While it is no doubt true that people like
Costello
have accumulated a nest egg of dimensions that might be envied by the common man I doubt that it is very great in the terms under discussion.
Lundberg - The-Rich-and-the-Super-Rich-by-Ferdinand-Lundberg
P.
Giannini--had scant schooling.
With few exceptions, the fortune-builders of more recent date, like their nineteenth-century forerunners, had little interest in school even when it was available to them.
Not especially well-educated or well-read either, they are obviously truants from high culture.
Many who weren't high school dropouts were grade-school dropouts.
Educators, trying in desperation to rally popular support for education and mulling over statistics, like to point out to rugged philistines that on the average educated people earn more than the meagerly educated. And this is true when it comes to offering marketable skills and personalities at modest salaries in an existing Establishment that requires ever-increasing skilled personnel for its complex operations. But it has never been true where really big money is concerned. An education can be a severe handicap when it comes to making money.
The reason for this is that in the process of being educated there is always the danger that the individual will acquire scruples, a fact dimly sensed by some of the neo- conservatives who rail against the school system as "Communistic. " These scruples, unless they are casuistically beveled around the edges with great care, are a distinct handicap to the full-fledged moneymaker, who must in every situation be plastically opportunistic. But a person who has had it deeply impressed upon him that he must make exact reports of careful laboratory experiments, must conduct exact computations in mathematics and logic, must produce exact translations and echoes of foreign languages, must write faithful reports of correct readings and must be at least imaginatively aware of the world in its diversity, and who has learned these lessons well, must invariably discover that some element of scrupulosity--even if he hasn't been subject to moral indoctrination--has been impressed on his psyche. If he enters upon money-making in a world bazaar where approximate truths, vague deceptions, sneak maneuvers, half promises and even bald falsehoods are the widely admired and heavily rewarded order of the day he must make casuistic adjustments of his standards. The very process of laboriously making the adjustment, even if he succeeds, puts him at a disadvantage vis-a-vis the unschooled, who need waste no energy on such adjustments, who pick up anything lying around loose as easily as they breathe. Some educated people can't make even a partial adjustment to the market bazaar, and their disgraceful bank accounts show it. They are, as even their wives sometimes kindly inform them, failures, though they are doing something conceded to be useful such as instructing children or enforcing the law. They can inscribe after their names a big "F" and go stand in a corner under a dunce cap as the propaganda dervishes scream about success.
But, so as not to alarm appropriations-conscious educators, mere schooling (which is not the same as an education) may prove no great handicap in the race for money, which is one reason some heavily schooled persons turn out to be pecuniary successes. For many persons dutifully put in the required number of years in a national school system noted for its permissiveness without ever acquiring dangerous scruples. One could cite hundreds of names. Among other things, they learn to cheat handily in examinations-- excellent training for the market, They learn to bluff overworked teachers with verbal balderdash. And they do well subsequently as loose-talking salesmen, jobbers, advertising men, promoters, agents, brokers, morticians, lobbyists, fixers, officeholders and smooth workers in the film and television industries. They all learn to be practical--
that is, judiciously unscrupulous. After all, as any of them can testify truthfully, the world isn't perfect and they piously feel no obligation to alter its skewness. They may even become tycoons, and it is only other tycoons who stand in their way.
An education, it is widely and correctly thought, should prepare the individual for life. But the preparation is not for life as the philistines preconceive it. Educators have prolixly explained what an education is so many thousands of times without denting the popular notion that it is vocational preparation that it would be piling prolixity on prolixity to attempt it again. Put most briefly perhaps, an education is designed solely to humanize the individual, and if it has done that it is a "take. " The idea of an education is to raise the individual above the level of mere animality, or at least to qualify his animality significantly. If such an individual makes out better-than-average financially it may be due to recognition of his worth. But thousands of thoroughly educated people have never been appraised by their contemporaries as worth a living wage. T. S. Eliot, Harvard-schooled and widely hailed as the most significant poet writing in English in the past half century, earned his living as a bank teller and, much later, as a publisher's reader. Financially speaking, Eliot as poet, teller or editor wasn't worth so much as a cuss word. Yet it seems probable that his writings will be appreciatively read long after every single existing American corporation and bank, and the memory thereof, has passed out of existence. Curious. . . .
An education, truth to say, has nothing whatever to do with making or not making money, except perhaps as a hindrance. The educators, in extolling the money-rewarding features of education, are indulging in a benevolent deceit, trying to hornswoggle a public with a peasant view of life to support the schools and perhaps lift themselves by their bootstraps above simple animality. Vocational trainees sometimes get sidetracked into true educational paths.
There is no evidence that any of the men on our list who had a higher education, except the General Motors engineering group, ever made use in their careers of what, if anything, they learned at college. There is little in the careers or expressions of either Getty or Kennedy to reflect the influence of Oxford or Harvard. Each could as well have finished off in a business college just as Raskob did. Harvard never endorsed either stock market pools or the general conduct involved in such pools. These were strictly extracurricular.
The General Motors men were all technicians and applied their knowledge of technology strictly to making money, not to engineering the best possible cars. Donaldson Brown, who married a Du Pont girl, is credited by Alfred P. Sloan, Jr. , in his memoirs with developing a penetrating method of ascertaining rate of return on investment by company subdivisions, a method taken over as well by Du Pont. 70
Most of the men on the Fortune list, as on Stewart Alsop's list, were unsuitable employees, a facet that Alsop takes note of. Few of these men could fit into a pre- arranged job, except for the General Motors executives. As far as employment was concerned, they were maladjusts, nonorganization men. In whatever brief employment some of them had early in their careers, they were like restless panthers, looking only for a chance to break out and track into the jungle. Again except for the General Motors crowd, who were team workers, nearly all the others mentioned were "loners. " And most of them remained "loners," detached, nongregarious. Exceptions would be found among some of the Texas oil men, although Hunt is very much of a "loner. "
Alsop found other peculiarities among those he interviewed, which apply, with some exceptions, to the Fortune listees. None played golf, supposedly the businessman's game. All were physically restless, standing up, moving about, scratching themselves, drumming their fingers, chain-smoking cigarettes, twiddling and twitching--all of which
may merely have been restiveness at having to submit to an interview. Alsop takes it as a general character trait.
Some who have been in the armed forces made out poorly under military discipline, couldn't take it. John D. MacArthur, Alsop reports, was discharged from the Navy in World War 1, "unsuited to naval discipline. " Despite the many big wars the United States has fought in the lifetime of all these men, none stands forth as a major or minor military figure. Where a Who's Who record is available it shows few in military service even when by age classification one would have expected to find a man in uniform. But some perhaps common deviant characteristic appears to have led the military to pass them by. Money-making and military service do not appear to mix.
As to religion, few on the Fortune list make a point of mentioning it. Two were Jews and one was a conspicuous Catholic, Mr. Kennedy. While a few of the others who do not give such information may be Catholics, the probability is that all thirty-one are at least nominally Protestants or religiously disinterested. Catholics do not appear among money-makers proportional to their numbers in society probably for the same reason that they do not loom large in any department of upper-hierarchical American life except local politics and trade-union leadership: They have been self-segregated from the mainstreams of American life by a clergy apparently afraid that contact with non- Catholics will cause their submissiveness to the Church to diminish. With the history of Europe before us we cannot conclude that Catholics as such are not interested in money and power.
Many of these men, dead or alive, are saluted as philanthropists by newspapers (that carry the advertising of their enterprises) because they have, before or at death, established foundations formally classified as charities under the law. Of these Kennedy, Sloan, Kettering, Kaiser, Benedum, Richardson stand out thus far, although virtually all of them will in the normal course of operations establish foundations. Such action has now become standard procedure in reducing estate taxes and keeping controlling shares either in a family or a friendly group, at the same time previsioning considerable posthumous social influence through the financial patronage the foundation is able to bestow.
Who among the noninheritors has made the deepest national impress? This question is easy to answer and one must say Mr. Kennedy, at second remove, mainly through his children. Although John F. Kennedy was not trained by his father to become what he became, not merely president of the United States but a president fantastically visualizing the United States as something more than a pettifoggers' paradise, the father did not impede him and in many ways must be conceded to have indirectly helped him, as the sire's biographer, Richard J. Whalen, skillfully brings to light. Through JFK, and possibly through his other sons, Mr. Kennedy (and his wife) enters History (that is, he comes under analytical individual consideration of the historians) instead of merely being part of history like his financial contemporaries and the rest of us. Between History and history there is a vast difference: The former invokes the canons of aesthetics and morality; the latter is nonevaluative, shapeless. Mr. Kennedy also made a signal contribution as the aggressive first chairman of the Securities and Exchange Commission.
If we continue beyond the Fortune list we find no significant alteration in these patterns although we do, here and there, run into odd variations in the form of Land, De Golyer and Danforth. These are untypical cases, sports.
As to the general human type of American wealth-builder, new and old, it can be said that he is usually an extrovert, given to little reflectiveness until perhaps he approaches senility. He is more often unschooled than schooled, and unread, and has for the most
part a naive view of the world and his role in it. A man of action, he is compulsive and repetitive in his single-minded acquisitiveness. He simply does not know what else to do. As De Golyer remarks, he substitutes money-making for living and often believes that he is engaged in a great crusade. He rarely, as far as the record shows, has qualms or doubts about himself. He is almost invariably devoid of a sense of humor. Color him grey.
"Beyond certain minima, economic gain is inevitably associated with prestige and status, self-validation called 'success,' opportunities for assertion against others, autonomy from disliked persons, tasks, or situations, and so forth. What gives economics its power to command such energy as is invested in the pursuit of gain is often its instrumental value as a means to some other objective. Money buys more than commodities; it buys psychic gratifications of all sorts-although never so completely as the money-seeker thinks it will. "71
The winner is consequently usually restive. For he evidently feels that with all his wealth he ought to strike a blow for something tremendous. But what? And how? Christianity? Science? World peace? Progress? Education? Free enterprise? Democracy? Health? In many cases he ends up feeling frustrated and morosely retires to some House and Garden paradise to meditate on the freakishness of the world and its people. In no case yet of record has he developed a sense of mission that the world can identify itself with. By his position alone he is alienated. For all he has, in fact (apart from deviants like De Golyer, Land and Danforth), is money.
