Part 19

Then it was that Cordell Hull, a freshman Representative from the foothills of the Cumberland mountains, boldly introduced a bill calling for a Federal tax on all incomes. He long had felt that tariff duties bore too heavily on the consumers of the country and that the wealthy were not paying a fair share of the cost of their government.

Bold though it was, the Tennessean’s move created scarcely a ripple in the capital. The House droned on with its business. The newspapers hardly made mention of the bill or of the new Congressman. It was as though a rock had been tossed into a lonely mountain pool to sink rapidly from sight, leaving no trace after the first plop on the quiet surface.

But Cordell Hull’s action on that cold December day marked the beginning of a long and bitter fight which would end six years later with an amendment to the Constitution authorizing Congress to enact an income tax law. With the passage of this law, the Customs Service became a secondary producer of Federal revenue.

The reforms of these years, together with those which came in the Tariff Act of 1922, established Customs on its present base. It was a leaner and more efficient service which shouldered the increased burdens imposed by the outbreak of World War I.

During the war years, the Customs Service was responsible for the enforcement of the neutrality laws in shipping. Its officers acted also as local agents for the Bureau of War Risk Insurance, insuring vessels, cargoes and seamen against the hazards of war at sea.

When the United States entered the war on April 6, 1917, Customs agents moved quickly to seize seventy-nine German and Austrian ships in American ports. Customs officers enforced the import and export licenses issued by the War Trade Board.

Two years after the Armistice in 1918, the country was swept by the nostalgic longing for a “return to normalcy”--and Warren G. Harding was installed in the White House. But there was nothing normal about the 1920s for the Customs Service. Its agents were to become involved in fighting the greatest wave of smuggling the nation had known since the days of Jean Laffite.

BOOZE AND BRIBES

Lawrence Fleishman had gone to sea at the age of sixteen, when most youths his age hadn’t yet put on long pants. He had enlisted in the Navy and served in convoy duty on the Atlantic in the final months of World War I. When the armistice was signed between the Allies and Germany, he had decided to remain in the Navy and he had achieved the rating of Chief Petty Officer. Still, he had no desire to spend the rest of his life at sea. When the opportunity had come, he had applied for a job with the Customs Service. He had been accepted after passing the Civil Service examinations.

Sodus Point had seemed a quiet enough haven. It was a resort center and coal shipping port on Lake Ontario, only a few miles removed from Rochester. The people were friendly and the work was pleasant. He had expected to remain for some time undisturbed, getting accustomed to the idea that his roving days were over.

Then an official-looking letter had arrived--marked “Confidential”--and within a few hours Fleishman was enroute to New York City under orders to tell no one of his destination. He was to report to Customs Agent Gregory O’Keefe in Room 501 at the Prince George Hotel.

Fleishman checked into his room at the hotel and then called O’Keefe. “Come to my room as soon as you can,” O’Keefe said. “We’re waiting for you.”

When Fleishman went to the room, he was introduced by O’Keefe to a deputy collector of customs and to another young employee named Frank Gallagher.

“We called you two down here,” O’Keefe said, “because you are new in the Service and no one around here knows you--not even the Customs people.”

O’Keefe explained that the Customs Service was under fire in Congress. Rep. Fiorello La Guardia had charged that the Port of New York was so “wide open” that a circus could be smuggled past Customs officers and New York City port authorities. He claimed that bribery and corruption were rampant in the administration of the debonair Mayor “Jimmy” Walker, and that illicit whiskey was pouring into the city. He demanded that something be done about a scandalous situation.

La Guardia’s charges had stirred Secretary of the Treasury Andrew W. Mellon to order an immediate inquiry. Customs officials had denied that conditions were as bad as La Guardia said they were. Nevertheless O’Keefe was directed by his superiors to undertake an investigation.

Fleishman got the impression in this meeting that the Customs people honestly believed that an investigation would clear the Service’s skirts and prove La Guardia to be wrong. Many apparently felt that the accusations were based more on political inspiration than on facts.

O’Keefe said, “You two are being assigned to the Special Agency Service. Everything is arranged for you to report for duty day after tomorrow as Customs guards on the North River piers. When you get your uniforms, badges, buttons and insignia, I’ll give you more specific instructions.”

Fleishman and Gallagher were assigned to work as partners on the piers handling the cargoes of the trans-Atlantic liners. In less than a week each was accepted as “one of the boys” and they listened to Customs guards, inspectors, stevedores, seamen and other waterfront employees openly discussing their success in smuggling liquor and other merchandise from incoming ships. The standard pay-off for permitting a case of whiskey to cross the pier unmolested was $1 per bottle.

They sat in on smuggling plans and watched the pay-offs being made. They accepted their share of the money--and then met in secrecy to mark the bills to be used as evidence in court. In only eighteen working days these two alone had gathered evidence of corruption involving twenty-three Customs and city waterfront employees.

Instead of proving La Guardia wrong, they found that his charges only touched the surface of a serious breakdown in law enforcement. They found that many waterfront workers were merely the tools of the mobsters. Whiskey smuggling was big business and the pay-offs were tempting to government employees whose average pay in the 1920s was less than $100 a month. Customs inspectors were earning only $4 a day and pier guards $75 a month. The Bureau of Labor Statistics had reported that the minimum salary on which a family could live decently was $2,260 a year--or $1,124 more than the average government wage. Forty per cent of the Customs employees in New York worked at night at whatever they could find to supplement their pay. The conditions were ripe for corrupting influences to flourish.

One night Fleishman and Gallagher were standing guard at Pier 57 aboard the French lineship DeGrasse. An underworld tipster had reported that the ship carried 1,500 cases of liquor which were to be smuggled ashore that evening. As they stood on the stern deck of the ship, a man dressed as a longshoreman walked up to Gallagher and asked for a light. Gallagher handed him a match and as the man touched the flame to his cigarette, the two agents saw well-manicured fingers and the gleam of a large diamond ring. Then they recognized their visitor as a hoodlum known as “Mike the Barber.” Whenever there was a waterfront murder at that time, the name of Mike the Barber was certain to be mentioned sooner or later in the police list of those to be questioned.

Mike the Barber had said suddenly to Gallagher, “You’re a new man, aren’t you?”

Gallagher said that he was, and the hoodlum said, “Where do you come from?”

Gallagher replied, “I’ve been working as a subclerk at the post office over in Paterson, New Jersey.”

Mike the Barber nodded. “Is that so? I happen to have a good friend over at Paterson. He is the assistant postmaster over there. You know his name, don’t you?”

Gallagher was evasive. He began to make excuses for not being able to recall the assistant postmaster’s name. Mike the Barber growled, “Oh, yeah? Look, you son-of-a-bitch, you forget everything you see here tonight or you’re liable to get killed.” And with that the hoodlum walked off into the darkness.

Fleishman and Gallagher knew their usefulness was over. Within minutes every member of the gang on the pier would know they were officers. Fleishman said to Gallagher, “You walk down the pier and walk down the middle of it--don’t get to the side where there is any cargo or anything else. Walk right down the middle in clear sight. I’m going after a taxi.”