While streetcars were eliminated in 1948, the PUC prevented destroying all the electric trains for a while. But the damage continued: severe overcrowding, continual service cutbacks, and ever-increasing fares.
Many letters to the editor complained of severe overcrowding. The PUC termed the Keys System's "plan to load trains and buses up to 170% of capacity during peak hours 'in excess of reasonable demand'" [2/11/48]. This did not stop GM from reducing transit vehicles. One transit commuter termed the overcrowding "cattle car" conditions.
Midday shoppers in downtown Oakland encountered most transit as standing room only. (Note: sprawl type shopping centers were not yet invented). The Key System bought dozens of new GM buses that were left completely unused; it stated that these were for "modernizing" streetcars, pending PUC approval.
There were large service cutbacks, like eliminating the B express trains (1947) and the A-1 train route (1946), a branch of the main A line. The A-1 traveled on its own right of way on a transit/pedestrian only narrow street or alley. The tracks were torn up and the street was paved for automobiles. GM tried to take advantage of the traffic engineers' severing the main A line in 1950 by requesting the PUC to completely abandon the A and B lines, but the request was denied.
The Key System also operated bus lines, and bus service was also cut back. For example, 700 people signed a petition with the PUC "against the Key System, seeking restoration of the bus service on the #70 Chabot Bus line" [10/29/48] which served their neighborhood. Some bus lines eliminated service after 7 p.m. or on Sunday. Service cutbacks pressured people to buy a car. For example, cutting evening service meant that people of that neighborhood could no longer go out at night, unless they purchased a car. Once they had a car, there was little incentive to take the bus even when it was running.
Fares were increased in 1946 (the takeover). On Jan. 1, 1947, there was another large fare increase. In November 1947, coincident with granting permission to destroy streetcars, the PUC granted another fair increase. This increase varied between 15% and 150%, according to the Bay Area Transportation League. These fare increases included imposing more zone charges. Fare increases continued. By 1954, fares were so high that the San Francisco Chronicle stated that the "SP commute fare is ... much less than half as much to commute the same distance" as the Key System. Needless to say, every fare increase resulted in a decrease in transit customers.
In just 8 years, from 1946 (the takeover) to 1954, transbay fares increased 250% (from 20¢ to 50¢). But the 20¢ train fare brought in a profit! Nonetheless, GM continued to characterize electric trains as money losers in order to exert political pressure for their destruction.
In order to get the PUC to grant fare increases, GM engineered an artificial financial crises. The majority of transit systems in those days, including the Key System, received no government subsidy. All expenses had to be paid from the fare box. GM's program to "motorize" streetcars and trains was very expensive. (The internal GM term for destroy was "motorize," their external PR term was "modernize," while most news reporters used "convert.") GM's "motorization program" was paid by transit users, but added nothing to the value of the transit system. Fares went to pay for streetcar track removal and street repaving, which cost $2.4 million (1948-1956), to buy new GM buses, and to build bus maintenance facilities. The process was repeated when electric trains were destroyed in 1958 (except for the maintenance facilities).
Transit systems made investments in tracks, electrification, streetcars and trains because there would be a payback after many years of operation. The life of streetcars and trains is 40 to 50 years. Many Key System trains should have lasted as long as 1989! To finance these investments, many companies, including the Key System, sold bonds. These bonds were still being paid back (through the fare box) even after GM had destroyed the investments!
Operating expenses were also greatly increased. Buses have much greater operating costs than streetcars or electric trains, not only because they carry less people per driver, but because they have much higher maintenance requirements and last about 1/4 as long. The 1946 Key System Annual Report shows that streetcars and electric trains generated a profit, while buses were money losers. The profit per car mile from operating the various transit modes, stated in cents per car-mile operated, were: streetcar 6.17, transbay trains 8.77 for each car of the train, local bus a loss of 4.13, and the longer distance transbay bus a loss of 5.54. It is interesting to compare the transbay trains and transbay buses, since both had the same 20¢ fare. [Original Document] (No other annual report year gives data by modes.) The transit company paid $645,308.53 in taxes and made a net profit of $436,170.21 . For an approximation in today's dollars, multiply by ten.
