Road to Perdition

Road to Perdition

A nearly forgotten criminal conspiracy by GM, Firestone and Chevron shut down the nation’s municipal railways, replacing them with gas-guzzling bus lines, paving the way for global warming and for our energy crisis.

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High gas prices and our “addiction” to foreign oil, as President Bush has called it, have roots in a nearly forgotten criminal conspiracy. It was this conspiracy that ordained our extreme dependence on cars and trucks and the inevitable and all-but-irreversible results, including filthy air, congestion, long commutes and accelerated global warming.

In 1949, three of our largest corporations–General Motors, Standard Oil of California (SoCal, now Chevron) and Firestone Tire and Rubber (now Japan’s Bridgestone)–were convicted of having conspired for more than a decade to replace highly efficient urban electric transit systems with bus lines. The bus lines’ operators contracted never to buy new equipment “using any fuel or means of propulsion other than” petroleum. GM, SoCal and Firestone were fined $5,000 each, the maximum the antitrust laws then allowed. GM’s treasurer, also convicted, was fined $1.

GM’s $5,001 punishment somehow failed to deter it from continuing for six years to acquire electric-powered rail and bus properties and convert them to gasoline and diesel. The conspiracy-to-monopolize convictions, upheld on appeal, never received attention commensurate with their impact. In 1974, however, they did become a subject of Senate Antitrust and Monopoly Subcommittee hearings on the broad topic of auto industry reform.

Strikingly, the subcommittee chairman, Philip Hart, was the senior senator from Michigan, where the auto industry was dominant and where GM was the dominant corporation. An assistant subcommittee counsel, Bradford Snell, had researched the conspiracy for American Ground Transport, a study financed by the Stern Fund. GM, he testified, had led the destruction of more than 100 electric-rail transit systems in forty-five cities, including New York, Los Angeles, Philadelphia, Baltimore and St. Louis.

The instruments of destruction were principally National City Lines (NCL) and other holding companies formed by GM, a manufacturer of gas and diesel buses; SoCal and Phillips Petroleum, providers of gasoline and diesel fuels; and Firestone, provider of bus tires. To finance the conversion of electric transit systems in sixteen states to gas or diesel buses, GM, SoCal, Firestone and Phillips (also convicted) gave NCL $9 million by 1950, Snell told the hearing. The conversion was virtually complete by the mid-1950s. In Los Angeles, Snell testified, GM and SoCal created NCL affiliates that bought up and scrapped rail lines, including those used by Pacific Electric, the world’s largest electric railway operation. Its 3,000 trains had carried 80 million passengers through fifty-six Southern California incorporated communities annually. “Motorization drastically altered the way of life in Southern California,” Snell wrote in a section of the study later endorsed by Los Angeles Mayor Tom Bradley. “Today,” he continued,

Los Angeles is an ecological wasteland. The palm trees are dying from petrochemical smog; the orange groves have been paved over by 300 miles of freeways; the air is a septic tank into which 4 million cars, half of them built by General Motors, pump 13,000 tons of pollutants daily…. As early as 1963, the city was already seeking ways of raising $500 million to rebuild a rail system “to supersede its present inadequate network of bus lines”…. A decade later, the estimated cost of constructing a 116-mile rail system, less than one-sixth the size of the earlier Pacific Electric, had escalated to more than $6 billion.

“In every city and suburb, our rail and bus services are either dead or dying,” Snell testified. “At the same time, American travelers returning from Europe, for example, say there is a ‘bus gap.’ Even in Moscow, they say, the buses and subways look better than anything made in the United States. Travelers back from Japan tell the same story. Having ridden the 150-mile-per-hour bullet trains, they ask, ‘Whatever happened to America’s railroads?’ ” What happened was that with the end of steam, railroads everywhere electrified. Everywhere but here, that is: GM, the railroads’ biggest single customer, forced them to switch to much less efficient diesel locomotives.

In a sixty-seven-page reply to these and other Snell charges, GM said it “did not generate the winds of change which doomed the streetcar systems” but did, “through its buses, help to alleviate the disruption left in their wake.” Recalling the 1930s, GM said: “Times were hard and public transportation systems were collapsing…. GM was able to help with technology, with enterprise, and in some cases, with capital…. The buses it sold helped give mass transportation a new lease on life, which lasted into the postwar years.” After reviewing the trial record, the senior judge of the US Court of Appeals in Washington, George MacKinnon, dismissed GM’s defense. The convictions of GM, SoCal and Firestone resulted from “their concerted effort to replace electric streetcars with buses in numerous large and small cities,” he told the Legal Times in 1990.

Resurrecting the story of the illegal behavior that distorted our transportation system will do nothing to lower gas prices. But it is instructive. It warns of a Congress that instead of overseeing corporate power is overseen by it. It illuminates the hypocrisy of tough-on-crime politicians and pundits who remain silent about corporate crime that harms people and the environment and even kills. And it shines a light on the inspiring legacy of a lawmaker whose name graces a Senate office building but whose brand of moral courage has too seldom been visible on Capitol Hill in the three decades since his death.

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