BLACK MARKETS: Nickel Profits

Before a Senate subcommittee last week appeared a little man with a long tale of woe. The man was Sidney Gould, head of a small Brooklyn company which nickel-plates towel racks and auto bumpers. His woe was the black market in nickel. “To get any nickel,” he told the Senators, “you practically have to open a peep hole and say ‘Benny sent me.’ Of course, if you want to pay the price and meet the terms—meaning cash so the OPS can’t keep track—then there’s no shortage . . .”

Gould himself admitted he had paid the price (up to $3 a lb.), and was grateful for what he got, whether it was new (Gould’s ceiling price: 59¢ to 63¢ a Ib.) or “the rankest nondescript scrap.” Gould identified the sellers as Benjamin S. Flug and Robert Corey, a pair of Brooklyn jobbers doing business under the name of Flurey Products Corp. Said he: Flurey Corp. disguised new nickel electroplating anodes as scrap ones (which are subject to more flexible ceilings), and sold them at many times their proper ceiling price.

Clam Up. Gould also testified—and showed canceled checks to prove it—that when he refused to pay in cash, Flug and Corey told him to make out a check to one Adrian Roman. On the basis of that and other evidence, the committee suspected that Roman was a peddler for Flurey’s high-priced nickel—and in many cases had actually pushed the price up some himself. There was evidence that Flurey would tell its regular customers that it had no nickel, said Gould, then sell what it had to Roman at a markup. Roman would then go to Flurey’s desperate customers, resell the nickel at another markup, and kick back some of the profit to Flug and Corey. Called as a witness, Roman himself clammed up on constitutional grounds. Flug and Corey were nowhere to be found.

But the Senate committee already knew the black market in nickel was far bigger than Flurey. The chairman, Michigan’s Blair Moody, ex-reporter for the Detroit News, first got on the scent two months ago when a Detroit businessman complained that one Marshall C. Thomas of Norwalk, Conn, was offering nickel at $4.50 a Ib. After questioning Thomas and others, the committee discovered nickel was so short even such giants as General Electric and Westinghouse were buying in the black market. G.E.’s small-appliances division, for example, paid Thomas $4.50 a Ib. for 10,000 Ibs. of nickel anodes which had passed through three middlemen before Thomas got the metal.

Clamp Down, At last week’s hearing, George A. Williams, materials manager of the G.E. division, admitted the purchase. Blared Pennsylvania’s Republican Senator James H. Duff: “When you are paying eight or nine times the market price, don’t you think you are in the black market?” Williams shrugged uncertainly. Snapped Duff: “Well, I can tell you—you are.”

At week’s end, the committee sent the testimony to the OPS for possible action, drew up some pointed suggestions for Mike Di Salle on how to close his loopholes on nickel prices.