Three
CRIME AND WEALTH
In the quest for new wealth there are shadier avenues yet to scan. For the organized underworld has been designated by a number of recent observers as the luxuriant seeding ground for new fortunes of menacing portent.
This theory grew out of hearings before the Special Senate Committee to Investigate Crime in Interstate Commerce, May 10, 1950, to May 1, 1951, under the chairmanship of Senator Estes Kefauver of Tennessee. In 1952 Kefauver was the Democratic candidate for vice president of the United States.
The germ of the theory appears in Kefauver's book based on the hearings, Crime in America (1951). With minor variants the story has since developed: Underworld characters with local political protection are acquiring legally established businesses as "fronts" and are snatching working control in various large corporations specially in hotels and hotel chains, motels and motel chains, in divers pleasure resorts and perhaps also in banks. Such characters, it is held, have made a bundle in the underworld-- through gambling operations, houses of prostitution, bootlegging, assassination, smuggling, the narcotics traffic--and they are now pyramiding their illicit gains in the labyrinthine corporate world.
Various dangers loom: They will loot companies from the inside, they will rig markets and defraud the public, they will be better able to procure politicians, they will prey on "legitimate" businessmen. They will turn a happy, honest corporate world into a devil's
den, with consequent demoralization of an orderly society. They will, in short, act like fairly typical businessmen.
As the senator himself put it, "I cannot overemphasize the danger that can lie in the muscling into legitimate fields by hoodlums . . . there was too much evidence before us of unreformed hoodlums gaining control of a legitimate business; then utilizing all his old mob tricks--strong-arm methods, bombs, even murder---to secure advantages over legitimate competitors. All too often such competition either ruins legitimate business men or drives them into emulating or merging with the gangsters.
" The hoodlums also are clever at concealing ownership of their investments in legitimate fields--sometimes, as Longie Zwillman said, through 'trustees' and sometimes by bamboozling respectable businessmen into 'fronting' for them. Virgil Peterson of the Chicago Crime Commission testified that 'hundreds' of hoodlum-owned businesses are successfully camouflaged. He told us of having been consulted by a friend of his who had been offered a $25,000-a-year job to head a 'new corporation. ' Peterson investigated and found that 'the fellow who had contacted him was part and parcel of the Capone Syndicate. " 1
Senator Kefauver said he feared legitimate business would be used as a "front," a
cover for tax-evading illegal operations; that unreliable men would arise in industries
vital to health and safety. "I, for one," he said, "do not like to think of food products
necessary to the health of my children, or of medicine that can mean life or death to a
good many people, coming from plants controlled by gangsters whose code of ethics is
the dollar sign, and who do not care if that dollar sign is stained somewhat with blood. " 2
But the senator nowhere gave definitions of "legitimate" and "respectable" businessmen.
Kefauver showed that mobsters were established on the fringes of seventy different industries, including drug manufacturing, baking, candy-making, food distribution and hotels. 3
While he did not enlarge Kefauver's theory, Robert F. Kennedy, chief counsel of the Select Committee (McClellan Committee) of the United States Senate on Improper Activities in the Labor or Management Field, subsequently attorney general of the United States, and still later senator from New York, did reinforce it in his book based on the McClellan investigation, The Enemy Within (1960). For the investigation found, as Kennedy reports, direct tie-ups between extremely vicious underworld characters, spurious labor unions and various leading corporations. 4
The object of these tie-ups was to prevent effective unionization of employees, a criminal violation of the National Labor Relations Act. Many other crimes, such as murder, were allegedly committed out of sheer exuberance of spirits.
After diplomatically saluting "the majority of American businessmen" as above crookedness and collusion in labor-management negotiations," Kennedy wrote that "we found that with the present-day emphasis on money and material goods many businessmen were willing to make corrupt 'deals' with dishonest union officials in order to gain competitive advantage or to make a few extra dollars. . . . We came across more than fifty companies and corporations that had acted improperly-and in many cases illegally--in dealings with labor unions . . . in the companies and corporations to which I am referring the improprieties and illegalities were occasioned solely by a desire for monetary gain. Furthermore we found that we could expect very little assistance from management groups. Disturbing as it may sound, more often the business people with
whom we came in contact--and this includes some representatives of our largest corporations--were uncooperative. " 5
"By and large," wrote Kennedy, "little accurate information came to us from the business community. We received 150,000 complaints during the Committee's life. Seventy-five per cent of them came from representatives of organized labor, mostly rank and filers. Some came from people outside the labor-management field. Only a handful came from people in the business world. Certainly no investigation was touched off by any voluntary help we received from management. And this was not because management had no information to give. I believe 90 per cent of the corrupt deals between business and labor could be eliminated if business officials would simply talk to proper authorities. " 6 Why business people, as the instigators of the corrupt actions, would do this he didn't say.
"Often," Kennedy related, "we found that corrupt deals involving management were handled through attorneys who played the role of 'middleman,' or, as we came to think of them, 'legal fixers' or 'legal prostitutes. ' More often it was the labor relations consultant who played the 'middleman. '" 7
Kennedy reeled off a list of names of offending companies that reads like a miniature Social Register of big business. "Although I thought I had become case-hardened," Kennedy remarked, "I discovered I still was not shockproof when I studied the results of our investigation of the A. & P. . . " 8
The thesis that the underworld is a direct bridge into new propertied wealth for latecoming frontiersmen is laid down flatly by Professor Daniel Bell, chairman of the department of sociology of Columbia University. 9
"The jungle quality of the American business community, particularly at the turn of the century, was reflected in the mode of 'business' practiced by the coarse gangster elements, most of them from new immigrant families, who were 'getting ahead' just as Horatio Alger had urged. 10
"For crime, in the language of the sociologists, has a 'functional' role in society, and the urban rackets--the illicit activity organized for continuing profit, rather than individual illegal acts--is one of the queer ladders of social mobility in American life. Indeed, it is not too much to say that the whole question of organized crime in America cannot be understood unless one appreciates (1) the distinctive role of organized gambling as a function of a mass-consumption economy; (2) the specific role of various immigrant groups as they, one after another, became involved in marginal business and crime; and (3) the relation of crime to the changing character of the urban political machines. " 11
Crime, in other words, was the road taken by many immigrants, imbued with the Horatio Alger ideal of 100 per cent Americanism to become property holders and escape the repressive wage yoke imposed upon them by foresightedly frugal Anglo- Saxon corporations.
As business became more organized so did racketeering and gambling, until in the 1920's and 1930's it had become "industrial racketeering" through the medium of labor disputes, a fertile field. 12
Leading entrepreneurs here were Arnold Rothstein (shot after a high stakes card game), Louis Lepke Buchalter (executed in Sing Sing), Gurrah Shapiro, Dutch Schultz (assassinated), Jack "Legs" Diamond (assassinated) and Lucky Luciano (deported). Buchalter and Shapiro, as Professor Bell notes, in New York in the 1930's dominated sections of the clothing industries, house painting, fur dressing, flour trucking, etc. "In a highly chaotic and cutthroat industry such as clothing, the racketeer, paradoxically,
played a stabilizing role by regulating competition and fixing prices. When the NRA
came in and assumed this function, the businessman found that what had once been a
quasi-economic service was now pure extortion, and he began to demand police action. " 13
Seeking other worlds to conquer, says Professor Bell, the criminal racketeer shifted his emphasis from production to consumption, mainly gambling, without wholly yielding his interest in the productive side--as his deep involvement in labor racketeering in the 1950's and 1960's attests.
The Kefauver investigation revealed the tentacles of the gambling and vice syndicates; the McClellan investigation disclosed the seamy labor racketeers in full bloom. The latter performed the economic function of keeping labor costs down for the owners (a function performed by the political police in Soviet Russia). The gambling entrepreneurs performed the political-economic function of helping finance surreptitiously the major local political organizations--"machines" to critics--in Boston, Providence, New York, Philadelphia, Pittsburgh, Buffalo, Cleveland, Detroit, Chicago, St. Louis, Kansas City and other large urban areas.
Properly rejecting the Kefauver Committee's idea that a Mafia rules the underworld, Professor Bell points out that the committee failed to understand "(1) the rise of the American Italian community, as part of the inevitable process of ethnic succession, to positions of importance in politics, a process that has been occurring independently but also simultaneously in most cities with large Italian constituencies--New York, Chicago, Kansas City, Los Angeles; (2) the fact that there are individual Italians who play prominent, often leading roles today in gambling and the mobs; and (3) the fact that Italian gamblers and mobsters often possessed 'status' within the Italian community itself and a 'pull' in city politics. " 14
The road of crime, in other words, was taken by some latecoming immigrants trying to become property owners: Italians, East European Jews in the garment trades and Irish. 15 The urban political machines levied on all of these a heavy tariff. 16
In the process many of these men became "legitimate" property holders--'legitimate" here meaning that a court will uphold one's property claim. "Many of the top 'crime' figures" (I don't know why Professor Bell puts crime' in quotation marks, since they were court-certified criminals--F. L. ) now derived their income from "legitimate investments (real estate in the case of Costello, motor haulage and auto dealer franchises [Ford] in the case of Adonis) or from such quasi-legitimate but socially respectable sources as gambling casinos. " 17
One arrives, in short, at the big shots of the underworld, their names paraded anew in the Kefauver and McClellan investigations, and including such "labor leaders" as Jimmy Hoffa, Dave Beek and their henchmen--topsy-turvy Robin Hoods who gleefully robbed the poor for the benefit of the rich. These are men who, it is widely asserted, have traveled the latest highroad to wealth and secretly own large shares in the largest corporations. They have indeed the requisite qualities of ruthlessness and unscrupulousness but lack finesse.
Without harrowing the reader with details of the lengths to which I have gone to verify this notion of the criminal underworld as the source of great new wealth, let me categorically say this: There is nothing to it.
While it is no doubt true that people like Costello have accumulated a nest egg of dimensions that might be envied by the common man I doubt that it is very great in the terms under discussion. If Costello or any other underworld character as of 1965 had a net worth of more than $5 million it would be surprising. No available evidence shows great underworld wealth unless Wall Street is located in the underworld.
