Government: Indictment Against G.M.

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Indictment Against G.M

General Motors is often a target of trustbusters and social critics of big business for selling 45% of all U.S. cars, 40% of all trucks, and 95% of buses. Last week G.M. was under attack on a less familiar front. In Manhattan, a federal grand jury, after hearing evidence for 17 months, handed down a criminal indictment against the corporation on charges of monopolizing the U.S. diesel locomotive industry.

The Government charged that G.M. used its position as a major U.S. shipper of goods to coerce railroads into buying G.M. equipment, had even gone so far as to threaten the Gulf, Mobile & Ohio Railroad that certain traffic would be diverted to lines that had bought more G.M. locomotives. The trustbusters also contended that G.M. at times sold locomotives at a loss to win a sale. As a result, charged the Government, two of G.M.'s chief competitors—Fairbanks, Morse & Co. and Baldwin-Lima-Hamilton Corp.—have been forced out of the field, and G.M. has cornered 84% of the market.

"Not guilty as charged," replied General Motors Chairman Frederic G. Donner. It was not surprising that G.M. "has been the leader in this field," he said, because G.M. was the chief U.S. developer of the diesel electric locomotive, while other U.S. makers were committed to building "the inefficient steam locomotive." As diesels replaced steam engines, argued Donner, the market naturally fell to the most experienced manufacturer.

The corporation alone was indicted. Since the violations alleged occurred over a 25-year period, the Justice Department thought it unfair to hold any present officials responsible while letting others, no longer with the company, go untouched.

If convicted, G.M. faces only a maximum fine of $50,000. More importantly, conviction on the criminal charge would lay G.M. open to treble-damage civil suits by purchasers of its diesels, if the trial proves—as the Government believes it will—that G.M.'s monopoly in the market resulted in higher prices. The Justice Department also intends to start a civil suit to try to force G.M. to relinquish all or part of its locomotive business.