This is the second set of notes from Internal Combustion: How Corporations and Governments Addicted the World to Oil and Derailed the Alternatives by Edwin Black (NY: St Martin's Press, 2006 ISBN-13: 978-0-312-35907-2) I ordered the book from the library and read it after seeing Black talk on CSPAN.
Edison to the Rescue: Pre-WWI Energy Independence is the first diary on this book.
(200) GM targeted trolley systems across the country for monopolistic takeovers and systematic irreversible conversion from electric streetcars to gasoline- and diesel-burning buses. A series of stealthy mergers and acquisitions began in the midthirties and continued unabated until GM and its corporate cohorts achieved a monopolistic market presence in dozens of cities from St. Petersburg, Florida, to Los Angeles.
My extensive notes continue on the flip.
The conspirators - GM, Mack Truck, Phillips Petroleum, Standard Oil of California, and Firestone Tires - acted through a front company called National City Lines, which they secretly financed. Once National City Lines purchased a transit company, electric trolley service was immediately discontinued, the tracks quickly pulled up, the wires dismantled, and the company switched to GM-made petroleum-burning buses.
In 1947, in a landmark case, the federal government prosecuted GM and its corporate partners for a criminal conspiracy to monopolize bus sales and foreclose competition across the United States in the many cities where National City Lines operated. The entire group of oil and automotive companies, as well as their executives, were convicted on one of two similar counts of conspiracy. Despite vigorous appeals by the best defense attorneys in the nation, the Supreme Court allowed the convictions to stand. Eventually, even though GM and National City Lines continued their monopolistic entrenchment in urban mass transit, the scandal faded off the nation's headlines.
A generation later, in 1974, in the immediate aftermath of the Arab-imposed 1973 oil shock, the GM Conspiracy was resurrected by the US Senate Judiciary Committe's subcommittee on Antitrust and Monopoly. In an exhaustively documented study entitled "American Ground Transport," Judiciary Committee staff attorney Bradford Snell accused GM of contributing to the nation's petroleum woes by a deliberate conspiracy against scores of local mass transit systems.
Snell's work was largely, but not exclusively, based upon thousands of pages of documents arising from the Department of Justice's 1947 prosecution of GM and the consortium that had created National City Lines. But going beyond the prosecution, Snell asserted that GM's true motives were not just to convert electric trolley systems into bus lines so it could sell more diesel buses and eliminate competitive electric systems, but also to then cause the abandonment of those very bus companies, thus killing mass transit altogether.
Snell's logic was that with those newly transformed bus companies defunct, America would be converted within a span of several years from a nation served by thousands of electrified mass transit systems to a nation reliant on the automobile for most transportation. Snell's report called GM's scheme not just a plan to eliminate trolleys but nothing less than "a drive by GM to sell cars and trucks by displacing rail and bus systems." That, Snell argued, was by implication at the root of the nation's petroleum dependence.
In other words, first acquire the trolley lines, then convert them to unlikable and unprofitable bus liens, and finally make those bus lines disappear altogether, leaving only highly profitable gas-guzzling automobiles. This final assertion - the actual filling of mass transit in any form, electric or motorized - added an additional conspiracy not found in the prosecution's documentation. It was the "extra" conspiracy that gave GM, its defenders, and surrogates the basis to discredit Snell's otherwise exhaustive and largely correct tsudy and to attack any who sought to learn more about this corrupt chapter.
After Snell's report was presented, GM immediately went on the counterattack, denying Snell's charges and demanding that the Senate Judiciary Committee cease circulating its won report. The automaker then created is own misleading and fact-shaded rebuttal report, entitled "The Truth About 'American Ground Transport,'" and further demanded that the Senate never permit its own report to be distributed without GM's rebuttal. The Senate agreed.
(206) [1924] Electric transport worked and its popularity was measured in billions of passenger boardings annually, but it could not keep; working without funding for infrastructure upgrades and extensions. One idea proposed by Congress would create a so-called superpower zone extending from Maine to Maryland. The zone would electrically unify the 315 public utilities, 18 electric railways, and 96,000 industrial sites within the zone. The result, if implemented, would electrify nineteen thousand new miles of railway throughout the urban and rural centers of the Northeast. The federal government's proposed "superpower' zone would save local economies a half billion dollars annually within a decade and provide the modernization and extensions urban transit systems needed to cement the idea of electric transport as an economic linchpin.
(214) The method: First, United Cities Motor Transit would locate a financially unstable transit system where trolleys needed to be rescued. Second, United Cities Motor Transit would help create a new, properly financed rival company. Often GM invested directly. Third, the management of the new transportation company would quickly orchestrate the termination of electric liens in favor of total GM motor-bus operations. Foruth, GM and Yellow would liquidate their own presence, turning the local company over to others.
(216) A prime target of Congress's reforms were the corrupt community of local utilities companies, commonly owned by secretive out-of-state syndicates and holding companies that were only one face of a complex of self-dealing pyramids. This in mind,the Roosevelt administration engineered the passage of the Public Utility Holding Company Act of 1935, which sought to dismantle those pyramids and force divestiture...
