elections of delegates to political conventions, or elections of State or local officials. In the case of those elections to which the law does apply, the Smith-Connally Act prohibits contributions of money or any other thing of value by a labor organization with respect to the specific offices covered by the law. Counsel further advises us that the law does not prohibit a labor organization, or the Congress of Industrial Organizations Political Action Committee as an instrumentality of the Congress of Industrial Organizations, from spending moneys in connection with its own activities, undertaken for the purpose of advancing the cause of one or more candidates for Federal office, provided that this money is spent directly by the labor organization and not pursuant to an agreement or prearrangement with these candidates, their political parties or committees. Thus the Congress of Industrial Organizations Political Action Committee is prohibited from making any contribution to a candidate for a Federal office or to his political party or political committee, to be used to forward his candidacy. The committee may, however, continue to engage in its general political and educational activity and, through the distribution of leaflets, the holding of meetings of members or organized labor and the general public, the use of radio time, etc., forward the candidacy of such persons as it may endorse for Federal office. These activities on the part of the committee are merely the exercise of its constitutional right of free speech, press and assembly. They are not and cannot be prohibited by law.

Counsel for the Political Action Committee, Mr. John J. Abt, testified before the Special Committee on Campaign Expenditures to the effect that the Federal Corrupt Practices Act made a "very clear distinction between contributions and expenditures." He pointed out that if the expenditure of money for the production of a poster, or a pamphlet, or an editorial urging the election of a candidate, were a contribution within the meaning of the Corrupt Practices Act, it followed that every newspaper which published an editorial endorsing a political candidate for Federal office would likewise be violating the law. It was further contended that the issuance of a pamphlet, circular, or leaflet by a labor union or a corporation under its own name and financed out of its own funds, which literature openly expressed support of a candidate for Federal office, was an "expenditure" which Congress did not intend to prohibit by passage of the Smith-Connally amendment. What Congress proposed to outlaw, counsel asserted, was the transfer of corporate or labor union funds to a political candidate or political committee. Except for the primary and local elections, the special committee was advised that in no instance did the Political Action Committee transfer any of its funds to a political candidate or committee for use in connection with a Federal election.

It was ascertained that all expenses of the Political Action Committee, from the time of its organization until the nomination of President Roosevelt for a fourth term, were paid from the trade-union contributions account. As of July 23, 1944, this fund was frozen insofar as Federal elections were concerned and remained frozen until after November 7, 1944. Reportedly, the operating expenses of the Political Action Committee, incurred or paid between these dates, were expended from the individual contributions account. The latter fund represented voluntary contributions in the sum of $1 from the individual members of the Congress of Industrial Organizations, 50 cents of which went to the national fund and 50 cents remained in the State or locality. In the words of Mr. Hillman, the trade-union contributions account was frozen on July 23, 1944 "in order to assure scrupulous compliance with the strictest possible interpretation of the Corrupt Practices Act as amended by the Smith-Connally Act." Prior to this date, the Political Action Committee had proceeded on

the premise that the Corrupt Practices Act had no application to primary elections.

As a possible means of broadening the source of individual contributions to the Political Action Committee fund, the National Citizens Political Action Committee was organized in July 1944. It was intended to function not later than November 7, 1944, in support of the candidacies of Franklin D. Roosevelt and Harry Truman, and "progressive" candidates for the Senate and House of Representatives. Its activities apparently were synchronized with the operations of the Congress of Industrial Organizations Political Action Committee, for Sidney Hillman was chairman of both groups and they used common offices. The National Citizens Political Action Committee solicited contributions from the general public and filed a financial statement with the Clerk of the House of Representatives as the law required. The financial report of the National Citizens Political Action Committee showed total contributions of $380,306.45 and total expenditures of $378,424.78.

The seventh annual Congress of Industrial Organizations convention, held at Chicago in November 1944, voted to continue the Political Action Committee and expand its organization under the chairmanship of Sidney Hillman. The committee was instructed to intensify its program of political education and to prepare the ground work for extensive participation in the local, State, and congressional elections of 1946.

