The Waterfront Commission of the Port of New York: a history and appraisal.
This study recounts the history and evaluates the record of the
Waterfront Commission of the Port of New York, established in 1953 to
rid the port of organized crime. The agency's ambitious purpose has not
been realized, the author finds; for example, in the 1970s an FBI
investigation resulted in indictments and convictions of many figures in
the New York--New Jersey longshore industry, including the vice-president
of the International Longshoremen's Association. The
Commission has, however, successfully combatted many blatant forms of
corruption that were once commonplace, and in the process significantly
improved the longshoremen's working conditions. The Commission's
experiences may, the author concludes, be useful in showing what can
and cannot be done by government intervention to stem organized
crime in an industry.
In establishing this commission we are determined that racketeers,
criminals and hoodlums be driven from the docks, together with
the evil practices they spawned and on which they thrived.
Governor Thomas Dewey (New York Times, Aug. 21, 1953)
[The ILA is] our union...what's going to happen, we're going to
have a [union] president.
Paul Castellano, Gambino Crime family boss (PCOC 1986:33)
In the first half of the twentieth century law enforcement officials and public policy makers generally ignored the waterfront rackets in New York City, either turning a deaf ear or colluding with the criminals. This neglect gave way to a burst of activity in the early 1950s, in which politicians, journalists, legal authorities, and reformers demanded drastic action to clean up the docks. The result was the establishment in 1953 of the Waterfront Commission of the Port of New York.
The ultimate objective of the Waterfront Commission was to rid the longshore industry of the influence of organized crime. New Jersey Governor Alfred Driscoll declared that the commission would "drive the gangsters and the hoodlums off the waterfront" (New York Times, July 1, 1953, p. 1). Nearly 35 years later, in apparent admiration of the Commission's work, New York Governor Mario Cuomo suggested that a body modeled on the Waterfront Commission could be used to "combat systematic corruption and racketeering in the multi-billion dollar construction industry in New York City" (New York Times, Nov. 14, 1987, pp. 1, 32)--a suggestion also made (albeit tentatively, and among many others) by the New York State Task Force on Organized Crime (henceforth NYSOCTF) in its interim report on that industry (NYSOCTF 1988: 93-96).
This report presents the first review in more than two decades of the Waterfront Commission's history, structure, operation, and successes and failures. It builds on several unpublished studies (Axelrod 1967; Johnson 1963), the work of Vernon Jensen (1964 and 1973), and the more recent investigations of the Presidential Commission on Organized Crime (henceforth PCOC) (PCOC 1986). The early unpublished works presented very favorable evaluations of the Commission's work, judging it a nearly unqualified success. I will argue, however, that recent investigations force a different conclusion. The Commission has, to its credit, reduced the influence of labor racketeers, especially in the day-to-day life of longshoremen; but it has not driven organized criminals from the docks. Indeed, its inability to do so provides valuable lessons to those who seek to combat labor racketeers today.
A review of the Waterfront Commission at this time is particularly appropriate given the federal government's recent moves against organized crime. Federal prosecutors have made full use of the Racketeer Influenced and Corrupt Organizations (RICO) Act, which was made law in 1970; they have filed suits in federal courts aimed at placing the Teamsters and various other unions under court trusteeship; and prosecutors and independent commissions have conducted highly visible investigations into the operations of organized crime in the labor movement, in drug trafficking, and in state and federal contracting. A study of the Waterfront Commission's experience will help to illuminate the advantages and disadvantages, the possibilities and limitations, of government intervention to combat crime in unions and industry.
Conditions That Gave Rise to the Commission
The main impetus for the creation of the Waterfront Commission was the investigation of the New York State Crime Commission (henceforth NYSCC). Also instrumental in drawing attention to the problems on the waterfront were the highly publicized crusade of Father John Corridan--the so-called Waterfront Priest --investigative reporting by the press, and other government and private inquiries (Raymond 1955; Johnson 1950; Bell 1961; NYSCC 1953). The public learned that the "criminal" conditions that pervaded the docks not only exploited the worker but threatened the economic health of the port, hence of the New York metropolitan region. Workers literally paid for criminal control of their union with their meager earnings; the public paid through higher consumer prices and a declining share of the shipping industry. Meanwhile, shipping magnates, union officials, and professional criminals profited, financially and politically.(1)
In May 1953, the NYSCC issued its "Fourth Report," a systematic review of the specific abuses that plagued the long-shore industry (NYSCC 1953). The report highlighted six categories of corruption: collusion, the shape-up, public loaders, theft, misrepresentation of workers, and misuse of office for private ends. Of these, the shape-up, public loaders, theft, and the misuse of union office received the greatest attention.
The shape-up. The shape-up, declared the NYSCC, was "a vicious and antiquated system" that stripped the worker of his dignity (NYSCC 1953:15). Hiring officials had absolute power to constitute the work gang, and an oversupply of job seekers gave them tremendous leverage. Routinely they extorted money and favors from the applicants; at the least, they insisted on a quiescent work force. Family, friends, and an assortment of shady characters, from gamblers to drug smugglers, were rewarded with work; dissidents found themselves unemployed. Furthermore, many of the hiring officials were men of ill repute who received their position as a payoff or favor from corrupt union officials.
