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The rise of general motors conspiracy to dismantle public transportation


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The rise of general motors conspiracy to dismantle public transportation

  1. 1. The Rise of General Motors 1 Running Head: THE RISE OF GENERAL MOTORS The Rise of General Motors: Conspiracy to Dismantle Public Transportation Diane Fittipaldi University of St. Thomas February 11, 2008 EDLD 912
  2. 2. The Rise of General Motors 2 The Rise of General Motors: Conspiracy to Dismantle Public Transportation The documentary, Taken For a Ride recounts the rise of General Motors and its role in eliminating streetcars in America (Klein, 1996). By using archival news clips, interviews, and ad reprints, the film reveals the powerful economic grip of big business. Specifically, the film asserts Alfred P. Sloan, president of General Motors, conspired to dismantle public transportation to make room for cars (Klein). In this paper, I analyze Taken For a Ride by applying economic theory from both Adam Smith and Karl Marx, explaining how each relates to the demise of public transportation. I begin by recounting the facts from the film. Next, I provide a brief review of the economic theories I selected, and conclude by using facts from the film to support my assessment. Chronology of Events as Presented in Taken For a Ride In the 1920s, people rode streetcars as their primary mode of transportation (Klein, 1996). To meet the demand, trains ran continuous schedules throughout the week (Klein). Only ten percent of Americans owned their own car (Klein). Alfred P. Sloan, saw this as an opportunity to sell cars to the remaining 90% (Brenegar & Rostyak, 2002). He set out to motorize America (Klein). Mr. Sloan’s plan started in 1927 (Ferner, 2006). He bought the largest bus operating company in the U.S., Omnibus Corporation, and the largest bus production company, Yellow Coach (Ferner). With additional financing from Standard Oil Corporation and Firestone Rubber Company, Sloan formed National City Lines, a bus company conceived to drive trolley cars out of business (Klein 1996). Sloan used a stealthy strategy to phase out demand for trolleys in order to replace them with buses and cars (Teaford, 1998). Using testimony from rail workers, the film asserts NCL bought trolley systems and then immediately cut back service (Klein, 1996). Reduced service meant fewer riders. To make ends meet, NCL raised fares. Higher fares made trolleys less attractive and demand decreased further. Then NCL moved in with buses to replace the streetcars (Klein). Over the years, other corporations joined General Motors to back National City Lines. Standard Oil of California, Mack Truck, and Philips Petroleum all contributed (Ferner, 2006). To hide these connections, Sloan installed Roy Fitzgerald, who along with his four brothers operated a small rural bus
  3. 3. The Rise of General Motors 3 line (Klein & Olson, 1996). To its critics and to the public, GM characterized Fitzgerald as “one of five farm boys trying to run a few buses” (Klein & Olson, ¶16). By 1936, National City Lines succeeded in destroying Manhattan’s rail system (Klein & Olson, 1996). At which point, General Motors published a national advertising campaign proclaiming motorization meant modernization (Klein & Olson). The ad read, “The motorization of 4th and Madison is the most important event in the history of transportation” (Klein & Olson ¶7). NCL’s acquisition streak continued; by 1946, it controlled public transit in 83 cities (Klein & Olson). In response, Edwin Quinby, a rail enthusiast, wrote a 33-page protest memo accusing General Motors of conspiracy to dismantle the rail system (Klein & Olson, 1996). He mailed it to hundreds of influential people (Klein & Olson). Retaliation from the powerful transportation lobby swiftly followed. Mass Transportation magazine published an editorial saying Quinby’s document fed the “lunatic fringe of radicals and crackpots springing up like weeds in the United States today” (Klein & Olson, ¶32). By 1946, Quinby’s persistence prompted an antitrust investigation (Klein & Olson, 1996). The Justice Department found National City Lines and General Motors guilty of conspiracy to monopolize the transportation industry (Klein, 1996). However, in a nod to big business, the Justice Department fined them only $5,000 (Klein). Over the next 25 years, the Justice Department tried to reign in GM with three additional investigations. None was successful (Klein). Adam Smith’s Theory of Self Interest Adam Smith used The Wealth of Nations to explain man’s selfish passions and discuss the importance of harnessing this self-interest for the public good (Muller, 1993). Smith noted that business owners usually place their own interests ahead of consumers’ interests, pursuing profit as their first priority and using all means possible to prevent competition (Muller). Specifically, Smith noted the way merchants use their influence to persuade legislators to install protectionist barriers (Muller). Much of The Wealth of Nations addresses legislators and warns them of merchants’ self interest (Muller, 1996). Smith showed merchants’ power stemmed from economic elitism. “Because employers were fewer in number, it was easier for them to connive without calling attention to themselves (Muller,
