Black market in the 1940s
The black market refers to the illegal trade of goods and services that occur outside government regulations, often flourishing in situations where restrictions are imposed, such as during wartime. During World War II, the U.S. government implemented a rationing program to manage the scarcity of consumer goods, prioritizing resources for the war effort and limiting the availability of items like meats, sugar, and gasoline. This led to the rise of black market activities, as individuals sought to bypass these restrictions to obtain goods that were otherwise scarce or rationed.
Participants in black market transactions included both buyers, who faced limitations from the rationing system, and sellers, motivated by the potential for higher profits. The extent of black market activity varied by region, influenced by local economic conditions and consumer needs. Although many chose to participate, a significant number of citizens resisted engaging in these illegal practices out of a sense of patriotism or moral duty. Efforts to combat the black market included public relations campaigns by the government and the enforcement of anti-black market laws, although enforcement proved challenging. The overall impact of the black market on the war effort remains a subject of debate, but it undeniably heightened public consciousness of wartime struggles.
Black market
Illegal wartime buying and selling of goods subjected to government restrictions
During World War II, black markets were the flip side of government-imposed rationing of consumer goods in both the United States and Canada. Although the full extent of black market activity in North America during the war may never be determined, it is clear that many millions of Americans participated in it.
A major problem facing the U.S. government and its citizens during World War II was a scarcity of consumer goods. This was due to the fact that fighting a war necessitated a priority for allocating goods to the war effort. In addition, the war limited imports and exports. Hence, the federal government enacted a policy of rationing certain goods. This meant that citizens were limited in the amounts and types of goods they could purchase throughout the years of the war. Meats, canned goods, sugar, coffee, and gasoline were among the rationed commodities.
The U.S. government also began its own rationing program in 1942. Enforcement of the program to the newly created Office of Price Administration. Rationing was justified primarily as a means of ensuring that the national war effort received sufficient quantities of needed materials, but it was also justified by concerns that no hoarding of goods should take place, as well as a fear of a wartime inflation in prices.
The United States was not alone in legislating a strict rationing program during the war. Canada initiated a similar program in January of 1942. Its rationing program even included beer. The Royal Canadian Mounted Police were given the additional responsibility of investigating black market activity.
Rationing and the Black Markets
An almost inevitable result of the U.S. rationing program was an increase in the criminal activity known as black marketing—a term was applied to the buying and selling of scarce consumer commodities illegal to sell outside the government rationing program. Black market buyers obtained items they wanted but could not easily get through legal channels. Sellers received higher profits than they would receive through legal sales. Both sides thus gained but did so by breaking a federal law. Black markets tend to arise wherever governments impose restrictions on sales of certain goods, including times when governments place restrictions on when goods can be sold. This is exactly what occurred during World War II.
Black markets cannot exist without buyers willing to flout the law. Reasons that Americans violated the rationing rules during World War II ranged from their inability to get along with the quantities of goods that the system permitted them, to their belief that certain items were not sufficiently scarce to justify being rationed. Another possible excuse was the belief that black market transactions would not really hurt the war effort. Persons who sold goods through the black market, on the other hand, were motivated mostly by a simple desire to make money.
A more interesting question about the black market, perhaps, is what motivated Americans who could have taken advantage of the black market not to do so. In many cases, it was undoubtedly patriotism and a desire to support the war cause. For others, it may have been a sense of morality and a desire not to violate any laws. For still others, it may have been a resentment against paying inflated black market prices. In any case, the federal government instituted a public relations program to encourage compliance with the rationing program and to counter black market activities.
The Black Market in Operation
The extent of black market activity varied across the United States and had much to do with local economic conditions and consumer needs. For example, black markets in foodstuffs could not flourish in agricultural regions, where residents could easily grow their own food without regard to rationing restrictions. In fact, Americans were encouraged by the federal government to save money (and avoid the black market) by growing food in their own personal “Victory Gardens.”
Participants in black market activity who were caught faced possible civil and criminal punishments. However, enforcement of anti-black market laws was not easy. Dissatisfied black market customers were unlikely to reveal their participation in the illegal activity by complaining to the government. A technical problem in prosecuting sellers arose when the goods were found to have been purchased with counterfeit ration coupons. Government-issued coupons were used to purchase rationed items. The coupon system naturally gave rise to a market in counterfeit ration coupons.
The Size of the Black Market
The exact amount of black market activity that occurred during World War II is not easy to determine because most participants in the black market kept no records, and those who did kept them secret. However, it can be confidently estimated that the amount of black market activity was substantial. In 1944, The New York Times published an article estimating the annual size of the black market in foodstuffs at $1.2 billion. Another Times article published the same year estimated that 70 percent of the residents of New York City had used the black market, and about one-third of them used it regularly.
Impact
One of the more interesting questions that still remains to be answered is what the effect of the black market was on the American war effort. Because the United States emerged from the war victorious and apparently had enough goods to conduct the war successfully, it seems reasonable to assume that the impact of the black market on the war was negligible. However, there is little doubt that the black market itself played a role in raising public awareness of the war effort by bringing the effects of the war so close to home that ordinary people could feel them.
Bibliography
Chandler, Lester V. Inflation in the United States, 1940–1948. New York: Harper & Brothers, 1951.
Chandler, Lester V., and Donald H. Wallace, eds. Economic Mobilization and Stabilization: Selected Materials on the Economics of War and Defense. New York: Henry Holt, 1951.
Harris, Seymour. Price and Related Controls in the United States. New York: McGraw-Hill, 1945.
Hoopes, Roy. Americans Remember the Home Front. New York: Berkley Books, 2002.
Lingeman, Richard R. Don’t You Know There’s a War On? The American Home Front, 1941–1945. Rev. ed. New York: Nation Books, 2003.