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THE STREETCAR CONSPIRACY
How General Motors Deliberately Destroyed Public Transit
Bradford Snell is a former U.S. Senate Counsel. His 1974 report gave national
prominence to the General Motors/National City Lines conspiracy case. His
history of GM will be published in 2002 by Alfred A. Knopf.
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Editor's Note: The following article was originally published in The New
Electric Railway Journal in Autumn 1995. In it, Mr. Snell responds to an
earlier article by Van Wilkins, who claimed commuter rail lines vanished due to
causes other than the conspiracy by GM and other companies to put them out of
business.
The electric streetcar, contrary to Van Wilkin's incredible naïve whitewash,
did not die a natural death: General Motors killed it. GM killed it by
employing a host of anti-competitive devices which, like National City Lines,
debased rail transit and promoted auto sales.
This is not about a "plot" hatch by wild-eyed corporate rogues, but rather
about a consummate business strategy crafted by Alfred P. Sloan, Jr., the
MIT-trained genius behind General Motors, to expand auto sales and maximize
profits by eliminating streetcars. In 1922, according to GM's own files, Sloan
established a special unit within the corporation which was charged, among
other things, with the task of replacing America's electric railways with cars,
trucks and buses.
A year earlier, in 1921, GM lost $65 million, leading Sloan to conclude that
the auto market was saturated, that those who desired cars already owned them,
and that the only way to increase GM's sales and restore its profitability was
by eliminating its principal rival: electric railways.
At the time, 90 percent of all trips were by rail, chiefly electric rail; only
one in 10 Americans owned an automobile. There were 1,200 separate electric
street and interurban railways, a thriving and profitable industry with 44,000
miles of track, 300,000 employees, 15 billion annual passengers, and $1 billion
in income. Virtually every city and town in America of more than 2,500 people
had its own electric rail system.
General Motors sought to reduce competition from electric railways through a
variety of measures, including the use of freight leverage. GM, for decades,
was the nation's largest shipper of freight over railroads, which controlled
some of America's most extensive railways. By wielding freight traffic as a
club, GM persuaded railroads to abandon their electric rail subsidiaries.
With a pack of notorious mobsters, GM helped purchase and scrap the street
railways serving Minneapolis-St. Paul.
Members of GM's special unit went to, among others, the Southern Pacific, owner
of Los Angeles' Pacific Electric, the world's largest interurban, with 1,500
miles of track, reaching 75 miles from San Bernardino, north to San Fernando,
and south to Santa Ana; the New York Central, owner of the New York State
Railways, 600 miles of street railways and interurban lines in upstate New
York; and the New Haven, owner of 1,500 miles of trolley lines in New York,
Connecticut, Rhode Island and Massachusetts.
In each case, by threatening to divert lucrative automobile freight to rival
carriers, they persuaded the railroad (according to GM's own files) to convert
its electric street cars to motor buses -- slow, cramped, foul-smelling
vehicles whose inferior performance invariable led riders to purchase
automobiles.
As the largest depositor in the nation's leading banks, GM also enjoyed
financial leverage over the electric railways, which relied heavily on these
banks to supply their capital needs. According to U.S. Department of Justice
documents, officials of GM visited banks used by railways in Philadelphia,
Dallas, Kansas City and other locations, and, by offering them millions in
additional deposits, persuaded their rail clients to convert to motor vehicles.
Where these measures were unavailing, GM formed holding companies to buy up and
motorize the railways directly. Thus, it helped organize and finance United
Cities Motor Transit as a wholly owned GM subsidiary, as well as Greyhound, Rex
Finance, Omnibus Corporation, National City Lines, Pacific City Lines, American
City Lines, City Coach Lines, Manning Transportation and numerous other
concerns, which acquired rail systems across the country, including those in
New York, Los Angeles, Chicago, Philadelphia, Baltimore, Washington, St. Louis,
Salt Lake City, Sacramento, San Diego and Oakland.
With officials of Greyhound and National City, it helped acquire and dismantle
the $50 million North Shore Line, the fastest electric service in the world,
providing Wisconsin's lakeshore cities and Chicago's northern suburbs
high-speed access to the downtown loop. With a pack of notorious mobsters, it
helped purchase and scrap the street railways serving Minneapolis-St. Paul.
Where rail systems could not be bought, GM bought rail officials instead,
giving Cadillacs to those who converted to buses.
And where rail systems were publicly owned and could not be bought, like the
municipal railway of St. Petersburg, Florida, GM bought their officials
instead, according to FBI files, providing complimentary Cadillacs to those who
converted to buses.
GM admitted, in court documents, that by the mid-1950s, its agents had
canvassed more than 1,000 electric railways and that, of these, they had
motorized 90 percent, more than 900 systems.
Van Wilkins, in his piece, went to considerable lengths to discount GM's role
in the death of the American trolley, perfervidly propounding alternative
explanations such as "proliferating" autos (this, properly, not the cause but
rather the result of the trolley's demise), government road building (inspired,
fundamentally, by GM-organized road lobbies), and unsympathetic traffic
engineers (virtually all of whom, at one time or another, studied at GMI, the
automaker's private accredited university).