Senator Kefauver cites incomes of various gambling groups taken from income-tax returns, which the underworld dislikes falsifying since Capone and others were caught at it and jailed for long terms, but though some of these figures are impressive, even if understated, it is only in a small way. They seem in the category of the marginal speculative businessmen scanned toward the end of the previous chapter, at best.
The reason for this low pecuniary estate is simple. The underworld in its public operations--gambling, prostitution, other variants of vice (as distinct from secret operations such as dope peddling)--is subject to "the split. " It must share its receipts (Kefauver estimated the gambling turnover alone at $20 billion a year) with local politicos, and the police from the beat patrolman up to the precinct captain.
This necessity diminishes the net return to the operators who, themselves a group, must also split. I should imagine the net return on total "sales" to be a good deal less than I per cent. On $20 billion (a figure pulled from the air) I per cent is $200 million, and even $200 million is far more than is likely to reach underworld coffers. For in addition to payoffs to winners, the gamblers must make heavy payouts for judicial fixes and lawyers. They must constantly yield tribute to hijackers. And when the residue is split among hundreds of operators there isn't much left for each. The "take" in prostitution is less and subject to a bigger overhead.
Someone who was known to be "on the take" for many years was Mayor Frank Hague of Jersey City, long a power in national councils of the Democratic Party (he might just as well have been a Republican). For Hague the revenue from gambling was steady. As a formal Catholic he frowned on prostitution. At his death he left an estate valued at $5 million. 18 If Hague, starting as a poor youth and never leaving the receiving end, could do no better than that, what must the so-called syndicate heads have made? Even if we allow that Hague spent $5 million additional in high living, his receipts would not have been more than $10 million for a very large, enduring and central gambling-political operation. While a goodly sum, this is not really "big" money. And Hague was not himself a gangster.
According to the newspapers, some criminal--usually Italian, Irish or Jewish-- establishes an organization. Then he shops about for "political protection" and manages to seduce some respectable churchgoing American official with a charming wife and children and a dog, cat and canary. A really decent chap, you know, until sweet-talked and bribed by an agent of the Mafia.
What actually almost always happens is that an established group in business and/or politics, having decided what the prospects are, looks about for a strong-arm man. If he can't be found locally he is imported, as Costello was imported into New Orleans to run slot machines, as Johnny Torrio and Capone, Brooklyn men, were imported into Chicago to dominate vice in general and as Harry Bennett was brought to Detroit by Henry Ford.
Something to notice about nearly all the underworld figures in their public appearances is that they are unsure of themselves. In fact, if they didn't have sponsorship they wouldn't have the assurance to set up extensive public operations. The newspapers require one to believe, for example, that the Anastasia brothers jumped ship and then proceeded autonomously to establish themselves on American soil as general strong-arm men and assassins. If one will only notice one's own uncertainty in a strange city (much less a strange country with a strange language) one will see how unlikely it is that lower-class people who don't know the language would take to large-scale lawbreaking in a strange land. But--if someone in authority convinced them it was all right to break the law, that they would be protected and paid, and if he was able to prove this on numerous touch-and-go occasions--one would produce the pattern of sullen,
defiant, wordless behavior of lower-class thugs at the bar with which the public is familiar.
The core of the Chicago prohibition mobsters, now world famous, was originally recruited by Chicago newspaper publishers who were engaged in literal gun battles for newsstand position--the "Circulation War. " All of the gunplay of the 1920's had a long dress rehearsal before World War I in the newspaper war. The participants learned through the Chicago newspaper attorneys how "the fix" worked and, later under political protection, they functioned the same way in the prohibition gangland wars. 19
Newspapers also purvey the fiction that once an operation has begun another independent comes along and tries to "muscle in," and then gang warfare breaks out. This is seldom true, although some independents (perhaps misled by reading the newspapers) have lent color to the theory, to their own undoing.
Most cases of urban gang warfare in the United States, apart from juvenile gangs, are expressions of factions in the local political party structure. Local branches of the two major parties or factions thereof extend protection to different strong-arm men, in gambling, prostitution, bootlegging, "protecting" small businessmen, and similar enterprises. Out in the field the cohorts of one gang infringe on the supposed territory of another, each catering to the hoi polloi. Formally outside the law, there is no way out for them except to fight or retreat. In some cases, no doubt, there have been retreats. In the known cases, violence has been the arbitrator.
The strong-arm men occasionally trip over the law (though there has not been a single conviction other than for the murder of a newspaperman for hundreds of gang murders in Chicago since World War 1), but rarely are their political protectors laid by the heels. One exception was James J. Hines, Tammany district leader and the political connection for the Dutch Schultz gang, who was convicted and sent to jail in the late 1930's by Thomas E. Dewey, later governor of New York and twice the Republican candidate for president. Somewhat later James J. Moran, fire commissioner under Mayor William O'Dwyer, was imprisoned for simple extortion as a result of disclosures before the Kefauver Committee. O'Dwyer himself stood clear.
But political protectors usually stand apart from gang affrays and may or may not come to terms among themselves. If they don't, as in Chicago in the 1920's, the various gangs--Gennas, Capones, Morans, O'Bannions, O'Donnells et al. -- fight a war of extermination. Capone swept the field, in part through greater cunning, in part because he introduced the machine-gun into his operations, a technological advance with devastating results. (Capone was a machine-gunner in World War I. )
Kefauver named a number of the Republican and Democratic Illinois legislative connections of Capone's successors. 20 The list could be greatly extended.
Sometimes outsiders do "muscle in. " One such was Vincent "Mad Dog" Coll in the 1930's, who preyed on various "banks" and "drops" of the rackets in New York City and is reported to have kidnapped for ransom some leading mobsters. Coil was abruptly shot to death in a telephone booth.
On rare occasions, a member of the underworld approaches officials with a view to buying political protection. A danger in doing this, shown in a case Kefauver cites, is that the official may be untouchable and may successfully turn and prosecute his tempter. For attempted bribery is, odd as it may seem, illegal.
But in these operations, the strong-arm men-agents of political parties or business groups--are the low men on the totem pole rather than the swashbuckling chiefs depicted by the newspapers. For it is they who are investigated, put on trial, pilloried in newspapers, sometimes jailed or executed, and murdered. It hardly seems a desirable
way to make a living. Their ulcer rate must be high. Even Frank Costello, referred to as "The Prime Minister of the Underworld" and in the 1940's a modest Warwick in elevating chosen men to local office, has been shot, narrowly escaping with his life. Most of the men summoned before Kefauver showed either physical scars or the ravages of tension and dissipation. None, despite possession of massive houses, swimming pools and cars, is really a winner. In their public appearances, they look congenitally unhappy. One pities their wives and children. A hard life, all in all, in the great American quest for property.
Crime: The Highroad to Wealth
Either sound instinct or a certain knowledge led Kefauver, Kennedy, and Bell to link notorious underworld figures with the business world. For crime is an historically established highroad to American fortune-building, as was first detailed by Gustavus Myers in The History of the Great American Fortunes and later by Matthew Josephson in The Robber Barons. If earlier men came into the upper propertied class by means of violent crime, it would seem that later criminal practitioners might be heading toward the same dubious salvation. So assiduously and unscrupulously did the earlier fortune- builders work that one might suppose they believed that in attaining wealth they were attaining eternal life.
Honore? de Balzac (1799-1850) held that behind every fortune there is a crime, a judgment with which I would disagree if he intended to suggest that in every case the fortune is conceived in crime. Another Frenchman, Pierre Joseph Proudhon (1809- 1865), in soaring hyperbole simply stated: "Property is theft. " With these notions--flares on a distant horizon--we need not concern ourselves here. But today, in view of what we are now about to consider, it could be said with some justness in paraphrase of Proudhon: "Business is crime. " And if this were so, businessmen would be, in all simplicity, criminals.
Both the Kefauver and Kennedy investigations were rooted to a considerable extent in newspaper preconceptions. And the standard newspaper pattern of crime in the United States is based on and has itself shaped the FBI's annual Federal Uniform Crime Reports, with variations here and there to suit individual editorial prejudices. These reports consist solely of crimes known to the police.
In this pattern thousands of individuals each year commit crimes ranging from petty larceny to murder. Some of these offenses, particularly theft, are committed for gain; many, particularly murder, are committed under emotional stress. Most convictions for theft, rape and assault involve members of the lower socio-economic classes. The culprits number few property holders except an occasional embattled husband and wife, ]over and mistress, or small-business arsonist.
Deviating a bit now from the annual Federal Uniform Crime Reports, the newspapers also recognize organized underworld crime and crime committed by politicians. The latter in the main, according to the press, receive bribes and graft, and are seldom caught; it is usually a red-letter day for the newspapers when one is convicted, providing much ground for editorial moralizing: the sanctity of the home, American institutions, the Founding Fathers. . . .
But the most threatening sort of crime to news editors is organized crime, carried on by Mafias, Cosa Nostras, Syndicates, gangs, mobs, and other nefarious enterprises. Sometimes these appear as coast-to-coast operations, under a shadowy board of sinister directors, wrong guys all. At other times they are purely regional but interlocking with other regional enterprises. The syndicates rule over gambling, prostitution, white slaving, drug peddling, smuggling, counterfeiting, fencing stolen goods, shady hotels, night clubs, bootlegging, labor racketeering and all manner of systematic evil, public
and private. They are protected by politicians, a disturbing special species, who participate in the ill-gotten gains and snicker all the way to the bank.
Although these phenomena are indeed all present in profusion, as a full pattern of American crime the picture is false and has been shown to be so by the scientific experts in the field--the criminologists. Nonetheless, every newspaper continues to present it, which is much like ignoring Pasteur's germ theory of disease in reporting on medicine.
Nearly all of these newspaper-featured crimes are crimes reported, if reported at all, to the police, although bribery of public officials and of the, police themselves is rarely so reported. But criminologists, interested in all crime, cannot confine themselves to police-reported crimes. They are interested as sociologists (criminology is a subdivision of sociology, the study of group behavior) in (1) crimes that may not be reported at all and (2) crimes reported to administrative agencies other than the police, such as juvenile boards. Many crimes are never reported. Rape is often not reported--some say 80 per cent of the time--because the victim, subject to twisted puritanical values, feels disgraced, stigmatized. Again, special agencies have been established for taking cognizance of many crimes, as of juvenile delinquents and businessmen, and newspaper reporting of the work of these agencies is extremely tentative.