While GM's Key System threatened insolvency if the PUC would not allow the "motorization" of transit, it was this very "motorization" that was the cause of the crisis. The granting of high fares resulted in a further decrease of customers, and an acceleration of the crisis, because revenue (gross income) was proportional to the number of transit passengers.
Rail service attracts car owners because of its comfort, speed and low cost. San Diego's trolleys have a fare box return between 90% and 100%; and would be profitable except for two paralleling freeways, which are free. "Trolleys are fun," stated San Diego's mayor in TV's 60 minutes report "Clang, clang, clang, went the trolley" . This report was about General Motors' destruction of transit systems. While the story was quite accurate, it misinterpreted GM's rail destructions as wanting to sell buses. GM also destroyed bus lines. The buses were not scrapped; they went to replace streetcars and trains, which were scrapped. The buses were scrapped anyway soon enough, since their average life is 10 years vs. 40 to 50 years for a streetcar or train.
The important point is that the investment for one bus is less than the investment to buy 50 automobiles to carry 60 people. Furthermore, a transit seat gets used over and over during the day. Therefore, hundreds of automobile purchases are required every 5 to 10 years to replace one bus every 10 years, or one streetcar every 40 or 50 years.
The combination of "170% of capacity" overcrowding, endless service cutbacks and ever increasing fares (250% increase) had the desired effect. A letter to the editor states it bluntly: "Every month more and more of us are being driven from the Key System to the use of private automobiles" [11/26/48]. Transbay ridership fell from 22.2 million in 1946 (the takeover) to 9.8 million in 1952. Bus ridership also fell, further evidence that GM wanted to sell cars, not buses. At that time, GM manufactured over 50% of the automobiles sold in America.
The combination of the political pressures of "freeway standards," the propaganda of the puppet Key System portraying it's own trains as undesirable money losers, and GM's successful efforts at eliminating most customers resulted in the state legislature and Governor Knight authorizing destruction of the trains in 1957. The trains were eliminated on April 20, 1958. Tracks were soon changed to more automobile lanes.
The Alameda-Contra Costa Transit District (AC Transit) was formed in 1956, and had tried for several years to acquire the Key System and rescue the trains. Only after all the trains were destroyed in 1958 was the Key System sold to AC Transit, in 1960.
In order to relieve the resultant congestion in automobile traffic and parking spaces, city councils acted in ways that actually caused further increases in automobile usage, and, for different reasons, discouraged transit and bicycle usage.
The solution to automobile congestion is to discourage automobile usage, for example, by charging demand pricing and charging for parking. Instead, cities passed ordinances requiring businesses to provide plenty of free parking spaces. This not only provides an artificial incentive for car usage, but causes buildings to be sprawled out. Even worse, low density zoning laws were instituted in almost every urban and suburban area for automobile "traffic mitigation" purposes. But sprawl development is very damaging to transit - service is less frequent and there are fewer transit lines per area. The longer average travel distances also detracts from bicycle usage and walking.
Government subsidy for automobiles are not only direct payments, like property taxes paying for most roads (including expressways!), but indirect subsidies. These include traffic police time, increased drainage costs (since rain doesn't absorb into the ground where there's asphalt), pollution damage costs, the cost of automobile accidents, lost productive use of property when land is used for roads, traffic signal lights (often $250,000 per intersection), and even school crossing guards necessitated by increased automobiles.
Government requirements for automobile accommodation include charging developers "traffic mitigation fees" when in fact these fees end up being passed on to homeowners and businesses who buy or rent the property. Even if one desires to use transit, the person still must pay the required subsidy toward automobiles. Their money has gone toward freeways or additional road lanes instead of transit fares. The freeways and lanes are built and are free, both factors encouraging their use. (They are not truly "free," being paid for by higher home prices, rents, etc. instead of the direct automobile users.) In addition, transit is spread so thin and infrequent, the result of low density zoning for "traffic mitigation" purposes, that it is unusable by most people.