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On October 16, 1975, New York City was deep in crisis. At 4 p.m. the next day, four hundred and fifty-three million dollars of the city’s debts would come due, but there were only thirty-four million dollars on hand. If New York couldn’t pay those debts, the city would officially be bankrupt.
On the morning of October 17th, New Yorkers woke to a series of grim headlines. (“Balk by UFT pushing city to default,” in the Staten Island Advance; “Teachers Reject 150-Million Loan City Needs Today,” in the New York Times.).
It was more than just the future of one city. New York’s bonds were held by banks throughout the United States and around the world. By some estimates, New York’s default would bring down at least a hundred banks, and expose others to liability for selling suspect or fraudulent products.
Twelve days later, President Ford stepped to the podium at the National Press Club and delivered a stinging rebuke.
“What I cannot understand—and what nobody should condone—is the blatant attempt in some quarters to frighten the American people and their representatives in Congress into panicky support of patently bad policy. The people of this country will not be stampeded; they will not panic when a few desperate New York City officials and bankers try to scare New York’s mortgage payments out of them.”
Later in the speech, he added, “I can tell you, and tell you now, that I am prepared to veto any bill that has as its purpose a federal bailout of New York City to prevent a default.”
Mayor Beame appeared at the same Press Club on November 5th and delivered a rebuttal to the Ford statement:
“Let me put to rest one major misunderstanding that persists here and elsewhere: the City of New York is asking for nothing of the America taxpayer except the opportunity to set its own house in order. And I repeat, contrary to President Ford’s impression that he may have given, the City of New York is not asking the Federal Government or the public for one cent. We are not looking for a handout or a bailout.
On the other hand, default will cost the American people billions of dollars, stripped of rhetoric, it’s that simple and that compelling.
The 8 million Americans who live in New York merely ask of the Congress and their President, the simple act of guarantee to permit us to continue the reforms and the economies now under way in the city.
Now there are simple precedents. The Federal Budget this yer reflects more than $200 billion guarantees, more than $200 bill in guarantees covering everything from the Washington Metro to the construction of a Chemical plant in Yugoslavia.
We seek the time that a guarantee offers, so the we can complete the program for recovery that has already been launched.”
Here is the complete address by Abraham Beame from The National Press club, as well as the Q&A as it was broadcast live on November 5,1975 by National Public Radio.
