The Rise of the Labour Racket: Jacob Orgen, Lepke Buchalter and the 1926 Garment District strike

Documentary about labour rackeetering in the textile industry

Before Louis “Lepke” Buchalter became infamous as the head of the Mafia’s official death squad, he had been a soldier for Jacob “Little Augie” Orgen. A powerful figure, Orgen had fought his way to kingpin status as a “labor slugger” in New York, which referred to street gangs which rented out their services to all sides of industrial unrest. In 1926, Orgen represented locals of the International Ladies Garment Worker’s Union (ILGWU), as they took part in a strike which quickly turned violent.

Soon after it was resolved, Orgen was shot dead, opening up the way for Lepke Buchalter to assume control of his operations. Afterwards, Buchalter created a sophisticated system of labour racketeering, where the interests of employers and gangsters were synthesised, while radicals were driven out of the union. The resulting process formed a strong base for the American Mafia in the years following the end of Prohibition, allowing them to tunnel deep into the national economy.

Coming at a time of relative peace in American labour history, the strikes of 1926 rocked employers, particularly due to the role of the Communist Party in the disruptions. In New York’s Garment District, the ILGWU Joint Board rejected the initial offer on wages, with the resulting walkout lasting twenty weeks. The employers retained the services of an Irish gangster named Jack “Legs” Diamond, who is believed to have been an ally of Orgen, who was then hired by the union. On the 8th of July, a picketer was shot dead, while union official Morris Kaplan was fired at a week later. Across New York’s Garment District, the violence was escalating, forcing to local authorities to set up a designated taskforce in response.

According to future ILGWU head David Dubinsky, the strike’s resolution only came after the involvement of powerful organised crime figure, who was the son of a prominent factory owner in Manhattan. Shortly afterwards, Orgen was gunned down, in a shooting which also wounded Legs Diamond. Given his subsequent rise to power, it is generally believed that Lepke Buchalter was behind Orgen’s death. A year later, a more disputed shooting would claim Arnold Rothstein, who had been lured to a meeting at an Manhattan’s exclusive Park Central Hotel. Since then, various theories about the reason for his demise have been put forward. At the time, the local authorities charged George “Hump” McManus with pulling the trigger, accusing him of murdering Rothstein over a debt.

As the story goes, Rothstein had taken part in a rigged poker game, and refused to pay. Given his prominence in the underworld however, he seems an odd target, with McManus and his fellow accused acquitted. As a result, there would be further speculation about his death, with one biography suggesting a multi-layered cover-up. Another theory points to a war with labour racketeer Dutch Schultz, who had interests in hospitality unions and is believed to have been allied with Legs Diamond. Potentially then, Rothstein’s murder was due to his role in the 1926 strike, although this possibility does not appear to have been examined by various Mafia theorists.

At any rate, Diamond would also survive several assassination attempts until he was finally taken out in late 1931. As with Orgen and Rothstein, his murder remains unsolved. What is clear is that their absence would allow for the rise of Buchalter, who is generally credited with creating the sophisticated labour rackets which emerged across the country in this period. Instead of serving as dumb muscle, the gangsters would now take over a given union, while also investing in relevant industries and creating business associations which served as a legitimate way to collect payments.

Documentary about the wider role of labour racketeering in suppressing radicalism

In exchange, employers would get a source of violence outside that of the state, a valuable asset during the 1930s. With grassroots militancy bad for business, the resulting arrangement would suppress radical demands by the working-class during a time of intense crisis. Speaking more broadly, the labour racket provided a space for the union bureaucracy to be absorbed into the functioning of the economy, and would remain an important feature of American capitalism until the later decades of the 20th century.

As Buchalter pioneered the modern labour rakcet during the turmoil of the Great Depression, the Garment District had been engulfed in a war between radical unionists and the hired muscle of their conservative rivals. Along with New York locals of the ILGWU, organised crime also battled with left-wing elements in the needle trade. In 1926, locals of the International Fur and Leather Workers Union (IFLWU) had joined the ILGWU in striking, led by the openly Communist Ben Gold, who later described an attack on picketing workers:

During the previous weeks the gangsters who had been hired by the bosses to bring the few scab workers into the shops each morning hadn’t dared use their fists against the workers…Suddenly one morning the gangsters came out of their hiding places and beat a large number of strikers mercilessly

Two years later, Gold left the IFLWU. Having clashed with the higher-ups and their gangster allies, he formed the Needle Trades Workers Industrial Union (NTWIU) as a radical competitor. The new organisation quickly launched further strikes, which gained success despite the ongoing opposition of organised crime. In March 1933, with the IFLWU membership declining sharply, NTWIU official Morris Langer was murdered in a bombing. Soon after, a daylight raid took place on the union’s headquarters, which saw the racketeers shoot union members only to be overwhelmed by the sheer numbers of fellow workers who streamed out of their job sites in the Garment District.