  4. 4. The Rise of General Motors 4 p.78). As a result, they used their means to influence policy. The challenge for the legislator “is to control the merchant for the sake of the public good by eliminating trade restraints which serve particular interests and by channeling the merchant’s activities through the competitive market so as to meet the needs of the consumer”(Muller, p.131). Application of Adam Smith’s Theory to Taken For a Ride General Motors behaved much as Adam Smith predicted. Sloan used the most effective method of thwarting the competition; he bought the trolley systems, one by one. By diminishing trolley schedules and raising fares, Sloan made the system so unattractive to riders that demand dropped off. By 1946, Sloan eliminated the trolleys with a stealthy strategy that made it appear as though market forces were at work (Klein & Olson, 1996). In addition, Smith envisaged the big business collusion illustrated in Taken For a Ride. In 1936, Sloan joined forces with Standard Oil and Firestone Rubber, Philips Petroleum and Mack Truck, companies who shared his self-interest (Klein & Olson, 1996). Together they formed an economic powerhouse so influential, the Justice Department could not stop them. Karl Marx Theory of Economic Determinism In his theory of economic determinism, Karl Marx asserted that the propertied class always dominates (Collins, 1985). This power stems from their control over the production of goods (Collins). Marx’s theory also asserted that he, who controls the production of goods, controls the means by which ideas are produced, or the means of mental production (Collins). According to Marx, books, newspapers and magazines, all reinforce the worldview of the economic elite (Collins). With this worldview slanted in their favor, the propertied class gains additional dominance and economic power (Collins). Similar to Smith, Marx believed the propertied class possessed superior means of mobilization, allowing them to dominate in any struggle (Collins, 1985). Marx saw capitalism as an interconnected system (Collins). Business people traded among themselves, they were well organized and formed cartels
  5. 5. The Rise of General Motors 5 (Collins). This power coupled with the means of mental production allowed a relatively small group to monopolize the public discourse. Application of Karl Marx’s Theory to Taken For a Ride Throughout Taken For a Ride, we see General Motor’s ability to organize and mobilize economic forces, allowing them to dominate their industry. Beyond the view of the public, GM formed deals with other powerful companies such as Standard Oil and Firestone (Klein, 1996). Together, they conspired to control the means of production. In concert, they purchased Omnibus Corporation and Yellow Coach to form the most powerful bus company in America (Klein & Olson, 1996). In time, GM organized additional financial support from Mack Truck and Phillips Petroleum, proving Marx’s theory of superior means of mobilization (Klein & Olson). Along with National City Line’s control over production, General Motors adeptly wielded power over the mental means of production or the power over public perceptions. Specifically, they concealed their involvement in NCL by installing Roy Fitzgerald as the president, whose image GM cleverly managed as a way to mitigate public pressure (Klein, 1996). In addition, GM’s national ad campaign claiming the “motorization of 4th and Madison is the most important event in the history of community transportation” (Klein & Olson, 1996, ¶7) clearly demonstrates Marx’s theory of control over the means of mental production. Lastly, we see additional support for Marx’s theory as evidenced by the editorial in Mass Transportation magazine, which discredited GMs detractors in an attempt to control public opinion. Through these examples and facts from Taken For a Ride, we see how Adam Smith’s theory of the economic self-interest and Karl Marx’s theory of economic determinism relate to the demise of public transportation in America. The film reveals the powerful economic grip of big business and its ability to mobilize, influence public perceptions and circumvent the open market system. While critics argued that the film offers a “narrow interpretation” (Teaford, 1998, p.1183) of the facts, it undeniably illustrates aspects of Smith and Marx’s economic theories.
  6. 6. The Rise of General Motors 6 References Brenegar, Juliet and Rostyak, Diane. (2002). Taken for a ride exposes a driving force behind the death of public transit in America. Retrieved February 3, 2008, from Collins, R. (1985). Three sociological traditions. New York: Oxford University Press. Ferner, M. (2006). Taken for a ride on the interstate highway system. Retrieved February 4, 2008, from Klein, Jim and Olson, Martha (Producer). (1996). Taken for a ride. [Motion Picture] St. Paul, Minnesota: Independent Television Service and Public Broadcasting Service. Klein, Jim and Olson, Martha (1996). Excerpts from the film by Jim Klein and Martha Olson. Retrieved February 2, 2008, from Muller, J. Z. (1993). Adam Smith in his time and ours (2nd ed.). Princeton, New Jersey: Princeton University Press. Teaford, J. C. (1998). Taken for a ride. The Journal of American History, 85(3), 1182.