General Motors streetcar conspiracy
The General Motors streetcar conspiracy refers to the convictions of General Motors and related companies that were involved in the monopolizing of the sale of buses and supplies to National City Lines and subsidiaries, as well as to the allegations that the defendants conspired to own or control transit systems, in violation of Section 1 of the Sherman Antitrust Act. This suit created lingering suspicions that the defendants had in fact plotted to dismantle streetcar systems in many cities in the United States as an attempt to monopolize surface transportation.
Between 1938 and 1950, National City Lines and its subsidiaries, American City Lines and Pacific City Lines—with investment from GM, Firestone Tire, Standard Oil of California, Federal Engineering, Phillips Petroleum, and Mack Trucks—gained control of additional transit systems in about 25 cities. Systems included St. Louis, Baltimore, Los Angeles, and Oakland. NCL often converted streetcars to bus operations in that period, although electric traction was preserved or expanded in some locations. Other systems, such as San Diego's, were converted by outgrowths of the City Lines. Most of the companies involved were convicted in 1949 of conspiracy to monopolize interstate commerce in the sale of buses, fuel, and supplies to NCL subsidiaries, but were acquitted of conspiring to monopolize the transit industry.
The story as an urban legend has been written about by Martha Bianco, Scott Bottles, Sy Adler, Jonathan Richmond, Cliff Slater, and Robert Post. It has been depicted several times in print, film, and other media, notably in the fictional film Who Framed Roger Rabbit, documentary films such as Taken for a Ride and The End of Suburbia and the book Internal Combustion.
Only a handful of U.S. cities, including San Francisco, New Orleans, Newark, Cleveland, Philadelphia, Pittsburgh, and Boston, have surviving legacy rail urban transport systems based on streetcars, although their systems are significantly smaller than they once were. Other cities, such as Washington DC, and Norfolk, have re-introduced streetcars.
History
Background
In the latter half of the 19th century, transit systems were generally rail, first horse-drawn streetcars, and later electric powered streetcars and cable cars. Rail was more comfortable and had less rolling resistance than street traffic on granite block or macadam and horse-drawn streetcars were generally a step up from the horsebus. Electric traction was faster, more sanitary, and cheaper to run; with the cost, excreta, epizootic risk, and carcass disposal of horses eliminated entirely. Streetcars were later seen as obstructions to traffic, but for nearly 20 years they had the highest power-to-weight ratio of anything commonly found on the road, and the lowest rolling resistance.Streetcars paid ordinary business and property taxes, but also generally paid franchise fees, maintained at least the shared right-of-way, and provided street sweeping and snow clearance. They were also required to maintain minimal service levels. Many franchise fees were fixed or based on gross ; such arrangements, when combined with fixed fares, created gradual impossible financial pressures. Early electric cars generally had a two-man crew, a holdover from horsecar days, which created financial problems in later years as salaries outpaced revenues.
Many electric lines—especially in the West—were tied into other real estate or transportation enterprises. The Pacific Electric and the Los Angeles Railway were especially so, in essence loss leaders for property development and long haul shipping.
By 1918, half of US streetcar mileage was in bankruptcy.
Early years
, better remembered for his car rental business, was also an early motorbus manufacturer and operator. In 1917 he founded the Chicago Motor Coach Company, which operated buses in Chicago, and in 1923, he founded the Yellow Coach Manufacturing Company, a manufacturer of buses. He then formed The Omnibus Corporation in 1926 with "plans embracing the extension of motor coach operation to urban and rural communities in every part of the United States" that then purchased the Fifth Avenue Coach Company in New York. The same year, the Fifth Avenue Coach Company acquired a majority of the stock in the struggling New York Railways Corporation. In 1926, General Motors acquired a controlling share of the Yellow Coach Manufacturing Company and appointed Hertz as a main board director. Hertz's bus lines, however, were not in direct competition with any streetcars, and his core business was the higher-priced "motor coach".By 1930, most streetcar systems were aging and losing money. Service to the public was suffering; the Great Depression compounded this. Yellow Coach tried to persuade transit companies to replace streetcars with buses, but could not persuade the power companies that owned the streetcar operations to motorize. GM decided to form a new subsidiary—United Cities Motor Transport —to finance the conversion of streetcar systems to buses in small cities. The new subsidiary made investments in small transit systems in Kalamazoo and Saginaw, Michigan, and in Springfield, Ohio, where they were successful in conversion to buses. UCMT then approached the Portland, Oregon, system with a similar proposal. The UCMT was censured by the American Transit Association and dissolved in 1935.
