American Ground
Transport*
Page
3
While emphasizing that
“[t]his is not a study of malevolent or rapacious executives. . .” and
that many of the corporate actions portrayed in the report can be viewed
as reasonable from the point of view of the interests of stockholders, the
Snell report reveals the extent to which General Motors and other industry
decisions influenced the course of apparently objective planning
decisions.
When, in the 1920’s, the
nation’s auto market seemed to be approaching saturation, GM diversified
into the mass transit market, producing city and intercity buses. Thus GM
first moved toward the potential of spanning all phases of surface
transportation.
“After its successful
experience with intercity buses, General Motors diversified into city bus
and rail operations. At first, its procedure consisted of directly
acquiring and scrapping local electric transit systems in favor of GM
buses. In this fashion, it created a market for its city buses. On June
29, 1932, the GM-bus executive committee formally resolved that ‘to
develop motorized transportation, our company should initiate a program of
this nature and authorize the incorporation of a holding company with a
capital of $300,000.’ Thus was formed United Cities Motor Transit (UCMT)
as a subsidiary of GM’s bus division. Its sole function was to acquire
electric street-car companies, convert them to GM motorbus operation, and
then resell the properties to local concerns which agreed to purchase GM
bus replacements. ‘In each case,’ [GM General Counsel] Hogan stated, GM
'successfully motorized the city, turned the management over to other
interests and liquidated its investment.’ The program ceased, however, in
1935 when GM was censured by the American Transit Association (ATA) for
its self-serving role, as a bus manufacturer, in apparently attempting to
motorize Portland’s electric streetcar
system.”
Smaller companies proved only a
beginning, however, as GM influence extended to the nation’s largest
cities: “The massive conversion within a period of only 18 months of the
New York system, then the world’s largest streetcar network, has been
recognized subsequently as the turning point in the electric railway
industry.”
In 1936, GM caused its
officers and employees to form National City Lines, Inc. (NCL) the report
alleges, and continues: “During the following 14 years General Motors,
together with Standard Oil of California, Firestone Tire, and two other
suppliers of bus-related products, contributed more than $9 million to
this holding company for the purpose of converting electric transit systems in 16 states to GM bus operations. The method
of operation was basically the same as that which GM employed
successfully in its United Cities Motor Transit program: acquisition, motorization, resale. By having
NCL resell the properties after conversion was completed, GM and its allied
companies were assured that this capital was continuously reinvested in the
motorization of additional systems. . .
Continued on page 4
Copyright © 1974 by Third Rail Press, © 1999 by The Composing Stack
Inc.
Reprinted by permission. Not responsible for
typographical errors.
*Quotations in this article are taken from “AMERICAN GROUND TRANSPORT,
A Proposal for Restructuring the Automobile, Truck, Bus, and Rail
Industries,” © 1973 by Bradford C. Snell. Excerpts used by permission of
the author.
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