With the NTWIU determined to resist the attacks, their continued growth would secure a merger with the IFLWU in 1935. By that point, the turmoil of the period had led to the election of Franklin Delano Roosevelt, formerly the Governor of New York State. Descended from several elite families, Roosevelt’s worldview was shaped by a decades-old conflict over the powerful political machines which had emerged during the late 1800s in major urban areas such as New York City. His father had been a prominent “Bourbon Democrat” figure, who saw small government as essential to fighting machine influence. Instead, Roosevelt saw the expansion of federal power as the way to beat the machines, which was a common goal of both men in spite of the different means they pursued.

With Roosevelt in office, the federal government launched a crackdown on the IFLWU, with Ben Gold caught up in it along with Buchalter and his underlings. Although Buchalter received a light sentence for labour racketeering, he fled the authorities in late 1937. Soon after, he was indicted on narcotics charges, again by the federal government. For the next two years however, Buchalter remained a fugitive, before suddenly resurfacing to surrender himself to J. Edgar Hoover, Director of the Federal Bureau of Investigation.

In 1941, while held in federal custody, Buchalter was convicted of the 1936 murder of George Rosen, a former truck driver in the Garment District. Having left the industry to open a candy store, Rosen was suspected of giving information to reformist New York prosecutor Thomas Dewey, who had led a famous campaign against the city’s syndicates. It is believed that Rosen’s assassination was carried by the “Murder Incorporated” group, a collection of contract killers led by Buchalter which is credited with carrying out hundreds of hits during the 1930s. Among their suspected victims are Pete Panto, a Brooklyn waterfront worker who had attempted to clean up the International Longshoremen’s Association.

Having set up the Brooklyn Rank-and-File Committee with the alleged support of the left-wing American Labor Party, Panto disappeared in mid-1939. His body was not found until 1941, after Murder Inc soldier Abe Reles had become an informant the year before. Along with tying Buchalter to the Rosen hit, Reles also led investigators to Panto’s body, implicating powerful Mafia boss Albert Anastasia in the crime.

Documentary about labour racketeering on the waterfront

Already, several members of Murder Inc had turned up dead. At some point in 1939, Hyman Holtz, the man who is believed to have shot Jacob Orgen, was stabbed to death. Along with Holtz, Abraham Friedman was shot dead in April, having been called to testify by Thomas Dewey. Later that year, the leader of the raid on the Needle Trades Workers Industrial Union, Harry Greenberg, suffered a similar fate. The following years would see further deaths, likely to insulate figures such as Albert Anastasia from the unravelling of Murder Inc.

In February 1941, shortly after the discovery of Pete Panto’s body, high-ranking Buchalter associate Benjamin Tannenbaum was shot and killed. By that point, Murder Inc had effectively ceased to exist, brought down by the testimony of Abe Reles. Then, mid-way through the year, Reles fell to his death while under police protection in a Brooklyn hotel. As the official story goes, Reles was supposedly attempting to flee the officers protecting him from certain death at the hands of his former colleagues. Naturally however, the circumstances of his demise led to suspicions that he had been silenced.

In 1944, the federal government handed over Buchalter to the local authorities in New York, where he was promptly executed via the electric chair. After his death, the wider role of labour racketeering in suppressing working-class militancy would go largely uninvestigated. By that point, the system which Buchalter pioneered had spread across the country, operating across state lines with little prosecution by either the FBI or local authorities. It would not be until 1957 that the FBI would even acknowledge that the existence of a National Crime Syndicate was a serious matter, with Hoover instead focusing his efforts on preserving his conservative vision for America.

Following Hoover’s death in 1975, FBI agents reported a close relationship between their former boss and Mafia kingpin Frank Costello. Allegedly, Costello had persuaded Hoover not to go after organised crime, although it should be noted that the FBI Director was well aware of the conflicts between labour racketeers and radicals in the union movement. Given his lifetime of persecuting these radicals, it could likely be that Hoover’s relaxed attitude to organised crime reflects an awareness of a shared enemy in elements such as the Communist Party.

At any rate, radical currents in organised labour were unable to make gains following the 1930s, and largely retreated from the union movement over the decades. In the case of Ben Gold, he held out until 1954, when he resigned as head of the International Fur and Leather Workers Union. By then, the Taft-Hartley Act had been passed, which placed various restrictions on union activities, making it effectively illegal for radicals to hold positions of power. While this was, in the short term, a win for the racketeers, the passage of Taft-Hartley, along with wider changes taking place in America, would spell the beginning of their end as a vital part of the national economy.

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