The New York Railways Corporation began conversion to buses in 1935, with the new bus services being operated by the New York City Omnibus Corporation, which shared management with The Omnibus Corporation. During this period, GM worked with Public Service Transportation in New Jersey to develop the "All-Service Vehicle", a bus also capable of working as a trackless trolley, allowing off-wire passenger collection in areas too lightly populated to pay for wire infrastructure.
Opposition to traction interests and their influence on politicians was growing. For example, in 1922, New York Supreme Court Justice John Ford came out in favor of William Randolph Hearst, a newspaper magnate, for mayor of New York, complaining that Al Smith was too close to the "traction interests". In 1925, Hearst complained about Smith in a similar way. In the 1941 film Citizen Kane, the lead character, who was loosely based on Hearst and Samuel Insull, complains about the influence of the "traction interests".
The Public Utility Holding Company Act of 1935, which made it illegal for a single private business to both provide public transport and supply electricity to other parties, forced electricity generator companies to divest from trolley, streetcar, electric suburban, and interurban transit operators that they used to cross-subsidize in order to increase the basis of their limited return on investment.
National City Lines, Pacific City Lines, American City Lines
In 1936, National City Lines, which had been started in 1920 as a minor bus operation by E. Roy Fitzgerald and his brother, was reorganized "for the purpose of taking over the controlling interest in certain operating companies engaged in city bus transportation and overland bus transportation" with loans from the suppliers and manufacturers. In 1939, Roy Fitzgerald, president of NCL, approached Yellow Coach Manufacturing, requesting additional financing for expansion. In the 1940s, NCL raised funds for expansion from Firestone Tire, Federal Engineering, a subsidiary of Standard Oil of California, Phillips Petroleum, GM, and Mack Trucks. Pacific City Lines, formed as a subsidiary of NCL in 1938, was to purchase streetcar systems in the western United States. PCL merged with NCL in 1948. American City Lines, which had been organized to acquire local transportation systems in the larger metropolitan areas in various parts of the country in 1943, was merged with NCL in 1946. The federal government investigated some aspects of NCL's financial arrangements in 1941. By 1947, NCL owned or controlled 46 systems in 45 cities in 16 states.From 1939 through 1940, NCL or PCL attempted a hostile takeover of the Key System, which operated electric trains and streetcars in Oakland, California. The attempt was temporarily blocked by a syndicate of Key System insiders, with controlling interest secured on January 8, 1941. By 1946, PCL had acquired 64% of the stock in the Key System.
Beginning in the 1940s, NCL and PCL slowly took control of Los Angeles' two streetcar systems: Pacific Electric Railway and Los Angeles Railway. In 1940, PCL acquired Pacific Electric's operations in Glendale, Burbank, and Pasadena. Lines to San Bernardino were phased out in 1941 and the Hollywood Subway, which ran lines from Burbank, Glendale, and the San Fernando Valley, closed in 1955. In 1945, ACL acquired Los Angeles Railway at a price of about $13,000,000. Soon after, the company announced it would scrap all but three of the existing Yellow Car lines.
In 1953, the remainder of Pacific Electric's network was sold to Metropolitan City Lines, a subsidiary of PCL. Subsequently, the remaining assets of the original Pacific Electric system and the original Los Angeles Railway system were sold by Metropolitan City Lines and Los Angeles Transit Lines, respectively, to the newly formed Los Angeles Metropolitan Transit Authority. Under the new public authority, the final remaining streetcars in Los Angeles were phased out, with the final Red Car making its last service on April 9, 1961 and the last Yellow Car on March 31, 1963.
Edwin J. Quinby
In 1946, Edwin Jenyss Quinby, an activated reserve commander, founder of the Electric Railroaders' Association in 1934, and former employee of North Jersey Rapid Transit, published a 24-page "expose" on the ownership of National City Lines 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". It 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". His activism may have led Federal authorities to prosecute GM and the other companies.He also questioned who was behind the creation of the Public Utility Holding Company Act of 1935, which had caused such difficulty for streetcar operations, He was later to write a history of North Jersey Rapid Transit.