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Monday, February 20, 2017

The Great American Streetcar Myth

Failures of government were the real culprit.

Among progressives in the planning profession today, the story of the Great American Streetcar Conspiracy is widely known. There are more nuanced variants, but it goes something like this: Streetcars were once plentiful and efficient, but then along came a bunch of car and oil companies like General Motors and Standard Oil, and they bought up all the streetcar companies, tore out their tracks and replaced the routes with buses, and ultimately set America on its present path to motorized suburban hell.

Although the story dates back to a 1950 court conviction and was retold by academics and government employees throughout the ’60s and ’70s, the theory leapt into the public consciousness in 1988 with both a 60 Minutes piece and a fictionalized account in the movie Who Framed Roger Rabbit?. Even today it resonates with progressives – The Atlantic casually mentions it as the reason America abandoned mass transit, The Nation wrote a whole article about it a few years ago, Fast Food Nation discusses it, and in the last week I’ve seen two references to the theory in the planning blogosphere.

It is perhaps because of the progressives’ complicity in the streetcars’ demise, that they omit the true reasons for the decline of streetcars in America.

Though the story has embedded itself in the progressive worldview, it has little basis in reality. A cursory look at transportation history shows that motorization was already well underway by the time National City Lines – the holding company backed by GM, Firestone Tire, and Standard Oil, among others – started buying up transit companies in 1938. Other factors, often championed by progressives, had already driven the industry into decline and it was really only a matter of time before buses took over.

Although General Motors and other car-centric companies were certainly lobbying the government in their favor, the progressive tendency to vilify private transit companies had already turned the public against streetcars, and local governments were already heavily predisposed towards motorization by the late ’30s. It is perhaps because of this progressive complicity in streetcars’ demise, along with continued loyalty to state ownership and regulatory power, that the modern progressive narrative omits the true reasons for the decline of streetcars in America.

The Streetcar Become Obsolete

By the time the automobile really hit the scene, the streetcar had been around for about as long as the car’s been around today. First powered by horses in the 1830s, later by steam-powered cable systems, and finally by electricity, it’s fair to say that the streetcar was a deeply entrenched mode of transit by the beginning of the 20th century. But while the streetcar gained in popularity, the industry also attracted a cruft of regulation and corruption that dogged it till its dying day. Bribery was endemic in the awarding of service franchises, and their exclusive monopolies (often granted by the government) didn’t do much to endear them to the public, either. Ironically, though, it was these exclusive contracts that eventually brought streetcars down.

Eager to receive guarantees on their large up-front investments, streetcar operators agreed to contract provisions that held fares constant at five cents and mandated that rail line owners maintain the pavement around their tracks. These rules made sense in the 19th century – inflation was a relatively minor phenomenon until World War I, and horses were rather destructive to the cobblestone streets – but as the next century dawned, these provisions grew increasingly anachronistic and would soon lead to the streetcar’s downfall.

The five-cent fare became a birthright to early 20th century voters and was a third-rail to politicians, not unlike toll-free roads today. Even when wartime inflation eroded the value of the nickel to half its prewar value, local governments would not release streetcar operators from their obligations to charge the uniform fare for all trips, no matter the distance. (Some have argued that this absence of zone pricing, which was so common in Europe, was itself sprawl-inducing, as it made living in far-off suburbs no more expensive than living closer to the city center.)

The paving requirements, too, turned out to be poisonous to the industry. When automobiles started arriving in cities, their roads were literally being paid for by the competition, despite the fact that horses had long been phased out, and electric streetcars ran on dedicated tracks and didn’t touch the pavement. Organized labor also took its toll on the streetcar, driving up wages in a heavily labor-intensive industry where the competition – jitneys, municipal buses, and automobiles – had much fewer labor restrictions (not to mention lower or nonexistent tax burdens). In San Francisco, unions managed to convince the city government to forbid the operation of streetcars by just one person, ostensibly on safety grounds, but more likely to encourage employment of union members. Companies were also required to continue to provide service on all the routes they owned, and in many cases were actually required to modernize them, regardless of profitability. In addition to draining the corporations of funds, this also explains why they opted for cheaper buses on routes that were no longer profitable, but had to be maintained by law.

American politicians have hitched their wagons too tightly to suburban homeowners to admit that it was a mistake.

The Government War on Streetcars

As the century wore on, “traction magnates,” as the titans of the streetcar industry were known, became the Wall Street bankers of their day. Progressive Era and New Deal reformers reacted against the Gilded Age elites, and the owners of streetcar networks were some of the wealthiest people around. The Nation was, by 1920, editorializing against density and subways (they “make a slum out of a suburb”), and the progressive New Dealer mayor of New York Fiorello La Guardia deemed trolleys to be “as dead as sailing ships” in 1935. Franklin Delano Roosevelt’s own Works Progress Administration was tearing up streetcar tracks in Manhattan years before National City Lines began doing the same in far less transit-worthy places.

Beyond local governments’ direct attacks on private transit companies, all levels of government contributed to rail’s demise by offering the vast majority of roads to consumers free of charge. While the status quo’s more libertarian-minded backers will point to the gas tax as a user fee, the highway funds are hardly adequate to cover the true costs. Though state and federal governments do now cover most of the capital and operating costs of the highways, local roads are still paid for almost entirely out of general revenues. And when you consider the forgone taxes and opportunity costs, roads start to look severely under-priced – to say nothing of the last hundred years of subsidized road building (the mainstay of FDR’s WPA), eminent domain, anti-urban federal home tax breaks and lending programs, positive feedback loops, and density-limiting zoning and parking policies. Private streetcar companies didn’t get the benefit of government-financed, tax-free tracks in their day, and in fact they paid the automobile’s subsidies directly in some cases, as with the aforementioned paving requirements, and indirectly in others, through local property taxes.

But if the suburban bug had infected America long before 1938 and failures of government were the real culprit, then why is the narrative of the Great American Streetcar Conspiracy so pervasive? Martha Bianco has pointed to the universal desire for a clear villain/victim dichotomy in her study of the myth, but I think the real reason is that politicians and progressive academics have too much at stake in the status quo explanations.

American politicians have hitched their wagons too tightly to suburban homeowners to admit that it was a mistake. Progressive economists, historians, and planners, on the other hand, have invested so much intellectual capital into the idea of state regulation and control that they cannot admit that the urban planning profession in America is rotten to the core, and that the mere granting of these powers to government was the original sin. With car-borne constituents and an economic ideology to defend, modern day progressives have apparently found their own culpability in the rise of the suburbs too tough a pill to swallow, and so they’ve settled on General Motors, Standard Oil, and Firestone Tire as scapegoats. But just because they can’t face their history doesn’t mean that we shouldn’t.


  1. Bianco, Martha. “Kennedy, 60 Minutes, and Roger Rabbit: Understanding conspiracy-theory explanations of the decline of urban mass transit.” [source]
  2. Bond, Winstan. “The flawed economics and morality of the American uniform five-cent fare.” [source]
  3. Lurie, Melvin. “The effect of unionization on wages in the transit industry.” [source]
  4. Schrag, Zachary. ” ‘The bus is young and honest’: Transportation politics, technical choice, and the motorization of Manhattan surface transit, 1919-1936.” [source]

Republished from Market Urbanism.

  • Stephen Smith went to Georgetown’s School of Foreign Service and majored in international political economy. Smith went on to find a career in writing for the Market Urbanism blog, whose twitter handle remains his, as well as Bloomberg View, Next City, Forbes, the New York Observer, and YIMBY, a website that chronicles real estate from a pro-development angle. Source: Politico.