Upper-Class Crime
The sorts of crimes ignored by newspapers in their bulk and persistence are what the late Professor Edwin H. Sutherland (1883-1950) of Indiana University called "white collar crime. " Sutherland was known as "the dean of American criminologists. " He was a former president of the American Sociological Association and chairman of his department. Out of his work, as out of Pasteur's, albeit on a smaller scale, there has grown an internationally reputed school of specialized researchers.
Sutherland like other criminologists was interested in the causes of crime, for which there are many divergent and irreconcilable theories. 21 He analyzed these theories, showed them defective. As a sociologist Sutherland was impressed as long ago as 1925 with the fact that more than 98 per cent of the prison population came from the lowest socio-economic classes; less than 2 per cent came from the upper classes. 22 To explain this disparity criminologists had developed two special theories: that crime is caused by poverty, that crime is caused by mental illness.
But Sutherland could accept neither as overarching in its explanation. He noticed, first, that well-to-do people showing no signs of mental disease commit what everybody agrees are serious crimes (murder, for example) and be then noticed that most of the poor were painfully law-abiding. And if poverty was not a cause of crime it did not account for the patent fact that most people in prison were very poor.
Reaching for a more enveloping standard, Sutherland concluded after prolonged study that crime--apart from impulsive crime--is no more than learned behavior that deviates from some prescribed norm. It may be learned in various ways or by face-to-face association with dominant persons who prescribe and approve the deviant behavior, giving rise to Sutherland's differential-association theory. The criminal, in acting, simply substitutes a different norm in accord with the teachings of those on whom he is dependent, usually the younger vis-a-vis the older on all social levels. Sutherland did not pursue the question of why some personalities made apt learners and others did not.
But, if this is so, it does not account for the preponderance of poor people in prisons unless one is to conclude that they alone have been instructed in deviant values. Why this preponderance? And why do some well-to-do lawbreakers land in prison and not others?
Sutherland after much inquiry noticed that the laws are written and administered with different emphases. In general, crimes in which property or the propertied might be injured, even though the nonpropertied might be injured by them as well, were implemented with much more severe sanctions than other crimes.
Most offenses open to members of the upper socio-economic class other than those traditionally proscribed, as he found, were dealt with by special administrative tribunals. The offenses were mostly variants of fraud or conspiracy. Where they were committed against the broad public they called for relatively light penalties, seldom prison terms. Verdicts against the offender were often carefully phrased so as to be nonstigmatic. But the crimes accessible to the lower classes, involving violence or direct theft or some of each, called for penalties that were physically severe and were intensely stigmatic in their language, some so stigmatic that the victims themselves could not use it--e. g. , rape and blackmail.
Even when a member of the upper socio-economic class was found guilty of a stigmatic crime and was about to be sentenced, there was a marked difference in language of the judge. Often in the case of a culprit of the lower classes the judge administered a savage tongue-lashing, while the defendant hung his head and his family sobbed, terrorized. But when upper-class culprits had been convicted in criminal court of using the mails to defraud the general public, the judge (as quoted by Sutherland) typically said: "You are men of affairs, of experience, of refinement and culture, of excellent reputation and standing in the business and social world. " They were in fact, as the judicial process had just disclosed, criminals. This difference in attitudes of judges is often pronounced. Severely reprehending toward members of the lower classes, the judges become wistful, melancholy or sadly philosophical when sentencing men of the upper class. (After all, this isn't strange as they both come from the same class, may have gone to the same school and may belong to the same clubs. ) And a sad duty does indeed confront the judge in contrast with those joyful occasions when he can say to some despicable specimen just convicted of armed robbery: "I sentence you to twenty years at hard labor. "
When Sutherland inquired closely be found, contrary to the established supposition, that many members of the upper classes did commit offenses for which the government held them accountable. But in most cases special arrangements had been made to handle them with kid gloves and in many cases to administer by way of punishment a slap on the wrist. 23
Nor was the reason for differential formulation and application of the law hard to find. The class whose members were being proceeded against was the class that had the dominant influence in the government and supported the political parties at the top. It was, indeed, their government and their political parties engaged in running their very own plantation.
As to the vast volume of crimes of all kinds in modern society, upper-class and lower- class, Sutherland is very clear about general background. "After the disappearance of the nobility," he says, "business men constituted the elite, and wealth became respected above all other attainments; necessarily, poverty became a disgrace. Wealth was therefore identified with worth, and worth was made known to the public by conspicuous consumption. The desire for symbols of luxury, ease, and success, developed by competitive consumption and by competitive salesmanship, spread to all classes and the simple life was no longer satisfying. . . . High crime rates are to be expected in a social system in which great emphasis is placed upon the success goal-- attainment of individual wealth--and relatively slight emphasis is placed upon the proper means and devices for achieving this goal. In this type of social organization the
generally approved 'rules of the game' may be known to those who evade them, but the emotional supports which accompany conformity to the rules are offset by the stress on the success goal. " 24
What Sutherland referred to as white collar crime did not concern some kind of newly discovered crime nor was it an extension of the concept of crime. He employed the white collar notion as Alfred P. Sloan had employed it in The Autobiography of a White Collar Worker. It referred simply to crimes open to commitment only by the upper, respected, approved and socially preferred class. Not reported to the police, these were of little interest to simple-minded police-oriented newspapers; they were reported to special administrative agencies.
Sutherland first presented his thesis in a speech in 1939 to the American Sociological Association. He later published a series of monographs and in 1949 a book, White Collar Crime. 25 This book is already a classic of sociology, ranking in the opinion of some professionals with works like Emile Durkheim's Suicide and perhaps even Max Weber's Protestant Ethic and the Spirit of Capitalism. It is required reading for anyone who wants to understand American society as well as crime and modern criminology.
"The thesis of this book, stated positively," says Sutherland, "is that persons of the upper socio-economic class engage in much criminal behavior; that this criminal behavior differs from the criminal behavior of the lower socio-economic class principally in the administrative procedures which are used in dealing with the offenders; and that variations in administrative procedures are not significant from the point of view of causation of crime. Today tuberculosis is treated by streptomycin; but the causes of tuberculosis were no different when it was treated by poultices and blood- letting. " 26
Sutherland accepts the combination of two abstract criteria used by legal scholars to define crime: a legal description of an act as socially injurious and a legal provision of a penalty for the act. 27
White collar crime, as Sutherland makes clear, is far more costly than crimes customarily regarded as constituting the "crime problem. " 28 The crimes committed
mostly by the propertied and wealthy in the course of managing their property include embezzlement; most big fraud; restraint of trade; misrepresentation in advertising and in the sale of securities; infringements of patents, trademarks and copyrights; industrial espionage; illegal labor practices; violations of war regulations; violation of trust; secret rebates and kickbacks; commercial and political bribery; wash sales; misleading balance sheets; false claims; dilution of products; prohibited forms of monopoly; income-tax falsification; adulteration of food and drugs; padding of expense accounts; use of substandard materials; rigging markets; price-fixing; mislabeling; false weights and measurements; internal corporate manipulation, etc. , etc. Except for tax fraud the ordinary man is never in a position to commit these crimes.
A distinction between most white collar crime and most ordinary crime is that the white collar criminal does not usually make use of violence; he depends chiefly on stealth, deceit or conspiracy. In the case of illegal labor practices, however, he does often through agents employ violence leading to death of workers. And there may be violent, even fatal, reactions to some of its nonviolent forms, such as the consequence of adulteration or improper preparation of foods and drugs.
The "white collar criminals, however, are by far the most dangerous to society of any type of criminals from the point of view of effects on private property and social institutions. " 29 For their predations gradually tend to undermine public morale and spread social disorganization. 30 Large-scale stock swindles, bank manipulations and
food and drug adulteration administer particularly convulsive shocks to broad segments of the populace. The volume of total violations, much of it officially unchallenged, leads to a spreading mood of public cynicism and more and more rank-and-file lawbreaking. It is finally echoed in the statement: "There's one law for the rich and another law for the poor. " Government itself stands impugned. The stage is set for anarchy, sometimes emerging in riots.
An equally grave consequence, which Sutherland does not notice but upon which I shall later touch, is that the attempt to gloss over, conceal, minimize and apologize for white collar crime in general and in specific cases trammels the channels of public communication, undermines the terms of public debate and clouds the critical faculties even of many scholars.
The laws relating to white collar crime, as Sutherland remarks, tend to "conceal the
criminality of the behavior" and thus do not reinforce the public mores as do other laws. 31
Sutherland surveyed the laws and took note of those instances in which white collar crime is explicitly stated to be crime and those where it is only implicitly indicated. White collar crimes are committed by individuals and by corporations, mostly the latter as the transmission mechanisms of widespread illegal planning. They are committed against a small number of persons in a particular occupation or against the general public; it is rarely a case of individual versus individual. Individuals only commit such white collar crimes as embezzlement and fraud, and when they do they come under statutes clearly labeled criminal.
But there are many newer statutes, developed incident to the emergence of machine technology and the modern corporation.
There are, first, the antitrust laws--the Sherman Act, the amendment thereto establishing the Federal Trade Commission, the Clayton Act and other amendments. The Sherman Act is explicitly stated to be criminal law, and various of its amendments explicitly define violations as crimes. The amendments are largely under the jurisdiction of the Federal Trade Commission, which may issue cease-and-desist orders or enter into stipulations for the termination of some behavior. If a stipulation is violated there may be issued a cease-and-desist order, and if this is violated there may be issued a court injunction, the violation of which is punishable as contempt of court, provided for in the original Act. If the interim procedures (similar to probation in the ordinary courts) are not effective, fines and imprisonment may be imposed for contempt. An unlawful act, as Sutherland remarks, is not legally defined as criminal by the fact that it is punished but by the fact that it is punishable. It follows from these and other considerations that "all the decisions made under the amendments to the antitrust law are decisions that the corporations committed crimes. " 32
Laws against false advertising, designed to protect competitors and consumers, and the National Labor Relations Law, designed to protect employees against coercion and the public from interference with commerce, are adaptations of the common law to modern conditions. Laws against false advertising relate to common-law fraud.
