The Future of Children, Princeton - Brookings: Providing research and analysis to promote effective policies and programs for children.

The gun industry operates in such a way as to make guns readily accessible to young people, criminals, and others who are prohibited from possessing them. Robert Hass, Smith & Wesson's former senior vice president of marketing and sales, has made this clear:

The company and the industry as a whole are fully aware of the extent of the criminal misuse of firearms...that the black market in firearms is...due to the seepage of guns into the illicit market from multiple thousands of unsupervised federal firearms licensees. In spite of their knowledge, however, the industry's position has consistently been to take no independent action to insure responsible distribution practices [and] to maintain that the present minimal federal regulation...is adequate.²⁰

An overview of the major features of the gun markets, as presented below, reveals that guns can quickly move from the regulated, legal market into the illegal market, through corrupt retailers, bulk transactions and "straw" (surrogate) purchasing, sales on the unregulated secondary market, or theft. Certain guns, especially inexpensive and high-powered semiautomatic pistols, are particularly attractive to criminals and youth.

Legal and Illegal Markets for Guns

The market for guns in the United States is complex enough that it is helpful to think in terms of several interdependent gun markets. There are both legal and illegal retail markets in guns. Until fairly recently, it was believed that theft was the main source of guns for the illegal market, but new evidence demonstrates that the legal market is the chief source of supply for the illegal market's crime guns. The intentional diversion of guns from the legal to the illegal market, a process known as "trafficking," has been the subject of intense research and intervention.

The legal gun market is divided into a primary market, comprising all transfers of guns by mainstream sources such as federally licensed retailers (gun dealers and pawnbrokers), and a secondary market, consisting of transfers involving less formal sources such as private parties, collectors, and unlicensed vendors at gun shows.²¹ The split between primary market sales by licensed retailers and secondary market sales by other sources is approximately 60/40.^9,21

Lack of regulation and oversight of the primary market's licensed retailers has contributed greatly to the availability of guns for criminal use. Practices such as bulk retail transactions and surrogate or straw purchasing make it easy for gun traffickers—sometimes with the cooperation of corrupt licensed gun dealers—to buy guns and then resell them on the secondary market, where sales are not subject to federal regulations such as background checks.

In the early 1990s, the United States had more gun retailers than gas stations.²² No mechanism existed, at either the federal or state level, for ensuring that licensed retailers were actually engaged in the legitimate business of selling guns or that they complied with state and local laws regarding the operation of such a business. As Box 1 shows, retailers often are sources of crime guns, both directly and through traffickers and other intermediaries.

Bulk retail transactions, also called multiple purchases, are another important source of crime guns. In 1999, some 22% of all crime guns had first been sold in a multiple purchase.² Youth frequently engage in multiple purchases (although not always from licensed retailers). Among correctional inmates under age 18, for example, one in five stated in a 1993 survey that they had gone out of state to buy guns in quantity, and 45% of these had "bought, sold, or traded a lot of guns" (italics in original).²³

Straw purchasers—persons who buy guns from licensed retailers on behalf of others who are prohibited from doing so—are another important source of crime guns.

This may be particularly true for young people: In the 1993 survey mentioned above, 32% of student-age inmates and, perhaps even more surprisingly, 18% of inner-city high school students, had asked someone to purchase a gun for them from a retail outlet.²³

Compelling evidence of the complicity of corrupt licensed retailers in these purchases comes from Chicago, where undercover police officers conducted sting operations in 1998. In a dozen cases, storefront gun retailers in Chicago suburbs—selected because of the frequency with which guns they sold were used in Chicago crimes—willingly participated in straw purchases and other sales that they knew to be illegal.²⁴

Despite cases like these, licensed retailers in the primary gun market make up the most regulated, and probably also the cleanest, segment of the retail gun market. Congress has created a double standard for gun sellers. Federal law requires those who are "engaged in the business" of selling guns to be licensed. But the law is deliberately ambiguous as to what "engaged in the business" means. As a result, unlicensed vendors in the secondary gun market can buy and sell dozens or hundreds of guns each year and still claim that they are pursuing a hobby.

This has divided the primary and secondary retail gun markets into two parallel systems for gun distribution, with clear implications for efforts to prevent the flow of guns into the illegal market. Licensed retailers are required to comply with federal, state, and local laws (although enforcement is problematic). They are obligated to identify prospective purchasers. They cannot transfer guns to prohibited persons, and they are required to observe waiting periods and submit purchaser information for background checks. They must keep records of all acquisitions and dispositions of guns, and report all multiple sales. The secondary market's unlicensed gun sellers, by contrast, can legally ignore the identification requirement and waiting period, cannot conduct background checks, and are not required to report multiple sales or keep records.

The problem is most visible (although probably not most extensive) at gun shows and flea markets. There are more than 4,000 gun shows in the United States each year, averaging 2,000 to 5,000 attendees each. ATF summarizes the situation: "Under current law, large numbers of firearms at these public markets are sold anonymously....there is virtually no way to trace them."²⁵ As a result, "too often the shows provide a ready supply of firearms to prohibited persons, gangs, violent criminals, and illegal firearms traffickers."²⁵ Unlicensed vendors, who make up 25% to 50% of all persons selling guns at gun shows, sometimes even advertise their exemption from the regulations that apply to licensed retailers. At one show, a vendor posted a sign stating, "No background checks required; we only need to know where you live and how old you are."²⁵ Because purchasers are not even required to show identification, such vendors clearly are an important potential source of guns for children and youth.

Thus, guns may be diverted directly from the legal to the illegal market through several channels. As shown in Figure 3, firearms can be furnished directly by a corrupt licensed retailer, bought from a licensed retailer by a straw purchaser, or sold, with almost no questions asked, in the unregulated secondary market.

Under these circumstances, reports that even serious criminals often buy rather than steal their guns have gained widespread credibility. A nationwide survey of inmates in state prisons in 1991 found that those incarcerated for a handgun offense were nearly as likely to have gotten the gun they used from a "retail outlet" (27%) as from the "black market, a drug dealer, or a fence" (28%); just 9% said that they had stolen it.²⁶

Theft remains a source of potential crime guns; about 500,000 guns are stolen each year.⁹ But the importance of theft to the supply of crime guns has been overestimated. This may be because theft does not yield desirable guns. Guns stolen from residences, at least, tend to be older revolvers, not the semiautomatic pistols that have become the weapons of choice for criminal use.²⁷