Bootlegging is Back

Wartime price and priority controls have already brought back an old U.S. institution: bootlegging.

Patriotism alone will not suffice to enforce the new overall price ceiling announced by OPA this week. U.S. patriotism does not work that way. Bootlegging flourishes for economic reasons, not moral. As long as there is more cash to spend than there are things to spend it on, and prices are not allowed to rise openly, they will rise privately. Verboten goods will change hands too.

The U.S. bootleg business is already more diversified, if not bigger, than it was in Prohibition's peephole days. To the still ample take from bathtub gin and moonshine* has been added the take from tires, scarce metals, chemicals, textiles, typewriters--even stockings.

Tires are far & away the biggest bootlegged item. Most local OPA or rationing board officials assert that there is little or no tire bootlegging in their district, harp on the fact that 80% of all new tires on the loose last December now rest in manufacturers' warehouses. But the remaining 20% is enough to support a brisk bootleg trade. Thus, of 3,500 tire dealers checked in the New York-New Jersey area, OPA itself found that at least 1% were actual violators. Of 1,575 dealers in five Western States, at least 60 were exposed as law breakers.

No big Capone-model bootleg rings have been uncovered. Most bootleggers are independent operators from petty rackets (like pinball machines), race tracks, dance-halls; many are once-legitimate tire dealers. Whether in Maine or Utah the procedure is the same: the motorist makes contact through his own filling station, is shunted into a cozy nearby bar to haggle price and delivery with the bootlegger or his agent. Some tires are stolen. Others come from pre-Pearl Harbor stocks of crooked dealers who did not list them on OPA's inventory forms, hid them in cellars, attics or backwoods garages. Prices are outlandish: from $30 to $60 for a Chevrolet-sized tire (6.00 x 16) which once sold for $11.40 to $12.50.

One hotbed of tire bootlegging is Los Angeles. Reasons: 1) the city has a poor transportation system, rambles over 450 square miles; 2) Angelinos are cash-rich and conscience-poor. Last week one cinemactress laid out $800 for eight tires, had them hijacked out of her garage the very next night. And barflies bandied the story of a film writer who bought five complete sets of tires. Month ago police nabbed tire dealer Guy O. Bryan, were flabbergasted when he freely admitted selling $28,000 worth of new tires since Pearl Harbor. Gloomed an OPA official: "There is an uncontrolled reservoir of new tires supplying the bootleg market."

Other towns are almost as bad. Houston police caught a ring (including several leading citizens) that had already sold over 300 tires. In Manhattan a three-hour nose-around uncovered four places with "Yeah --all the tires you want." Chicago racketeers have house-to-house "salesmen," armed with phony Goodrich order blanks, who get suckers to put downpayments on new tires, then never show up again.

Most other bootlegging is done to dodge price ceilings or priorities. Examples:

> To smelters who hold no priorities, almost any kind of steel scrap is worth almost any price. No. 1 bootleg method is to "upgrade" a load of low-grade scrap with a thin top layer of good scrap, sell the whole thing at the top limit for good stuff, exchange winks with the buyer.

> To get around OPA's 11 5/8-c- ceiling on grey goods, one textile mill added a process costing less than 2-c-, sold millions of yards as "bleached" goods at 17-c-.

> In Manhattan Acme Chemical Co. and Rona Chemicals got caught reselling chemicals WPB had allowed them to make aspirin. Their profit: over 100%. Their loss: no vital chemicals at all for six months.

> Even intangibles are bootlegged. Two New York freight forwarders now face Maritime Commission music because they reserved cargo space on an American Export Lines freighter at the official rate of $50 a ton, sublet it to desperate shippers at $100.80 a ton.

These are just a sample of the headaches OPA will get when it starts enforcing overall price ceilings and rationing more goods. OPA will get tougher, ride the limit on penalties ($10,000 fine and/or a year in jail). But bootlegging will still flourish, until U.S. excess purchasing power is sopped up at the source: with stiffer taxes, forced savings, credit controls. A fiscal problem needs a fiscal solution, or it is not solved.

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