General Motors Streetcar Conspiracy - Other Factors

Other Factors

A number of analyses have suggested that the eventual replacement of electric-powered street cars with buses was inevitable and indeed occurred within the same timeframe in several other cities where NCL was not involved. It has been suggested that the ultimate reach of GM's conspiracy extended to approximately 10% of all transit systems, but the areas affected by GM's interference include 7 of the currently largest 9 Combined statistical areas (government term for metropolitan areas) in the country.

Other significant factors included:

• Difficult labor relations, and tight regulation of fares, routes, and schedules took their toll on city streetcar systems in the first third of the 20th century. By 1916, street railroads nationwide were wearing out their equipment faster than they were replacing it. While operating expenses were generally recovered, money for long-term investment was generally diverted elsewhere.
• The Dual Contracts signed by operators in New York City restricted their ability to increase fares at a time of high inflation; however, these contracts also allowed the city to operate them.
• The Public Utility Holding Company Act of 1935 (an antitrust law) prohibited regulated electric utilities from operating unregulated businesses, which included most streetcar lines. The act also placed restrictions on services operating across state lines. Many holding companies operated both streetcars and electric utilities across several states; those that owned both types of businesses were forced to sell off one. Declining streetcar business was often somewhat less valuable than the growing consumer electric business, resulting in many streetcar systems being put up for sale. The independent lines, no longer associated with an electric utility holding company, had to purchase electricity at full price from their former parents, further shaving their already thin margins.
• The Great Depression left many streetcar systems short of funds for maintenance and capital improvements with local governments reluctant to contribute to their upkeep.
• Streetcar lines were built using funds from private investors and were required to pay numerous taxes as well as dividends. By contrast new roads were constructed and maintained by the government from tax income. The U.S. Government responded to the Great Depression with massive subsidies for road construction, notably with the creation of the Interstate Highway System which was authorized by the Federal Aid Highway Act of 1956 and approved the expenditure of $25 billion for the creation of a new 41,000 miles (66,000 km) interstate road network. Federal Fuel taxes, introduced in 1956 was paid into a new Highway Trust Fund which could only fund highway construction (until 1983 when some 10% was diverted into a new Mass Transit Account). Streetcar operators were also at times required to pay for the reinstatement of their lines following the construction of the freeways system (see Transportation in metropolitan Detroit).
• Urban sprawl, white flight and suburbanization created land-use patterns which could not be easily served by streetcars, or indeed by any public transport.
• Every first time purchaser of an automobile deprived the streetcars operator of income whilst simultaneously created additional traffic congestion which often reduced service speeds and thereby increased their operational costs and making the services less attractive to the remaining users.
• Free parking facilities were generally provided at business and leisure destinations with the costs often being paid by all client, regardless of mode of transport.
• Others have suggested that streetcars were naturally replaced by the private automobile and the bus following the development of reliable internal combustion engines. These include Cliff Slater and also by Randal O'Toole of the Cato Institute, (a libertarian think tank which receives significant funding from oil industry interests).