Philadelphia Transportation Company

The Philadelphia Transportation Company (PTC) was incorporated in Pennsylvania on January 1, 1940, by the merger of all the bus, streetcar and subway companies in the city of Philadelphia, with suburban routes extending to Doylestown in Bucks County and Chester and Media in Delaware County. On September 30, 1968, it sold all its assets to the Southeastern Pennsylvania Transportation Authority (SEPTA) a public agency and went into liquidation.

Philadelphia's first horse-drawn streetcar line went into service in 1858. There had been earlier street railroad service in the 1830s and 1840s, but these were seasonal operations by private transporters over tracks owned by the city or, when outside the city limits, by private companies. These "pleasure cars" ran only in the summer and fall to carry city residents to places of amusement along the Schuylkill River. The horse cars of the 1850s were a full-time transit service and contributed to the dispersal of population and the development of Philadelphia as a "city of homes" rather than a city of packed tenements. By 1876 there were nineteen companies operating 289 miles of track and carrying 117 million passengers annually.

The street railway companies received franchises to occupy the public streets. In the early years these were granted for little more than promises to pave part of the roadways, remove snow, and maintain a five-cent fare. In later years, this produced substantial friction between city politicians and the companies. This was compounded in the 1880s, as the network reached the limits for working with animal power.

Mechanization would require a huge capital investment, while at the same time, the laws usually prevented outright merger of companies. The integration and mechanization of the Philadelphia streetcar network was accomplished by a trio of entrepreneurs, P. A. B. Widener, William L. Elkins, and William Kemble, who, as they became wealthy and powerful, were resented and attacked as "transit czars." The most readily available method of combining companies for the purpose of operating efficiency was to create a pyramid of long-term leases, with generous annual dividends guaranteed to the old companies at the base of the pyramid, the so-called "underliers." The trio's activities spurred rival imitators, who then had to be bought out at good prices, adding more layers to the pyramid, and more claims on profits.

Widener, Elkins and Kemble formed the Philadelphia Traction Company in 1883. This company would provide the central power stations needed to replace some of the horse car lines with cable cars. After five years, only ten miles had been reequipped at a cost of $4 million and many technical failures. After Kemble died in 1891, Widener fixed upon electrification. The first electric trolley cars ran in 1892, and horse power was retired in 1897 after an expenditure of over $10 million. The Union Traction Company of Philadelphia was organized in 1895 as the new top company in the pyramid. To boost ridership, the company built a 100-acre amusement part at Willow Grove in the northern suburbs in 1895.

Electrification had not solved the problem of street congestion, which could be met only by the construction of elevated or subway lines. During a temporary break with Widener in 1901, political boss Matt Quay awarded a series of franchises covering every desirable elevated or subway route to a rival group headed by paving contractor John Mack. After a compromise between Mack and Widener, the final step of the pyramid was put in place with the creation of the Philadelphia Rapid Transit Company (PRT) on May 1, 1902. The Market Street subway and elevated opened between 15th Street near City Hall and 69th Street on the city's western boundary in March 1907. A parallel streetcar subway to give trolley cars from West Philadelphia quick access to the center of town was completed between City Hall and the Schuylkill River in 1908.

The cumulative cost of electrification and the building the Market Street line nearly bankrupted the PRT. It was forced to defer service and equipment improvements, like car heaters. Its management was viewed as monopolistic and secretive and was savaged by the press. The employees were overworked and underpaid and prone to violent strikes. Finally, in 1907 a compromise was brokered by the owners of the big department stores east of 15th Street, who desperately wanted the subway at their front doors. The city eliminated its car tax and paving and street-cleaning requirements in return for representation on the PRT board. The Market Street line was completed to the Delaware River ferries in 1908.

Finally, after two long and violent strikes in 1909 and 1910, the city's leading banking firm of Drexel, Morgan & Co. agreed to refinance PRT at the price of buying out the Widener interests and installing a new management. The White Knight was Thomas E. Mitten (1864-1929), a native of Great Britain who had made his reputation on the Buffalo and Chicago systems. Mitten took over in 1911. He purchased over a thousand new streetcars of his own modern design (the so-called Nearside Car) and bought labor peace through his "Co-operative Plan" established in August 1911.

Under this plan, 22 percent of the gross passenger earnings were marked for wages, pensions and benefits. Part of this fund was used to finance the Co-operative Welfare Association, which performed corporate welfare work. This was followed on November 1, 1912, by the Philadelphia Rapid Transit Co-operative Beneficial Association, which began as a sick-and-death benefits organization and was expanded to encompass co-op buying of food and consumer goods and, in 1918, life insurance. The Co-operative Welfare Association Saving Fund was established in October 1919. Because of these programs, employees rejected the Amalgamated Association in favor of a company union in November 1911 and successfully resisted World War I-era organizing drives.

