I assume you mean this report:
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Some comments:
- This mysterious Newark source is consistent w/ Joe Bonanno in that both say Schiro was extorted by the national mafia leadership (the NJ source doesn't say who but is clearly implying the upper-leadership was responsible, i.e. Masseria) before stepping down. Bonanno said the extortion amount was $10,000 while the NJ gives the absurd number of $300k. It's not typical of the mafia to demand extortion payments or tribute from a boss without reason so I suspect there was some kind of justification that made it "legal" in mafia law, though Bonanno and this source both mentioning Schiro being coerced into paying tribute adds credibility to the idea that Schiro did indeed pay money to Masseria.
- Bonanno only says that Masseria intimidated Schiro into paying him tribute, Morello likely influencing the move, and Schiro sheepishly disappeared / gave up his position afterward, nothing about Lanza. The NJ source was aware of Schiro's close relationship with Lanza which is accurate although his explanation of the dispute doesn't make a ton of sense. There was indeed a conflict in the San Francisco Family at this time with underboss "Joe Piazza" attempting to extort important figures but according to SF sources Lanza himself was not a target (one of the targets was allegedly consigliere Sam Lima). The mafia also doesn't kidnap its own members (a boss in this case) and demand ransom, doing so would be a major violation of the organization's core principals and create massive backlash, so the idea that Schiro would be punished for tipping Lanza off is strange. Schiro tipping off Lanza about a kidnap plot wouldn't be seen as "informing" but use of the word "informed" does make me wonder if Schiro spoke out of turn in some other way.
- The NJ source may have been conflating a couple of stories, i.e. he remembered there was a conflict in SF involving extortion/kidnapping of high-ranking members, knew of Schiro's involvement with Lanza and San Francisco, and misremembered/misunderstood Schiro's own downfall as related to this. Or Schiro was meddling in San Francisco in some other way that drew the ire of the national leadership and the source got the details wrong. There were certainly issues at the top levels of SF around this general period involving Lanza, "Piazza", and the Limas so maybe Schiro overstepped his bounds in some other way, especially if he did it on his own independent of the capo. There's no doubt Joe Bonanno oversimplified what happened with Schiro but you'd think he'd mention these other factors if they played a big role though Bonanno was a new member and his own knowledge was likely limited.
- Decades later the Commission demanded that Joe Magliocco pay a sum of money to Commission members to cover their travel expenses. If Schiro was in fact blamed for some kind of major infraction, like Magliocco, maybe the money he was forced to pay had a similar justification. Even if the tribute demand was high, the national leadership could justify it by saying they were covering their own travel / personal expenses as they did with Magliocco.
- We don't know who the NJ source was but it appears to be someone older and if not a member himself definitely someone close to members with historic knowledge not otherwise typical of sources from this era. If we knew who it was we could better gauge his perspective but it's a great report either way.
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My belief about the Schiro / Morello Family relationship is it had more to do with opposition to D'Aquila. Nothing brings people together like a common enemy and the 1913 conflict was LoMonte / Mineo / Schiro against the newly-crowned D'Aquila and again in the early 1920s the same basic groups seem to have been defying D'Aquila. Adding to this is that Schiro allowed Gentile to transfer into his Family to escape D'Aquila's influence around that time and Gentile subsequently transferred to San Francisco which was a Schiro stronghold. Schiro was a national powerhouse in his own right and my take is he was something of a rival to D'Aquila's otherwise dominant position.
After 1928 D'Aquila is gone and the new national regime is imposing their influence, then Schiro falls out with them. A common enemy is gone and some of the Morello members Schiro allegedly lined up with were dead. Schiro became boss after Morello went to prison so he may have had no direct relationship with him before the 1920s. Schiro's relationship to the Morello Family may have been primarily with guys like LoMonte and Pecoraro who were in a similar position to Schiro in that they were all at odds with the national capo. Morello comes out of prison and using Masseria as a proxy eventually starts up the same behavior D'Aquila was accused of which you can imagine wouldn't sit well with Schiro.
There are so many holes in our knowledge between 1912 and 1930 that any number of events and scenarios could have influenced what took place and we're missing valuable context, having only a few fleeting anecdotes to help us understand what was a volatile and long stretch of mafia history filled with shifting relationships.