A pivotal provision of the Public Utility Holding Company Act intended to protect the public called for the immediate divestiture by all utilities of their local transit companies. The intent was to insulate electrical transit from the manipulations of the unscrupulous.
Instead, a great transit power vacuum was created. This was the time for public policy on the local, state, and federal level to implement measures to preserve, modernize, and rejuvenate the clean electric systems within their midst. That did not happen. Into the vacuum stepped GM.
(223) The government said it best years later. Referring to GM and a circle of other corporate icons in plain words, on page 7 of the indictment, in section IV, labeled "THE CONSPIRACY," senior federal prosecutors and the grand jury jointly declared, "Beginning on or about January 1, 1937, the exact date being to the Grand Jury unknown, and continuing to and including the date of the return of this Indictment, the defendants, together with other persons to the Grand Jury unknown, the defendants, together with other persons to the Grand Jury unknown, have knowingly and continuously engaged in a wrongful and unlawful combination and conspiracy to acquire to otherwise secure control of or acquire a substantial financial interest in a substantial part of the companies which provide local transportation service in the various cities, towns and counties of the several states of the United States, and to eliminate and exclude all competition in the sale of motorbuses, petroleum products, tires and tubes to the local transportation companies owned or controlled by or in which National City Lines... had a substantial financial interest... in violation of Section 1 of the Act of Congress of July 2, 1890... commonly known as the Sherman Act." The indictment was signed by the grand jury foreman and countersigned by six prosecutors plus U.S. Attorney James M. Carter.
(233-234) Prosecutors calculated that between National City Lines, Pacific City Lines, and American City Lines and their dozens of subsidiaries spread across at least forty-two cities in sixteen states, GM ultimately invested more than $3.1 million, Standard invested more than $2 million, and Phillips invested more than $1.5 million, while Firestone and Mack each invested more than $1.3 million.
Prosecutors also calculated that over a decade, from 1936 to 1946, GM enjoyed $25 million in bus sales to National City Lines, Pacific City Lines, and American City Lines systems, while Mack sold the companies approximately $3.5 million. During that same decade, Phillips annually sold the companies as much as $900,000 in petroleum products in its territory, while STandard sold as much as $700,000 annually in its western territory. Firestoen annually sold al the operating companies in excess of $450,000 in tires....
In many cases, state commissions or local city councils had already voted to madndate the dismantling of the streetcars because city planners had often consciously failed to incorporate electric buses, trolleys, and light rail into their metropolitan growth. This policy amounted to a mixture of planned obsolescence and strategic neglect. In some cases, city officials were indifferent. In some cases, they were induced to vote for trolley abandonment, In St. Petersburg, Florida, for example, rumors were rife that councilmen, municipal engineers, and others had been bought off with Cadillacs to facilitate the conversion by National City Liens and GM.
(229) Pantaleoni's next sentences virtually outlined the quid pro quo at the heart of the later prosecution. "First: You are buying the stock only as part of a larger deal which gives you the oil contract. Second: Neither you or any of the other purchases [eg Firstone, GM, and Standard] are in the business of distributing securities. Third: You are buying the stock at $50 a share, when the market, which is very thin, is about $38 a share. Fourth: Certain privileges of yours under the oil contract are affected by your holding or failure to hold your stock."
(238-239) But the five-page order received by National City Lines went counter to the plans of Slaoan and GM. In many ways, Sloan did not believe the war rules applied to his company. Sloan had been tangling with the Roosevelt administration for years. In 1934, when Sloan telephoned Secretary of Labor Frances Perkins to renege on a promise made to meet with labor strikers, Perkins lashed out bitterly at the GM chief. Shocked at the reversal, Perkins shouted into the phone, "You are a scoundrel and a skunk, Mr. Sloan. You don't deserve to be counted among decent men... You'll go to hell when you die... Are you a grown man, Mr. Sloan? Or are you a neurotic adolescent? Which are you? If you're a grown man, stand up and be a man for once."
A flabbergasted Sloan protested, "You can't talk like that to me! You can't talk like that to me! I'm worth seventy million dollars and I made it all myself! You can't talk like that to me! I'm Alfred Sloan."
Yet at the same time, Sloan and GM were being profoundly deferential to Adolf Hitler. GN became a key Nazi collaborator in the growing Hitler war machine that was publicly rearming despite international sanction. The corporation's wholly owned Opel division prospered as the number two auto manufacturer in the Third Reich. Overseeing GM's German operation was James D. Mooney, president of the Genral Motors Overseas Corporation. Mooney had learned early on to pump his arm diagonally, pal, outstretched, in the Hitler salute. On one occasion, in 1934, Mooney practiced his "Heil, Hitler" salute in a mirror to get it just right before an important meeting with der Fuhrer in Hitler's chancellery office. Ironically, that day Hitler did not return Mooney's salute, but merely shook the GM official's hand. Mooney, like others, found Hitler to be fascinated by all thing automotive. GM and the Hitler regime found great common ground.
