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 (v. net); 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 John D. Hertz, 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 (which had been bankrupted and reorganized at least twice). 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". 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 (NCL), 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 (now Chevron Corporation),
Phillips Petroleum (now part of
ConocoPhillips), GM, and
Mack Trucks (now a subsidiary of
Volvo).
Pacific City Lines (PCL), 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 (ACL), 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. 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 (known as the "Red Cars") and
Los Angeles Railway (known as the "Yellow Cars"). 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. 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 (Los Angeles to Long Beach Line) making its last service on April 9, 1961 and the last Yellow Car (V Line) on March 31, 1963.
Edwin J. Quinby In 1946, Edwin Jenyss Quinby, an activated reserve
commander, founder of the Electric Railroaders' Association in 1934 (which
lobbied on behalf of rail users and services), and former employee of
North Jersey Rapid Transit (which operated into New York State), 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.
Court cases, conviction, and fines On April 9, 1947, nine corporations and seven individuals (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" In 1948, the venue was changed from the Federal District Court of Southern California 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.) which felt that there was evidence of conspiracy to monopolize the supply of buses and supplies. 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; they were
acquitted of conspiring to monopolize the ownership of these companies. The verdicts were upheld on
appeal in 1951. GM was fined and GM treasurer H.C. Grossman was fined $1. The trial judge said "I am very frank to admit to counsel that after a very exhaustive review of the entire transcript in this case, and of the exhibits that were offered and received in evidence, that I might not have come to the same conclusion as the jury came to were I trying this case without a jury," Haugh was also president of the Key System, and later was involved in Metropolitan Coach Line's purchase of the passenger operations of the
Pacific Electric Railway. The last San Diego streetcars were converted to buses by 1949. Haugh sold the bus-based San Diego system to the city in 1966. The
Baltimore Streetcar system operated by the Baltimore Transit Company was purchased by NCL in 1948 and started converting the system to buses. Overall Baltimore Transit ridership then plummeted by double digits in each of the following three years. The
Pacific Electric Railway's struggling passenger operations were purchased by Metropolitan Coach Lines in 1953 and were taken into public ownership in 1958 after which the last routes were converted to bus operation.
Urban Mass Transportation Act and 1974 Antitrust hearings The
Urban Mass Transportation Act of 1964 (UMTA) created the
Urban Mass 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
National Mass Transportation Assistance Act (1974) which allowed funds to support transit operating costs as well as capital construction costs. In 1970, Harvard Law student Robert Eldridge Hicks began working on the
Ralph Nader Study Group Report on Land Use in California, alleging a wider conspiracy to dismantle U.S. streetcar systems, first published in ''Politics of Land: Ralph Nader's Study Group Report on Land Use in California''. During 1973, Bradford Snell, an attorney with
Pillsbury, Madison and Sutro and formerly, for a brief time, a scholar with the
Brookings Institution, prepared a controversial and disputed paper titled "American ground transport: a proposal for restructuring the automobile, truck, bus, and rail industries." The paper, which was funded by the Stern Fund, was later described as the centerpiece of the hearings. In it, Snell said that General Motors was "a sovereign economic state" and said that the company played a major role in the displacement of rail and bus transportation by buses and trucks. This paper was distributed in Senate binding together with an accompanying statement in February 1974, implying that the contents were the considered views of the Senate. The chair of the committee later apologized for this error. Adding to the confusion, Snell had already joined the Senate Judiciary Committee's Subcommittee on Antitrust and Monopoly as a staff member. At the hearings in April 1974,
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". Neither mayor, nor Snell himself, pointed out that the two cities were major parties to a lawsuit against GM which Snell himself had been "instrumental in bringing"; all had a direct or indirect financial interest. (The lawsuit was eventually dropped, the plaintiffs conceding they had no chance of winning.) However,
George Hilton, a professor of economics at UCLA and noted transit scholar rejected Snell's view, stating, "I would argue that these [Snell's] interpretations are not correct, and, further, that they couldn't possibly be correct, because major conversions in society of this character—from rail to free wheel urban transportation, and from steam to diesel railroad propulsion—are the sort of conversions which could come about only as a result of public preferences, technological change, the relative abundance of natural resources, and other impersonal phenomena or influence, rather than the machinations of a monopolist." GM published a rebuttal the same year titled "The Truth About American Ground Transport". The Senate subcommittee printed GM's work in tandem with Snell's as an appendix to the hearings transcript. GM explicitly did not address the specific allegations that were
sub judice.
Role in decline of the streetcars Quinby and Snell held that the destruction of streetcar systems was integral to a larger strategy to push the United States into
automobile dependency. Most transit scholars disagree, suggesting that transit system changes were brought about by other factors; economic, social, and political factors such as
unrealistic capitalization, fixed fares during inflation, changes in
paving and automotive technology, the
Great Depression, antitrust action, the
Public Utility Holding Company Act of 1935,
labor unrest,
market forces including declining industries' difficulty in attracting capital, rapidly increasing
traffic congestion, the
Good Roads Movement,
urban sprawl, tax policies favoring private vehicle ownership, taxation of fixed infrastructure,
consumerism, franchise repair costs for co-located property, wide diffusion of driving skills,
automatic transmission buses, and general enthusiasm for the automobile. The accuracy of significant elements of Snell's 1974 testimony was challenged in an article published in
Transportation Quarterly in 1997 by Cliff Slater. A significant rebuttal to Slater's article was published about one year later in the 1998
Transportation Quarterly finding that, without GM and other companies' efforts, the streetcar would not "have been driven to the verge of extinction by 1968". Recent journalistic analysis question the idea that GM had a significant impact on the decline of streetcars, suggesting rather that they were setting themselves up to take advantage of the decline as it occurred. Guy Span suggested that Snell and others fell into simplistic
conspiracy theory thinking, bordering on
paranoid delusions stating, In 2010, CBS's Mark Henricks reported: ==Other factors==