The public loading racket. Collective bargaining agreements made by the ILA and the New York Shippers Association (NYSA) carried a provision whereby only "public loaders" could move cargo between a pier and a truck. This system, the NYSCC argued, threatened the economic health of the industry (pp. 19-32). It was unique to the Port of New York, and thus put that port at a competitive disadvantage. (At other ports, either the truckers or dockworkers unloaded the cargo.)
Even had they always operated legally, public loaders would have increased the New York shippers' costs, but they also regularly extorted money from shippers and truckers. For instance, Michael Clemente, financial secretary of Local 856 and owner of the public loading operation on the East River, received $100 per boat in 1950 and $80 in 1951 from the Davie Transport Company to allow the company to move cargo directly from the ships to the trucks without the help of the public loaders (NYSCC 1953:51).
Theft. Stolen goods valued at "millions of dollars" every year further increased the cost of doing business in New York and added to the hardship of the dockworker (NYSCC 1953:27--32). ILA watchmen were encouraged to ignore pilferage of cargoes. Thomas Launders, a watchman, testified that after he had thwarted the theft of two cases of meat...the pier hiring boss came to him with a dollar bill and said he was taking up a collection for flowers. When the watchman asked who the flowers were for, he was told for him. (Raymond 1955:23--27) Nor did the shippers help. Rather than pay for better and more security, they collected insurance money for stolen goods and passed on to the consumer the cost of high premiums.
Grand larceny, although not as widespread as pilferage, did take place and clearly indicated organized crime's presence. When 20,000 cases of macaroni disappeared or when $750,000 worth of watch movements and lighters were stolen, it was evident that only those with connections to organized crime could hope to fence the articles without getting caught. The high percentage of criminals on the waterfront exacerbated the problem. Besides the theft of cargo, crime pervaded the docks in the ever-present form of loan sharks, gamblers, and drug smugglers.
Misuse of union office. By establishing themselves legitimately as union representatives or as hiring officials, racketeers aided their illegitimate enterprises. Legally appointed hiring officials granted loan sharks access to the docks. The latter preyed on the indebted rank and file, with at least the sanction of the hiring official and sometimes with his help. As a prerequisite for work, hiring officials could demand that longshoremen borrow money from specific loan sharks or place bets with certain bookies. In turn, the hiring officials or more elite members of the organized crime "families" skimmed the profits of the loan sharks or gamblers.
Moreover, stated the Crime Commission, the ILA and its locals hired organizers who did not organize and business agents who never kept accounts, and appointed known criminals to office (NYSCC 1953:19--32). And the international union failed to supervise its locals. When dissident locals complained about conditions on the docks and challenged the ILA leadership, the international union created new "paper" locals, headed by the allies of the corrupt ones, and together defeated the dissidents. This practice of gerrymandering elections was completely legal according to the ILA's bylaws and a practice then common to other allegedly corrupt unions.
To make matters even worse, unlike most unions involved in casual labor markets, the ILA made no attempt to limit the number of workers eligible for work in its jurisdiction (and thus to improve the average member's annual income). Instead, ILA officials issued an unlimited number of union books, at a fee, and collected union dues. Stevedores and shippers who benefited from a large supply of casual labor did not complain. One by-product of this practice was a hefty union treasury, lacking supervision by the international union, waiting to be pilfered.
The Crime Commission concluded that "the time has come for drastic action" (NYSCC 1953:33--36). It urged the government to abolish the shape-up; regulate or license public loaders, stevedores (defined as the employers of the dockworkers), and union officials; and create an authority with the power to conduct investigations into the state of the port. Subsequently, Governor Thomas Dewey called for special hearings with the intent of mobilizing public support for implementing the Crime Commission's recommendations. Inquiries by the state of New Jersey and the Subcommittee of the House Judiciary Committee, along with the reportage of various investigative journalists and scholars, supported the demand for reform.
In short order, the state legislatures of New York and New Jersey and Congress passed legislation establishing the Waterfront Commission of New York Harbor. The Waterfront Commission Act was approved unanimously by the state legislature of New York, and fell one vote short of unanimous support in both the state of New Jersey and the U.S. Congress. (The approval of both states was necessary because the New York harbor included ports in both New York and New Jersey.) President Dwight Eisenhower signed the act into law on August 12, 1953 (Waterfront Commission 1954).
Two generals, Major General Edward C. Rose and Lieutenant General George P. Hays, were appointed co-commissioners. On the occasion of the appointment of General Hays as the New York commissioner, the New York Times commented, "General Hays ... is no stranger to the storming of entrenched armies, and both he and Governor Dewey made clear their estimate of the job ahead as one of warlike magnitude" (Aug. 21, 1953, p. 1).
The Waterfront Commission
Powers of the Commission
The Waterfront Act of 1953 that created the Waterfront Commission also invested it with numerous specific powers. First, the Commission was authorized to abolish the shape-up and in its place to establish state-run employment information centers. Second, it could register and license employers, union officials, and dockworkers. Relevant to this function of the Commission was Section 8 of the Waterfront Act, which barred individuals with criminal records from serving as union officials. Dockworkers and their employers could be denied registration or have their registration suspended for commission of a crime, misrepresentation of character, transference of privileges, or "wilful commission of or wilful attempt to commit" physical harm to or theft from any other person on the waterfront.
