By Mike La Sorte, Professor Emeritus
"Does Chicago have viable organized crime?"
"We don't need organized crime. We have businessmen."
(An elderly Chicagoan, September 15, 2011)
"The best way to reduce illegal trade is to make it legal trade." (Olaf Pronk)
A racketeer is a person engaging in fraudulent activities; full-time, part-time, individually or in collusion with others. Racketeering and the business world can be all of a piece. A racketeer can own a legitimate business, to provide a cover for illegality, or operate a combination of legal and illegal enterprises. Monies received illegally can be laundered through legal outlets as well as to buy into other ventures. Racketeers bribe, blackmail, extort, and corrupt persons and institutions. Payoffs are offered and received. The traditional "Mob" concept has been eclipsed. Racketeering has evolved over time to meet new opportunities, such as cybercrime. Since the 1970s, the racketeering RICO statute has been successfully employed in various kinds of criminal cases.
Just as the Volstead Act, in 1919, which forbade the sale of alcoholic beverages (Prohibition), served as a windfall for racketeers, who engaged in the production, importation, distribution and sale of booze, the advent of the Second World War in the 1940s saw a sharp increase in racketeering because of rationing and the scarcity of goods. Blackmarkets flourished during both eras and corruption became widespread. Much has been said of the Twenties; not much of the early Forties.
Narcotrafficking into the United States was an unresolved problem. During the war the Customs Service was tasked with suppressing that traffic. Because the war had curtailed overseas sources, the Mexican narcotrade took up the slack. Shortages existed, but American addicts were willing to bear the extra costs to satisfy their cravings.
The campaign against narcotics-running was promising. More illicit drugs, exclusive of marihuana, were confiscated in 1943 over 1942, despite the shortage of custom officers due to the military draft. (In the United States, for reasons not clear, marihuana consumption did not increase, although the weed could be easily grown by homegrown traffickers.) Once the Mexican-American border became a major crossing point, Mexican drug lords increased their smuggling activity. One case was known as "La Nacha."
La Nacha (The Pug-Nosed) was the self-proclaimed queen of the cross-border drug racket. Plump and pleasant looking, the matron was known to be "diabolical, ruthless and cunning." Mexican officials, who cooperated with the American authorities to combat trafficking, called La Nacha "an unqualified menace to the Mexican people and a danger to Mexican security." She was finally taken into custody by the Mexican police in Juarez. The vacuum she left behind was soon filled.
The Mexican drug trade extended to the interior of the United States and north into Canada. In one scheme, William Levin, a professional drug smuggler, was discharged from San Quentin Penitentiary in January of 1944. He quickly hatched a plan with his partner and a few collaborators to move a shipment of narcotics to Canada. The gang was bought down by a combination of Canadian and American agents.
The wartime scarcities of consumer goods opened a number of blackmarket opportunities. Washington established price ceilings and rationing to check inflation and to ensure an equitable distribution of goods to all Americans. The war combined with the scarcity of labor had increased wages. Families now had more disposable income. More money in circulation was chasing fewer goods to purchase. Those who were willing to pay helped to fill the pockets of an ever increasing number of opportunistic racketeers.
A number of rackets flourished: false ration books; gasoline and liquor scams; conning service station owners; meat and produce rackets. Organized gasoline dealers' groups operated throughout the nation. Countless gallons of gasoline were drained from civilian supplies by alliances of gangsters, counterfeiters, gas station owners, and motorists--whose patriotism took second place to need.
The liquor blackmarket flourished as well. Wartime priorities demanded that the distilling industry direct its production to explosives, medications and synthetic rubber. The situation brought back some of the evils of the Prohibition era. Bootleggers, hijackers and moonshiners emerged from the shadows of the turbulent Twenties to stage a comeback. The Federal Trade Commission sought to stop the liquor racketeering collusion of wholesalers and retailers by charging unfair trade practices. But retailers were reluctant to testify against their co-conspirators. To do so, the retailers feared, would produce a backlash: wholesalers would refuse to sell product in retaliation.
The Bureau of Internal Revenue seized quantities of bootlegged booze on which excise taxes had not been paid. Adulterated liquor filtered into the market. One bootlegger had his own formula: one-half whisky; one-quarter orange juice; one-quarter anti-freeze. National brand labels were pasted on the bottles.
One of the more lucrative rackets was trafficking in gasoline and counterfeit or stolen ration coupons. An estimated thirty percent of all gasoline coupons in circulation in the New York City area were either false or stolen. In other cities, percentages reached forty percent or more. It was a vast underworld racket that touched the lives of a fair proportion of Americans. The gangs included counterfeiters, strong-arm men and distributors. The counterfeit books and stamps were given to the distributors, who, in turn, would sell them to colluding gas station owners and motorists, or force them on otherwise law-abiding citizens. The thugs kept everyone in line. The stamps were produced on clandestine presses, each used for a short time. Gangs had their own engraving plates, moving them from place to place to avoid detection.
Moonshining was not confined to the backwoods of the South. Northern stills secured rationed sugar from racketeering food wholesalers. One example: agents uncovered 10,000 pounds of sugar in a Manhattan warehouse destined for the production of New York moonshine. During Prohibition, Philadelphia was known for its distilleries that marketed product to several states. In the Forties, those same large-scale operations entered the blackmarket and were funded and protected by layers of otherwise legitimate businessmen and corrupt lawyers. The wartime shortages produced intermediaries between distillers and wholesalers, called "liquor brokers." For a price, the broker would guarantee a shipment to the wholesaler of specified quantities. The profits were then shared with the racketeering distiller whom he represented.
The exigencies of the global war provided a number of opportunities for scams, hustles, swindles, many of which had been honed during the Prohibition years and applied anew to the conditions present during the war years. Blackmarketing not only appealed to the criminal class because of the prospects of big money, it also appealed to the many consumers, otherwise "honest" citizens, who took advantage of a national emergency, making widespread racketeering possible. The negative effect on the war effort was incalculable.
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