Who Killed Public Transportation in Los Angeles?
With Elon Musk's Hyperloop making news in Israel, the story of how Los Angeles' trolley system disintegrated is once again rising in discussions. The demise of the Red Car trolleys in Los Angeles is the stuff of legend. It's such a great narrative that it made its way into the plot of the movie Who Framed Roger Rabbit?, the Chinatown-esque movie that spearheaded the resurgence in American animated films. But, like the story of Preston Tucker's quest to outdo the American automotive industry at its own game, there's a lot more to the story of the demise of Pacific Electric -- also known as the Red Car System -- than meets the eye. The Conspiracy
There's no doubt that General Motors and many other automotive-centric companies bought up trolley services all over America. According to United States Court of Appeals for the Seventh Circuit in 1951, "Pacific City Lines was organized for the purpose of acquiring local transit companies on the Pacific Coast and commenced doing business in January 1938," with the backing of investors like Firestone, Standard Oil of California, Phillips Petroleum, General Motors, Mack Trucks and the Federal Engineering Corporation.
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National City Lines -- the parent company of Pacific City Lines -- bought the Yellow Cars of the Los Angeles Railway, converting most of those lines to bus routes. National City Lines, Pacific City Lines and American City Lines made similar purchases and conversions in over 100 American cities like Oakland, Baltimore and San Diego, and eliminated streetcar service en masse.
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 and other companies. However, they were acquitted of conspiring to monopolize the ownership of these companies. The verdicts were upheld on appeal in 1951.
In 1946, Edwin J. Quinby had recently retired from the US Navy as a Lieutenant Commander. As a result of the conversion of the Key System trolleys in Oakland, California, Quinby penned a 24-page expose on the owners and investors of the National City Lines. "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," Quinby wrote.
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Quinby had previously worked for the North Jersey Rapid Transit, which operated in New York and had established the Electric Railroaders' Association in 1934, which had lobbied on behalf of rail users and the services they used.
Thirty years later, Bradford Snell, a the Senate antitrust attorney, former scholar with the Brookings Institution and attorney with Pillsbury, Madison and Sutro testified before the United States Senate, and provided what would become the document of record that conspiracy theorists would refer back to time and time again when discussing the "Great American Streetcar Scandal."
Snell testified: "My findings, contained in a study entitled American Ground Transport, are briefly this: the Big Three car companies used their vast economic power to restructure America into a land of big ca=rs and diesel trucks...General Motors' destruction of electric transit systems across the county left millions of urban residents without an attractive alternative to automotive travel."
Snell took particular issue with the leniency of the fines levied in the conspiracy cases: "The court imposed a sanction of $5,000 on GM. In addition, the jury convicted H.C. Grossman, who was then treasurer of GM. Grossman had played a key role in the motorization campaigns and had served as a director of Pacific City Lines when that company undertook the dismantlement of the $100 million Pacific Electric system. The court fined Grossman the magnanimous sum of $1."
The Mitigating Factors
Whether or not GM, Firestone and Standard Oil were buying up trolley companies and converting them to buses, the fact was that many of those lines were in dire financial shape when they were purchased, due in part to the trust-busting that followed the stock market crash of 1929.
The Public Utility Holding Company Act of 1935 -- also known as the Wheeler-Rayburn Act -- put the kibosh on trolley company profitability. Prior to the Act, streetcar companies like Pacific Electric could provide a public transportation service, as well as producing electricity for sale to other parties. By 1932, eight utility holding companies controlled 73 percent of the private electric industry. Complex legal structures made it very hard for individual states to regulate.
Companies like Pacific Electric were private companies, not public services. They were owned by electric utility holding companies. The electric utility company could sell electricity to the streetcar affiliate company and artificially mark up the price, allowing the utility company to effectively subsidize the streetcars, and then jack up electric rates for other customers.
The Wheeler-Rayburn Act resulted in the divestiture of utility-owned electric streetcar companies, and seriously impinged their ability to run profitably.
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In 1997, in an issue of Transportation Quarterly, Cliff Slater essentially exploded the myth that the demise of trolley cars in America was due solely to the fact that GM and its cohorts were buying them. Slater essentially said that the trolley car systems around the country were able to be purchased because they were going broke. As far back as 1920, ridership on streetcars was on the decline. By the time of the stock market crash, 20 percent of cities across the country were already relying solely upon bus service.
In 1915, streetcars were cheaper than buses to operate, according to Slater, but just a few short years later, as soldiers returned home from World War I, that wasn't necessarily the case. The capital cost of maintaining railways exploded, versus the road maintenance for buses, which was essentially subsidized by road construction specifically for automobiles that were becoming vastly more popular in the 1920s.
Streetcar ridership increased heavily during World War II, which made it a lot easier for conspiracy theorists to point to increased ridership as a suggestion that all was well with the trolley systems. But it was a time of great austerity and gas rationing, artificially inflating ridership during the war years. Immediately following the war, ridership plummeted and never recovered.
"GM simply took advantage of an economic trend that was already well along in the process — one that was going to continue with or without GM's help," concluded Slater.
Films like Who Framed Roger Rabbit? and documentaries like Who Killed the Electric Car? have continued to utilize Snell's testimony and his writing as the basis for the theory that GM was at fault for cities in the United States not having adequate public transportation. But in an article entitled The Transformation of the Pacific Electric Railway: Bradford Snell, Roger Rabbit, and the Politics of Transportation in Los Angeles, scholar Sy Adler flatly states that everything Snell suggested about transit in Los Angeles "was wrong."
Like the story of Preston Tucker, when you start to look at the actual facts of what happened, it turns out he was just a guy who wasn't particularly good at paying his bills.
Image Source: The Atlantic Cities (graphs)
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