The case of the two-percent assessment and the question of union susceptibility

In 1934, the Chicago Mafia, or Outfit, arranged to have a mob associate, George Browne, elected as the national president of the International Alliance of Theatrical Stage Employes (IATSE). Subsequently Outfit leaders used Browne to perpetrate a massive embezzlement scheme from this union. For 18 months IATSE members paid a two-percent assessment from their wages into a special fund. That money was later siphoned out in the form of cash payments that went mainly to Browne, a co-conspirator, and the Outfit. The amount taken would be equivalent to about twenty million dollars today. The episode previewed the schemes that organized crime groups later used to mulct union benefit funds from the Teamsters and other labor organizations in the post-World War II era. Such schemes depended upon the wide scale complacency of the leadership within the affected national unions. This article uses the history of IATSE’s two-percent assessment to analyze the reasons behind that complacency. In this way it addresses the question of why unions might be more susceptible to organized crime manipulation than other institutions.