Why Markets Get Grey

The Joint Congressional Committee on Housing had padded from coast to coast, sniffing for the scent of a grey market in building materials. All over the country, Wisconsin's Senator Joe McCarthy, vice chairman of the pack, had picked up signs of one Isadore Ginsberg of New York City, who was plying a brisk and highly profitable trade in gypsum lath. McCarthy was outraged at Ginsberg's prices. (He was getting $52.50 per 1,000 sq. ft. for lath selling for about $40 in lumber yards.) Furthermore, McCarthy charged, Ginsberg moved fast enough to buy up large quantities of lath, presumably kept it out of normal channels.

Last week the committee confronted its quarry in a witness chair in Washington. But Ginsberg, 301 lbs. (5 ft. 4 3/4 in.) of truculence, did not look trapped. World War II Veteran McCarthy glared at World War I Veteran Ginsberg (a onetime leader in a New York veterans' organization that has plugged for lower-cost veterans' housing), and called him "the most vicious of grey marketeers."

Demanded Senator McCarthy: How about that 18% profit? Well, retorted Ginsberg, what about it? He considered his profit no more than fair for delivering scarce goods. Snapped Ginsberg: "I want to say, sir, Ginsberg is as proud as McCarthy. I don't believe you can possibly pass legislation to prevent me, and honest men like me, from making a fair profit. Only in Russia could that be done."

McCarthy grumpily conceded that Ginsberg had a legal right to commit what McCarthy considered a moral wrong, but added: "I hope men like Ginsberg will be forced out of business."

A few minutes later Shipbuilder Andrew Jackson Higgins, who has as hard a time getting steel as the next manufacturer, was in the witness chair. Why, he asked with elaborate irony, didn't Ginsberg go into the steel grey market and "make the same small margin of profit that he makes in building materials?" Chirped unabashed Mr. Ginsberg, who was once New York State's champion lightning calculator: "How much do you need, sir?"

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