The final reports of the Political Action Committee and its affiliated committee, the National Citizens Political Action Committee, filed with the Clerk of the House of Representatives showed receipts and disbursements as follows:

The special committee found no clear-cut violation of the Corrupt Practices Act on the part of the Political Action Committee. In this connection, it will be noted that the Attorney General of the United States discovered no violation of the criminal provisions of the act following investigations initiated at the request of several members of Congress. Inquiry into the affairs of the Political Action Committee emphasized two outstanding facts which enabled the committee to function within the law; namely, (1) The Federal Corrupt Practices Act, by expressed limitation, has no application to primary elections; (2) section 313 of the Corrupt Practices Act prohibits a labor union or a corporation from making a "contribution" in connection with a Federal election, but it does not extend the ban to "expenditures."

Minority comment

Senators Ball and Ferguson, believing that use of union funds to support a particular candidate or course of political action is wrong in that it opens the way for use of money paid in by individuals for political action which they, as a minority would oppose, believe the Federal law should be clarified so that the prohibition on use of such union funds would apply to primary elections and political conventions and to expenditures as well as contributions by unions. There is no doubt in our minds that Political Action Committee primary and preconvention activity carried over into and influenced greatly the general election result, and the loopholes in the law which purportedly permitted this should be closed. If the Political Action Committee had been organized on a voluntary basis and obtained its funds from voluntary individual contributions from the beginning, there could be no quarrel with its activities or program and in fact both are desirable in a democracy.

(d) PEOPLES COMMITTEE TO DEFEND LIFE INSURANCE, AND SAVINGS, NEW YORK, N. Y.

COMPLAINT

Complaint was made to the special committee by Julius Emspak, general secretary-treasurer, United Electrical Radio and Machine Workers of America. It was claimed that the Peoples Committee to Defend Life Insurance and Savings was engaged in activities which violated the Federal Corrupt Practices Act, and further, that the vice chairman of the organization, James D. Zurcher, was acting as a “front” for an insurance lobby receiving financial support from corporations. The special committee was also advised that this same organization had sponsored a well-attended banquet in Providence, R. I., prior to the election, featuring an address by James D. Zurcher, and had financed widespread political advertisements in the press in furtherance of its purposes. It was alleged that although the dinner was advertised at a price, actually the banquet was served free of charge to the guests. The special committee considered the complaint and directed an investigation be conducted.

STATEMENT OF FACTS

In 1940, on complaint of the general counsel of the Democratic. National Committee, the Gillette committee conducted an investigation of certain life-insurance companies which were charged with furnishing lists of policyholders to the Peoples Committee to Defend Life Insurance and Savings. The insurance companies uniformly denied the charges and no violation of the Federal Corrupt Practices Act was found.

With respect to the more recent complaint, it was established that the Peoples Committee to Defend Life Insurance and Savings was incorporated in 1940 under the laws of Delaware as a political committeę. The exectutive offices were formerly located at Cincinnati, Ohio, but with the appointment of Philip A. Traynor as chairman of the labor division of the peoples committee, the national headquarters were technically shifted to Philadelphia, Pa. Actually, the principal office, however, is located at 116 Nassau Street, New York, N. Y., in

the permanent suite occupied by National Conference of Railroad Investors. Robert E. Smith, who represented the Peoples Committee to Defend Life Insurance and Savings before the Gillettee committee in 1940, is chairman of the National Conference of Railroad Investors and also is a director of the Peoples Committee to Defend Life Insurance and Savings. The committee's financial report contained in the questionnaire filed with this special committee indicated that a substantial portion of the expenditures was paid to the Progress Printing & Mailing Co. of which the same Robert E. Smith was reported to be the owner. This report showed contributions in the amount $69,797.29; expenditures totaling $69,677.63; and an approximate membership of 7,000.

The principal activity of the committee was said to consist of transmitting "educational information" through the mails concerning matters affecting life insurance. It was further disclosed that voluntary contributions were solicited by inserting subscription blanks in the correspondence and by means of ads in the daily press. The advertisement would generally read: "Your contribution, whether it be 10 cents or $1,000, will be used exclusively to carry this message to the American people in the press and on the radio." The objectives of the Peoples Committee were represented as "educational and legislative in support of governmental measures and policies calculated to be beneficial to the holders of life-insurance policies and savings."

