Milk Racket

When country producers collaborate to improve their incomes, they receive the blessing of the U. S. government and loans from the Federal Farm Board. When city middlemen similarly collaborate, they tread dangerous ground. They may be racketeers.

Last fortnight bleachers had to be erected in a New York courtroom to accommodate 86 defendants in a poultry-selling racket (TIME, Oct. 21). Last week the New York authorities started action against another, similar game, common to all big cities--"cooeperative" selling of loose (unbottled) milk. The New York milk racket was notable and illustrative by virtue of its central figure, a lank, loose-knit individual named Larry Fay. First taxicabs, then night clubs were Larry Fay's game, the latter in collaboration with famed Mary Louise ("Texas") Guinan. Loose night clubs are crowded at the same, time of day that loose milk is delivered. When Prohibition closed one after another of his clubs, Larry Fay found it easy to switch to the milk business without any great change in work ing hours. His mistake was in attempting to trans fer night club business methods (i.e. polite but firm extortion) to the new enterprise. Even big, established milk companies feared his power. The result was that, when Larry Fay last week received his 57th summons in 14 years, whereas his previous offenses had been minor, this time the charge against him was more serious: conspiracy in restraint of trade. The New York Chain Milk Association was the name of Larry Fay's milk game. He was president, vice president, secretary and treasurer. His big-muscled "adjusters" persuaded loose milk dealers to join his association by methods not always gentle. As in rural farm cooperatives "dues" were levied upon all members. According to the city health authorities, Treasurer Fay's collections ran up to $800,000 per year. Yet he complained: "All I get out of this racket is $500 a week. It is not enough for all this worry. Besides it might affect my credit in my other lines of business." Indicted with Fay were 140 members of his Association, all unproductive city men who had learned too easily the principle which government is trying to teach their productive country cousins.