Educators, trying in desperation to rally popular support for education and mulling over statistics, like to point out to rugged philistines that on the average educated people earn more than the meagerly educated. And this is true when it comes to offering marketable skills and personalities at modest salaries in an existing Establishment that requires ever-increasing skilled personnel for its complex operations. But it has never been true where really big money is concerned. An education can be a severe handicap when it comes to making money.
The reason for this is that in the process of being educated there is always the danger that the individual will acquire scruples, a fact dimly sensed by some of the neo- conservatives who rail against the school system as "Communistic. " These scruples, unless they are casuistically beveled around the edges with great care, are a distinct handicap to the full-fledged moneymaker, who must in every situation be plastically opportunistic. But a person who has had it deeply impressed upon him that he must make exact reports of careful laboratory experiments, must conduct exact computations in mathematics and logic, must produce exact translations and echoes of foreign languages, must write faithful reports of correct readings and must be at least imaginatively aware of the world in its diversity, and who has learned these lessons well, must invariably discover that some element of scrupulosity--even if he hasn't been subject to moral indoctrination--has been impressed on his psyche. If he enters upon money-making in a world bazaar where approximate truths, vague deceptions, sneak maneuvers, half promises and even bald falsehoods are the widely admired and heavily rewarded order of the day he must make casuistic adjustments of his standards. The very process of laboriously making the adjustment, even if he succeeds, puts him at a disadvantage vis-a-vis the unschooled, who need waste no energy on such adjustments, who pick up anything lying around loose as easily as they breathe. Some educated people can't make even a partial adjustment to the market bazaar, and their disgraceful bank accounts show it. They are, as even their wives sometimes kindly inform them, failures, though they are doing something conceded to be useful such as instructing children or enforcing the law. They can inscribe after their names a big "F" and go stand in a corner under a dunce cap as the propaganda dervishes scream about success.
But, so as not to alarm appropriations-conscious educators, mere schooling (which is not the same as an education) may prove no great handicap in the race for money, which is one reason some heavily schooled persons turn out to be pecuniary successes. For many persons dutifully put in the required number of years in a national school system noted for its permissiveness without ever acquiring dangerous scruples. One could cite hundreds of names. Among other things, they learn to cheat handily in examinations-- excellent training for the market, They learn to bluff overworked teachers with verbal balderdash. And they do well subsequently as loose-talking salesmen, jobbers, advertising men, promoters, agents, brokers, morticians, lobbyists, fixers, officeholders and smooth workers in the film and television industries. They all learn to be practical--
that is, judiciously unscrupulous. After all, as any of them can testify truthfully, the world isn't perfect and they piously feel no obligation to alter its skewness. They may even become tycoons, and it is only other tycoons who stand in their way.
An education, it is widely and correctly thought, should prepare the individual for life. But the preparation is not for life as the philistines preconceive it. Educators have prolixly explained what an education is so many thousands of times without denting the popular notion that it is vocational preparation that it would be piling prolixity on prolixity to attempt it again. Put most briefly perhaps, an education is designed solely to humanize the individual, and if it has done that it is a "take. " The idea of an education is to raise the individual above the level of mere animality, or at least to qualify his animality significantly. If such an individual makes out better-than-average financially it may be due to recognition of his worth. But thousands of thoroughly educated people have never been appraised by their contemporaries as worth a living wage. T. S. Eliot, Harvard-schooled and widely hailed as the most significant poet writing in English in the past half century, earned his living as a bank teller and, much later, as a publisher's reader. Financially speaking, Eliot as poet, teller or editor wasn't worth so much as a cuss word. Yet it seems probable that his writings will be appreciatively read long after every single existing American corporation and bank, and the memory thereof, has passed out of existence. Curious. . . .
An education, truth to say, has nothing whatever to do with making or not making money, except perhaps as a hindrance. The educators, in extolling the money-rewarding features of education, are indulging in a benevolent deceit, trying to hornswoggle a public with a peasant view of life to support the schools and perhaps lift themselves by their bootstraps above simple animality. Vocational trainees sometimes get sidetracked into true educational paths.
There is no evidence that any of the men on our list who had a higher education, except the General Motors engineering group, ever made use in their careers of what, if anything, they learned at college. There is little in the careers or expressions of either Getty or Kennedy to reflect the influence of Oxford or Harvard. Each could as well have finished off in a business college just as Raskob did. Harvard never endorsed either stock market pools or the general conduct involved in such pools. These were strictly extracurricular.
The General Motors men were all technicians and applied their knowledge of technology strictly to making money, not to engineering the best possible cars. Donaldson Brown, who married a Du Pont girl, is credited by Alfred P. Sloan, Jr. , in his memoirs with developing a penetrating method of ascertaining rate of return on investment by company subdivisions, a method taken over as well by Du Pont. 70
Most of the men on the Fortune list, as on Stewart Alsop's list, were unsuitable employees, a facet that Alsop takes note of. Few of these men could fit into a pre- arranged job, except for the General Motors executives. As far as employment was concerned, they were maladjusts, nonorganization men. In whatever brief employment some of them had early in their careers, they were like restless panthers, looking only for a chance to break out and track into the jungle. Again except for the General Motors crowd, who were team workers, nearly all the others mentioned were "loners. " And most of them remained "loners," detached, nongregarious. Exceptions would be found among some of the Texas oil men, although Hunt is very much of a "loner. "
Alsop found other peculiarities among those he interviewed, which apply, with some exceptions, to the Fortune listees. None played golf, supposedly the businessman's game. All were physically restless, standing up, moving about, scratching themselves, drumming their fingers, chain-smoking cigarettes, twiddling and twitching--all of which
may merely have been restiveness at having to submit to an interview. Alsop takes it as a general character trait.
Some who have been in the armed forces made out poorly under military discipline, couldn't take it. John D. MacArthur, Alsop reports, was discharged from the Navy in World War 1, "unsuited to naval discipline. " Despite the many big wars the United States has fought in the lifetime of all these men, none stands forth as a major or minor military figure. Where a Who's Who record is available it shows few in military service even when by age classification one would have expected to find a man in uniform. But some perhaps common deviant characteristic appears to have led the military to pass them by. Money-making and military service do not appear to mix.
As to religion, few on the Fortune list make a point of mentioning it. Two were Jews and one was a conspicuous Catholic, Mr. Kennedy. While a few of the others who do not give such information may be Catholics, the probability is that all thirty-one are at least nominally Protestants or religiously disinterested. Catholics do not appear among money-makers proportional to their numbers in society probably for the same reason that they do not loom large in any department of upper-hierarchical American life except local politics and trade-union leadership: They have been self-segregated from the mainstreams of American life by a clergy apparently afraid that contact with non- Catholics will cause their submissiveness to the Church to diminish. With the history of Europe before us we cannot conclude that Catholics as such are not interested in money and power.
Many of these men, dead or alive, are saluted as philanthropists by newspapers (that carry the advertising of their enterprises) because they have, before or at death, established foundations formally classified as charities under the law. Of these Kennedy, Sloan, Kettering, Kaiser, Benedum, Richardson stand out thus far, although virtually all of them will in the normal course of operations establish foundations. Such action has now become standard procedure in reducing estate taxes and keeping controlling shares either in a family or a friendly group, at the same time previsioning considerable posthumous social influence through the financial patronage the foundation is able to bestow.
Who among the noninheritors has made the deepest national impress? This question is easy to answer and one must say Mr. Kennedy, at second remove, mainly through his children. Although John F. Kennedy was not trained by his father to become what he became, not merely president of the United States but a president fantastically visualizing the United States as something more than a pettifoggers' paradise, the father did not impede him and in many ways must be conceded to have indirectly helped him, as the sire's biographer, Richard J. Whalen, skillfully brings to light. Through JFK, and possibly through his other sons, Mr. Kennedy (and his wife) enters History (that is, he comes under analytical individual consideration of the historians) instead of merely being part of history like his financial contemporaries and the rest of us. Between History and history there is a vast difference: The former invokes the canons of aesthetics and morality; the latter is nonevaluative, shapeless. Mr. Kennedy also made a signal contribution as the aggressive first chairman of the Securities and Exchange Commission.
If we continue beyond the Fortune list we find no significant alteration in these patterns although we do, here and there, run into odd variations in the form of Land, De Golyer and Danforth. These are untypical cases, sports.
As to the general human type of American wealth-builder, new and old, it can be said that he is usually an extrovert, given to little reflectiveness until perhaps he approaches senility. He is more often unschooled than schooled, and unread, and has for the most
part a naive view of the world and his role in it. A man of action, he is compulsive and repetitive in his single-minded acquisitiveness. He simply does not know what else to do. As De Golyer remarks, he substitutes money-making for living and often believes that he is engaged in a great crusade. He rarely, as far as the record shows, has qualms or doubts about himself. He is almost invariably devoid of a sense of humor. Color him grey.
"Beyond certain minima, economic gain is inevitably associated with prestige and status, self-validation called 'success,' opportunities for assertion against others, autonomy from disliked persons, tasks, or situations, and so forth. What gives economics its power to command such energy as is invested in the pursuit of gain is often its instrumental value as a means to some other objective. Money buys more than commodities; it buys psychic gratifications of all sorts-although never so completely as the money-seeker thinks it will. "71
The winner is consequently usually restive. For he evidently feels that with all his wealth he ought to strike a blow for something tremendous. But what? And how? Christianity? Science? World peace? Progress? Education? Free enterprise? Democracy? Health? In many cases he ends up feeling frustrated and morosely retires to some House and Garden paradise to meditate on the freakishness of the world and its people. In no case yet of record has he developed a sense of mission that the world can identify itself with. By his position alone he is alienated. For all he has, in fact (apart from deviants like De Golyer, Land and Danforth), is money.
Three
CRIME AND WEALTH
In the quest for new wealth there are shadier avenues yet to scan. For the organized underworld has been designated by a number of recent observers as the luxuriant seeding ground for new fortunes of menacing portent.
