16 operatives in a single plant, all reporting on sabotage and radical activities. We supplied copies of our reports to various agencies of the Government at that time, and I think this bill should specifically exempt all work relating to investigation of thefts and sabotage in plants working on war orders so that prospective clients might be assured as to the legality of the work we propose to do for them."

Rice stated that the demand for labor-espionage service was nonexistent in those plants where strong union organizations existed and where union agreement had been entered into. He said: "There are very few plants which have not been organized, and, therefore, the market for this sort of service is practically gone. However," he said, "if labor unions are ever cleaned out of the plants that are now organized the demand for industrial work will come back. Under present conditions there is very little demand, and consequently I don't think the proposed bill would affect the situation much in one way or another."

The extensive offices maintained by the Railway Audit & Inspection Co. in Philadelphia under the direction of Mr. Rice, assisted by the district manager, William A. Schraisen, and Earl R. Simons, employment manager, indicate the maintenance of ample facilities available for labor espionage and for future expansion of this business should the opportunity arise.

*

Person interviewed: H. N. Brown, Brown Survey Co., suite 1119, 1700 Walnut Street, Philadelphia, Pa.

151548-39-11

H. N. Brown was the founder, and for many years the president of the Railway Audit & Inspection Co., having formed that detective agency in 1906 and severed his connection with it about 1927 or 1928. In 1934 he formed the Brown Survey Co. in competition with his previous concern, and he is one of the deans among the executives of detective agencies in the United States.*

Mr. H. N. Brown was interviewed at his offices in Philadelphia on May 23. Mr. Brown stated as his opinion that Senate bill 1970, which would make unlawful the reporting of union activities and strikebreaking services, might be a good thing. He said that such an act would not affect his present business in any case, as that work consisted of legitimate detection of thefts and thieves and in checking up on the observance of rules by client corporations, principally consisting of railways and street railway companies. Mr. Brown also stated that the investigation and exposures by the La Follette committee have caused a general decline in all classes of detective-agency business. He said that employers are afraid to use the services of detective agencies for fear that their employees will misunderstand the purposes of such use.

Mr. Brown gave as his opinion that with the passage of S. 1970 it will lie with the legitimate detective agencies to rehabilitate themselves and regain the confidence in their legitimate work that has been lost because of their labor-espionage work. He stated that for his part he has issued stringent orders to all operatives to steadfastly refuse to divulge any information about union activities or membership and that he has insisted that where it has been necessary for operatives to join a union in order to become employed in a plant on theft cases such operatives should never attend any union meetings or participate in any union activities so that such data can be shown in court or to the client or guilty parfies when the evidence of the theft or other wrongdoing is exposed. Mr. Brown stated that it is his opinion that current and forthcoming orders for war materials will create a new and very large market for detective-agency service in disclosing sabotage and foreign political agitation. To perform such work, he stated, operatives will have to get into the unions. "Legitimate work," he said, "will not be further damaged by any law prohibiting labor espionage, such as this bill."

Mr. Brown stated that despite the fact that the La Follette committee failed to find any substantial amount of evidence of under-cover espionage being used to promote efficiency and provide management with helpful suggestions and otherwise provide constructive services, such work had constituted a considerable portion of the service rendered to employers. He said that the reason the Senate investigators didn't find evidence of these services was because the operatives of agencies reporting on such matters so frequently combined it in the same reports with items on union activities that, therefore, the agencies were reluctant to supply copies of those reports to the Senate.

*

"The problem before the detective agency business today," said Mr. Brown, "is how to convince the public that the submission of reports on employees of industrial clients has, and will have, no connection with the union activities of such employees."

Person interviewed: J. Walter Kelly, manager, William J. Burns International Detective Agency, suite 1401, Widener Building, Philadelphia, Pa.

5

The William J. Burns International Detective Agency, found by the subcommittee to be one of the largest detective agencies in the United States, operating 26 district offices and having 440 industrial clients in the years 1933 to 1936, was one of the agencies which did a considerable volume of labor spy work and supplied strike guards in a number of instances. While it was not possible to determine exactly what proportion of the industrial clients were involved in labor espionage or utilization of strike-guard services, it was established that such services were supplied in many instances and were available to employers, and extensive efforts were made to sell such services. Of the 440 industrial clients, investigation disclosed that the Philadelphia office served 34 such clients between 1933 and 1936.