Mitten inaugurated profit-sharing in 1923 by paying a wage-dividend. A share of net profits after stockholders' dividends was apportioned to employees up to 20 percent of wages. These payments were made into the cooperative fund and invested in PRT stock. The wage dividend was created as an operating charge rather than a bonus, but a ruling of the Superior Court in October 1924 invalidated this interpretation. In anticipation of this ruling, Mitten formed Mitten Management, Inc., in 1923, to which he transferred his 1911 management contract with PRT. Mitten then upped the management fee from 2 percent of gross earnings to 4 percent and paid the difference to the employees in lieu of the wage dividend.

In 1912, the reform Mayor Rudolph Blankenberg established a Department of City Transportation, which produced a master plan for a comprehensive system of subway and elevated lines to be built by the city and leased to PRT for operation. They included a subway on Broad Street with a Center City distribution loop, a branch in Locust Street to Woodland Avenue and continuing by elevated to Darby, another subway up the Benjamin Franklin Parkway connecting with a elevated to Roxborough, and an elevated from the foot of Market Street to Frankford. The Frankford Elevated, opened on November 5, 1922, was the first to be completed. The Broad Street Subway between Olney and City Hall followed on September 2, 1928, with an extension to South Street on April 20, 1930, and the Ridge Avenue Spur to 8th and Market Streets on December 21, 1932. Further construction was halted by the Depression.

As the city expanded from its traditional core into the formerly empty spaces of the Northeast, and suburban development spread along newly-paved roads, Mitten responded accordingly, aiming at a complete and fully-integrated transit system. The Philadelphia Rural Transit Company was formed on June 25, 1923, to operate buses in the city and reach out into the farther suburbs. The first rubber-tired trackless trolleys ran on Oregon Avenue on October 14, 1923. The Peoples Rapid Transit Company began interurban bus service began between Philadelphia and New York in 1924 and later extended service to Washington, D.C., and Atlantic City. The Montgomery Bus Company, Inc., and the Philadelphia Suburban Transit Company extended bus service into the western suburbs formerly the exclusive preserve of the Pennsylvania Railroad. Mitten also planned bus service to the New Jersey suburbs over the new (1926) Delaware River Bridge through the medium of the Pennjersey Rapid Transit Company.

Under Mitten's administration, PRT ridership rose from 443.2 million in 1910 to 974.9 million in 1926, the peak year for both the company and Mitten. Mitten's approach had always required the company to grow its way out of trouble, and when growth slowed and then stopped, it became increasingly difficult to juggle the competing demands of employees, riders, and the city. On April 23, 1926, Mitten purchased the Yellow Cab Company of Philadelphia for $3 million as a new source of growth.

Mitten had gambled on the 1926 Sesquicentennial Exposition in South Philadelphia to showcase his system and generate business. In connection with the fair, Mitten established the "PRT Air Service" with three Fokker Tri-motors running between Philadelphia, Washington and Norfolk during the summer and fall. It was the first regularly scheduled air service in the East, but like the fair, it was not a success, and the losses fell indirectly on PRT.

Mitten had broken with his erstwhile patrons at Drexel & Co. over the latter's fiscal conservatism in 1919, so to raise capital for his expansion program, he resorted to selling shares in small lots to employees and riders. Advertising for stocks was posted in the cars and in handbills, and individuals could buy shares from conductors and ticket vendors. Mitten also ventured into the banking business. A labor bank called the Producers & Consumers Bank had been established in 1922, but after three years of mismanagement, it had failed owing debts of $1 million. Through the services of realtor Albert M. Greenfield, who was appointed receiver, the new Mitten Men and Management Bank & Trust Company was formed on March 16, 1926, and the Producers & Consumers depositors were promised sixty cents on the dollar. On January 1, 1927, it absorbed the Brotherhood of Locomotive Engineers Title & Trust Company, another labor bank.

