The GM Trolley Conspiracy: What Really Happened

Last Updated Sep 2, 2010 7:24 PM EDT

Back in the dawn of the Automobile Age, General Motors began systematically buying streetcar lines and then shutting them down, leaving millions of Americans without viable public transportation options. Its motive? To ensure a market for its still-novel personal transportation technology. Rather than walk, the idea was, people would buy Buicks.

If you've seen "Who Framed Roger Rabbit?" you know this story in broad outline. If you have happened to catch one of the airings of a 1996 public television show called "Taken for a Ride," these details are just a few of the ones assembled into a convincing portrait of a high-level, backroom industrial conspiracy to cheat Americans out of cheap, convenient, sustainable transportation. If so, what you know is not what happened.


There is no question that a GM-controlled entity called National City Lines did buy a number of municipal trolley car systems. And it's beyond doubt that, before too many years went by, those street car operations were closed down. It's also true that GM was convicted in a post-war trial of conspiring to monopolize the market for transportation equipment and supplies sold to local bus companies. What's not true is that the explanation for these events is a nefarious plot to trade private corporate profits for viable public transportation.

While the general public, at least those who've been exposed to the story, is likely to buy the GM-as-evil-conspirator tale, transportation historians and economic researchers do not. Just why is made clear in a 1997 article in Transportation Quarterly, a journal published by the non-partisan Eno Transportation Foundation of Lansdowne, Virginia.

The main point of "General Motors and the Demise of Streetcars" and other critics of the conspiracy theory is that trolley systems were replaced by bus systems for economic reasons, not because of a plot. Bus lines were less expensive to operate than trolleys, and far less costly to build because there were no rails. Extending service to rapidly growing suburbs could be accomplished quickly, by simply building a few bus stops, rather than taking years to construct rail lines. So, buses replaced streetcars.

For similar reasons, with the added one of personal preference for individual transportation, private cars also played an important role in the demise of streetcars. People understandably liked driving their own cars directly to their destinations more than crowding onto trolleys that dropped them blocks from where they were going.

None of this is to say that streetcars are bad, nor that the light-rail transit systems under construction or expansion in many cities today are doomed to meet the fates of their predecessors. Nor is it intended to make the case that corporate goliaths are not likely to be merciless competitors who use whatever means are at their disposal, including semi-legitimate or illegitimate as well as legitimate techniques.

The lesson this story has for entrepreneurs is that when you come across something that everybody knows, that is something you should suspect is wrong. Especially when the tale tugs at our emotions, twanging heartstrings tied to nostalgia, stirring latent suspicion of giant organizations, and reviving nostalgic longings for times when things were supposedly better, reserve judgment. It may be that we stopped riding streetcars because we didn't want to, not because we couldn't.

Image courtesy of Flickr user plattypus1, CC2.0
  • Mark Henricks

    Mark Henricks' reporting on business and other topics has appeared in The Wall Street Journal, The New York Times, The Washington Post, Inc., Entrepreneur, and many other leading publications. He lives in Austin, Texas, where myth looms as large as it does anywhere.

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