User:Springee/streetcar conspiracy

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The General Motors streetcar conspiracy (also known as the Great American streetcar scandal) was an alleged plot by General Motors (GM) and other companies to purchase and dismantle streetcars and electric trains in the 1930s and 1940s. By intentionally running these streetcar companies out of business, it is suggested, the auto companies helped to solidify the market for their major product. Several of the major companies involved were convicted in 1949 of conspiracy to monopolize interstate commerce.

Some believe that this plot helped to cause the mid-century decline of public transit in United States cities. A key proponent of this theory is Bradford C. Snell, whose 1974 testimony against G.M., Chrysler, and Ford brought the issue to national awareness. Snell argued that the the deliberate destruction of streetcars was part of a larger strategy to push the United States into automobile dependency.

Others say that independent economic factors brought about changes in the transit system. This group accuses Snell and others of falling into conspiracy theory thinking].

Background
In the 19th century, city transit systems were rail-based, first with Horsecars and later cable railway or trams powered by electricity. Electrically powered Trolleybuses were also common.

At one time, nearly every city in the U.S. with population over 10,000 had at least one streetcar company: nearly all were privately owned and were later dismantled. Author and former U.S. Senate antitrust attorney Bradford Snell estimates that in 1920, 90% of all trips were via rail using 1,200 separate electric street and interurban railways with 44,000 miles of track, 300,000 employees, 15 billion annual passengers, and $1 billion in income. Only one in 10 Americans owned an automobile

Early years
In 1922, GM President and CEO Alfred P. Sloan established a special unit within the corporation charged with the task of replacing America's electric railways with cars, trucks and buses.

The Omnibus Corporation was formed in 1926 by John D. Hertz with "plans embracing the extension of motor coach operation to urban and rural communities in every part of the United States" and that said that "it was not the purpose of the corporation to enter into competition with street car companies or railroads, but to work with them for the rehabilitation of street car companies or parts of railroads in sections where the service was now inadequate." Omnibus owned the Chicago Motor Coach Company which Hertz founded to operate buses in Chicago, and the Fifth Avenue Coach Company in New York. That same year, the Fifth Avenue Coach Company acquired a majority of the stock in the struggling New York Railways Corporation. Hertz was made a GM board member by 1927 when the company acquired a controlling share of the Yellow Coach Manufacturing Company, a successful bus and coach manufacturer founded by Hertz in 1923.

In 1932, GM formed a new subsidiary—United Cities Motor Transport (UCMT)—to finance the conversion of streetcar systems to buses in small cities. UCMT purchased several smaller systems within Michigan and Ohio before being censured by the American Transit Association after approaching the city of Portland, Oregon with a similar proposal. UCMT was dissolved in 1935.

Conversion
The Public Utility Holding Company Act of 1935 caused great difficulties for the streetcar operators by making it illegal for a single business to both provide public transport and supply electricity to other parties. E. Quinby later asked "Who is behind this campaign to separate the obviously economical combination of electric railway and its power plant?".

When the New York Railways Corporation converted streetcars to buses in 1935 and 1936, the new bus services were operated by the New York City Omnibus Corporation which shared management with The Omnibus Corporation.

National City Lines, Pacific City Lines, American City Lines
1936 was the year that saw GM establish several front companies for the express purpose of purchasing and dismantling America's streetcar systems.

National City Lines (NCL), a bus operation founded in 1920 by an E. Roy Fitzgerald and his brother, was reorganized into a holding company. By 1938, Pacific City Lines (PCL) was formed to purchase streetcar systems in the western United States. NCL raised funds to purchase transportation systems in cities "where streetcars were no longer practicable" and to replace them with buses. Investors consisted of Firestone Tire, Standard Oil of California (now Chevron Corporation), Phillips Petroleum (now part of ConocoPhillips), GM, Mack Trucks (now a subsidiary of Volvo), and the Federal Engineering Corporation.

