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The Conspiracy Revisited Rebutted
The Conspiracy Revisited

by Louis Guilbault

Sorry Van: it Was a Big, Nasty Conspiracy

WWGeneral Motors hated competing with streetcars, and the company became very successful at ditching them. Bradford Snellís forthcoming history of GM should give an unprecedented look at the scale of GMís scheming. In the meantime, I too have been working on a book on the subject for more than five years. (I only became aware of Snellís work about a year-and-a-half ago). In spite of what Van Wilkins says in his 1995 article (The Conspiracy Revisited), there was nothing minor about efforts by auto, oil, and rubber companies to eliminate streetcar companies.

WWFrom 1932 until the early 1980s, many auto, oil and rubber firms - but especially and obsessively General Motors - engaged in all manner of questionable activities, usually under a pervasive blanket of secrecy, to achieve a rubber-tired, internal-combustion transportation monopoly. Wilkins is hugely wrong about one thing: there was indeed conspiracy in Minneapolis. Seeds of the sleazy bus conversion were sown in 1951. That year, a former high-ranking executive of National City Lines - NCL, the bus conversion outfit GM created - embarked with mobsters on an spree of corruption in the Twin Cities. Thugs lined their pockets while tearing out one of the finest streetcar systems in North America. Multiple convictions for fraud and conspiracy resulted nine years later.

Dirty Thirties Beginnings

WWLet's start in 1932. It was the Depression, and Yellow Truck and Coach - which GM had bought control of in 1925 - was a dog, a chronic money-loser. Even before the Depression, Yellow lost money: $6.8 million in 1927, for example. Red ink gushed for seven of the ten years after GM got into making heavy trucks, buses and taxicabs, a business vastly different from automaking.

WWSo how do you sell buses, say, if competitive bids don't do the job? Well, the best way is to ditch the competition, which GM proceeded to do. In 1932, competitor #1 was the electric railway. GM later pointed out that many of these railway transit companies were in dire financial straits. This is true, but of course in 1932 the giant automaker's bus division was no goldmine itself. Yellow Truck and Coach, however, had what the little railway companies didn't- a rich uncle. GM provided money to replace streetcars with Yellow buses in a few small cities in the Midwest.

WWOf course, bigger cities are what you want if you're trying to sell a lot of buses. In 1935, GM had a huge success in its bus conversion campaign: New York City. Omnibus Corporation of America, which had a web of interlocking directors and managers with GM, tore up 92 miles of Manhattan streetcar lines and started putting in hundreds of Yellow buses. Not surprisingly, '35 was the year Yellow's financial position took a sharp turn for the better as well.

Misguided Role of Government

WWOne thing that Wilkins is absolutely right about is the unexpected destructive effects of the Public Utilities Holding Act of 1935. The big electric utilities, manufacturers like Brill, Pullman and St. Louis Car; and suppliers such as General Electric, Ohio Brass and Westinghouse could have served as effective competition to the likes of General Motors. However, electrical interests were prevented from any ownership of transportation companies, while auto, oil and rubber companies ran amok.

Creation of NCL

WWIn 1936, General Motors turned over its bus conversion efforts to the entrepreneurial Fitzgerald brothers of Minnesota. The Fitzgeralds, and especially Roy, had become successful in the intercity bus business by simply working their tails off. Apparently, someone at GM convinced them to get into urban transit.

WWThe company GM created with frères Fitzgerald was National City Lines. NCL didn't mess with niceties like public hearings or democratic process. (GM had been rejected when it tried to convince the people of Portland, Oregon to tear out their streetcars in the 1930s.) NCL's tactics were simpler: they bought streetcar companies, tore up the rails, torched or sold off the streetcars, and put in buses. GM almost always made the new vehicles. When Roy Fitzgerald was asked how he attracted former trolley users to buses in Joliet, Illinois, he replied, "We never done anything about the streetcars. They discontinued the city one night, and we started operating modern buses...the next day." Sometimes NCL would have to get regulatory approval, but that usually didnít present a big problem.

WWIn 1936, NCL bought thirteen transit companies in Illinois, Oklahoma and Michigan. In '37, the company tore out the streetcars in Butte, Montana and purchased more transit firms in Mississippi and Texas. Sometimes these systems were run down, but not always. In Butte, and Beaumont, Texas, for example, substantial investments had been made on improvements to streetcar lines less than five years before NCL swooped in.

WWYellow executive Irving Babcock recruited Standard Oil of California into the cartel. The company branched into California. In Bellingham, Washington, businessman Tim Manning tore out the streetcars. Manning would later become an NCL executive. Over 1938 and '39, NCL's tentacles reached to Alabama, Indiana and Ohio. Two more companies, Firestone Tire and Mack Truck - joined the fun.

