the post war era rail was dying in America, in large part because of federal highway subsidies and the rise of car culture. Private companies were unable to compete with free parkways and freeways. By the 1950s most streetcar companies were on the edge of bankruptcy or were bankrupt.
It was really happening before that. Just as soon as the Model T and other cars became a household items in the 1910s and 1920s, people stopped riding the streetcars.
Boston Street Railway, the New York Railways Company, and Detroit United Railway had all declared bankruptcy or gone out of business by 1930. Seattle, Kansas City, Pittsburgh, Cleveland, Houston, Tampa, and Jacksonville, among many others, had either declared bankruptcy and been taken over by the city, or had just gone out of business outright, by 1942.
World War II actually probably extended the lifespan of remaining streetcar service in several cities where it would have otherwise failed by the mid-40s. Instead, places like Cincinnati, Milwaukee, and Buffalo maintained streetcar systems until about 1950, when it finally went out of business there, too.
Buses became a big part of the auto industry starting in the late 20s and early 1930s. They were cheaper than streetcars, held about the same number of people, and also didn't rely on tracks. That meant, they could be rerouted easily, they could be replaced whenever one broke down, and track issues wouldn't shut down the whole system.
Streetcar companies began investing heavily in bus transportation by the end of the 1920s, and instead of maintaining their train tracks, the companies started dismantling them.
The prosperity of the post-war era was certainly the nail in the coffin, and the "conspiracy" didn't start until then. But even without that prosperity, the streetcars were on their way out.
It should also be pointed out that people tend to think of those old streetcars as if they're like modern light rail. They're not. They're like those old historic streetcars that New Orleans has--one of the few surviving lines from that era. They're about the size of a bus, with no air conditioning, and they stop every few blocks so it takes hours to get from one end of town to the other. And that's assuming there weren't any track problems or a broken down streetcar, either of which would ground the whole system to a hault. They were really a lot more like buses except on train tracks, with all the problems inherent to both kinds of transporation.