Quickly, Sloan, Mooney, and GM realized that the Reich military machine was its best customer in Germany. In large measure, the Nazi army moved in GN trucks and automobiles, especially the three-ton Opel Blitz trucks. Sales to the army yielded a greater per truck profit than civilian sales - a hefty 40 percent more. So GM preferred supplying the military, which from the outset loudly declared it was preparing for war against Europe. Almost 17 percent of Blitz truck production was sold directly to the Nazi military in 1937, despite Hitler's open threats to overrun Europe. That sales figure was increased to 29 percent in 1938 - totaling some six thousand Blitz trucks that year alone. The Wehrnmacht, the German military, soon became Opel's number one customer by far. Toher important customers included major industries associated with the Hitler was machine. The expansion of its German workforce from seventeen thousand in 1934 to twenty-seven thousand in 1938 also made GM one of Germany's leading employers. Unquestionabily, GM's Opel became an integral facet of Hitler's Reich.
(245) Forty-two cities in sixteen states were converted, and dozens more targeted. Millions of Americans were affected. some $9.5 million was invested. On April 1, 1949, the judge handed down his sentence: a $5,000 fine to each corporate defendant except Standard, which was fined $1,000. AS for Fitzgerald and his coconspirators, they too were fined. Each was ordered "to forfeit and pay to the United States of America a fine in the amount of one dollar."
(248) A typical November 1946 weekly report to Chicago headquarters from the Jackson, Mississippi, subsidiary explained, "Last week it was necessary for one of our operators to call the police officer for a colored passenger that refused to move back from the front of the bus so white passengers could be loaded. This colored passenger's name Elport Chess had to be taken off the bus by force by the police and it was necessary for the police officer to strike him with his club in order to subdue him.. This colored party was a G.I. Veteran with five years in the pacific and was attending the colored school... As a result of this negro being arrested, the colored school children at the school he attended boycotted the busses."
(249) But while millions of hard-lobbied dollars were devoted to automotive transport and road building, little was done for mass transit. No money was allocated for urban systems, which stagnated as a public became more and more unwilling to ride, Just when mass transit needed it most, during the country's postwar industrial boom, the emphasis was turned to internal combustion and done so against a backdrop of fiery mass approval. Teh secretary of defense marshaling the great new highway expansion was Charles Wilson, who from 1941 to 1952 had served as president of GM.
At his confirmation hearings, Senator Rovert Hendrickson (R-New Jersey) pointedly challenged Wilson, asking whether he had a conflict of interest considering his forty thousand dollar shares of GM stock and years of loyalty to the controversial Detroit company. Bluntly asked if he could make a decision in the country's interest that was contrary to GM's interest, Wilson shot back with his famous comment, "I cannot conceive of one because for years I thought what was good for our country was good for General Motors, and vice versa. The difference did not exist. Our company is too big..."
One man, one vote. Soon one man, one car.
(259) Why did GM fail in its national designs? The answer: The company was stopped by prosecutors in 1947, but thereafter found that the motorized transit revolution GM and its cohorts had set in motion had caught fire across the nation and now burned of its own volition. By the fifties, conspiracies were no longer necessary. It was just progress.
Did GM deliberately convert electric traction systems to bus systems with the intent to then cause the demise of those companies, leaving nothing but automobiles to clog cities? The answer: No, there is not a single line of evidence in thousands of pages of documentation to suggest this. GM wanted to sell buses. But in many ways, that is what happened anyway.
(261) A century of lies about internal combustion arising from a millennium of monopolistic misconduct in energy has wounded the world's collective health, fractured a fragile environment, and ignited a deadly petropolitical war that has become nothing less than a cataclysmic clash of cultures. Oil is the root of all this tribulation. In energy as in politics, power corrupts. Through the ages, power has indeed corrupted those who need it, those who produce it, and those who control it....
Those mistakes have left the twenty-first century a hostage to internal combustion, which consumes some 63 percent of America's petroleum use.
(267-268) Some of the most quoted and informed studies conclude the true cost of gasoline to be between $5 and $15 per gallon, creating a yearly national pump-supporting expenditure of between about $231 billion and $1 trillion. The number defy hardening because the costs, such as military expenditures - amounting to about $6 billion per month in Iraq - require a political measuring stick to attribute them to oil. But this much is known about external costs: They are real and massive. The Defense Department allocates from $55 billion to $96.3 billion annually to safeguarding petroleum supplies, two-thirds f which are pumped from the Persian Gulf. Tax incentives and government programs supporting oil are estimated to be at least 438 billion and perhaps as much as $114.6 billion annually. America's oil producers despite the industry's record gargantuan profits. Social, health, and environmental programs add staggering sums, but segregating how much of those expenditures are rooted in petroleum is impossible, even though most experts agree the expenses are significant.