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General Motors streetcar conspiracy

From Academic Kids

The General Motors streetcar conspiracy refers to a contention that General Motors (GM), acting in conjunction with several other companies and through the National City Lines (NCL) holding company, illegally acquired many streetcar systems in various cities around the United States and replaced them with buses for the express purpose of promoting the automobile.

Contents

The legal case

Bradford Snell has written that in 1949 GM and its partners in NCL were convicted in U.S. District Court in Chicago of criminal conspiracy in this matter and fined $5,000 each for anti-trust violations (contracts in restraint of trade, i.e forcing subsidiaries to buy products from their owners (GM buses, Firestone tires, Standard and Phillips oil)).

The claim above is often repeated and is based on testimony by Snell to a United States Senate Enquiry circa 1974.

The case ultimately reached the United States Supreme Court in United States v. National City Lines Inc. 334 U.S. 573, 596 (1948)) ("National City I")'. Caselaw summary of case (http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=search&court=US&case=/us/334/573.html) which reversed lower court rulings on the case

The proceedings were against General Motors and its subsidiary, National City Lines, along with seven other corporations. They were indicted on two counts under the US Sherman Antitrust Act. The charges, in summary, were:

  • Conspiring to acquire control of a number of transit companies, forming a transportation monopoly;
    • All defendants were acquitted on this charge.
  • Conspiring to monopolize sales of buses and supplies to companies owned by National City Lines.
    • General Motors alone was convicted on this charge.

The case for the conspiracy

It is argued that Alfred P. Sloan, Jr., long-time president of GM in the early 20th century, developed a business strategy 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 the United States' electric railways with cars, trucks, and buses.

For instance, between 1926 and 1936 GM acquired New York Railways. Bad service reduced reliability and thus actively created the trend towards private transport that GM advertised. By underinvestment and poor service the public transport system was systematically destroyed.

A 1974 report by Bradford Snell ignited the conspiracy theory by claiming that General Motors was convicted of conspiracy in 1949 (and fined $5000) in their program to buy up and destroy electric urban trolley systems so that urban transit would be forced to rely on GMC buses, and that this is the principal reason that modern-day trolley systems are rare in the United States today. Between 1936 and 1950, National City Lines, a holding company sponsored and funded by GM, Firestone, and Standard Oil of California, bought out more than 100 electric surface-traction systems in 45 cities (including New York, Philadelphia, St. Louis, Salt Lake City, Tulsa, and Los Angeles) to be dismantled and replaced with GM buses. In 1949 GM and its partners were convicted in U.S. district court in Chicago of criminal conspiracy in this matter and fined $5,000.

The case against the conspiracy

This belief has been questioned by Sy Adler who points out, among other things, that GM was not convicted of buying up urban trolley systems but rather merely of forcing bus companies owned by General Motors to use General Motors buses, and that trolley ridership peaked in the year 1920 before GM's actions. The trolley industry's problems largely predated GM's interest. Many transportation historians note that the conversion to buses would likely have occurred anyway, and that streetcar ridership was steadily declining through this period.

Further evidence against the conspiracy lies in the fact that Los Angeles had two separate trolley systems, known as the the "Red Cars" and the "Yellow Cars." National City Lines owned only one of the two systems, yet both were dismantled.

Additionally, during this period automobile ownership was rising everywhere, in cities both with and without GM purchasing the local streetcar systems. Streetcars were being converted to buses almost everywhere, including cities like London, without GM involvement, because buses were seen as the new technology at the time and were more flexible than streetcars, as they could route around track blockages for instance, and could use any road, not just roads with tracks, thereby off-loading infrastructure costs to the municipality.

Some documentation of the rapid transit interurban systems is often best provided by the history buffs, such as The Electric Railway Historical Association of Southern California (http://www.erha.org/index.html).

Framing the arguments

Part of the controversy is contained in the fact that popular articles on this subject have been framed by describing the issue as the General Motors streetcar conspiracy, and by the contention that GM's motivation was to promote automobile purchases by destroying streetcar systems. The problem arises because:

  • General Motors did not act alone. It combined with Firestone Tire, Standard Oil of California and two other companies to form National City Lines, which actually purchased streetcar systems. Therefore, if "conspiracy" is a proper description, it would rightly be the National City Lines conspiracy. (Although GM and direct subsidiaries had been involved in similar behavior from 1922 to 1935.)
  • Streetcar systems failed for other reasons than National City Lines: System deterioration during World War II; politically or socially motivated opponents of streetcar systems, such as Robert Moses and Fiorello LaGuardia; federal subsidy of competing systems; competition with automobiles for road space; and suburbanization all played roles. None of that means that "National City Lines" was not a significant player.
  • A central part of the argument concerns motivation—that GM and its business partners wanted to discontinue streetcar lines to increase automobile demand. This is an interpretation, but it is fairly undisputed that they wanted to create a market for their own products.

See also

External links

Further reading

  • Bradford C. Snell, American Ground Transport: A Proposal for Restructuring the Automobile, Truck, Bus and Rail Industries. Report presented to the Committee of the Judiciary, Subcommittee on Antitrust and Monopoly, United States Senate, February 26, 1974, United States Government Printing Office, Washington, 1974, pp. 16-24.
  • Cliff Slater, 'General Motors and the Demise of Streetcars' published in Transportation Quarterly vol 51, 1997 (Eno Transportation Foundation) (http://www.enotrans.com/index.html) puts forth the argument that the streetcar was eliminated by the market.
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