The Commission also had the power to issue licenses to port watchmen, applying criteria similar to those applied to other dockworkers but (by virtue of amendments to the Act) in some respects more exacting. A watchman had to submit to a physical exam, take a training or refresher course, and submit supplementary personal history information.
Other powers of the Commission were the power to prohibit public loaders--an authority that went beyond the NYSCC's recommendation that public loaders merely be regulated; regularize or decasualize employment; hold hearings and take action in accordance with its findings; appoint or designate employees with police powers (powers to investigate and make arrests) throughout the states of New York and New Jersey; and assess and collect fees from the employers for the purposes of covering the expenses of the Commission.(2)
Were there any guiding principles behind the provisions of the Act? Exactly how did the framers expect these measures to end exploitation and assure the economic competitiveness of the Port, concerns singled out in the preamble of the Act? Two main assumptions stand out.
First, the proponents of the law believed that crime was a product of bad characters. Remove the criminals, through a process of registration, licensing, and oversight, and crime would diminish, if not disappear. Second, it was believed that systematic problems could be (or must be) battled without disturbing the existing modified free market economy or the rights guaranteed under the existing law. Public loaders and the shape-up must be outlawed, and the work force must be decasualized, but there must be no abrogation of the right of private ownership or collective bargaining.
The framers of the Act did not countenance government ownership of the docks or trusteeship of the union, actions that have since been considered as ways to deal with racketeering in other industries and that have been implemented, in part, in other countries (Jensen 1964:2--6). The Waterfront Commission was conceived as a classic "progressive" agency. The framers of the law justified government regulation on the grounds that the state had the responsibility to protect public safety and prosperity or welfare. Like regulatory bodies established in the first half of the twentieth century, from public utility boards to the Food and Drug Administration, the Commission was formed to police or discipline an industry that had failed to discipline itself. Experts, with presumed impartiality, would take an inefficient industry and force it, in its own interest, to act more responsibly (Hays 1959; Haber 1964; Rothman 1984).
The Commission's proponents and the authors of the enabling legislation described the body as a temporary agency.(3) Commission would cease to exist, and shippers, stevedores (defined as the companies responsible for unloading and loading cargo), and dockworkers would be free from government regulations.
In part, this planned obsolescence, which helped win support for the Commission, reflected the political pragmatism of the founders. It was a good way to meet the shipping industry's opposition to the Waterfront Commission Act on the traditional grounds that business operates best when unfettered by government red tape (Jensen 1973). But Dewey's and the legislators' desire that the agency be temporary also reflected an authentic dislike for bureaucracy. Bureaucracies were not directly accountable to the public and tended to take on a life of their own. As a Republican, Dewey could go only so far in defense of government oversight.
The IBL Challenge to the ILA
Concurrent with the birth of the Waterfront Commission, the American Federation of Labor expelled the ILA, because of its corrupt practices, and established a dual union, the International Brotherhood of Longshoremen (IBL). The IBL challenged the ILA for the right to act as the collective bargaining agent for dockworkers in the Port of New York.
Reformers pinned much hope on this challenge (Jensen 1973). Advocates of the Commission, most vocally Father J. Corridan, maintained that worker democracy was necessary for reform to take place. Organized criminals could be defeated only with the support of the rank and file, and the IBL promised to give clean unionism a chance on the docks (Raymond 1954). In addition, an IBL victory would make it easier for the Waterfront Commission to fulfill the promise that it would be a temporary agency.
The AFL/IBL drive was led by a board of trustees consiting of George Meany, Paul Hall, Al Hayes, William Doherty, and Dave Beck--heads of the AFL, Seaferers, Machinists, Letter Carriers, and Teamsters, respectively. Although ostensibly neutral agencies, both the NLRB and the Waterfront Commission supported the IBL challenge (Jensen 1973). The latter, for instance, recommended that the New York Shippers Association (NYSA) not bargain with the ILA before the election took place, presumably because a favorable contract negotiated by the ILA would diminish the IBL's chances. United Mine Workers President and founder of the CIO, John L. Lewis, and Harry Bridges, president of the West Coast longshoremen's union (the ILWU), supported the ILA.
Two elections for representation took place. The results of the first, held in December 1953, were inconclusive. The ILA received 9,060 votes, the IBL 7,568, and 4,405 votes were challenged. Violence and intimidation were widespread; subsequently the NLRB ordered a second election. In June 1954 a second contest resulted in similar confusion, although with less violence. The ILA won 9,110 votes, the IBL 8,791, and 1,797 votes were challenged. Most of the challenges grew out of questions regarding eligibility, and after the NLRB devised a formula for sorting out the challenges, the ILA was declared the winner.
This is not the place for an analysis of the reasons for the ILA's success.(4) It is clear, however, that a combination of factors led to the IBL's defeat. Naming Dave Beck one of the trustees did not help the IBL, since Beck himself was suspected of criminal ties, a suspicion that was subsequently confirmed in government hearings. A substantial proportion of the rank and file remained either intimidated by or committed to the ILA; others may have preferred a known evil to an unknown one. And the Waterfront Commission's strategy of supporting the IBL may have backfired because of the dockworkers' traditional distrust of state intervention.
