Black Markets

With its chief Leon Henderson slogging through the worst political mess he has yet encountered (see p. 20), the rest of OPA was also out looking for trouble last week. OPA lawyers were engaged in their first big wave of enforcement actions. The day had come for OPA to put up or shut up on price control and rationing. OPA was putting up.

> In Washington two big stores (Hecht Co. and Woodward & Lothrop) were charged with ceiling violations. In 21 war-plant areas, 60 landlords were haled into court for violating rent ceilings. Throughout the land, OPA brought suit to enjoin 116 meat packers from "upgrading" standard cuts of meat, warned 4,000 retailers to fix their prices or else. These were not random actions but test cases carefully picked for a showdown on whether OPA is really price boss for the duration. For OPA investigations have shown that out of 12,000 groceries and butchers 40% are ceiling violators, and that 70% of 500 East Coast gas stations are disobeying OPA regulations.

Confronted with price controls and short ages, no nation, democratic or totalitarian, has ever escaped "black markets" — the widespread sale of scarce goods outside the normal channels of distribution. Not even the sentence of death (now imposed in Germany) keeps economic man from trading at an off-the-record price. Trouble is that this is lawbreaking and a happy hunting ground for the racketeer.

Black Gasoline. Though misuse of a single gas-rationing coupon risks as much as a $10,000 fine and a year in jail, rackets in gas coupons have been the most flagrant of all, are bound to get worse as the oil-rich west is subjected to rationing. In New York City OPA broke up a gas-coupon pool that sounded like the Al Capone days, included gangsters called "Red," "Lefty," "The Mutt" and "Bananas." A Utica ring stole 8,450 "B" and "C" books, peddled them through a long chain of New York City racketeers who kept hijacking them from each other. OPA got its first big clue from frisking a murdered gangster in Queens who had not" had the foresight to remove the cover from the stolen book in his pocket.

As a source for bootleggers, OPA has just about dried up the stolen-coupon pool. OPA hopes that the new requirements for ODT approval of truck and taxi mileage will undercut the other big source — commercial operators who get more than they really need, "lose" ration books etc. Boot leg coupons are usually sold (for 3-5¢ a gallon) to gas stations which pass the gas on to unwitting joyriders as a "favor" (at a 100-200% markup over cost).

Black Sugar. Because the sugar ration is more than enough for most householders, the black market — and its source of supply — is confined largely to big industrial users at the wholesale level. Biggest buyers are illegal operators of stills. Biggest sources: coupon counterfeiting and industrial users who have excess sugar through false applications, undeclared inventories, etc. Most spectacular arraignment so far: New York City's ex-convict and bootlegger Waxey Gordon. Fortunately, U.S. Treasury Alcohol Tax Unit sleuths help it track down illegal sugar traffic.