In 1941, PCL attempted a hostile takeover of the Key System, which operated electric trains and streetcars in Oakland, California (details about this were not made public until 1955). American City Lines (ACL) was organized to acquire local transportation systems in the larger metropolitan areas in various parts of the country in 1943 and merged with NCL in 1946.

As the 1940s progressed, the three companies gained more power. NCL acquired the Los Angeles Railway (aka the "Yellow Cars") in 1945 and converted many lines to bus routes. By 1946, the company acquired 64% of the stock in the Key System which operated electric trains and streetcars in Oakland, California. Many of these conversions to buses resulted in public outcry.

Edwin J. Quinby
That same year, Edwin J. Quinby, a recently retired naval lieutenant commander, published a 24-page expose on the owners of NCL. It was addressed to "The Mayors; The City Manager; The City Transit Engineer; The members of The Committee on Mass-Transportation and The Tax-Payers and The Riding Citizens of Your Community" and began, "This is an urgent warning to each and every one of you that there is a careful, deliberately planned campaign to swindle you out of your most important and valuable public utilities–your Electric Railway System". Quinby had previously worked for the North Jersey Rapid Transit which operated in New York and had established up the Electric Rail Users Association in 1934 which lobbied on behalf of rail users and services. He was later to write a history of North Jersey Rapid Transit. By 1947, NCL owned or controlled 46 systems in 45 cities in 16 states.

Court cases
On April 9, 1947, nine corporations and seven individuals (constituting officers and directors of certain of the corporate defendants) were indicted in the Federal District Court of Southern California on counts of 'conspiring to acquire control of a number of transit companies, forming a transportation monopoly" and "Conspiring to monopolize sales of buses and supplies to companies owned by National City Lines" which had been made illegal by the 1890 Sherman Antitrust Act.

The initial court case was in the Federal District Court of Southern California. In 1948, the venue was changed to the Federal District Court in Northern Illinois following an appeal to the United States Supreme Court (in United States v. National City Lines Inc.) who felt that there was evidence of conspiracy to monopolize the supply of buses and supplies.

The San Diego Electric Railway was sold to Western Transit Company, which was owned by a J. L. Haugh, Oakland, for $5.5 million in 1948. Jessie Haugh was also president of Key Systems which later purchased Pacific Electric Railway. The financial arrangements were not public at the time. In the same year the Baltimore Streetcar system was purchased by NCL and started converting the system to buses.

Conviction, $1 fine
In 1949, Firestone Tire, Standard oil of California, Phillips Petroleum, GM and Mack Trucks were convicted of conspiring to monopolize the sale of buses and related products to local transit companies controlled by NCL and other companies; they were acquitted of conspiring to monopolize the ownership of these companies. The verdicts were upheld on appeal in 1951. Bradford Snell summed up the controversial verdict, as the punishment so poorly matched the crime:

"'The court imposed a sanction of $5,000 on GM. In addition, the jury convicted H.C. Grossman, who was then treasurer of GM. Grossman had played a key role in the motorization campaigns and had served as a director of Pacific City Lines when that company undertook the dismantlement of the $100 million Pacific Electric system. The court fined Grossman the magnanimous sum of $1.'"

According to Snell, GM's own testimony had shown that by the mid-1950s, GM and its agents had canvassed more than 1,000 electric railways and had motorized 90%—more than 900 systems. The struggling Pacific Electric Railway was purchased by Metropolitan Coach Lines in 1953.

Jesse Haugh, who operated Metropolitan Coach Lines and was a former executive of PCL, had previously purchased San Diego Electric Railway though a separate company in 1948. The remaining streetcars were converted to buses by 1950. The remains of the Pacific Electric Railway and of the Los Angeles Railway were taken into public ownership in 1958; all routes were converted to bus routes. Though Federal anti-trust action was taken against NCL, the damage was already done: Los Angeles was dominated by automobiles. Haugh sold the bus-based San Diego system to the city in 1966.

