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General Motors stops the trollies

by Jeff Hyslop | Issue #19

If you can’t beat the competition, buy them out. That was General Motors’ post-Depression strategy for stimulating bus sales, an effort that led to the destruction of the U.S. streetcar system and, ultimately, a criminal conviction.

When General Motors’ bus and auto sales began to level off during the 1930s, the company targeted the urban transportation market, which in nearly every U.S. city was dominated by streetcars (trollies). The streetcar was not easily replaced; its tracks occupied both sides of the roadway, and it offered no additional room for buses to operate. GM’s solution was to create United Cities Motor Transit, the first of many GM holding companies. Its sole purpose was to acquire streetcar companies around the country, convert them to GM motorbus operation, and then resell the systems to local concerns that agreed to purchase only GM replacements.

When GM formed the holding company National City Lines (NCL) in 1936, Standard Oil and Firestone had already agreed privately to help fund its motorization campaign. Between 1936 and 1950, the three companies contributed $9 million to NCL, which covered the purchase, motorization, and resale of more than 100 streetcar systems in 45 cities, including New York, Los Angeles, and Philadelphia. The number of streetcars in operation over that period fell from 73,000 to 18,000, and the removal of public trollies helped make way for the automobile and suburban explosion of the 1950s.

The federal government began investigating the scandal in 1946 and prosecuted the firms two years later. In 1949, they were found guilty of "conspiracy to monopolize the local transportation field" but were fined only $5,000 each (an amount roughly equal to GM’s profit from the sale of one bus). Seven high-ranking executives at the companies were individually found guilty and fined the prodigious sum of one dollar.