I disagree. I don't doubt that racism existed at the time, but why alienate a portion of the audience on a throwaway line or lines from a character that isn't seen before or since? I would hardly call the scene unrealistic without the slurs.
I didn't mind that line, because it showed a bit of the mindset of the Dons and reminded us that, for all the talk about them being "businessmen," they were really amoral scumbags only too ready to take "the souls" of people they look down upon in order to make a few bucks.
Also, don't forget that the movie is over 40 years old. Back then, there was less concern about shielding people from potentially hurtful opinions, so I don't think there was much danger of "alienating" the audience; the potentially offended portion of the audience would have been far more used to opinions like that being tossed around than they would be today.