Regardless of the reasons for the ILA's victory, the significance of that victory was indisputable. The IBL's defeat removed one of the cornerstones of the reform effort. Henceforth, the responsibility for breaking the control of the racketeers rested with the Commission alone. No serious rank-and-file threat emerged in the ensuing years. In the fall of 1959 the AFL-CIO readmitted the ILA, without substantial evidence that the ILA had cleaned its own house. By then the Landrum-Griffith Act was in effect; the Teamsters were no longer part of the federation; and organized labor was shunning further government intrusions into its affairs (Hutchinson 1970).
Structure and Operation of the Commission
The structure and operation of the Commission grew out of its legislative mandate and the pressures of the time (which, of course, changed over the years). The Commission had two commissioners, one appointed by the governor of New York and the other by the governor of New Jersey, with the advice and consent of the respective state legislatures. Each was paid a token salary and neither was expected to work full-time. Hence, the bulk of the responsibility fell to the executive director. The first executive director was Lawrence Walsh, a protege of Governor Dewey and as of 1989 the special prosecutor in the Iran-Contra affair. Walsh left a permanent stamp on the Commission, setting up its administrative apparatus and its policy priorities.
Essentially, the Commission was divided up into three and then four subdivisions (see Figure 1). They were the Division of Administration, the Division of Licensing and Employment and Information Centers, the Division of Investigation, and the Division of Law (Enforcement). Arguably, the Division of Licensing and Employment and Information Centers was the most important. In terms of personnel and budget, it was the largest branch, in 1954 employing 85 workers, over 40% of the Commission's work force, and expending about the same percentage of the Commission's total budget (Waterfront Commission 1954:45, 52). Its strategy of decriminalization and decasualization was true to the framers' intent. The division abolished the shape-up, replacing it with "neutral" and fair employment centers; denied registration to individuals of poor repute; and barred criminals from serving as union officials or employers. It restricted registration to bona fide dockworkers, thus decreasing the size of the work force and increasing the earning potential of the average worker.
The other divisions policed the port and carried out the Commission's legal and administrative duties. In its early years, lawyers for the Commission fought a continual battle in the courts to establish its constitutionality. As this concern receded, with the Supreme Court's sanction of the Act in 1960 (Waterfront Commission 1960:9--10; DeVau v. Braisted, 363 U.S. 144 ), the Commission, with the exception of the Division of Employment and Information, evolved into an agency resembling other task or strike forces. It conducted long-term investigations, lobbied for improved powers, and served as an example in the fight against organized crime. As the number of workers and operators to be registered decreased, leading finally to the closing of the register, these divisions of the agency grew more important relative to the Division of Licensing and Employment and Information Centers.
The Commission is smaller today than at its origins--a remarkable pattern for a government bureaucracy. The number of personnel reached a peak of 278 employees in 1958, and as of 1986 it stood at 152 (Waterfront Commission 1986). The Commission's 1986 budget of 6.4 million dollars was nearly six times as large as in 1954, but in constant dollars it represented only a 30 percent increase.
Over the years, the Port of New York has undergone extraordinary change. Table 1 shows that the number of dockworkers has fallen dramatically. Whereas an estimated 40,000--50,000 men (no women at the time) shaped-up for work before the Commission was born, in 1986 there were fewer than 8,000 men and women registered and thus allowed to work. Work hours and earnings, once exceptionally irregular and not shared evenly by the work force, have become more regular and evenly distributed, as a result of both the Guaranteed Annual Income (established by collective bargaining agreements in the mid-1960s) and the diminished work force.
More cargo passed through the port in 1986 than in 1953, but less than in the 1970s. Moreover, the percentage of all U.S. exports and imports that passed through the New York harbor was much smaller in 1986 than in 1953--8.4%, compared to almost 20% in 1953. The value of products shipped through the port has increased healthily, but New York no longer has the most valuable general cargo trade of any port.
Finally, containerization (whereby a large quantity of material is packaged in one large container), nonexistent in 1953, constituted the bulk of the trade by the mid-1980s. The era in which men still used time-honored techniques of loading and unloading, especially brute strength, has given way to an age of high technology and mechanization.
Successes and Failures
Assessing the successes and failures or shortcomings of the Waterfront Commission is an elusive exercise, partly because of the difficulty of devising fair and adequate standards. The Commission itself has evaluated its performance favorably by pointing to the decrease in crime and exploitation; yet, at the same time, in order to justify its continued existence, it maintains the necessity of constant vigilance (Waterfront Commission 1986).
One plausible way to evaluate the Commission's performance is to compare its record with its own mandate. Has the Commission attained its own goals? Has it ended the specific abuses delineated in the "Fourth Report"? Has it driven racketeers off the docks and out of the industry? Rather than present summary answers to these questions, I will assess the Commission's achievements, or lack thereof, over time, presenting a view of its initial impact, a midterm report, and an evaluation of the Commission in recent years.
From its birth, the Waterfront Commission faced union and industry opposition. The ILA filed a series of suits challenging the Commission's authority, and the NYSA (the association of New York shippers) complained about its implementation (Jensen 1973). Most important, union subterfuge and continued labor and management collusion undermined efforts to rid the docks of racketeers and end the exploitation of longshoremen. Union officials who were forced to resign their posts by Section 8 were rehired as union employees (as clerks, for instance) or moved into branches of the ILA beyond the Commission's jurisdiction, such as "Chenangoers," the individuals who loaded and unloaded railroad lighters (Waterfront Commission 1960:12--25). Often these individuals continued to receive the same salary as before and maintained authority over the rank and file. In some cases their replacements did not even know that they held union posts.