This theory grew out of hearings before the Special Senate Committee to Investigate Crime in Interstate Commerce, May 10, 1950, to May 1, 1951, under the chairmanship of Senator Estes Kefauver of Tennessee. In 1952 Kefauver was the Democratic candidate for vice president of the United States.
The germ of the theory appears in Kefauver's book based on the hearings, Crime in America (1951). With minor variants the story has since developed: Underworld characters with local political protection are acquiring legally established businesses as "fronts" and are snatching working control in various large corporations specially in hotels and hotel chains, motels and motel chains, in divers pleasure resorts and perhaps also in banks. Such characters, it is held, have made a bundle in the underworld-- through gambling operations, houses of prostitution, bootlegging, assassination, smuggling, the narcotics traffic--and they are now pyramiding their illicit gains in the labyrinthine corporate world.
Various dangers loom: They will loot companies from the inside, they will rig markets and defraud the public, they will be better able to procure politicians, they will prey on "legitimate" businessmen. They will turn a happy, honest corporate world into a devil's
den, with consequent demoralization of an orderly society. They will, in short, act like fairly typical businessmen.
As the senator himself put it, "I cannot overemphasize the danger that can lie in the muscling into legitimate fields by hoodlums . . . there was too much evidence before us of unreformed hoodlums gaining control of a legitimate business; then utilizing all his old mob tricks--strong-arm methods, bombs, even murder---to secure advantages over legitimate competitors. All too often such competition either ruins legitimate business men or drives them into emulating or merging with the gangsters.
" The hoodlums also are clever at concealing ownership of their investments in legitimate fields--sometimes, as Longie Zwillman said, through 'trustees' and sometimes by bamboozling respectable businessmen into 'fronting' for them. Virgil Peterson of the Chicago Crime Commission testified that 'hundreds' of hoodlum-owned businesses are successfully camouflaged. He told us of having been consulted by a friend of his who had been offered a $25,000-a-year job to head a 'new corporation. ' Peterson investigated and found that 'the fellow who had contacted him was part and parcel of the Capone Syndicate. " 1
Senator Kefauver said he feared legitimate business would be used as a "front," a
cover for tax-evading illegal operations; that unreliable men would arise in industries
vital to health and safety. "I, for one," he said, "do not like to think of food products
necessary to the health of my children, or of medicine that can mean life or death to a
good many people, coming from plants controlled by gangsters whose code of ethics is
the dollar sign, and who do not care if that dollar sign is stained somewhat with blood. " 2
But the senator nowhere gave definitions of "legitimate" and "respectable" businessmen.
Kefauver showed that mobsters were established on the fringes of seventy different industries, including drug manufacturing, baking, candy-making, food distribution and hotels. 3
While he did not enlarge Kefauver's theory, Robert F. Kennedy, chief counsel of the Select Committee (McClellan Committee) of the United States Senate on Improper Activities in the Labor or Management Field, subsequently attorney general of the United States, and still later senator from New York, did reinforce it in his book based on the McClellan investigation, The Enemy Within (1960). For the investigation found, as Kennedy reports, direct tie-ups between extremely vicious underworld characters, spurious labor unions and various leading corporations. 4
The object of these tie-ups was to prevent effective unionization of employees, a criminal violation of the National Labor Relations Act. Many other crimes, such as murder, were allegedly committed out of sheer exuberance of spirits.
After diplomatically saluting "the majority of American businessmen" as above crookedness and collusion in labor-management negotiations," Kennedy wrote that "we found that with the present-day emphasis on money and material goods many businessmen were willing to make corrupt 'deals' with dishonest union officials in order to gain competitive advantage or to make a few extra dollars. . . . We came across more than fifty companies and corporations that had acted improperly-and in many cases illegally--in dealings with labor unions . . . in the companies and corporations to which I am referring the improprieties and illegalities were occasioned solely by a desire for monetary gain. Furthermore we found that we could expect very little assistance from management groups. Disturbing as it may sound, more often the business people with
whom we came in contact--and this includes some representatives of our largest corporations--were uncooperative. " 5
"By and large," wrote Kennedy, "little accurate information came to us from the business community. We received 150,000 complaints during the Committee's life. Seventy-five per cent of them came from representatives of organized labor, mostly rank and filers. Some came from people outside the labor-management field. Only a handful came from people in the business world. Certainly no investigation was touched off by any voluntary help we received from management. And this was not because management had no information to give. I believe 90 per cent of the corrupt deals between business and labor could be eliminated if business officials would simply talk to proper authorities. " 6 Why business people, as the instigators of the corrupt actions, would do this he didn't say.
"Often," Kennedy related, "we found that corrupt deals involving management were handled through attorneys who played the role of 'middleman,' or, as we came to think of them, 'legal fixers' or 'legal prostitutes. ' More often it was the labor relations consultant who played the 'middleman. '" 7
Kennedy reeled off a list of names of offending companies that reads like a miniature Social Register of big business. "Although I thought I had become case-hardened," Kennedy remarked, "I discovered I still was not shockproof when I studied the results of our investigation of the A. & P. . . " 8
The thesis that the underworld is a direct bridge into new propertied wealth for latecoming frontiersmen is laid down flatly by Professor Daniel Bell, chairman of the department of sociology of Columbia University. 9
"The jungle quality of the American business community, particularly at the turn of the century, was reflected in the mode of 'business' practiced by the coarse gangster elements, most of them from new immigrant families, who were 'getting ahead' just as Horatio Alger had urged. 10
"For crime, in the language of the sociologists, has a 'functional' role in society, and the urban rackets--the illicit activity organized for continuing profit, rather than individual illegal acts--is one of the queer ladders of social mobility in American life. Indeed, it is not too much to say that the whole question of organized crime in America cannot be understood unless one appreciates (1) the distinctive role of organized gambling as a function of a mass-consumption economy; (2) the specific role of various immigrant groups as they, one after another, became involved in marginal business and crime; and (3) the relation of crime to the changing character of the urban political machines. " 11
Crime, in other words, was the road taken by many immigrants, imbued with the Horatio Alger ideal of 100 per cent Americanism to become property holders and escape the repressive wage yoke imposed upon them by foresightedly frugal Anglo- Saxon corporations.
As business became more organized so did racketeering and gambling, until in the 1920's and 1930's it had become "industrial racketeering" through the medium of labor disputes, a fertile field. 12
Leading entrepreneurs here were Arnold Rothstein (shot after a high stakes card game), Louis Lepke Buchalter (executed in Sing Sing), Gurrah Shapiro, Dutch Schultz (assassinated), Jack "Legs" Diamond (assassinated) and Lucky Luciano (deported). Buchalter and Shapiro, as Professor Bell notes, in New York in the 1930's dominated sections of the clothing industries, house painting, fur dressing, flour trucking, etc. "In a highly chaotic and cutthroat industry such as clothing, the racketeer, paradoxically,
played a stabilizing role by regulating competition and fixing prices. When the NRA
came in and assumed this function, the businessman found that what had once been a
quasi-economic service was now pure extortion, and he began to demand police action. " 13
Seeking other worlds to conquer, says Professor Bell, the criminal racketeer shifted his emphasis from production to consumption, mainly gambling, without wholly yielding his interest in the productive side--as his deep involvement in labor racketeering in the 1950's and 1960's attests.
The Kefauver investigation revealed the tentacles of the gambling and vice syndicates; the McClellan investigation disclosed the seamy labor racketeers in full bloom. The latter performed the economic function of keeping labor costs down for the owners (a function performed by the political police in Soviet Russia). The gambling entrepreneurs performed the political-economic function of helping finance surreptitiously the major local political organizations--"machines" to critics--in Boston, Providence, New York, Philadelphia, Pittsburgh, Buffalo, Cleveland, Detroit, Chicago, St. Louis, Kansas City and other large urban areas.
Properly rejecting the Kefauver Committee's idea that a Mafia rules the underworld, Professor Bell points out that the committee failed to understand "(1) the rise of the American Italian community, as part of the inevitable process of ethnic succession, to positions of importance in politics, a process that has been occurring independently but also simultaneously in most cities with large Italian constituencies--New York, Chicago, Kansas City, Los Angeles; (2) the fact that there are individual Italians who play prominent, often leading roles today in gambling and the mobs; and (3) the fact that Italian gamblers and mobsters often possessed 'status' within the Italian community itself and a 'pull' in city politics. " 14
The road of crime, in other words, was taken by some latecoming immigrants trying to become property owners: Italians, East European Jews in the garment trades and Irish. 15 The urban political machines levied on all of these a heavy tariff. 16
In the process many of these men became "legitimate" property holders--'legitimate" here meaning that a court will uphold one's property claim. "Many of the top 'crime' figures" (I don't know why Professor Bell puts crime' in quotation marks, since they were court-certified criminals--F. L. ) now derived their income from "legitimate investments (real estate in the case of Costello, motor haulage and auto dealer franchises [Ford] in the case of Adonis) or from such quasi-legitimate but socially respectable sources as gambling casinos. " 17
One arrives, in short, at the big shots of the underworld, their names paraded anew in the Kefauver and McClellan investigations, and including such "labor leaders" as Jimmy Hoffa, Dave Beek and their henchmen--topsy-turvy Robin Hoods who gleefully robbed the poor for the benefit of the rich. These are men who, it is widely asserted, have traveled the latest highroad to wealth and secretly own large shares in the largest corporations. They have indeed the requisite qualities of ruthlessness and unscrupulousness but lack finesse.
Without harrowing the reader with details of the lengths to which I have gone to verify this notion of the criminal underworld as the source of great new wealth, let me categorically say this: There is nothing to it.
While it is no doubt true that people like Costello have accumulated a nest egg of dimensions that might be envied by the common man I doubt that it is very great in the terms under discussion. If Costello or any other underworld character as of 1965 had a net worth of more than $5 million it would be surprising. No available evidence shows great underworld wealth unless Wall Street is located in the underworld.
Senator Kefauver cites incomes of various gambling groups taken from income-tax returns, which the underworld dislikes falsifying since Capone and others were caught at it and jailed for long terms, but though some of these figures are impressive, even if understated, it is only in a small way. They seem in the category of the marginal speculative businessmen scanned toward the end of the previous chapter, at best.
