Railroading the streetcars?

GM was accused of buying trolleys to kill them, but the systems were headed for oblivion

The story has the ingredients for a good urban myth: conspiracy, greed, big-business hardball. The premise was that General Motors worked quietly with oil companies and tire makers to buy up and dismantle trolley lines and destroy public transportation in the United States.

But a vigorous debate continues over whether GM killed the trolley or whether it died a natural death.

According to the story, the conspirators ended 50 years of electric-powered streetcars or trolleys serving hundreds of U.S. towns and cities. Most of those systems were dismantled by the 1950s.

They were replaced by buses built by GM, and passengers were steered toward automobiles, according to testimony before the Senate in 1974 by Bradford Snell, then an assistant counsel to the U.S. Senate. Snell testified on the Industrial Reorganization Act before the Senate Judiciary Committee's subcommittee on antitrust and monopoly.

Under Alfred Sloan, GM diversified into airlines, diesel locomotives and refrigerators. Diversification into urban transit did not look like a fertile field, but it made sense because of GM's strategy of protecting the automobile market, says David St. Clair, a professor of economics at California State University, East Bay and author of The Motorization of American Cities.

A combination of forces

Urban rail lines were in fact dismantled across the nation. But their demise had more to do with economics and cultural changes than a corporate conspiracy, says Lynn Long, a transportation research specialist at the University of California.

In any case, buying up the competition "was all perfectly legal," St. Clair says.

Myths survive on a kernel of truth, and the truth is that GM spent much of the 20th century monopolizing transportation.

By the 1960s, GM was not only the nation's biggest producer of cars but also the largest maker of trucks and buses, a leading manufacturer of earthmoving equipment and aircraft engines, and a key producer of military tanks.

GM's near monopoly in the auto industry even prompted President Eisenhower's Department of Justice to unleash a team of antitrust lawyers. They eventually produced three suits against the company.

GM stood accused of stifling competition in the off-road hauling and earthmoving markets. The automaker fought the suit for eight years before agreeing to sell its Euclid earthmoving business.

Another suit accused GM of illegally monopolizing the diesel locomotive business but was dropped for lack of evidence. Still another sought to force GM to divest itself of its bus manufacturing operations. The suit was settled without trial and without divestiture.

Even in the movies

Even Hollywood jumped aboard.

GM was caricatured as the rapacious villain Judge Doom in the 1988 movie Who Framed Roger Rabbit? In the film's subplot, the evil Judge Doom laid out a vision of eight-lane freeways across the land that would attract "restaurants that serve rapidly prepared food, tire salons, automobile dealerships and wonderful, wonderful billboards reaching as far as the eye can see. My God, it'll be beautiful."

The character Valiant responded: "Come on. Nobody's gonna drive this lousy freeway when they can take the Red Car (trolley) for a nickel."

Doom: "Oh, they'll drive. They'll have to. You see, I bought the Red Car so I could dismantle it."

The role of NCL

The GM trolley conspiracy story got another telling in a 1996 independent film titled Taken for a Ride, which was broadcast on PBS. Snell, who had testified before the Senate subcommittee on the issue in 1974, told a compelling tale of how GM and Greyhound bus executives in 1936 created National City Lines, a holding company that acted as a front for GM. NCL was formed to buy up transit lines.

GM had acknowledged in the 1974 subcommittee testimony that it invested about $2.9 million in NCL and other transit lines but said it had no managerial control over any of these entities. Adjusted for inflation, the $2.9 million would be worth $17.5 billion today.

According to the 1974 testimony, GM's investments were made at the request of transit lines, which had trouble raising money elsewhere.

NCL also received $9 million in financing from Standard Oil of California, Firestone and other automotive-related companies, say Snell and St. Clair.

St. Clair says the conspiracy theory arose because of GM's use of "a jungle of front companies" to acquire urban transit systems and convert them to GM buses. Some of the other participants also sought to disguise their involvement.

In 1950, more than 6,500 trolley coaches were in service in the United States. By 1970 there were just 1,050.

Snell's arguments caught public attention because of a nugget of truth in his assertions.

In 1944, National City Lines did buy the Los Angeles Railway. NCL did replace some streetcar lines with buses. But the introduction of buses had begun as early as 1930.

The big question

The question not answered by conspiracy theorists: Had GM not entered the transit market, would the United States still have a viable streetcar system? The answer is no, Long concluded in a 2004 report for the Institute for Transportation Studies.

Trolley car patrons, she argued, had many reasons to seek automobiles. And Long found that trolley cars were failing before GM entered the market.

U.S. streetcar systems had deteriorated during World War II. No new streetcars had been built during the period. And many riders needed automobiles as suburbanization took hold. (Although that's a chicken-and-egg argument: Did suburbanization lead to more cars, or vice versa?)

GM: It's an urban legend

GM spokesman Tom Wilkinson says the idea that the company conspired to destroy trolley systems is an urban legend.

"Trolley systems went out of business on their own," Wilkinson says. "It was a combination of high capital costs and tracks and overhead lines, and as population began to shift around, it was very expensive. Cities moved to buses on their own because they were more economical and more flexible."

Author St. Clair said there was in fact an effort to buy up trolley lines, but there was nothing illegal. He told Automotive News that these rail lines were a regulated franchise acquired by a company that saw opportunity.

"If there was a failure, it was a failure of public policy," he said.

In 1949, a federal court convicted GM of seeking to monopolize the sale of buses. GM was fined $5,000. But, says GM's Wilkinson, that's a far cry from conspiring to wreck economically viable transit systems.

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