To the average person in our major cities, who had traveled mainly by horse-drawn carriage or trolley, the new electric rail cars and interurban lines must have seemed like the most exciting way in which modern technology would change the nation. The other modern technological improvement in personal transportation, however, had been the automobile; and its introduction and advancement happened concurrently with that of electric rail.
True, by 1910 there were fewer than half a million cars on the roads in this country, while the electric rail car was already established in most major cities and its feeder lines were being built out to the cities nearby. But just 10 years later, even before the last of the interurban lines were finished, America was building and selling 2.3 million out of the 2.4 million vehicles built worldwide each year.
That one statistic alone explains why the rest of the world still relies on mass transit, including electric rail, but here in the U.S. the latter was not destined to survive.
Automakers Enter Mass Transit
In America our electric rail and interurban lines were privately owned. In hindsight, the sheer cost of acquiring the land, laying rails, hiring thousands of workers and regularly fixing or replacing passenger cars seems like a bad bet when America was so quickly motorizing. However, it was not the car alone that did in this form of early high-speed mass transit. What killed electric rail were the advent of the modern bus and the rise of 20th Century corporate financial power, on top of our government’s responding to the newly mobile population’s demand for more and better roads.
After all, buses could transport people in numbers near an electric rail car’s capacity. Instead of having to travel along permanently set tracks in the ground, though, a bus could go anywhere the public needed to go. More important than any other factor in the transformation of American mass transit was that electric rail and interurban companies owned the land and the rails, which had cost them dearly — but buses ran on the “free” city streets and highways provided and maintained by the government.
The shift started in 1922, when General Motors’ new president, Alfred P. Sloan, put together a committee to study the viability of manufacturing buses for city transit. One of the committee’s most important discussions concerned how buses’ lower costs and greater flexibility would in fact mean they would ultimately displace electric rail. However, in spite of Sloan’s brilliance at seeing where the future was taking us, it was actually John Hertz — most famous for his rental car business — who started the Yellow Coach Manufacturing Company the next year. Three years later it was also Hertz who formed the Omnibus Corporation, whose stated goal was to push the extension of motor coach operations in every part of the country.
Just one year after that, when GM acquired a majority stake in his extremely profitable Yellow Coach Company, John Hertz became a board member at GM. Both Sloan and Hertz had seen the future; it wasn’t based on costly, extremely limited electric rail companies, but in the ability to move masses in modern buses. The very success of Hertz’s bus company and his holding firm in overtaking mass transit in some cities had proved Sloan’s original vision correct.
Little Help, Please
In 1932 GM started its first company whose sole mission was to buy up the financially troubled transit systems in major cities and replace their electric rail systems with modern buses. That GM subsidy was shut down three years later, but it was the Public Utility Holding Company Act of 1935 that effectively ended electric rail in America.
That law made it illegal for any private business both to own the electric rail lines and to be the primary provider of electricity to any one region. Keep in mind that similar laws during that period forced manufacturers, including car companies, to give up aircraft production if they also owned an airline. The federal government, during the Great Depression, was doing its best to break up the last of the monopolies, hoping to spur new industries, real competition and create better economic growth.
That same year New York City moved away from electric rail, instead choosing bus lines controlled by Hertz’s Omnibus Corporation for public transportation. The following year saw GM creating the Pacific City Lines, to purchase West Coast cities’ older electric streetcar systems and convert their public transport to buses.
GM, Mack Trucks, Firestone, Standard Oil of California and others, meanwhile, reorganized Roy Fitzgerald’s National City Line, a competing bus line service, trying to implement the same concept in other cities nationwide. Just after the Second World War ended, National City Line controlled 46 transit systems in 45 cities in one third of the states.
Of course there was an outcry. Many cities’ electric rail systems were a beloved form of mass transit, no matter how inefficient they were becoming in accommodating Americans’ mass migration to every last corner of the counties in which they lived, worked and spent their money. The biggest protests against this transit monopoly, however, probably came from those who owned the electric rail line services. As Americans bought new cars by the millions or demanded the far more convenient modern buses to take them where they needed to go, rail owners were watching their huge investments turn to dust.
And to the ordinary person, this all looked like the worst possible conspiracy against the public’s familiar rail mass transit systems. GM, Firestone and Standard Oil working together to provide buses, tires and gasoline for their vision of mobility? The major players involved suggested something suspicious.
The federal government filed its lawsuit on April 9, 1947, to end it all. Convicted in 1949 of monopolistic practices, GM was fined a mere $5,000, while GM’s Treasurer, H.C. Grossman, was handed a $1 fine to pay. But this legal finding did nothing to save the last of the electric rail systems.
By 1955, of America’s 1,000 electric rail systems more than 900 were gone. Most had been bought, shut down and replaced by buses; but some simply went out of business when continuing high operational costs combined with a steady fall-off in riders and revenues. Americans continued to buy cars by the millions.
Size Mattered Then, Too
Today the most common line is that GM, Firestone, Mack Truck and Standard Oil of California conspired to destroy electric rail for mass transit. In reality, however, electric rail for mass transit, the most brilliant technological jump in the mid-1890s, was already destined to fail just a generation later. High costs, no flexibility and the public’s love affair with personal transportation had doomed it from the start, at least here in America.
That may have happened because for the most part our systems were driven by private investment. In Europe, where cities and countries often owned the electric rail systems, they remained and still flourish. This fact also explains why light electric rail is coming back today as a public utility. In Texas it often covers the exact same lines as were first built more than 100 years ago — and it’s just as or even more expensive than it was then to do it today.
I would say there’s great irony in all of this, but maybe it’s just bureaucratic reasoning. It was the government’s building all of the roads in America that created an environment in which buses could take over from electric rail. Now that the government doesn’t want to build more roads to ease congestion, unbelievably expensive and extremely limited electric rail is coming back.
Our past, therefore, becomes our future. Only time will tell whether we do it smarter the second time around.