1960s to present
The Urban Mass Transportation Act of 1964 created the Federal Transit Administration with a remit to "conserve and enhance values in existing urban areas" noting that "our national welfare therefore requires the provision of good urban transportation, with the properly balanced use of private vehicles and modern mass transport to help shape as well as serve urban growth." Funding for transit was increased with the Urban Mass Transportation Act of 1970 and further extended by the 1974 National Mass Transportation Assistance Act which allowed funds to support transit operating costs as well as construction costs.

In 1970, Harvard Law student Robert Eldridge Hicks began working on the Ralph Nader Study Group Report on Land Use in California to report the wider conspiracy to dismantle U.S. streetcar systems. These allegations were first published in Politics of Land: Ralph Nader's Study Group Report on Land Use in California. In 1974, Snell testified before a United States Senate inquiry into the causes of the decline of the transit car systems in the U.S., highlighting the NCLines acquisitions as the primary cause. San Francisco mayor and antitrust attorney Joseph Alioto testified that "General Motors and the automobile industry generally exhibit a kind of monopoly evil", adding that GM "has carried on a deliberate concerted action with the oil companies and tire companies...for the purpose of destroying a vital form of competition; namely, electric rapid transit." Los Angeles mayor Tom Bradley also testified, saying that GM—through its subsidiaries (namely PCL) "scrapped the Pacific Electric and Los Angeles streetcar systems leaving the electric train system totally destroyed".

GM published a rebuttal the same year titled "The Truth About American Ground Transport" The role of GM and buses in the decline of mass transit was further explored in the doctoral thesis of David Lipson in 1987.

In the 1988 film Who Framed Roger Rabbit, the scandal is masked and set in Los Angeles. Script-writers Jeffrey Price and Peter S. Seaman explained: "the Red Car plot, suburb expansion, urban and political corruption really did happen. In Los Angeles, during the 1940s, car and tire companies teamed up against the Pacific Electric Railway system and bought them out of business. Where the freeway runs in Los Angeles is where the Red Car used to be."

In recent decades, many cities have started reconstructing new streetcar systems, light rail, and other public transport systems. However, most U.S. cities still have high levels of automobile dependency with limited or non-existent levels of public transport. This limited transport consists of poor bus service with limited frequency and quality and typically utilized by those with no other transportation options. Commuter rail had been similarly limited or eliminated entirely in some areas, but commuter rail systems have been maintained or new ones built in other areas during recent decades. The only national passenger rail service has been operated by the government-subsidized Amtrak since 1971.

Other factors
A number of analyses have suggested that the eventual replacement of electric-powered street cars with buses was inevitable and indeed occurred within the same timeframe in several other cities where NCL was not involved. It has been suggested that the ultimate reach of GM's conspiracy extended to approximately 10% of all transit systems, but the areas affected by GM's interference include 7 of the currently largest 9 Combined statistical areas (government term for metropolitan areas) in the country.

