Friday, December 22, 2006

General Motors, Major Disgrace

From the "They Said I was Nuts" department:

I've blogged in the past (and once discussed on my old radio program) about how General Motors got us into our modern transportation mess by making sure the US trolley system died, much the same way GM made sure all of the EV1 electric cars were junked. Edwin Black's four-part investigative series "Hitler's Carmaker" has been appearing locally in The Jewish World newspaper. It tells how it all went down. The accompanying photograph of Hitler was one of several in a series of booklets given to German citizens in return for donations to Nazi charity Winterhilfswerk. The booklets came with strings so they could be hung on the Christmas tree! For what it's worth, General Motors issued a response to the JTA investigation.

GM was playing both ends to the middle in the 1930s and 1940s. While GM was busy getting wheels under Hitlers's Third Reich, here at home GM was hatching a lucrative criminal conspiracy to undermine electric mass transit in dozens of American cities.
The war in Europe had only been over for 16 months when on October 2, 1946, a memo from the Department of Justice landed on the desk of J. Edgar Hoover, outlining the elements of the GM conspiracy.

At the center of the conspiracy was National City Lines, an Enronesque company that suddenly arose in 1937, ostensibly run by five barely educated Minnesota bus drivers, the Fitzgerald brothers. Yet the Fitzgeralds miraculously marshaled millions of dollars to buy up one failing trolley system after another. Soon, through a patchwork of subsidiaries, the brothers owned or controlled transit systems in more than 40 cities. Generally, when National City Lines acquired the system, the tracks were pulled from the street, the beloved electric trolleys were trashed or burned, and the whole system was replaced with more expensive, unpopular and environmentally hazardous motor buses that helped addict America to oil.

The Justice Department discovered that National City Lines was just a front company for General Motors, in league with Mack Truck, Phillips Petroleum, Standard Oil of California and Firestone Tires - all petroleum interests. The companies became the major preferred stockholders of National City Lines, but operated behind the scenes.

The scheme worked this way: The manufacturers purchased NCL preferred stock to acquire transit lines on condition that when the systems were acquired, the trolleys would be dismantled and replaced with motor buses. That is exactly what happened. All the conspirators gained immensely when non-polluting electric systems were replaced by oil-burners. Phillips and Standard sold oil products. Firestone sold the tires. GM and Mack divvied up the bus manufacturing and sales market according to an agreed-upon formula.

Transit systems in 16 states were converted, adversely affecting millions of Americans, who had to pay higher fares for lesser, more unpopular service. Dozens more cities were targeted in the $9.5m. scheme.
The series is available online:

Hitler's carmaker (Part I), (Part II), (Part III), (Part IV)

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