maybe a dishonest businessman by the name of Kamenow, who may have worked up a pretty slick racket in Flint, whereby they could sit down and say "Here is the Macgregor Tire Co., here is the Advance Electric Co., here is another one. I will go in as the advance man and I will either throw up a picket line for a couple of days or go in and say 'I have a couple of union cards in my pocket, we are going to unionize you, and I will rattle the sword, and they will fear they will be put out of business.' And then they will come to you and say 'Mr. Kamenow, you have had some experience with these propositions, maybe you can adjudicate these differences.' You make whatever kind of proposition you can. And stick in this $2,000 or $5,000 for gratuities and Rose Bowl games, and we will get the money and just cut it down the middle. I will take my part, you take your part and we will let this fellow continue in business."

I think there can be a third hypothesis which is just as easy to demonstrate by the testimony we have had thus far. This is no reflection on management as being dishonest in general. This is no reflection on unions as being dishonest in general. But it is a dishonest fellow using a union title and a dishonest fellow setting himself up as consultant who conceivably have a pretty good racket, such as operated in Flint, and you might have been the victim of it. Do you think that is out of the possibilities?

Mr. MACGREGOR. It is not out of possibilities, no.

Senator MUNDT. It seems to me that it makes a good deal of sense from what I have heard from some of the witnesses up to now. If the laboring man is satisfied without a union, and management is willing to give them a chance to vote if they wish it, they work out this little triangle. This has been counting up pretty fast, and soon you will have a lot of people at the Rose Bowl. Nobody else will be able to get in. They will all be union officials.

Mr. MACGREGOR. My payments were so small, I thought it would have no influence.

Senator MUNDT. I think you have to give the boys credit for ingenuity. They didn't think about Rose Bowl games all the time. They had fishing trips. Now they have a trip to Washington. That is new in the business. But it is entirely conceivable to me that if there were not so many trips, if this was not a subsidization for the transportation industry, as it may appear, this was just a racket, and a couple of boys, quite regardless of the unions and quite regardless of anybody else, were taking away loot for themselves. Maybe I have been unjust to them. They will be called to testify and asked to explain it. Maybe they can explain it.

On the basis of what I have heard so far, that looks like a pretty plausible hypothesis.

Mr. MACGREGOR. I don't think any employer objects to a union properly conducted and in a properly conducted election.

Senator MUNDT. Apparently nobody wanted to have an election. They just wanted a shakedown.

Mr. KENNEDY. You hadn't even gotten that far, Mr. Macgregor, you were paying $500 to make sure these people were happy and entertained. You can't put yourself in that class.

Mr. MACGREGOR. I do.

The CHAIRMAN. I submit to you some 3 statements from Labor Relations Associates, 3 original checks in payment of the statements—

4 checks, I believe; 3 statements and 4 checks. I ask you to examine them and state if you identify them. They appear to be the originals.

(Documents handed to witness.)

Mr. MACGREGOR. Yes, I identify them.

The CHAIRMAN. Those statements were rendered to you and those are the checks in payment of the statements?

Mr. MACGREGOR. That is correct.

The CHAIRMAN. They may be made exhibit No. 53-A, B, and C; and the checks will be exhibit 54-A, B, C, and D.

(The documents referred to were marked respectively "Exhibits 53A, B, and C," and "Exhibits 54A, B, C, and D," for reference and will be found in the appendix on pp. 6619-6625.)

The CHAIRMAN. What is your gross business?
Mr. MACGREGOR. Around $650,000 a year.

The CHAIRMAN. $650,000?

Mr. MACGREGOR. Yes.

The CHAIRMAN. Thank you very much.
Call your next witness.

Mr. KENNEDY. George Spaulding.

The CHAIRMAN. Mr. Spaulding, come forward, please. You do solemnly swear the evidence you shall give before this Senate select committee will be the truth, the whole truth, and nothing but the truth, so help you God?

Mr. SPAULDING. I do.

TESTIMONY OF GEORGE SPAULDING

The CHAIRMAN. State your name, your place of residence and your business or occupation.

Mr. SPAULDING. My name is George Spaulding. I live at 2922 Circle Drive, Flint. I am assistant general manager for Applegate Chevrolet.

The CHAIRMAN. How long have you been assistant general manager for that company?

Mr. SPAULDING. Six or seven years.

