Friday, March 20, 2009

Guest Post: Some Streetcar History

This was an email written earlier today by Scott Bernstein at the Center for Neighborhood Technology who is a huge streetcar historian and always discusses it in a different way than others. I asked if I could repost this to the blog because I thought a wider audience might be interested. Sometimes for good reason.

As a background, some on the list where I took this from were arguing about the NCL affair. It's not complete but I hope at some point Scott writes a book about this stuff.

Guest Post: Scott Bernstein, CNT.
"Do you think Fiorello LaGuardia insisted on removal of New York's streetcars because he was in the pocket of GM or NCL?" Clearly not, however, I would urge members of this list interested in the issue to read Zach Schrag's excellent article on the topic,
"The Bus Is Young and Honest": Transportation Politics, Technical Choice, and the Motorization of Manhattan Surface Transit, 1919-1936" published in Technology and Culture, Volume 41, No. 1, 2000, pp. 51-79; La Guardia clearly inherited what this eminent scholar called "Mayor Hylan's war against transit." NY Mayor Hylan went so far as to support a phony advocacy group that became famous for the eponymous title of their pamphlet, prompting Schrag to comment that the bus may have been young and honest, but nothing about the case for streetcar removal or anything else in the pamphlet was.
Having read some of the Congressional testimony on the NCL case including George Hilton's, the transport economist who argued most eloquently for the theory that the companies were on the way out in any event, I'd have to say that none of this is dispositive.

From 1885 to 1902, the US went from one electric street railway system (Richmond) to one in every city of 5,000 or more. The rapid growth was due, I believe to two factors.

First, network economies or economies of scope that occurred because of standardization and inter-connectivity (i.e. when Bell invented the telephone it was useless until he made a second one and had someone to talk with, and it kept getting better economically, with each additional
user). In a network economy, economies of scale arise precisely because of the economy of scope, as opposed to an economy that occurs because of returns to scale. The same can be said about electric, water, sewer, natural gas, road, fax, email and Internet networks, among others.

Second, rapid growth of streetcars served a second purpose that's very important to this list--it helped accelerate investment in urban street networks. Then as now, transportation funding was a conundrum. By deeding public right of way to transportation operators, a shared funding arrangement could be created, and almost always was. In exchange for franchises, street railway operators were required to share in the cost of paving and maintaining the streets they operated on, sometimes with the municipality, other times with the municipality and the adjacent property owners.

So then why were these two factors compelling enough to keep the street railways in business?

I'd suggest expanding the list of reasons and this discussion to include the following--

1. Street railway franchises were regulated by local city councils who were not sufficiently independent or accountable. Accounting systems were primitive, and once special assessment districts and public benefit districts started generating sufficient funds, they too often looked the other way when the railways starting deferring mandatory system renewal and maintenance. I can provide a slide showing that anywhere from 3 to 16 percent of municipal revenues came from such districts. (New York, by the way, was at the low end of the scale and Los Angeles at the high end).

2. Cities got somewhat greedy. Automobile registration, licensing, sales taxes on fuel, cars and rubber (for tires) provided tremendous additional revenue. Then as now, these taxes on throughput of transportation and energy, put states and cities in a conflict of interest when efforts are made to minimize such throughput, whether by direct regulation or incentive. (Ad valorem energy taxes are among the top 3 or 4 revenue sources for municipalities, along with property, sales and income taxes where they exist, almost everywhere in the US; one of the big behind-the-scenes brakes on rates of energy and location efficiency is the concern by local financial officials over potential lost revenue). With an apparent major new source of revenue coming in and powerful interests emerging around motorized vehicles, it became difficult to implement common sense regulations on traffic and parking

3. The street railway companies responded rationally. Yes, the histories show the obvious ones were controlled by rapacious money-grubbing traction barons; however, with cities being willing to allow unlimited growth in street use by motor vehicles, their basic business model was compromised. This was a real problem for cities, as improving rather than destroying mass transit was the key to successful and sustainable urbanization. Several excellent books and papers by Joel Tarr at Carnegie Mellon and Clay McShane at Northeastern University show clearly that this kind of hostile, cross-modal competition between bus and rail originated in fights between 1840 and 1890 between the early "omnibus" operators (from which we get the rubric of a "bus") and the early horse-drawn street railway companies.

The early street railway franchises were street-by-street entitlements, which were eventually consolidated into area-wide agreements, the argument for which was again urban value creation and value capture. And these were joint value creation agreements--once a city had acted to undercut the market by failure to limit the use of streets by motor traffic, the companies could state with impunity that the deal had been abrogated. (this theme is touched on by me all too briefly in the history chapter I contributed to Street Smart: Streetcars & Cities in the 21st Century by Reconnecting America)

4. Bad accounting again. As joint service agreements, the intended result was that the streets would come with the means of (mass) transportation, permanently. While the formal testimony in New York and elsewhere clearly showed not only the superior traffic handling capacity of street railways over both buses and individual automobiles, it also showed awareness of the relatively shorter life expectancy of buses when compared to fixed guideway vehicles. Making the decision in favor of the shorter-lived vehicle is the equivalent of deciding in favor of siting residential districts in single use trailers, another disposable commodity.


Matt Fisher said...

I'm the first commenter on this first guest post I've seen! Hooray!

This is a good post. When streetcar operators vowed to substitute buses as they were controlled by GM/NCL, they sold this scheme under the (phony) pretext of "modernization" and "motorization". :)

While I don't associate with libertarianism, this guy I'm linking to has some points that Wendell Cox and Randal O'Toole don't. Here's some propaganda from Oakland when GM bought up the streetcars. What a sad story!

Cap'n Transit said...

I haven't had a chance to read Bernstein's post yet, but I'm halfway through the Schrag article he links to, and it's fascinating. Let me know if you have trouble finding it.