The Labor Division of the Peoples Committee to Defend Life Insurance and Savings was particularly active during the campaign. Influence on the vote in the large industrial States was attempted by means of Nation-wide newspaper advertising and the distribution of literature in an effort to counteract the influence of the Political Action Committee of the Congress of Industrial Organizations. Literature was invariably captioned: "To my fellow C. I. O. members who refuse to clear everything with Sidney." The industrial workers were urged to refuse to contribute to the Political Action Committee, to refuse to be coerced or intimidated, to stand on their rights as free Americans, to vote and work for the President of their choice "not the choice of Brother Hillman or Earl Browder." The advertisements generally carried the names and union label of Philip A. Traynor, Brotherhood of Railroad Trainmen; J. D. Zurcher, department steward, Congress of Industrial Organizations; and Israel C. Horst, financial secretary American Federation of Labor local. It appeared that Philip A. Traynor was being used in a nominal capacity only so that advantage could be taken of his union affiliation. Mr. Robert E. Smith, chairman of the National Conference of Railroad Trainmen, personally edited all this literature and disbursed the funds, according to information furnished committee investigators by Miss Thomas, assistant secretary and treasurer of the Peoples Committee to Defend Life Insurance and Savings. Miss Thomas is the personal secretary of Mr. Robert E. Smith.

The special committee was advised that the superintendent of insurance for the State of New York conducted an investigation of alleged political activities of insurance companies following the 1940 national election. His report, examined by committee agents, read in part as follows:

By far the more serious aspect of the situation appears in the work of the so-called Peoples Committee to Defend Life Insurance and Savings. This committee maintains executive offices in Philadelphia, Pa., and is not an accredited

Congressional Newsletter has indicated certain incumbent Congressmen who seem worthy of reelection or defeat"; receipts, $23,373.54, and expenditures, $23,373.54, as of September 1, 1944; appeals through meetings and literature. Union Labor League of Illinois.

Address: Chicago, Ill.; Thomas Priestly, president; James S. Quinlan, secretarytreasurer; "Not connected or affiliated with any organization"; temporary; 600 members; no contributions; purpose: "To support and endorse political candidates who in our opinion are favorable to organized labor"; endorsed Dewey-BrickerLyons slate and supported national and local Republican tickets; headquarters furnished by Cook County Republican Central Committee; no receipts listed; current bills paid by officers and members of executive committee.

Young Americans for Roosevelt.

Address: New York, N. Y.; Barney Ross, Hollywood, Calif., and Olivia de Haviland, Beverly Hills, Calif., cochairmen; Marion Seay, New York, treasurer; "An independent nonpartisan association"; unaffiliated; temporary; organized September 29, 1944, to support President Roosevelt for reelection; 40 members of national committee; receipts, approximately $2,319.56; expenditures, $2,321.07; appeals through literature, rallies; press and radio releases.

2. COMMITTEES SPECIALLY INVESTIGATED

(a) AMERICAN DEMOCRATIC NATIONAL COMMITTEE

COMPLAINT

Subsequent to September 10, 1944, it was found that the American Democratic National Committee, a national organization actively engaged in supporting the Republican nominees for Presidential and Vice Presidential candidates, was found not to have filed reports with the Clerk of the House of Representatives as required by section 305 of the Federal Corrupt Practices Act. This section of the act provides that the treasurer of a political committee must file a statement containing the name and address of each person making a contribution of $100 or more, the total sum of all contributions, the total sum of all expenditures, and the name and address of each person to whom an expenditure of $10 or more has been made by such committee; the report is required to be filed between the 1st and 10th day of March, June, and September in each year, and on subsequent dates during a year when a general election is conducted.

The committee, therefore, initiated an investigation and committee investigators interviewed representatives of the American Democratic National Committee and reported that doubt was expressed by some of them as to whether or not the organization was a political committee within the intendment of the Federal Corrupt Practices Act.

On October 18, 1944, a hearing was conducted before the full committee in Washington. Witnesses appearing before the committee at that time were: William J. Goodwin, treasurer; James C. Crummey, auditor; Robert O'Brian, secretary; Ralph W. Moore, assistant treasurer, and Robert M. Harriss, one of the founders of the committee.

STATEMENT OF FACTS

The American Democratic National Committee was organized in Chicago on the 4th of February 1944, following a luncheon meeting of the Executives Club in which Harry H. Woodring, of Kansas, former secretary of war, was the principal speaker. Immediately following the luncheon meeting, a group of those present, including former Congressman Otha Wearin, of Iowa; former Senator, the late