The CHAIRMAN. Do you own an interest in the company?

Mr. SPAULDING. NO.

The CHAIRMAN. You are just an employee?

Mr. SPAULDING. Well, I should qualify that.

The CHAIRMAN. First, you waive counsel, do you?

Mr. SPAULDING. Yes, sir.

The CHAIRMAN. All right.

Mr. SPAULDING. Personally I don't have an interest in the company. I should say that.

Senator MUNDT. Let's strip all the mystery off of it. What is your relationship? This is kind of confusing. You do or you don't, or your wife does or does not.

Mr. SPAULDING. Well, it is my wife.

Senator MUNDT. Tell us what it is. You are working for the company and your wife has an interest in it?

Mr. SPAULDING. Yes. She has stock.

The CHAIRMAN. Proceed.

Mr. KENNEDY. In 1954, did you understand there was a national drive being made by unions to organize auto company employees? Mr. SPAULDING. Yes.

Mr. KENNEDY. And specifically did you understand that the teamsters were interested in doing so?

Mr. SPAULDING. Yes.

Mr. KENNEDY. Did the company approach Mr. George Kamenow of LRA to represent them?

Mr. SPAULDING. Yes.

Mr. KENNEDY. What financial arrangements were made at that time? Were you to pay him $300 a month?

Mr. SPAULDING. We established a contract with him for a year. Mr. KENNEDY. For $300 a month?

Mr. SPAULDING. The total would be so much for each year. It would be so much per month and then a special disbursement or two during the year.

Mr. KENNEDY. A special disbursement or two during the year? Mr. SPAULDING. Yes.

Mr. KENNEDY. But the flat fee was to be $300 a month plus these 1 or 2 disbursements, is that right?

Mr. SPAULDING. Yes.

Mr. KENNEDY. Did you understand the disbursements were to be for expenditures for certain of these teamster union officials? Mr. SPAULDING. Not for teamster union officials, no.

Mr. KENNEDY. Did he originally say the boys?

Mr. SPAULDING. Yes.

Mr. KENNEDY. Did you understand, then, was it your conclusion that the boys were these teamster officials?

Mr. SPAULDING. No, that wasn't my conclusion, and it was not my understanding. I don't know who the boys were, to tell you the truth. I just don't.

Mr. KENNEDY. What did you assume it was? Where did you assume the money was going to?

Mr. SPAULDING. I assumed that probably some of them would be union officials. But I am not assuming that they were all and that all the travel and entertainment was for them. Whenever he called about a special disbursement, my first question was "Is this within our contract which we made for the year?"

And the answer was "Yes." And it always was. It was never over that contract.

Mr. KENNEDY. I understand that. Everybody has that. They either pay $1,800 or $500.

The CHAIRMAN. What was your total to be during the year?
Mr. SPAULDING. I believe it was $5,500 for the first year.

The CHAIRMAN. $500?

Mr. SPAULDING. Yes.

The CHAIRMAN. And $300 a month that was fee, is that correct? Mr. SPAULDING. We considered the whole $5,500 as fee.

The CHAIRMAN. You didn't consider these extra disbursements as fees, did you?

Mr. SPAULDING. Yes, sir.

The CHAIRMAN. You referred to those specifically. The fee was to be $300 a month, is that correct?

Mr. SPAULDING. Yes, but the whole total fee

The CHAIRMAN. I understand. You would have outside disbursements over and beyond the fee up to a limit of the 2 of not to exceed $5,500 a year. Is that correct?

Mr. SPAULDING. Well, what I mean is that I considered the whole thing as a fee.

Mr. KENNEDY. It was $3,600 a year, and in addition to that, in August of 1954 there was a special expense of $1,991.90; in May of 1955, it was $2,003.75; in May of 1956, $2,000. So it was $3,600 a year plus those 3 special expenditures bringing the total up to approximately $5,500 or $5,600.

The CHAIRMAN. That is what I want to ask the witness. He said he regarded all of it as a fee. I want to know if you had a fee and then had expenses in addition to it or not.

Mr. SPAULDING. Well, we paid the $300 a month.

The CHAIRMAN. As a fee.

Mr. SPAULDING. You asked me if we considered the whole thing a fee, and I always have, Senator.

The CHAIRMAN. I know, you considered the whole thing, that you were paying that much for whatever protection or service you were getting, that you were obligated to get that much.