Other significant factors included:
 * Difficult labor relations, and tight regulation of fares, routes, and schedules took their toll on city streetcar systems in the first third of the 20th century. By 1916, street railroads nationwide were wearing out their equipment faster than they were replacing it. While operating expenses were generally recovered, money for long-term investment was generally diverted elsewhere.
 * The Dual Contracts signed by operators in New York City restricted their ability to increase fares at a time of high inflation; however, these contracts also allowed the city to operate them.
 * The Public Utility Holding Company Act of 1935 (an antitrust law) prohibited regulated electric utilities from operating unregulated businesses, which included most streetcar lines. The act also placed restrictions on services operating across state lines. Many holding companies operated both streetcars and electric utilities across several states; those that owned both types of businesses were forced to sell off one. Declining streetcar business was often somewhat less valuable than the growing consumer electric business, resulting in many streetcar systems being put up for sale. The independent lines, no longer associated with an electric utility holding company, had to purchase electricity at full price from their former parents, further shaving their already thin margins.
 * The Great Depression left many streetcar systems short of funds for maintenance and capital improvements with local governments reluctant to contribute to their upkeep.
 * Streetcar lines were built using funds from private investors and were required to pay numerous taxes as well as dividends. By contrast new roads were constructed and maintained by the government from tax income. The U.S. Government responded to the Great Depression with massive subsidies for road construction, notably with the creation of the Interstate Highway System which was authorized by the Federal Aid Highway Act of 1956 and approved the expenditure of $25 billion for the creation of a new 41,000 miles (66,000 km) interstate road network. Federal Fuel taxes, introduced in 1956 was paid into a new Highway Trust Fund which could only fund highway construction (until 1983 when some 10% was diverted into a new Mass Transit Account). Streetcar operators were also at times required to pay for the reinstatement of their lines following the construction of the freeways system (see Transportation in metropolitan Detroit).
 * Urban sprawl, white flight and suburbanization created land-use patterns which could not be easily served by streetcars, or indeed by any public transport.
 * Every first time purchaser of an automobile deprived the streetcars operator of income whilst simultaneously created additional traffic congestion which often reduced service speeds and thereby increased their operational costs and making the services less attractive to the remaining users.
 * Free parking facilities were generally provided at business and leisure destinations with the costs often being paid by all client, regardless of mode of transport.
 * Another viewpoint suggest that streetcars were naturally replaced by the private automobile and the bus following the development of reliable internal combustion engines. The most prominent holder of this view is Cliff Slater.

Relevant actors
The businesses and people in this section have all been referenced by one other external sources in relation to the 'streetcar scandal'.


 * Holding companies for transport operators
 * National City Lines (1920-?) Main holding company for public transport operators
 * The Omnibus Corporation (1925–1954) Started by John D. Hertz, who was a director of GM Also known as the 'Omnibus Corporation of America'
 * New York City Omnibus Corporation (1926–1962) Shared management with The Omnibus Corporation Later known as 'Fifth Avenue Coach Lines'
 * United Cities Motor Transport (1932?-1934?) Was 'censored by the American Transit Association for its obviously self-serving role'.
 * Pacific City Lines (1937–1948) Merged into National City Lines in 1948
 * American City Lines (1943–1946) Merged with National City Lines 1946.


 * Personnel
 * William Randolph Hearst American newspaper magnate and leading newspaper publisher who, according to Guy Span "had been supporting a populist campaign against the so-called "Traction Trusts" for years"
 * John D. Hertz President of many relevant businesses and main board member of General Motors
 * John Francis Hylan Mayor of New York from 1918 to 1925 who complained about the power of the "bankers and Rockefeller-Standard Oil interests"
 * Alfred P. Sloan Head of General Motors
 * Charles Erwin Wilson Former head of General Motors, later Defense Secretary

In addition to the six business indicted in 1947:
 * Manufacturing companies
 * Yellow Cab Manufacturing Company Manufacturer of Taxicabs and parent company of 'Yellow Coach Manufacturing Company'.
 * Yellow Coach Manufacturing Company Major manufacturer of Buses Coaches, acquired by General Motors


 * Finance organizations
 * General Motors Acceptance Corporation There were allegations that the organization encouraged conversion to buses by offering the operator's banks deposits in return for conversion to buses.


 * Training
 * General Motors Institute Training city planners with alleged bias towards buses.


 * Advocacy groups
 * American Highway Users Alliance. Founded in 1932 by Alfred P. Sloan, president of General Motors


 * Affected transit lines
 * Chicago North Shore Line
 * Cleveland Railway (Ohio) Details are in short supply.
 * Key System
 * Los Angeles Railway "Yellow Cars"
 * History of MTA Maryland
 * New York and Harlem Railroad
 * Pacific Electric Railway "Red Cars" using 'Metropolitan Coach Lines'
 * San Diego Electric Railway
 * Philadelphia trolleys
 * Streetcars in St. Louis. Mentioned in the 1949 court papers.