display

When Volkswagen's Dieselgate became known in the USA in September 2015, the possible costs that the group could face due to the manipulated exhaust gas values ​​were quickly mentioned.

At the time, there was talk of 18 billion dollars, which roughly corresponded to the gross domestic product of Bosnia-Herzegovina.

Some observers of the proceedings quickly suspected that this would also put a European competitor in its place in the highly competitive American car market.

Especially since the astronomical sums are in stark contrast to an affair that went down in history as the Great American Tram Scandal.

At the center of this scandal was the original American company General Motors.

However, the fines that were issued at the time for “conspiracy to monopolize the markets for local public transport” were so low that those involved could easily pay them from their postage.

The key figure in the case, also known as General Motors Streetcar Conspiracy, was Alfred Pritchard Sloan Jr., President of General Motors from 1923 to 1937 and then Chairman of the Board of Directors.

Sloan faced an urgent problem when he took office.

In the early 1920s, GM's annual loss was $ 65 million.

The saturation of the market was identified as the reason.

But Sloan didn't want to accept that.

display

The new GM president introduced the hierarchy of the various car brands and created independent central departments.

In addition to these business innovations, Sloan is also considered to be the inventor of “planned obsolescence”, the deliberately planned reduction in the lifespan of a product.

If his cars wore out faster, customers would buy new and more expensive ones, was the calculation.

Trailer of "Wrong Game About Roger Rabbit"

But why should the Americans even get the idea of ​​buying cars?

Los Angeles has the best means of public transport in the world, says director Robert Zemeckis in the four Academy Award-winning film "Wrong Game with Roger Rabbit" (1988) raving his private detective Eddie Valiant as he drives himself off a tram through the city as a stowaway leaves.

In fact, in the 1920s, LA had the largest tram network in the world at around 2,000 kilometers.

Alfred Pritchard Sloan junior (1875-1966) managed General Motors until 1946

Source: picture-alliance / United Archive

Alfred P. Sloan, Jr. provided the blueprint for the fantastic plot of the film. An obscure company bought the shares in the tram operator, as well as numerous other properties of the happy entertainment industry, in order to turn them into endless highways.

The film answered Valiant's rhetorical question of how one could encourage Americans to move about in such a nonsensical manner with a highly brutal measure: by simply shutting down the tram.

display

"Wrong game with Roger Rabbit" is now considered a congenial parody of the great tram scandal, who interpret the ruin of American public transport and the transformation of its cities into car-friendly agglomerations as the result of a perfidious conspiracy.

The originator is a cartel of petrol-based companies which, under the leadership of Sloan, brought 45 major American cities by one hundred electrically operated tram systems.

In addition to General Motors, the oil companies Standard Oil of California and Phillips Petroleum, the tire manufacturer Firestone, the commercial vehicle manufacturer Mack Trucks and the mechanical engineering company Federal Engineering Corporation joined forces and invested in various bus companies that returned the favor with lucrative supply contracts.

At the same time, the cartel began to purposefully buy up local operators of trams and trolleybuses.

In the 1920s, Los Angeles had the largest tram network in the world

Source: picture alliance / akg-images

In the course of the volatile industrialization since the 19th century, the large US cities were well equipped with it.

According to statistics from 1920, 90 percent of all journeys were made by rail.

Around 1200 independent and mostly privately operated rail systems transported more than 15 billion passengers per year on more than 70,000 kilometers of track.

The revenue was around a billion, which is more than 13 billion in the present.

display

The measures taken by Sloan & Co. soon had an effect.

In numerous cities, efficient bus companies increasingly competed with the established rail systems.

The vehicles for this were supplied by GM after it had bought the Yellow Coach Manufacturing Company from John D. Hertz and expanded it into a potent manufacturer of long-distance buses.

In 1930 GM acquired a majority stake in Winton Engine Company.

It supplied the railways with powerful engines, but Sloan changed the business model.

Instead of electric, diesel engines soon left the factory halls.

The purchase of local electricity producers proved to be an additional means of pressure.

Rising energy prices eroded the profit margins of the tram companies.

While hardly any investments were made in their networks and they were finally shut down in more and more cities and their tracks immediately dismantled, the bus routes expanded.

And if the red numbers do not convince the operators, luxury gifts like Cadillac limousines help, writes lawyer Bradford Snell, who investigated the affair on behalf of the US Senate's Anti-Cartel Committee.

In addition to the subway, New York also had an efficient tram network

Source: picture alliance / arkivi

At the same time, sales of cars skyrocketed.

Associated with this was the accelerated suburbanization of American cities.

Since the suburbs could not be supplied by the dwindling rail companies, this acted as a further economic engine for bus companies and the car industry.

Not only in Los Angeles, but also in Baltimore, Cleveland, Detroit, New York, Oakland, Philadelphia and San Diego, the internal combustion engine replaced electrically powered local transport.

During the Great Depression of the 1930s and World War II, America's politicians and citizens had other things on their minds than the disappearance of trams and high-speed trains.

That did not change until 1947, when GM and eight other companies were charged in the Federal District Court of Southern California on the basis of an antitrust law for establishing a monopoly and conspiracy for the exclusive sale of buses.

Conspiracy in favor of the bus industry

The arguments of the prosecution and defense have changed little since then.

Bradford Snell wrote, “The noisy, smelly buses of the time turned off regular rail customers ... which led them to buy millions of cars.

For this reason, Los Angeles is now an ecological desert. "

Urban historians and planners, on the other hand, consider the collapse of local transport to be just one of the reasons that left America's city centers deserted while residents flee to their suburbs on huge asphalt roads.

Mismanagement of the tram companies and the fascination with private car traffic would have ensured that the USA had become an automotive nation even without the help of Sloan & Co.

The Supreme Court also agreed.

Only in the case of the conspiracy in favor of increased bus sales was a guilty verdict.

The sentence, however, is likely to bring tears to the eyes of Volkswagen managers today: General Motors had to pay $ 5,000, and an accused manager got away with one dollar.

This article was first published in 2015.