The reason for this low pecuniary estate is simple. The underworld in its public operations--gambling, prostitution, other variants of vice (as distinct from secret operations such as dope peddling)--is subject to "the split. " It must share its receipts (Kefauver estimated the gambling turnover alone at $20 billion a year) with local politicos, and the police from the beat patrolman up to the precinct captain.
This necessity diminishes the net return to the operators who, themselves a group, must also split. I should imagine the net return on total "sales" to be a good deal less than I per cent. On $20 billion (a figure pulled from the air) I per cent is $200 million, and even $200 million is far more than is likely to reach underworld coffers. For in addition to payoffs to winners, the gamblers must make heavy payouts for judicial fixes and lawyers. They must constantly yield tribute to hijackers. And when the residue is split among hundreds of operators there isn't much left for each. The "take" in prostitution is less and subject to a bigger overhead.
Someone who was known to be "on the take" for many years was Mayor Frank Hague of Jersey City, long a power in national councils of the Democratic Party (he might just as well have been a Republican). For Hague the revenue from gambling was steady. As a formal Catholic he frowned on prostitution. At his death he left an estate valued at $5 million. 18 If Hague, starting as a poor youth and never leaving the receiving end, could do no better than that, what must the so-called syndicate heads have made? Even if we allow that Hague spent $5 million additional in high living, his receipts would not have been more than $10 million for a very large, enduring and central gambling-political operation. While a goodly sum, this is not really "big" money. And Hague was not himself a gangster.
According to the newspapers, some criminal--usually Italian, Irish or Jewish-- establishes an organization. Then he shops about for "political protection" and manages to seduce some respectable churchgoing American official with a charming wife and children and a dog, cat and canary. A really decent chap, you know, until sweet-talked and bribed by an agent of the Mafia.
What actually almost always happens is that an established group in business and/or politics, having decided what the prospects are, looks about for a strong-arm man. If he can't be found locally he is imported, as Costello was imported into New Orleans to run slot machines, as Johnny Torrio and Capone, Brooklyn men, were imported into Chicago to dominate vice in general and as Harry Bennett was brought to Detroit by Henry Ford.
Something to notice about nearly all the underworld figures in their public appearances is that they are unsure of themselves. In fact, if they didn't have sponsorship they wouldn't have the assurance to set up extensive public operations. The newspapers require one to believe, for example, that the Anastasia brothers jumped ship and then proceeded autonomously to establish themselves on American soil as general strong-arm men and assassins. If one will only notice one's own uncertainty in a strange city (much less a strange country with a strange language) one will see how unlikely it is that lower-class people who don't know the language would take to large-scale lawbreaking in a strange land. But--if someone in authority convinced them it was all right to break the law, that they would be protected and paid, and if he was able to prove this on numerous touch-and-go occasions--one would produce the pattern of sullen,
defiant, wordless behavior of lower-class thugs at the bar with which the public is familiar.
The core of the Chicago prohibition mobsters, now world famous, was originally recruited by Chicago newspaper publishers who were engaged in literal gun battles for newsstand position--the "Circulation War. " All of the gunplay of the 1920's had a long dress rehearsal before World War I in the newspaper war. The participants learned through the Chicago newspaper attorneys how "the fix" worked and, later under political protection, they functioned the same way in the prohibition gangland wars. 19
Newspapers also purvey the fiction that once an operation has begun another independent comes along and tries to "muscle in," and then gang warfare breaks out. This is seldom true, although some independents (perhaps misled by reading the newspapers) have lent color to the theory, to their own undoing.
Most cases of urban gang warfare in the United States, apart from juvenile gangs, are expressions of factions in the local political party structure. Local branches of the two major parties or factions thereof extend protection to different strong-arm men, in gambling, prostitution, bootlegging, "protecting" small businessmen, and similar enterprises. Out in the field the cohorts of one gang infringe on the supposed territory of another, each catering to the hoi polloi. Formally outside the law, there is no way out for them except to fight or retreat. In some cases, no doubt, there have been retreats. In the known cases, violence has been the arbitrator.
The strong-arm men occasionally trip over the law (though there has not been a single conviction other than for the murder of a newspaperman for hundreds of gang murders in Chicago since World War 1), but rarely are their political protectors laid by the heels. One exception was James J. Hines, Tammany district leader and the political connection for the Dutch Schultz gang, who was convicted and sent to jail in the late 1930's by Thomas E. Dewey, later governor of New York and twice the Republican candidate for president. Somewhat later James J. Moran, fire commissioner under Mayor William O'Dwyer, was imprisoned for simple extortion as a result of disclosures before the Kefauver Committee. O'Dwyer himself stood clear.
But political protectors usually stand apart from gang affrays and may or may not come to terms among themselves. If they don't, as in Chicago in the 1920's, the various gangs--Gennas, Capones, Morans, O'Bannions, O'Donnells et al. -- fight a war of extermination. Capone swept the field, in part through greater cunning, in part because he introduced the machine-gun into his operations, a technological advance with devastating results. (Capone was a machine-gunner in World War I. )
Kefauver named a number of the Republican and Democratic Illinois legislative connections of Capone's successors. 20 The list could be greatly extended.
Sometimes outsiders do "muscle in. " One such was Vincent "Mad Dog" Coll in the 1930's, who preyed on various "banks" and "drops" of the rackets in New York City and is reported to have kidnapped for ransom some leading mobsters. Coil was abruptly shot to death in a telephone booth.
On rare occasions, a member of the underworld approaches officials with a view to buying political protection. A danger in doing this, shown in a case Kefauver cites, is that the official may be untouchable and may successfully turn and prosecute his tempter. For attempted bribery is, odd as it may seem, illegal.
But in these operations, the strong-arm men-agents of political parties or business groups--are the low men on the totem pole rather than the swashbuckling chiefs depicted by the newspapers. For it is they who are investigated, put on trial, pilloried in newspapers, sometimes jailed or executed, and murdered. It hardly seems a desirable
way to make a living. Their ulcer rate must be high. Even Frank Costello, referred to as "The Prime Minister of the Underworld" and in the 1940's a modest Warwick in elevating chosen men to local office, has been shot, narrowly escaping with his life. Most of the men summoned before Kefauver showed either physical scars or the ravages of tension and dissipation. None, despite possession of massive houses, swimming pools and cars, is really a winner. In their public appearances, they look congenitally unhappy. One pities their wives and children. A hard life, all in all, in the great American quest for property.
Crime: The Highroad to Wealth
Either sound instinct or a certain knowledge led Kefauver, Kennedy, and Bell to link notorious underworld figures with the business world. For crime is an historically established highroad to American fortune-building, as was first detailed by Gustavus Myers in The History of the Great American Fortunes and later by Matthew Josephson in The Robber Barons. If earlier men came into the upper propertied class by means of violent crime, it would seem that later criminal practitioners might be heading toward the same dubious salvation. So assiduously and unscrupulously did the earlier fortune- builders work that one might suppose they believed that in attaining wealth they were attaining eternal life.
Honore? de Balzac (1799-1850) held that behind every fortune there is a crime, a judgment with which I would disagree if he intended to suggest that in every case the fortune is conceived in crime. Another Frenchman, Pierre Joseph Proudhon (1809- 1865), in soaring hyperbole simply stated: "Property is theft. " With these notions--flares on a distant horizon--we need not concern ourselves here. But today, in view of what we are now about to consider, it could be said with some justness in paraphrase of Proudhon: "Business is crime. " And if this were so, businessmen would be, in all simplicity, criminals.
Both the Kefauver and Kennedy investigations were rooted to a considerable extent in newspaper preconceptions. And the standard newspaper pattern of crime in the United States is based on and has itself shaped the FBI's annual Federal Uniform Crime Reports, with variations here and there to suit individual editorial prejudices. These reports consist solely of crimes known to the police.
In this pattern thousands of individuals each year commit crimes ranging from petty larceny to murder. Some of these offenses, particularly theft, are committed for gain; many, particularly murder, are committed under emotional stress. Most convictions for theft, rape and assault involve members of the lower socio-economic classes. The culprits number few property holders except an occasional embattled husband and wife, ]over and mistress, or small-business arsonist.
Deviating a bit now from the annual Federal Uniform Crime Reports, the newspapers also recognize organized underworld crime and crime committed by politicians. The latter in the main, according to the press, receive bribes and graft, and are seldom caught; it is usually a red-letter day for the newspapers when one is convicted, providing much ground for editorial moralizing: the sanctity of the home, American institutions, the Founding Fathers. . . .
But the most threatening sort of crime to news editors is organized crime, carried on by Mafias, Cosa Nostras, Syndicates, gangs, mobs, and other nefarious enterprises. Sometimes these appear as coast-to-coast operations, under a shadowy board of sinister directors, wrong guys all. At other times they are purely regional but interlocking with other regional enterprises. The syndicates rule over gambling, prostitution, white slaving, drug peddling, smuggling, counterfeiting, fencing stolen goods, shady hotels, night clubs, bootlegging, labor racketeering and all manner of systematic evil, public
and private. They are protected by politicians, a disturbing special species, who participate in the ill-gotten gains and snicker all the way to the bank.
Although these phenomena are indeed all present in profusion, as a full pattern of American crime the picture is false and has been shown to be so by the scientific experts in the field--the criminologists. Nonetheless, every newspaper continues to present it, which is much like ignoring Pasteur's germ theory of disease in reporting on medicine.
Nearly all of these newspaper-featured crimes are crimes reported, if reported at all, to the police, although bribery of public officials and of the, police themselves is rarely so reported. But criminologists, interested in all crime, cannot confine themselves to police-reported crimes. They are interested as sociologists (criminology is a subdivision of sociology, the study of group behavior) in (1) crimes that may not be reported at all and (2) crimes reported to administrative agencies other than the police, such as juvenile boards. Many crimes are never reported. Rape is often not reported--some say 80 per cent of the time--because the victim, subject to twisted puritanical values, feels disgraced, stigmatized. Again, special agencies have been established for taking cognizance of many crimes, as of juvenile delinquents and businessmen, and newspaper reporting of the work of these agencies is extremely tentative.