Mr. J. Walter Kelly, manager of the Philadelphia district of the William J. Burns International Detective Agency, was interviewed on May 23, at the agency's suite of offices at 1401 Widener Building, Philadelphia, Pa. When asked for his views on Senate bill S. 1970, Mr. Kelly inquired, "What are you fellows planning to do? Put us out of business altogether?" Mr. Kelly stated that the

4 See pp. 260, 261, exhibit 45, pt. 1.

5 See p. 16, subcommittee report, Industrial Espionage.

Burns organization did very little industrial work and had done none in the Philadelphia office since the investigation got under way, or since the National Labor Relations Act was upheld by the Supreme Court. Mr. Kelly stated that in the past 10 years, prior to the Senate's investigation, the Burns Agency had had a few under-cover jobs in the Philadelphia area and that the object was to find out who were the agitators among the employees, the purpose being to get rid of them when found. Such activities are illegal under the Wagner Act, he said, and have not been engaged in by the Burns Agency. Therefore, he stated, he did not feel himself very well qualified to discuss the proposed Oppressive Labor Practices Act of 1939. He suggested that the executives of the Railway Audit & Inspection Co. and the Pinkerton National Detective Agency were much better qualified to discuss such a subject.

Mr. Kelly stated that as a result of the investigation and the operations under the Wagner Act legitimate work on thefts, criminal activities, and irregularities had declined considerably in the Philadelphia office of the Burns Agency because employers are fearful about engaging operatives for fear of discovery and resulting labor unrest and publicity. As an example he cited one client who operates a considerable chain of drug stores and faces losses ranging up to $500 a month in inventories. This concern, he said, has a closed-shop agreement with union labor and it is impossible to put an operative inside the organization to check on the thefts unless they put a man in the union. All attempts to approach union members to become operatives on this case have met derisive rejection and the accusation that attempts were being made to hook union members for labor spy work despite assurances to the contrary.

Legislation such as proposed by the Senate subcommittee, he stated, would further handicap detective agencies in the pursuit of theft work, even after all labor espionage had been repudiated and abandoned. "However," he said, "no law that you can pass prohibiting reporting on union activities will stop that kind of work. Detective agencies and others that go in for that sort of thing will combine it with legitimate work on thefts and other irregularities." He said further: "You can't stop an operative from reporting by phone or verbally. Only if the act requires some such drastic action as the registration of all operatives will it be possible to stop labor espionage. Even that would require considerable enforcement machinery and the periodic checking up and taking of statements under oath as well as detailed interrogation of operatives periodically. Experience under the Wagner Act which already makes the practice unlawful, has demonstrated that the passage of a law won't stop reporting of labor activities."

With regard to the clauses in the bill pertaining to use of armed guards, Mr. Kelly stated: "Those clauses which prohibit guards from acting outside the premises of a client are in line with rules of the Burns organization. Occasionally, however," he said, "men employed as guards take matters into their own hands. The Burns Agency," he said, "in a recent instance had issued orders against guards carrying arms outside of the premises of a client, yet one of its guards under provocation recently shot a man on the street adjacent to the premises of the client, having used the gun of a deputy sheriff and having shot from the car belonging to the deputy sheriff. As a result, the Burns Agency was faced with a suit for damages although the guard had been vindicated for his action in the criminal courts."

Concerning the features of the bill which provide for investigation of further labor espionage and use of armed guards Kelly stated: "Continued investigation by a Federal agency will ruin the business, even all nonlabor work. It's already staggering from the result of the La Follette committee investigation."

Person interviewed: C. W. Nickel, assistant superintendent, Philadelphia district, Pinkerton's National Detective Agency, Inc., twelfth floor, Liberty Bank Building, Philadelphia, Pa.

The Pinkerton's National Detective Agency was found by the subcommittee during its investigation to be one of the larger agencies most active in industrial espionage work, employing in 1936 in its 27 district offices which served the entire United States, a total of 1,228 under-cover operatives serving between 1933 and 1936, 309 industrial clients. Not less than 336 under-cover operatives of the Pinkerton Agency were members of American trade-unions between January 1934 and June 1937.

* See pp. 17 and 19, subcommittee report, Industrial Espionage.