Furthermore, employers and unions pre-arranged hiring, enabling them to maintain control of the process, de facto if not de jure. They did this by taking advantage of a loophole in the Commission's initial hiring regulations: the absence of a requirement that workers physically pass through the employment information centers. The Commission waived that requirement in order to allow the employers to avoid paying costly "portal to portal wages," whereby workers received wages for travel time. Employers exploited this loophole by requisitioning regular gangs of workers, an extension of long-standing practices, as Vernon Jensen (1964) observed. The gangs were prepared by the unions and generally contained more than the necessary number of workers. When the gangs arrived at the docks they had to be thinned out--just as in the old days. Despite the supervision of the hiring of casual laborers (those who were not part of regular work gangs), union officials still managed to command favors and kickbacks (Larrowe 1955: 217--36; T. Johnson 1963:220--69).
When the Waterfront Commission became cognizant of the union-management chicanery, it held public hearings to mobilize support for amendments to close the loopholes (Waterfront Commission 1960). Thenceforth, the union was no longer able to play the shell game of changing the titles of union officials but not their pay or authority. In addition, the rules for forming work gangs were tightened so as to limit the union's hand in hiring.
This efficient response to ILA subterfuge exemplifies one of the Commission's greatest strengths. By empowering the Commission to conduct ongoing investigations and hearings, the law enabled the Commission to rapidly combat resistance. By exercising its power, the Commission demonstrated its commitment and forced the union and shippers to realize that they would no longer have free rein on the docks.
On an even more positive note, decasualization began and the system of public loading was terminated without a hitch. For the dockworker who remained on the register, earnings rose from $2,469 in 1954 to $6,417 in 1965, $12,055 in 1975, and $29,877 in 1985 (see Table 1). This rate of increase compares very favorably to that for industrial workers in other fields: for example, in 1955, all manufacturing workers earned an average of $4,356; in 1985, $20,000 (U.S. Department of Commerce 1975:166, 1986:384).
Ironically, by decasualizing the work force the Waterfront Commission strengthened the hand of the ILA. Jerome Klied, who has been with the Commission since the mid-1950s and is now deputy executive director, has stated that the ILA maintains the allegiance of the rank and file because they earn a decent living. The nearly $30,000 earned by the average dockworker in the Port of New York in 1986 was among the highest annual earnings of any group of unskilled or semiskilled workers in the country.
Even though the Waterfront Commission benefited the ILA leadership and rank and file, neither exhibited tremendous gratitude. The ILA condemned the Commission for siding with the IBL in 1953 and 1954 as an abuse of its power. It filed one suit after another challenging the Commission's constitutionality, and when that failed it resorted to lobbying legislatures to weaken or repeal the bistate compact (Waterfront Commission 1956, 1957, 1958).
As evidenced by the testimony at public hearings, the rank and file saw the Commission as an obtrusive agency that, in the process of ridding the industry of its abuses, created new problems for the dockworker who wanted to work. As one worker complained, in reference to a Commission-supported program to implement seniority hiring--presumably a more fair and rational system than the shape-up: You are stopping me from working. If I had the open shop Tommy Maher [an employer] would hire me. You stopped him. . . . Whose fault is it? . . . You've done away with my job. I can't load the trucks no more like I use to. You got honesty, but no public loading. (Jensen 1973:348--49)
There is undoubtedly some truth in the criticism that the Commission's decasualization of the work force, although it increased the earnings of dockworkers, adversely affected other groups--namely, those who lost their place on the work roll and, more important, newcomers seeking work on the docks. Young unskilled and semiskilled men lost an avenue of opportunity, limited though it was. As a breakdown of today's work force shows, the proportion of old workers is astronomical. Of the 7,000 + registered workers in 1986, fewer than 550 were under the age of 40, whereas more than 550 were over the age of 65 and more than 3,500 were over 55 (Klied 1988). (The Commission is not alone responsible for the aging work force. The Guaranteed Annual Income, for example, deters ILA members from retiring.)
The plight of minority workers is a case in point. Beginning in the late 1950s, the NAACP and the New York branch of the National Urban League condemned the ILA for its discriminatory practices. Historically, blacks had difficulty gaining employment on the docks and suffered from the abuse of corrupt hiring agents. (Marshall 1965; Northrup 1973). In the 1960s, when the civil rights movement challenged these practices, the union hid behind the Waterfront Commission's closed register as the reason for the failure of blacks to gain employment.
On the other hand, it should be emphasized that two studies of the Waterfront Commission published in the mid-1960s gave it high marks (Axelrod 1967; Johnson 1963). The authors' sternest criticism was that the Commission had not been phased out, as promised. Yet, neither study advocated deregulation. Both highlighted the role of the Commission in improving the conditions of labor: "Once the symbol of fear, insecurity, and irregularity in employment, the longshoreman has achieved a security far in advance of what is available to most American workers today" (Axelrod 1967:464--66). The dockworkers in the mid-1960s enjoyed a guaranteed annual income, hiring by seniority, and two and one-half times the wages they had earned in 1953. "The shape-up has disappeared. . . . Kickbacks for jobs have become virtually a thing of the past and loansharking has decreased" (Axelrod 1967:466).
