Financial History Issue 128 (Winter 2019) | Page 23
Treasury Secretary William Simon (left), Secretary of State Henry Kissinger (center) and Alan Greenspan, chairman of the Council of Economic
Advisers, brief reporters aboard Air Force One on plans to stabilize sharp fluctuations in the value of the dollar, November 1975.
quote journalist Theodore H. White. In
presidential election years, it was a tradi-
tion for both major candidates to attend
and to share a stage for the last time before
voters went to the polls.
Instead of serious debate, they would
trade short, jokey speeches poking fun at
themselves and at each other, as though
to reassure all present that no matter
who won in November, everyone still
belonged to the same club. In past years,
John F. Kennedy, Richard Nixon, Dwight
Eisenhower, Lyndon Johnson and Hubert
Humphrey had all been featured speakers.
Despite the desperate mood in the city,
no one thought of canceling the 1975 event.
Ella Grasso, the first woman governor of
Connecticut, was the guest of honor. But
her speech was to be the least-remem-
bered aspect of the dinner on October 16.
When New York Governor Hugh Carey
left his office on Thursday afternoon to
attend the Smith dinner, he was aware that
the city did not have the money to cover
the next day’s debt payments, but there
seemed to be a plan to assemble it in time.
The trustees of the Teachers’ Retirement
System, the pension fund for the teachers’
union, were gathering that same evening
to authorize the purchase of a round of
the bonds of the municipal assistance cor-
poration, a state agency (known as MAC)
charged with raising money for New York.
That purchase would, in turn, give the
MAC board—scheduled to meet at 10:00
pm—the legal ability to release money for
the payment of city debts. Carey had fully
expected the Teachers’ Retirement Sys-
tem to approve the MAC bonds. He had
not, however, accounted for the intense
unhappiness within the union about the
direction of the city. The previous day,
October 15, Mayor Beame had made public
the first version of the city’s new financial
plan as required by the Emergency Finan-
cial Control Board (EFCB). It proposed to
shrink the public sector in almost every
way—closing hospitals, day care centers,
fire companies and senior citizen centers;
ceasing addiction treatment services; and
limiting other social programs.
According to the plan, the city could
no longer afford an “expansive university
system,” a “large and under-utilized hos-
pital system,” or the spending that had
grown out of the “federally sponsored
social services revolution of the 1960s.” It
could only accomplish the bare minimum
expected of all city governments: police
and fire protection, sanitation, sewage and
the provision of potable water.
“We can take no pride in the plan,”
Beame wrote in a public letter to Carey,
“because it places a higher priority at
this time on the grim economic realities
confronting the city, rather than the needs
of our citizens. Unfortunately, this is a
course that must be taken at this time in
the interests of our economic survival.”
The mayor’s announcement was hard
for the city’s labor leaders to swallow.
Among other issues, it would necessitate
the layoff of thousands of union mem-
bers without even the pretense of nego-
tiation with the unions, which seemed an
ominous sign for the future of collective
bargaining. The Municipal Labor Com-
mittee immediately issued a fierce public
statement, saying that the only people who
really understood what these cuts would
mean for the city were the city workers
themselves.
“In the schools, hospitals, precincts,
parks, libraries, youth centers, social, rec-
reational and other agencies of New York
City, we see firsthand how the fabric of
life in this city is being irretrievably torn.”
www.MoAF.org | Winter 2019 | FINANCIAL HISTORY 21