Wartime Prosperity; Antitrust Conviction

WWWorld War Two forced a change in tactics, since bus conversions were largely put on hold. But this certainly didn't hurt NCL. Transit was booming, with gas, autos and tires rationed. Cash-rich, National could buy into really big operations: the railway from Chicago to Milwaukee, transit systems in Baltimore, St. Louis and Los Angeles, as well as smaller operations in California, Florida, Iowa, Texas and Washington state.

WWNCL, GM, Firestone, Standard Oil, Mack Truck, Phillips Petroleum and executives from each firm were indicted on antitrust charges in 1947. They were acquitted on some charges and convicted on others in Chicago in 1949. Fines were not onerous: $5,000 for each of the firms and one dollar for the executives. Antitrust prosecutor William C. Dixon was "shocked and disgusted".

The Twin Cities Mire

WWThe truly spectacular story was yet to come. General Motors was not involved in the Minneapolis - St. Paul bus conversion, but local lawyer Fred Ossanna, and Benson (Barney) Larrick, former 20-year veteran and regional manager for NCL, most certainly were. (Another former NCL manager, Jim Gibb, also worked in the Twin Cities in the early 1950s, but was not convicted of anything and in fact testified for the prosecution).

WWThe Twin City Rapid Transit Company (TCRT, commonly called Twin City Lines) marched to a different drummer than much of the North American transit industry. They did not embrace bus conversion (though a few lightly used lines had been converted), and ran an extensive and well-maintained trolley system with many modern PCC streetcars.

WWIn 1951, Collier's writer Gordon Schendel wrote an article exposing organized crime connections to Twin City Lines, which was followed-up by Mass Transportation columnist Orson A. Round. Ossanna was displeased with both publicationsí "cheap claptrap", and threatened libel action.

WWOn August 6, 1960, Ossanna and Larrick were both convicted on 13 counts: six of mail fraud, two counts of wire (telegraph) fraud, three counts of interstate transportation of property taken by fraud and conspiracy. Both men went to jail. Gangster Isadore Blumenfeld (aka "Kid Cann") was acquitted.

WWKid Cann did not enjoy his freedom much longer. In 1961, he went to jail for transporting prostitutes across state lines and - to the surprise of nobody - for trying to bribe a juror. People of the Twin Cities footed the bill, one way or another, for the $27.5 million dollar cost of the bus conversion. The biggest beneficiary of the whole sordid affair was General Motors. The last streetcar made by an American firm had rolled out of the factory in 1951.

Other Cities and Firms

WWBesides the Twin Cities, Wilkins cites San Francisco and Seattle as cities where NCL had no influence. None other than Colonel Marmion Mills, a former GM engineer, oversaw the bus conversion in Seattle. In San Francisco, the chairman of the Public Utilities Commission, a strong bus conversion proponent, was a Cadillac dealer. Mills was also on the scene there, as he had been in Oklahoma City. Only determined work by community groups in San Francisco retained some of the cable cars and trolley lines. In Canada, the ubiquitous Colonel Mills produced a report favoring, yes, the continued tearing out of streetcar lines by BC Electric in Vancouver.

WWGeneral Motors was not the only firm or individual in chronic conflict-of-interest in the transportation industry. W.C. Gilman, for example, was a New York consultant whose firm advocated the replacement of electric trolley buses with diesel buses in Seattle, the elimination of four remaining streetcar lines in St. Louis, and that buses replace rail service on the Chicago North Shore Railroad. Gilman also happened to be vice-president and director of Coronado Petroleum Corp. and president and director of International Oil Pipeline Co.

More Antitrust; GM Gets out of Busmaking

WWAs manufacturer after manufacturer dropped out of bus manufacturing, GM found itself in overwhelming dominance of the transit vehicle market. This again attracted the attention of the antitrust people. After years of litigation, the company signed a consent decree with the Justice Dept. in 1965. It required GM to license its technology, among other things.
WWMarket forces were working against GM's buses by the 1970s. Transit authorities were demanding more innovative buses than the standardized product built at the firm's huge plant in Pontiac, Michigan, and European and American competitors were offering them. In 1979, GM made its last intercity bus and in 1987 it shut down transit bus production as well.
WWBoth the internal-combustion motor and electric motor are wonderful devices that provide tremendous mobility and have freed us from a vast amount of mindless toil. But as we become more concerned with the greenhouse effect and more traditional concerns about air pollution, we can take more advantage of the quiet, efficiency and cleanliness of the electric motor. There is vast profit to be made from burning petroleum, however, and rest assured that those making the money will be in there pulling the strings every way they can.

The Conspiracy Revisited

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