Like many entrepreneurs of the 1920s, Mitten was able to control his empire with a small real outlay by a series of pyramiding companies and by using the holdings of the employee stock fund. To perfect his control, the Philadelphia Investment Company was formed on December 1, 1925, and renamed the Mitten Bank Securities Corporation on June 28, 1927. In October 1928, the 221,000 shares of PRT and 19.500 shares of the Mitten Men and Management Bank & Trust Company were exchanged for $14 million in the stock of the Mitten Bank Security Corporation. The Mitten Bank Security Corporation controlled 52 percent of the PRT with ownership divided at 47 percent PRT employees, 8 percent Mitten Management, and 45 percent by the general public. The Mitten Building was opened at Broad and Locust Streets on June 1, 1927, to serve as the headquarters for all of the Mitten enterprises.

As ridership began to contract after 1926, and the system became more unstable, Mitten began to sell assets to raise money. A 75 percent interest in Peoples Rapid Transit Company and the western bus lines was sold to the Pennsylvania Railroad Company late in 1928, although they remained under Mitten Management. The Pennsylvania Rapid Transit Company was sold to Public Service Co-ordinated Transport of New Jersey in 1929. Negotiations for the sale of PRT to the city commenced in 1927.

In September 1929, the City of Philadelphia began a suit against Mitten and the PRT, charging Mitten Management with excessive fees and diversion of funds and demanding an independent audit. On the morning of October 1, 1929, Mitten was found drowned in a lake at his Pocono summer home. Ruling on the city's allegations, the court ordered the appointment of trustees for PRT on April 11, 1931. On the same date, the contract with Mitten Management, Inc., was cancelled at an annual saving of $3 million, as was the lease of the Mitten Building from the Mitten Bank Securities Corporation. The independent audit revealed a number of irregularities, and accounting practices were revised. Most of Mitten's estate was attached for the benefit of PRT. The company filed for bankruptcy on October 1, 1934.

After Mitten's death, the remaining interest in the Peoples Rapid Transit Company was sold to the PRR's Pennsylvania Greyhound Lines, Inc., in 1930, and the Yellow Cab Company of Philadelphia was sold on February 15, 1936. The Mitten Bank Securities Corporation was renamed the Transit Investment Corporation on February 9, 1938, and liquidated on July 7, 1948. The Mitten Men and Management Bank & Trust Company was renamed the Mitten Bank & Trust Company in 1934 and the Mid-City Bank & Trust Company on February 4, 1941. Some of the lightly traveled streetcar lines were replaced with buses, starting with the Doylestown line in 1931. Ridership dropped steadily during the Depresssion to 637.4 million in 1938. In the same year, the company purchased its first twenty streamlined PCC (Presidents' Conference Committee) trolley cars.

The Depression crippled the city's plans for subway expansion. Work began on the Locust Street Subway and extending the Market Street Subway and trolley subway west of the Schuylkill, but both were discontinued without any part being brought into use and not revived until the 1950s. The PRT became the operator of the rapid transit line built on the new Delaware River (Ben Franklin) Bridge by the Delaware River Joint Commission, which opened from 8th & Market Streets to Broadway, Camden, on June 7, 1936. With the resulting decline of business on the Delaware River ferries, the elevated spur of the Market Street line on Delaware Avenue was abandoned on May 8, 1939. The Broad Street Subway was extended from South Street to Snyder Avenue in South Philadelphia on September 18, 1938.

During the 1930s, the city and private investors sparred over the reorganization of PRT. A particular sticking point was the disposition of the many "underlier" companies and how they should be valued in any reorganization. The city insisted that the underliers were overvalued and the generous rentals granted during the nineteenth century mergers were unjustified. By 1939, the parties had consented to a final reorganization plan that would merge the PRT and all the remaining underliers into a single company.

The Philadelphia Transportation Company (PTC) was formed on January 1, 1940. The dominant figures were Edward Hopkinson, Jr., and realtor Albert M. Greenfield. All of the stock was placed in a ten-year voting trust. Ridership reached an all-time high of 1.1 billion in 1943 but declined steadily after the war, falling to 790.4 million in 1951 and 655 million in 1954. Wages, material costs and fares increased in an inflationary spiral. Employees deserted the old Mitten-era company union. The operating employees were organized by the Transport Workers Union (CIO) in 1944 and the office employees by the Teamsters in 1945. However, the company continued to expand and reequip its bus and car routes. The subways that had sat unfinished during the Depression and war were completed, from 8th and Market Streets to 16th and Locust on February 15, 1953, and from the Schuylkill River to 44th and Market on October 31, 1955. The subway-surface tunnels were extended from the river to 40th Street and Woodland Avenue to reduce street congestion near the University of Pennsylvania campus at the same time. The Broad Street Subway was extended from Olney to Fern Rock on September 9, 1956.

