New York came within hours of bankruptcy 40 years ago, weighed down by debt, the crisis and uncertain management. An unthinkable episode today from which she will take 20 years to recover.
“Drop dead”. Will die. On October 30, 1975, the Daily News, a New York tabloid, thus summarized the response of the President of the United States Gerald Ford to New York City, who called on him for help.
For months now, the economic capital of the country has been engaged in senseless contortions to avoid default.
The accumulation of deficits for several years and the absence of effective financial measurement instruments have been exacerbated by the oil crisis.
New York can no longer borrow on the markets since April, the big banks have slammed the door in its face. The mayor, Abraham Beame, a democrat with a social fiber, never gave them confidence.
“The banks have managed to organize themselves, the unions have not. That was the turning point ”, analyzes Eric Lichten, professor of sociology at the University of Long Island and author of the book“ Class, Power and Austerity: The New York Fiscal Crisis ”(“ Class, power and austerity: the financial crisis of New York”).
Despite the help of New York State, which has already injected several billion dollars into the city’s coffers, it still has to repay $ 1.6 billion by June 1976.
The crisis has already taken to the streets. In early July 1975, tons of waste piled up in the heat during a strike by garbage collectors, worried about their wages.
Valéry Giscard d’Estaing in reinforcement
But Gerald Ford, a Republican, doesn’t want to know. On October 29, he is already talking about filing for bankruptcy and ensures that he will veto any emergency plan eventually voted by Congress.
“Much of this crisis was played out in Washington,” said Robert Polner, co-author of the book “The man who saved New York: Hugh Carey” (“The man who saved New York”).
“President Ford wanted to make New York an example. (…) He refused to help them until the last minute,” he explains.
His advisers, including future Federal Reserve Chairman Alan Greenspan and Defense Secretary Donald Rumsfeld, encourage him to take this hard line.
French President Valéry Giscard d’Estaing and German Chancellor Helmut Schmidt will have to urge him to act, on the sidelines of the Rambouillet summit (France), in mid-November, for the lines to move.
“Ford finally understood the message: it would have been as if the United States had been bankrupt,” says Robert Polner.
The president finally grants $ 2.3 billion in federal aid to New York on November 26, saving the city a humiliation.
But for New York, the Stations of the Cross have only just begun. Thousands of municipal workers are made redundant, new taxes are passed, capital spending is frozen.
“The city did not come out of this spiral until the 1990s, where we could still see the deterioration of parks, roads, schools, the health system,” said Robert Polner.
After 1975, New York, whose social model, heavily invested in education and health in particular, had been a pioneer, has never been governed in the same way.
The mayor is “not a boss anymore. They look more like bankers, ”said Robert Polner.
For Eric Lichten, the economic and social characteristics of today’s New York, which is deeply unequal, originate from the crisis of 1975.
Before that date, “we cultivated hope”, he says, “there was more affordable housing, higher education was free, public transport was cheaper”.
Today, “New York is a great city, but for whom? Well-off and very well-off people. “
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