Hidden Inflationary Pressures

In that address before the Rotary Club of New York City. Seymour was clearly indignant. He com­plained that business crimes receive favored treat­ment in the courts. which give much lighter sentences, frequently suspended, than are given to individuals prosecuted for petty stealing. “Businessmen,” he noted sharply. “too often tend to smile understand­ingly at illegal conduct by their colleagues—while loudly complaining about ‘crime in the streets.’ We must. set these things right.”

Official complaints about “crime in the suites” are increasing. The acting FBI director, L. Patrick Gray, told another business group in Cleveland recently that, among other lawbreakers, corporate executives who conspire to fix prices in violation of the antitrust laws “attack the society of law from within.”

State and local governmental units, recognizing that business crime costs consumers billions of dollars yearly, are stepping up their enforcement. California, for example, has brought suit under the antitrust laws against snack food manufacturers for alleged price-fixing. Washington state has sued major dairy compa­nies for fixing the prices of milk and milk products sold to school districts. Illinois has cases in the courts over alleged statewide coal price-fixing and tie-in sales of milk and ice cream, milk price-fixing in Chi­cago, and beer price-fixing in Decatur. New York has charged a large oil company with price-fixing and price discrimination.

In addition to the increasing number of suits brought by state attorneys general, consumer fraud offices are being expanded or opened at state and lo­cal levels in cities such as New York City, Cleveland, Pittsburgh and Los Angeles. The New York Depart­ment of Consumer Affairs, led by Bess Myerson, be­lieves that catching business violators is not enough. She says full refunds with interest must be repaid de­frauded consumers. In Maryland, unprecedented prison sentences of six and 10 years were meted out to the operators of an auto repair store which system­atically fleeced motorists.

What is clear from a survey of business crime prosecutions brought by federal and state authorities in recent years is that the defendants represent a wide diversity and cross-section of industry and com­merce. They are not just fly-by-night outfits. Price-fixing or other economic crimes have been located in such varied industries as companies selling pharma­ceuticals, bread. heavy electrical equipment, steel sheets, plumbing fixtures, cranberries and chryasathe¬mums.

What such depredations do to the consumer dollar in the marketplace is similar to what a pay-cut or traditional inflation does to individuals’ purchasing power. Sen. Philip Hart’s antitrust and monopoly subcommittee, for example, reports that consumers spend about $10 billion annually on auto repairs and parts) that arc improperly done, unnecessary or not performed at all. A House subcommittee estimates that elderly citizens are swindled out of $1 billion yearly through medical quackery. The Michigan De­partment of Agriculture found shortages in 15 per cent of 50,000 food packages that it examined.

Given these and many other similar surveys and cases, what is the reply to the Indiana official who stated at a recent antitrust meeting of state attorneys general: “We have no money and we have no staff. But we have a healthy interest.” The best advice for state attorneys general is to vigorously apply for grants from the justice Department’s Law Enforce­ment Assistance Administration. According to LEAA’s General Counsel’s office, funds can be made available for corporate crime and consumer fraud law enforcement purposes. In fiscal 1973, LEAA will have almost $850,000,000 for distribution to law enforce­ment agencies. Some of these funds can be wisely used to combat the corporate crime wave.