Upper-Class Crime
The sorts of crimes ignored by newspapers in their bulk and persistence are what the late Professor Edwin H. Sutherland (1883-1950) of Indiana University called "white collar crime. " Sutherland was known as "the dean of American criminologists. " He was a former president of the American Sociological Association and chairman of his department. Out of his work, as out of Pasteur's, albeit on a smaller scale, there has grown an internationally reputed school of specialized researchers.
Sutherland like other criminologists was interested in the causes of crime, for which there are many divergent and irreconcilable theories. 21 He analyzed these theories, showed them defective. As a sociologist Sutherland was impressed as long ago as 1925 with the fact that more than 98 per cent of the prison population came from the lowest socio-economic classes; less than 2 per cent came from the upper classes. 22 To explain this disparity criminologists had developed two special theories: that crime is caused by poverty, that crime is caused by mental illness.
But Sutherland could accept neither as overarching in its explanation. He noticed, first, that well-to-do people showing no signs of mental disease commit what everybody agrees are serious crimes (murder, for example) and be then noticed that most of the poor were painfully law-abiding. And if poverty was not a cause of crime it did not account for the patent fact that most people in prison were very poor.
Reaching for a more enveloping standard, Sutherland concluded after prolonged study that crime--apart from impulsive crime--is no more than learned behavior that deviates from some prescribed norm. It may be learned in various ways or by face-to-face association with dominant persons who prescribe and approve the deviant behavior, giving rise to Sutherland's differential-association theory. The criminal, in acting, simply substitutes a different norm in accord with the teachings of those on whom he is dependent, usually the younger vis-a-vis the older on all social levels. Sutherland did not pursue the question of why some personalities made apt learners and others did not.
But, if this is so, it does not account for the preponderance of poor people in prisons unless one is to conclude that they alone have been instructed in deviant values. Why this preponderance? And why do some well-to-do lawbreakers land in prison and not others?
Sutherland after much inquiry noticed that the laws are written and administered with different emphases. In general, crimes in which property or the propertied might be injured, even though the nonpropertied might be injured by them as well, were implemented with much more severe sanctions than other crimes.
Most offenses open to members of the upper socio-economic class other than those traditionally proscribed, as he found, were dealt with by special administrative tribunals. The offenses were mostly variants of fraud or conspiracy. Where they were committed against the broad public they called for relatively light penalties, seldom prison terms. Verdicts against the offender were often carefully phrased so as to be nonstigmatic. But the crimes accessible to the lower classes, involving violence or direct theft or some of each, called for penalties that were physically severe and were intensely stigmatic in their language, some so stigmatic that the victims themselves could not use it--e. g. , rape and blackmail.
Even when a member of the upper socio-economic class was found guilty of a stigmatic crime and was about to be sentenced, there was a marked difference in language of the judge. Often in the case of a culprit of the lower classes the judge administered a savage tongue-lashing, while the defendant hung his head and his family sobbed, terrorized. But when upper-class culprits had been convicted in criminal court of using the mails to defraud the general public, the judge (as quoted by Sutherland) typically said: "You are men of affairs, of experience, of refinement and culture, of excellent reputation and standing in the business and social world. " They were in fact, as the judicial process had just disclosed, criminals. This difference in attitudes of judges is often pronounced. Severely reprehending toward members of the lower classes, the judges become wistful, melancholy or sadly philosophical when sentencing men of the upper class. (After all, this isn't strange as they both come from the same class, may have gone to the same school and may belong to the same clubs. ) And a sad duty does indeed confront the judge in contrast with those joyful occasions when he can say to some despicable specimen just convicted of armed robbery: "I sentence you to twenty years at hard labor. "
When Sutherland inquired closely be found, contrary to the established supposition, that many members of the upper classes did commit offenses for which the government held them accountable. But in most cases special arrangements had been made to handle them with kid gloves and in many cases to administer by way of punishment a slap on the wrist. 23
Nor was the reason for differential formulation and application of the law hard to find. The class whose members were being proceeded against was the class that had the dominant influence in the government and supported the political parties at the top. It was, indeed, their government and their political parties engaged in running their very own plantation.
As to the vast volume of crimes of all kinds in modern society, upper-class and lower- class, Sutherland is very clear about general background. "After the disappearance of the nobility," he says, "business men constituted the elite, and wealth became respected above all other attainments; necessarily, poverty became a disgrace. Wealth was therefore identified with worth, and worth was made known to the public by conspicuous consumption. The desire for symbols of luxury, ease, and success, developed by competitive consumption and by competitive salesmanship, spread to all classes and the simple life was no longer satisfying. . . . High crime rates are to be expected in a social system in which great emphasis is placed upon the success goal-- attainment of individual wealth--and relatively slight emphasis is placed upon the proper means and devices for achieving this goal. In this type of social organization the
generally approved 'rules of the game' may be known to those who evade them, but the emotional supports which accompany conformity to the rules are offset by the stress on the success goal. " 24
What Sutherland referred to as white collar crime did not concern some kind of newly discovered crime nor was it an extension of the concept of crime. He employed the white collar notion as Alfred P. Sloan had employed it in The Autobiography of a White Collar Worker. It referred simply to crimes open to commitment only by the upper, respected, approved and socially preferred class. Not reported to the police, these were of little interest to simple-minded police-oriented newspapers; they were reported to special administrative agencies.
Sutherland first presented his thesis in a speech in 1939 to the American Sociological Association. He later published a series of monographs and in 1949 a book, White Collar Crime. 25 This book is already a classic of sociology, ranking in the opinion of some professionals with works like Emile Durkheim's Suicide and perhaps even Max Weber's Protestant Ethic and the Spirit of Capitalism. It is required reading for anyone who wants to understand American society as well as crime and modern criminology.
"The thesis of this book, stated positively," says Sutherland, "is that persons of the upper socio-economic class engage in much criminal behavior; that this criminal behavior differs from the criminal behavior of the lower socio-economic class principally in the administrative procedures which are used in dealing with the offenders; and that variations in administrative procedures are not significant from the point of view of causation of crime. Today tuberculosis is treated by streptomycin; but the causes of tuberculosis were no different when it was treated by poultices and blood- letting. " 26
Sutherland accepts the combination of two abstract criteria used by legal scholars to define crime: a legal description of an act as socially injurious and a legal provision of a penalty for the act. 27
White collar crime, as Sutherland makes clear, is far more costly than crimes customarily regarded as constituting the "crime problem. " 28 The crimes committed
mostly by the propertied and wealthy in the course of managing their property include embezzlement; most big fraud; restraint of trade; misrepresentation in advertising and in the sale of securities; infringements of patents, trademarks and copyrights; industrial espionage; illegal labor practices; violations of war regulations; violation of trust; secret rebates and kickbacks; commercial and political bribery; wash sales; misleading balance sheets; false claims; dilution of products; prohibited forms of monopoly; income-tax falsification; adulteration of food and drugs; padding of expense accounts; use of substandard materials; rigging markets; price-fixing; mislabeling; false weights and measurements; internal corporate manipulation, etc. , etc. Except for tax fraud the ordinary man is never in a position to commit these crimes.
A distinction between most white collar crime and most ordinary crime is that the white collar criminal does not usually make use of violence; he depends chiefly on stealth, deceit or conspiracy. In the case of illegal labor practices, however, he does often through agents employ violence leading to death of workers. And there may be violent, even fatal, reactions to some of its nonviolent forms, such as the consequence of adulteration or improper preparation of foods and drugs.
The "white collar criminals, however, are by far the most dangerous to society of any type of criminals from the point of view of effects on private property and social institutions. " 29 For their predations gradually tend to undermine public morale and spread social disorganization. 30 Large-scale stock swindles, bank manipulations and
food and drug adulteration administer particularly convulsive shocks to broad segments of the populace. The volume of total violations, much of it officially unchallenged, leads to a spreading mood of public cynicism and more and more rank-and-file lawbreaking. It is finally echoed in the statement: "There's one law for the rich and another law for the poor. " Government itself stands impugned. The stage is set for anarchy, sometimes emerging in riots.
An equally grave consequence, which Sutherland does not notice but upon which I shall later touch, is that the attempt to gloss over, conceal, minimize and apologize for white collar crime in general and in specific cases trammels the channels of public communication, undermines the terms of public debate and clouds the critical faculties even of many scholars.
The laws relating to white collar crime, as Sutherland remarks, tend to "conceal the
criminality of the behavior" and thus do not reinforce the public mores as do other laws. 31
Sutherland surveyed the laws and took note of those instances in which white collar crime is explicitly stated to be crime and those where it is only implicitly indicated. White collar crimes are committed by individuals and by corporations, mostly the latter as the transmission mechanisms of widespread illegal planning. They are committed against a small number of persons in a particular occupation or against the general public; it is rarely a case of individual versus individual. Individuals only commit such white collar crimes as embezzlement and fraud, and when they do they come under statutes clearly labeled criminal.
But there are many newer statutes, developed incident to the emergence of machine technology and the modern corporation.
There are, first, the antitrust laws--the Sherman Act, the amendment thereto establishing the Federal Trade Commission, the Clayton Act and other amendments. The Sherman Act is explicitly stated to be criminal law, and various of its amendments explicitly define violations as crimes. The amendments are largely under the jurisdiction of the Federal Trade Commission, which may issue cease-and-desist orders or enter into stipulations for the termination of some behavior. If a stipulation is violated there may be issued a cease-and-desist order, and if this is violated there may be issued a court injunction, the violation of which is punishable as contempt of court, provided for in the original Act. If the interim procedures (similar to probation in the ordinary courts) are not effective, fines and imprisonment may be imposed for contempt. An unlawful act, as Sutherland remarks, is not legally defined as criminal by the fact that it is punished but by the fact that it is punishable. It follows from these and other considerations that "all the decisions made under the amendments to the antitrust law are decisions that the corporations committed crimes. " 32
Laws against false advertising, designed to protect competitors and consumers, and the National Labor Relations Law, designed to protect employees against coercion and the public from interference with commerce, are adaptations of the common law to modern conditions. Laws against false advertising relate to common-law fraud.
