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. . .

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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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