Axelrod and Johnson concluded that the watchful eye of the Commission had pushed the ILA into becoming more like other unions, representative of its workers, if undemocratic. The Commission had successfully decasualized the labor force, and as long as the size of the work force remained appropriate, many of the abuses of the past would not return. Licensing and registration had proven "potent weapons" in driving criminal elements off the docks. Criminals no longer headed the ILA. The public loader had disappeared and, with him, kickbacks and extortion. And the Commission had gained additional powers to combat theft.
In retrospect, many of these assessments seem apt. Several of the specific abuses reported by the New York State Crime Commission had disappeared by the mid-1960s--the public loaders, the shape-up, misrepresentation of workers, and outright collusion between union leaders and employers. Yet, one abuse--large-scale theft--persisted to a much greater degree than Axelrod and Johnson supposed. It was a problem when these favorable reviews were written and remains a problem today.
The bulk of the evidence for the persistence of theft comes from the Waterfront Commission itself. As a special Waterfront Commission report (1970) proclaimed: "The present security system is deplorably inadequate." Although containerization had diminished petty pilferage, it had attracted large organized schemes. In 1967, 25 containers were stolen; in 1968, 41; in 1969, 50; and in the first quarter of 1970, 17. In addition, shippers continued to under-report losses, preferring to keep security costs down. Large thefts included the loss of over $650,000 worth of travelers' checks, $255,000 worth of scotch, and a shipment of cigarettes valued at $138,000. (Liquor and cigarettes were the two most prominent targets of container larceny.)
Port watchmen lacked industry support and felt too intimidated by dockworkers to increase their vigilance. In the four-year period from 1967 through 1970, approximately 1,000 watchmen apprehended only 24 personnel for theft, while in the same period the Waterfront Commission's 50 special agents arrested over 800 and law enforcement agents arrested another 294 (Waterfront Commission 1970). Changes in the standards for becoming a watchman had had little impact.
Acknowledging its inability to stop theft, the Commission requested expanded jurisdiction from both the state and federal government. Although it could deter longshoremen from committing crimes by threatening them with revocation of their licenses or removal from the registrar, it lacked similar leverage with truckers and other workers who freely moved in and out of the port. Observed the Commission, "107 truck drivers were arrested for various crimes on the docks since 1959; and yet most of them returned to the piers and may still be operating" (Waterfront Commission 1970:13). Hence, some mechanism for systematically overseeing these workers was mandatory.
The answer, the Commission contended, was to define the Commission's jurisdiction in terms of the work site rather than the type or function of work. The Waterfront Commission detailed this idea in a proposal for the creation of an Airport Commission of New York and New Jersey. The proposed Airport Commission would oversee the site of the airline industry. All workers who moved in and out of the airport would be required to obtain licenses, registration, or both. Not only airport workers, but truckers, garbage collectors, vendors, and all others who performed any work on airport grounds, whether regularly or sporadically, would have to abide by the Airport Commission's regulations (Klied 1988; S.J. Res. 222, 91st Cong., 2d Session). It is clear that the Waterfront Commission hoped to have similar powers extended to itself.
In 1970 the Airport Commission Compact was passed by the state legislatures of the states of New York and New Jersey and signed by their governors, but because of heavy opposition by the airport industry, it was never approved by Congress. To this date, the jurisdiction of the Waterfront Commission has not been expanded, and theft remains a problem (PCOC 1986).(5)
Besides theft, new specific abuses came to the Waterfront Commission's attention in the latter half of the 1960s and in the 1970s, most prominently medical and payroll rackets or frauds. As longshoremen won the right to medical benefits and a guaranteed annual income, schemes for defrauding these programs emerged.
For instance, the health clinic that served many of the Brooklyn workers was run by a doctor who had a suspended license, was addicted to narcotics, and was indebted to loan sharks. He became director of the clinic through his connections with ILA officials and underworld figures, most prominently Henry "Buster" Bell, president of ILA local 1804. (Bell was convicted of jury tampering in the Hoffa case.) In one six-month period, in 1962, the doctor received $15,000 for treating only 21 patients, a very high salary at the time. Evidently, the director kicked back his profits to underworld figures (Waterfront Commission 1966). The cost of performing unnecessary services was passed on to employers and insurance companies.
Such abuses associated with medical claims and workmen's compensation seemed to increase despite repeated Commission investigations (Waterfront Commission 1970). In other words, although many of the specific abuses identified in 1953 had disappeared, the core of the problem remained. Crime was more sophisticated and less dangerous to the worker, but still widespread and costly to the port.
The most startling revelation of the persistence of criminal influence came through the Union Racketeering in Ports on the Atlantic and Gulf Coasts (UNIRAC) investigations (PCOC 1986; Salerno and Salerno 1981). These were massive undercover operations conducted primarily by the FBI in the mid- and late 1970s that resulted in scores of arrests, indictments, and convictions. The biggest catch was Anthony M. Scotto, vice-president of the ILA, president of its largest local, number 1814, and a "political power broker" in the New York region.
