The Other Side of the 'Trolley Conspiracy'
By Tom Rubin
In preparing his Op-Ed, "Trolley Folly of Decades Past Still Affects Transit Systems," published July 24th issue of the Salt Lake City Tribune, Roger McDonough has unfortunately failed to fully research the underlying facts behind the near disappearance of streetcars from the American public transit scene.
In fairness, he is only one of many who have heard only side of the story of how General Motors Corporation and other major industrials were supposed to have destroyed streetcars in cities from coast to coast and chosen to believe what they have heard or read without question.
Yes, it is true that these entities founded and operated National City Lines (NCL) and other entities that did take over streetcar operators, tear out their tracks and junk the cars, and replace them with buses.
Yes, it is true that this resulted in a conviction of GMC on an antitrust charge (later reversed). However, a deeper look into the real facts provides a far different picture than the impression that is gained from Mr. McDonough’s piece.
The facts are, streetcars and electric interurbans were an important part of the American transportation scene for many years – and then, their time passed and they all but disappeared, not due to conspiracy or malice, but because they became fundamentally uneconomical given competition from more modern superior technologies.
During the two decades from just after the Korean War to the early 1970's, there was a fundamental shift in public transit in the U.S. Prior to this period, the vast majority of transit operators were private, for-profit companies that operated without public subsidy and actually paid franchise fees and taxes TO governments. After it, virtually every transit system of any size in the U.S. was a governmental agency, receiving substantial subsidies FROM governments – and the taxpayers. It is important that readers understand how this fundamental shift in the profitability of transit impacted – drove – the elimination of streetcars from the American transit scene.
Streetcars and interurbans had their heydays up until approximately the end of World War I. From then on, they became increasing obsolete as two far superior economic technologies – the private automobile and the internal combustion bus – became wider and wider used. As the 1920's progressed, electric train transit operators found that they were in a less and less profitable business and, by the time the 1930's and the Great Depression came, most were clearly unprofitable. The transit companies responded by reducing operating costs, cutting back service on marginal lines, reducing maintenance and capital renewal and replacement on their track and vehicles, petitioning governmental agencies for fare increases – and looking for superior technologies.
That superior transit technology was the internal combustion bus (although electric trolley buses – "trackless trolleys" – were also popular for a time). Gasoline, and later diesel, buses required no direct investment in the right-of-way by the transit agencies, nor were they subject to property tax; just the payment of the fuel user fees that all other road users, such as auto and trucks, paid. They also did not require large expenditures for right-of-way maintenance. Also, on comparable routes, the operating costs of buses were generally superior to that of surface rail modes. Finally, interestingly, in many cases, buses were very successfully marketed to the public as improvements on the old-fashioned streetcars.
Yes, National City Lines and other entities bought out many streetcar operations and converted them to bus – but, as the record clearly shows, there was not really any significant difference in the replacement of streetcars by buses in the transit operators that didn't sell out. It was not a case of people having to conspire to get rid of streetcars; it was a case of many independent entities, from coast to coast, determining that buses were far superior to streetcars in trying to keep their companies going. For example, in Los Angeles, there were two separate electric transit train operators, GM controlled one, but both eliminated their trains and tracks. The few places where streetcars survived generally fell into one of two categories: (1) public agencies, owned by a city or county, where profit or loss was not the prime consideration, and (2) transit operators that were owned by utility companies and were not allowed to abandon the service by state regulatory authorities.
Now, was there a Federal antitrust conviction of General Motors? Yes, there was – but it was NOT for conspiring to acquire control of transit companies to form a transportation monopoly, all parties were acquitted on these charges. The conviction was that GM "monopolized" the sale of bus to the controlled transit agencies, not allowing other suppliers of these entities to compete for their business – and this was later overturned by the Supreme Court. The first action failed for a variety of reasons, but principally because: (1) This was going on all over the nation, for both the NCL-owned and almost every other streetcar system in the nation, and (2) What was the harm in getting rid of streetcars if there was bus service?
Keep in mind that many, if not most, of the streetcar systems that NCL et al were taking over were close to, if not in, bankruptcy. They were reaching the point where it would be simply impossible to continue to operate because the fare revenues coming in were not sufficient to make the payroll and pay the other necessary expenses. With the far greater cost-efficiency of buses, unprofitable streetcar transit systems because profitable bus transit systems – and transit service was saved, and saved without any taxpayer subsidy. The lower costs, greater flexibility, and other advantages of bus over rail kept transit operators across the nation from requiring taxpayer subsidies for another two to three decades.
Don't forget, by 1941, the United States was fighting World War II, gas and tire rationing was the order of the day, and there were sudden needs to move large numbers of workers to newly constructed war production plants – such as aircraft manufacturing plants and their runways – that were often far from the former beaten path. If the U.S. had entered WWII with a public transit system consisting of failing – and failed – streetcar operators, attempting to handle this demand would have been a major additional strain on a national economy already operating at the maximum. With a large part of the national transit system already converted to buses – which, by their very nature, have the flexibility that streetcars totally lack – this transition, while certainly not easy, was at least possible, and it worked. In fact, a good case can be made that, rather than the NCL players being hauled into court, they should have received metals for risking large amounts of their own funds to save the failing U.S. transit system.
There are many that bemoan the loss of these streetcar systems and blame the National City Line parents for this demise, which they clearly see as a conspiracy to do an evil deed. Well, consider this – when NCL et al were taking over these obsolete and failing streetcar systems and converting them to bus, saving the transit systems, saving the jobs of the employees, and investing in these cities – there did not appear to be much in the way of such concerns expressed. The people who were there at the time, who had a close-up picture of what was going on, knew that there was not really any alternative and that this was the best course of action available – and they were proven right. What we didn't have was much in the way of anyone with money stepping forward to say, "don't tear out the tracks, I'm willing to pay to keep the streetcars running!"
Were all such rail systems beyond hope, were some destroyed that should not have been? Undoubtedly, there were errors made. For example, I am one of many who wish that the Key System, which linked the San Francisco to the East Bay Communities over the Bay Bridge, had not been destroyed in the late 1950's – a decision that was made by the State of California engineers who operated the Bridge and wanted to use the space used by the rails for additional auto lanes. (Of course, saying that I wish that the Key System had not been dismantled is a far cry from saying that an attempt to replace in this day and age would have any purposes.)
Of course, the fundamental economic and transportation advantages of bus over streetcars – and their more recent incarnation, light rail – has not changed since the conversion from streetcars to buses began over eighty years ago, but that is a discussion for another time and place.
For those that are interested in a more detailed account of these events, I recommend: (1) for a short version, "General Motors streetcar conspiracy," Wikipedia, the free encyclopedia, http://en.wikipedia.org/wiki/General_Motors_Streetcar_Conspiracy, and (2) a more detailed study by Cliff Slater, "General Motors and the Demise of Streetcars, Transportation Quarterly, Vol. 51, No. 3, 1997 (45-66), http://www.lava.net/cslater/TQ.HTM. Both have many citations representing all sides of the controversy.
In the way of my background, I have over three decades in the transit industry as a senior executive of some of the largest transit operators in the nation and as a consultant and auditor to over 100 transit operators, metropolitan planning organizations, state departments of transportation, transit industry associations, and transit labor unions.
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