Mr. SPAULDING. Yes, sir.

The CHAIRMAN. But you were paying $300 of this a month as a fee, and so understood it and were so billed, were you not?

Mr. SPAULDING. No, the original agreement was that the fee was $5,500.

The CHAIRMAN. You paid the bills, didn't you?

Mr. SPAULDING. Our accountant did.

The CHAIRMAN. You approved them?

Mr. SPAULDING. Yes, sir.

The CHAIRMAN. You received the bill. Didn't it say on the face of it "Retainer fee for the month," and so much? Look at it. Mr. SPAULDING. That is right.

The CHAIRMAN. Then what does it say about disbursements?

Mr. SPAULDING. Well, it would give disbursements for the month. The CHAIRMAN. All right. As between the two of you, your contract and your whole operation, the bills reflected it and you paid them accordingly?

Mr. SPAULDING. That is right.

The CHAIRMAN. So it was a $300 a month fee, isn't that correct? Anything above that was disbursements.

Mr. SPAULDING. That is the way it is itemized here.

The CHAIRMAN. That is the way you paid it, isn't that correct? Mr. SPAULDING. Yes, sir.

The CHAIRMAN. Why do you hesitate to say you paid a $300 a month fee and then paid these other expenses?

Mr. SPAULDING. Well, I don't know the technical word for it, or anything, but I did consider and still do, that that was our contract, so much for the year.

The CHAIRMAN. Sure it was a contract. It was a contract for $300 a month for a fee, and then the balance up to $5,500 for entertainment and so forth. Is that correct?

Mr. SPAULDING. Yes.

The CHAIRMAN. And you were billed accordingly?

Mr. SPAULDING. Yes.

The CHAIRMAN. Will you examine these photostatic copies of checks and invoices or bills, 4 bills and 4 checks, and see if you identify them. (Documents handed to witness.)

The CHAIRMAN. Those are the four bills you received?

Mr. SPAULDING. Yes, sir.

The CHAIRMAN. They may be made exhibits 55A, 55B, 55C, and 55D.

(The documents referred to were marked "Exhibits 55A, 55B, 55C, and 55D" for reference and will be found in the appendix on pp. 6626-6629.)

The CHAIRMAN. Are those the four checks in payment of those bills?

Mr. SPAULDING. Yes, sir.

The CHAIRMAN. They may be made exhibits 56A, 56B, 56C, and 56D.

(The documents referred to were marked "Exhibits 56A, 56B, 56C, and 56D" for reference and will be found in the appendix on pp. 6631-6633.)

Senator MUNDT. Mr. Spaulding, you said early in the procedure you received a letter from the union addressed to your company, indicating that they wanted to organize your salesmen?

Mr. SPAULDING. No, sir; I didn't say that.

Senator MUNDT. Let me ask you, then: Was an attempt made in April 1952 by the local union to organize the salesmen of your company?

Mr. SPAULDING. In 1951 or 1952; yes.

Senator MUNDT. What kind of an attempt was it? Was it in the nature of a letter that the company received? Was there a picket line out in front? Was there a meeting of protest by the salesmen?

Mr. SPAULDING. No; we received a letter, as I recall.
Senator MUNDT. Did Mr. Kierdorf sign that letter?

Mr. SPAULDING. Yes.

Senator MUNDT. The same man whose name we have had mentioned here. It fits into the pattern. The K & K boys, of Michigan, were doing what the B & K boys, of Russia, are doing, only they are doing it on a little more limited scale.

Mr. SPAULDING. Except that that was 3 years before we hired Mr. Kamenow.

Senator MUNDT. That is right. But the letter was the thing that induced you to hire a labor consultant?

Mr. SPAULDING. No.

Senator MUNDT. It was the bronze light, it was the only warning that you had from the union, as I understand it, that you were about to be organized.

Mr. SPAULDING. Well, no. That was in 1951. We didn't make our first contract with Labor Relations Associates until 1954. Senator MUNDT. That is true. In 1951 you got the letter from Mr. Kierdorf. Did anything happen laborwise in 1952?

Mr. SPAULDING. No, sir.

Senator MUNDT. Did anything happen in 1953?

Mr. SPAULDING. No, sir.

Senator MUNDT. By 1953 the rumor had gotten out that other people were getting these letters, and in 1954 that the national drive