Scotto was indicted and convicted, in 1980, on charges of "racketeering, accepting unlawful labor payments and income tax evasion." So too was his co-defendant Anthony Anastasio, another high-ranking Brooklyn ILA official. The two had developed a complicated workmen's compensation scheme whereby industry representatives paid them to reduce fraudulent insurance claims. Walter D. O'Hearn, president of McGrath Services Corporation, for instance, paid Scotto $5,000 a month, plus additional payments at Christmas, to decrease the number of claims, which were costing his company one million dollars a year. In addition to cash, Scotto received a cabana on his summer estate from another stevedore. (U.S. v. Anthony Scotto and Anthony Anastacio, Appelants, 641 F 2d. 47 (1980); Salerno:1980.)
Shortly after Scotto and Anastasio's conviction, the Waterfront Commission forced them to resign from their union posts. But one has to wonder to what effect. The Presidential Commission on Organized Crime reported in 1986 that the ILA, historically a "synonym for organized crime in the labor movement," remained corrupt (PCOC 1986:33). Scotto was described as a capo in the Gambino family, and though he no longer held an official position with the union, the family maintained control of the Staten Island and Brooklyn docks (PCOC 1986:41).
Moreover, Scotto and Anastasio were not the only ones caught by the UNIRAC investigators. The PCOC (1985) listed over 100 indicted figures in the longshore industry, including several other local union presidents and vice-presidents. The report added that the Genovese family retained a grip on the Manhattan, Newark, and Bayonne piers (PCOC 1986:48).
The recent indictments (1986) of John DiGillio, John Barbato, and Donald Carson on extortion charges bolster the Presidential Commission's charge. Carson, secretary-treasurer of Locals 1587 and 1588 in Bayonne and general organizer of the ILA, the international's third-highest ranking position, along with DiGillio, a reputed capo in the Genovese family, allegedly conspired with United Terminals, Inc., a stevedoring firm, to defraud the Sea Land Company of millions of dollars. The Sea Land Company thought that workers were being paid $12 per hour. In reality, their rate was $7. The union officials received kickbacks, and the stevedoring company (the longshoremen's employer) saved money. "In essence," U.S. Attorney Thomas Greelish declared, "he [Carson] sold out [his men] for personal gain" and the employers allegedly went along with the scheme (Journal of Commerce 1986).
This evidence of the persistence of organized crime on the docks does not imply that the conditions of 1953 still exist. Most important, the exploitation of dockworkers, rampant before the Commission came into existence, has diminished considerably. Racketeers no longer operate openly and unabashedly. They have had to devise much more subtle ways to profit from their impregnation of the industry. The Commission controls the influence of labor racketeers and, aided by special efforts like UNIRAC and occasional high-profile trials, keeps racketeers on notice that the penalties for crime can be high.
The Commission has not, however, proved to be the panacea that Governor Dewey and other policy makers predicted it would. Dewey heralded the Waterfront Commission Act as a symbol of the government's determination to "end organized piracy, extortion and economic wrecking on the waterfront." Presumably he hoped that the Commission would do the job that special task forces and ordinary law enforcement agencies were unable to do alone. Thirty-five years later, quite the contrary, the Waterfront Commission cooperates in special efforts against organized crime but lacks the manpower and jurisdiction to take the lead. It helps to plug the dike, but has not managed a permanent repair; and most likely it will not be in a position to fade from the scene, as was originally hoped, any time soon.
Of course, the persistence of corruption cannot be blamed solely on the Waterfront Commission. Organized crime was deeply entrenched in the industry when the Commission was founded, and it is not surprising that the agency still faces an uphill struggle to achieve Governor Dewey's goal of eradicating criminals from the docks. More important, even the Commission's failures are not without value, since they provide significant lessons for those who wish to combat organized crime in other unions and industries. The Commission's experience suggests both important possibilities and sobering limitations of government intervention to fight organized crime in the labor movement.
First, the Commission's experience demonstrates the need for broad jurisdiction in its own or any other fight against labor racketeering. Considering the extent of the powers that were conferred on the Waterfront Commission, it has done an admirable job. But those powers were never great enough. The Commission cannot be expected to curb theft on the docks, for example, unless it is given jurisdiction over the truckers and other workers who move freely on and off the docks.
The RICO statutes of 1970 enable law enforcement officials to attack organized crime more effectively than can the Waterfront Commission. For example, RICO permits "the criminal forfeiture of an interest obtained through the violation of a statute" and allows the court to impose a fine equal to up to three times the loss caused by a criminal activity. (18 U.S.C. sec. 183, N.Y. Penal Law sec. 460.30.) Moreover, government officials can create a climate in which workers might feel safe to challenge their corrupt unions by taking full advantage of the Landrum-Griffin Act and RICO.(7) Even if a challenge to the ILA is not feasible, the IBL's near victory should encourage similar efforts in other industries today.
Second, the Waterfront Commission's history shows that even if the influence of organized crime cannot be eradicated, some of the worst aspects of labor racketeering can be curtailed. Although the Commission's particular powers cannot be grafted onto attempts to root out racketeers in other industries, the concept of licensing and registering employers and employees is worth further consideration by those who wish to reform (for example) the construction industry. At least such regulation provides a deterrent to criminal behavior. Government regulation of hiring clearly improved the life of the dockworker, and some form of oversight in the construction industry might also prove beneficial.
