The death of President Ford earlier this week is a reminder of some of New York City's darkest days --namely its flirtation with bankruptcy in 1975. How close was the city to declaring itself insolvent? Very close. Mayor Abe Beame had a statement typed and ready to release on October 17th that read, in part, "...the City of New York has insufficient cash on hand to meet debt obligations due today..." As reported in the Times today the statement went on to prioritize which services the city would pay for, with police, fire, sanitation and public health services leading the list.
The statement was never issued because Albert Shanker of the teachers' union supplied money from the union's pension fund to by municipal bonds. Manufacturers Hanover was told to remain open late while the city put together the union's pension fund payment along with other money to pay off short-term debt due that day. It was two weeks later that President Ford said he would not bail out the city in a speech that resulted in the Daily News' famous headline.
A Time magazine article from that time period pointed to a federal study that indicated that 100 of the country's banks had invested half or more of their capital in New York City bonds and other obligations. If the city had defaulted on its payments those banks would have been in serious trouble and the shock would have spread throughout the country's economy.
In remembering Gerald Ford, the Daily News tries to clear up several myths about the 38th president. In short, he wasn't friends with Nixon or Reagan (he really disliked the latter), wasn't clumsy, and wasn't an amiable airhead.
Daily News front page by Triborough via Flickr.