In March 1955, control of PTC passed to National City Lines, a transit company organized by General Motors and the oil and rubber companies for the purpose of buying streetcar systems and equipping them with GM buses. National City Lines purchased 1,000 new buses between 1955 and 1957, retired 600 old trolleys, discontineud twenty-four car lines, and removed over 200 miles of street railway track. However, more trolleys survived than in other systems reorganized by National City Lines, primarily because of the subway-surface lines and the presence of a local faction on the PTC board of directors. A modern bus maintenance facility and office was built at 3rd and Wyoming Streets in 1957. Express bus service to City Line Avenue in Bala-Cynwyd via the new Schuylkill Expressway began in 1959, and similar services to Ardmore and King of Prussia followed in 1962.

The new management also reduced the workforce and began to uproot the old PRT/PTC corporate culture. Non-transit assets were sold, including Willow Grove Park in 1955. (It closed twenty years later, and the site became a shopping mall.) The Market-Frankford line was equipped with new cars in 1961. However, despite these improvements, ridership continued to fall, to 316.5 million in 1962 and 277.4 million in 1967. The next year, National City Lines finally sold the system to SEPTA.

From the description of Agency history record. (Hagley Museum & Library). WorldCat record id: 164035408

Prior to the 1870s, Philadelphia's public transportation system consisted of dozens of independently owned and operated horse-drawn streetcar lines. However, as Philadelphia's population grew, increasing street congestion and the disorganization of the numerous independent streetcar lines created a need for a more efficient transportation system. Efficiency could only be achieved through expensive mechanization, which required consolidated capital. The path to electrification and unification was begun in 1883 when three men, William Kemble, Peter Widener and William Elkins, formed the Philadelphia Traction Company to supply power to existing lines. At that point, there were three primary rival companies operating in Philadelphia: Philadelphia Traction Company, People's Traction Company and Electric Traction Company. They merged to form the Union Traction Company in 1895. Still, the problem of street congestion remained, and the solution seemed to lie in subway and elevated rail lines. To accomplish this, Union Traction Company was absorbed into a new organization, the Philadelphia Rapid Transit Company (PRT) in 1902. Construction on the Market Street subway began in 1903, and by 1905 the western part of the subway was open for use.

Through a 1907 contract with the City of Philadelphia, the municipality gained control over the public transportation system and the company gave up leadership in the development of Philadelphia's rapid transit system. In addition, the burden of snow removal and other maintenance tasks formerly carried out by the rail companies, as well as the car licensing fees mandated in the 1850s by streetcar laws, were taken away. The city gained control of PRT through a number of measures. Namely, municipal representatives were given seats on the Board of Directors. The city also gained access to PRT financial records and the right to approve mergers or any other major changes to the company structure.

Despite the changes brought on by the 1907 charter, PRT still experienced financial troubles and could not finance the promised subway lines. Further pressure was placed on the PRT in the form of multiple strikes by transit workers demanding pay increases. The strike of 1910 turned into a violent city-wide riot, after which PRT underwent a drastic refinancing and reorganization. Thomas E. Mitten (1864-1929) took over management of PRT in 1911. He placated the workers by establishing a Co-Operative Welfare Association, expanded PRT's business, and brought the company back from the brink of financial ruin.

In 1913, the city established the Department of City Transit, which would oversee the development of rapid transit in Philadelphia. PRT could then rent or lease the infrastructure constructed and paid for by the city department. The relationship between PRT and the municipality was not without conflict, and disputes over finances continued well into the 1930s. Nevertheless, PRT and the Department of City Transit managed the public transportation system until 1940, when Philadelphia Transportation Company (PTC) was created. With the establishment of this company, the City of Philadelphia and public transportation became even more intertwined. The city received half the company's profits and the right to purchase all its property. Essentially, through the formation of this private company, the municipality gained even more control of Philadelphia's transit system. In 1968, PTC was purchased by the Southeastern Pennsylvania Transportation Authority (SEPTA), a municipal authority still in control more than 40 years later.

Bibliography:

Baer, Christopher T. "John F. Tucker Transit Collection Finding Aid." Hagley Museum and Library (Wilmington), accession 2046. April 2010.

Cheape, Charles W. Moving the Masses: Urban Public Transit in New York, Boston and Philadelphia, 1880-1912 . Cambridge: Harvard University Press, 1980.

Weigley, Russell F., ed. Philadelphia: A 300 Year History . New York: W.W. Norton and Co., 1982.

From the guide to the Harold E. Cox transportation collection, Bulk, 1858-1960, 1803-1967, (The Historical Society of Pennsylvania)