Third, although the Waterfront Commission's abolition of the shape-up and public loader may not be directly applicable to other industries, indirectly its success in eliminating these practices shows that firm government action can significantly affect time-honored but thoroughly corrupt practices. perhaps this example bodes well for reformers who wish to eliminate similar abuses in the construction industry, such as the working Teamster foreman (NYSOCTF 1988:52).
Finally, the Commission's history shows that the campaign to establish a regulatory body or other legislative remedies to labor racketeering should not make exaggerated claims, such as Governor Dewey's pronouncement that the Waterfront Commission would rid the industry of racketeers. Rather, reformers must seek to educate the public, to develop a sophisticated view of corruption, so as to develop constituencies committed to a long-term battle for substantive change, both within companies and unions and among the public at large.
Perhaps, as the Association for Union Democracy has suggested, only when and if the government elevates the right to a democratic union to a plane on a par with civil liberties, such as freedom of speech, will the battle succeed (Summers 1988). Only then will embattled workers and employers believe that the fight against organized crime is real; and, just as important, only then will the public feel that the struggle against labor racketeering concerns its own fundamental rights, and is not just someone else's problem. [Figure 1 Omitted] [Tabular Data 1 Omitted]
(1)The NYSCC did not explicitly differentiate between individual and organized (mafia) criminal activities, although in its "Fourth Report" (1953) it did link various criminal gangs or families with corruption in the longshore industry. For example, the Crime Commission claimed that Mickey Bowers, a convicted felon, and his gang of ex-cons controlled the waterfront along the West Side of New York City (NYSCC 1953:23-33). The use of the term "mafia" or "La Cosa Nostra" became more popular following the McClellan hearings and the publication of the Vallachi Papers (Tyler 1962:321-62; Peterson 1973:79-91). (2)A pamphlet, "The Waterfront Commission Act" (n.d.), compiled by the Waterfront Commission, contains the original enabling legislation and subsequent amendments. For the original statutes, see NJ Laws 1953, c 202 (N.J.S.A. 32-231); NY Laws 1953, c 882 (McK Unconsol. Laws $9801); U.S. Public Law 252--August 12, 1953, c 407. (3)There are at least two clear indications that the Commission was meant to be a temporary agency. First, the Act itself requires the Commission to annually report to the state legislatures and governors of New York and New Jersey to determine "whether the public necessity still exists" for the Commission to continue to register and license labor and management and operate employment centers. Second, Governor Dewey publicly and privately termed the Commission a temporary measure (Axelrod 1967:457; Johnson 1963). (4)Further research on this election is needed. Still, in spite of the IBL's shortcomings, arguably the 1953 challenge to the ILA represented the last real effort by organized labor to root out labor racketeers. The merged AFL-CIO expelled the Teamsters in 1957 and established an Ethical Practices Committee, but neither of these actions attacked corruption as directly as did the formation of a dual and supposedly democratic union. Furthermore, in 1987 the Teamsters Union was readmitted to the AFL-CIO without evidence of internal reform, and the Ethical Practices Committee has been moribund for over twenty years. (5)As the PCOC observed (1988:36), an accurate assessment of the amount of cargo that is stolen each year is unavailable: No federal, state or local government agency or industry trade association accurately monitors or records losses due to cargo theft from waterfronts and airports. The magnitude of the problem at the ports and carriers most targeted for theft is simply not known. Cargo losses are often absorbed as part of the cost of doing business. In fact, shippers continued to under-report theft in order to avoid hikes in already enormous insurance premiums. (6)Carson was convicted of extortion in spring 1988; DiGillio was found innocent. (Barbato's case was severed from the Carson and DiGillio case and as of this writing he still awaits trial.) Despite his legal victory, suspicions about DiGillio's connections with the underworld did not end with the trial. Shortly after his acquittal, DiGillio disappeared, and later his body was found floating beside a New Jersey riverbank; he had been murdered "gang" style, according to law enforcement authorities (New York Times, May 27, 1988, Part 4, p. 14). (7)The argument that government alone cannot carry the fight against labor racketeering is one put forth by a variety of individuals and organizations. The Association for Union Democracy has most forcefully expressed this view for years. Father Corridan, the so-called "Waterfront Priest" made famous by the movie "On the Waterfront," contended that the rank-and-file worker had to be at the forefront of reform. The problem is how to induce workers to stand up for their right to a democratic union.
Corridan viewed long-term government intrusion with skepticism. The Association for Union Democracy, on the other hand, now advocates a strong government presence toward the end of creating a climate in which rank-and-file workers will step forth. Recognizing the risks that workers face in demanding reform, the Association notes that organized crime must understand that the government remains committed to the rights of workers, and that reform will not be a temporary or fly-by-night operation.
The author PETER B. LEVY is Assistant Professor, Department of History, Rutgers University--Newark. He thanks James Jacobs, Tobe Thatcher, Herman Benson, and his wife, Diane, for their words of wisdom, and Roger Chari for his help in preparing the charts and tables.
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|Title Annotation:||Attacking Corruption in Union-Management Relations: a Symposium; includes bibliography|
|Author:||Levy, Peter B.|
|Date:||Jul 1, 1989|
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