National City Lines
He even endeavored to whitewash GM's criminal conviction regarding National
City Lines, declaring, not without sarcasm, that "no one was convicted of
plotting to destroy the street railway industry." In fact, everyone involved
knew that GM's purpose in organizing National City was, precisely, to destroy
the electric railways and to replace them with GM buses. The federal
prosecutors knew. In their draft indictment, they declared that the rationale
underlying GM's financing of National City was "adoption by defendant National
of a program to eliminate electrically propelled conveyances...."
The assistant U.S. attorney general knew. The "result" of GM's plans, he
declared, "has been the elimination of electrically propelled vehicles and the
substitution of motor buses in a number of cities."
"An organized campaign to deprive the American public of their splendid
electric railway systems."
E.J. Quinby, president and founder of the Electric Railroader's Association,
who bravely persuaded the government to bring the lawsuit against GM and its
powerful automotive allies, also knew. GM, he wrote in a detailed 25-page
letter to the U.S. attorney general, had combined with Standard Oil of
California (Chevron), Phillips Petroleum, and Firestone, to form National City
as part of "an organized campaign to deprive the American public of their
splendid electric railway systems..."
Van Wilkins sought to diminish the significance of National City Lines by
claiming that, with regard to railways acquired in Tulsa, Salt Lake City and
Los Angeles, the decision to abandon at least some of the electric lines had
already been made. Yet this was not at all unexpected, for National was but
part of GM's multifaceted anti-rail strategy. Tulsa, for example, as acquired
and converted by another GM-assisted holding company, Rex Finance, before it
was turned over to National. GM agents pressed Salt Lake City to convert to
buses before GM's Pacific City Lines bought the system.
Likewise, GM was involved in Los Angeles Railway decades before its acquisition
by National. As early as 1923, interests associated with GM threatened to
parallel the railway with double-decker buses and "skim the cream" of its
short-haul trade, thereby weakening its resolve; by 1939, National and other
holding companies allied with GM (namely, Omnibus and City Coach) were
jockeying to buy the railway and convert it to GM buses.
[Van Wilkins] claimed, with respect to Baltimore, St. Louis, Philadelphia and
Oakland, cities in which National acquired the railways expressly to abandon
them, that other factors, including the antipathy of traffic engineers and
politicians, might also have contributed to the trolley's demise. Indeed, this
was possible, given GM's willingness to generously reward those who promoted
its mobilization objectives.
Finally, he derived solace from a list of cities not acquired by National that
nevertheless lost all or part of their electric railways. But here, as before,
he failed to comprehend that National was but one of myriad devices employed by
GM since 1922 to eliminate the trolley. The railways of Boston, Detroit, San
Francisco, Seattle, as well as those of Canada were publicly operated and
unavailable for purchase; but this did not preclude GM, which was equally
active in Canada, from using bribes and other inducements to persuade their
officials to motorize.
Indeed, in San Francisco and Seattle, it arranged for one of its former
regional bus managers, the ex-president of its United Cities subsidiary, to
become manager and transit czar. In northern New Jersey, Atlanta, Kansas City,
Denver, Dallas, and Houston, it relied on banking connections to facilitate
abandonment; in Chicago and Milwaukee, it relied on Greyhound, Omnibus, City
Coach, and National; in Portland, on United Cities, Pacific Cities and Manning
Transportation; in Miami, Cleveland, Cincinnati, Louisville, Memphis, and
Pittsburgh, on freelance agents and former GM and National officials; in New
Orleans and Indianapolis, on gifts to high-placed executives; in Minneapolis,
on unprincipled gangsters.
GM Killed the Trolley
The streetcar did not die, as Wilkins contended, because of demographics or
economics or disinvestments or evolution; it died because GM in 1922 made a
conscious decision to kill it and, for the next several decades, pursued a
strategy designed to accomplish this objective. Yet, by reason of timidity or
negligence or ignorance or cowardice, Wilkins simply cannot bring himself to
admit that a powerful corporation would seek to maximize profits by eliminating
its competition.
He refused, in his piece, to admit GM had motorized a single system: when he
alluded, for example, to the motorization of Manhattan, he said only that its
railway "came under the control of bus interests."
Which bus interests?
Well, he declined to specify.
Why?
Because they were affiliated with GM -- a corporation he felt obliged to
protect.
Take courage, Van Wilkins, before the only rails left in America are those used
to reinforce concrete in the double-deck freeways GM has projected for Los
Angeles and other metropolitan areas.
The subject of GM and the electric railways is far too complex and detailed to
summarize in a few pages. I have attempted briefly to describe some of the
major activities undertaken by GM, directly or indirectly, since 1922 to
destroy the nation's electric streetcar and interurban systems.
Postscript: For further information, I would direct those interested to my
earlier treatise on this matter, "American Ground Transport," which is to be
found in Part 4A of Hearings in S. 1167, The Industrial Reorganization Act,
before the Subcommittee on Antitrust and Monopoly of the Committee of the
Judiciary, U.S. Senate, 93rd Congress, 2nd Session (Washington, D.C.: 1974).