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SUMMER ONE 2012 BROOKLYN COLLEGE

HISTORY 3480: HISTORY OF NYC BRENDAN O’MALLEY INSTRUCTOR BOMALLEY@BROOKLYN.CUNY.EDU. CHAPTER TEN Disaster and Rebirth. SUMMER ONE 2012 BROOKLYN COLLEGE. Daily News headline, Oct. 30, 1975. CHAPTER TEN Disaster and Rebirth. “SUCKING IN THE ‘70s” CLIPS

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SUMMER ONE 2012 BROOKLYN COLLEGE

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  1. HISTORY 3480: HISTORY OF NYC BRENDAN O’MALLEY INSTRUCTOR BOMALLEY@BROOKLYN.CUNY.EDU CHAPTER TENDisaster and Rebirth SUMMER ONE 2012 BROOKLYN COLLEGE Daily News headline, Oct. 30, 1975

  2. CHAPTER TENDisaster and Rebirth • “SUCKING IN THE ‘70s” CLIPS • What vision of NYC is being depicted in these clips? • Trailer from The Out-of-Towners (1970) • http://www.youtube.com/watch?v=_FRyAFPWBHs • Opening montage from Dog Day Afternoon (1975) • http://www.youtube.com/watch?v=rhyjIMrFlpw • Clip from The Warriors (1979) (start at 00:21) • http://www.youtube.com/watch?v=z2fo2Tk5PeE

  3. CHAPTER TENDisaster and Rebirth • Lindsay’s Second Term (1969-1973) • A backslash against Lindsay (in part due to the Feb. 1969 • blizzard) led him to lose the Republican primary to State • Senator John J. Marchi; conservative Democrat Mario • Procaccino wins the Democratic primary. Lindsay stays • on the ballot on the Liberal Party ticket. • Lindsay barely wins with 42 percent of the vote; he lost • white working-class voters, but his coalition of well-to- • do white Manhattanites, liberal middle-class whites in • the outer boroughs, middle-class Jews, and blacks and • Puerto Ricans is enough to put him over. • Lindsay’s 1969 election marked the total breakdown of • traditional party politics, a process that had begun under • Wagner. • Some claim the World Series victory of the 1969 “Miracle • Mets” helped to boost his electoral chances. • The massive Co-op City project in the Bronx opens its • doors in Dec. 1969. • The MTA is also created by the state legislature in 1969 as • a part of Lindsay’s effort to centralize agencies.

  4. CHAPTER TENDisaster and Rebirth • Lindsay’s Second Term (1969-1973) • Hard Hat Riots: On May 8, 1970, 200 construction workers gathered by the AFL-CIO • attacked a march of 1,000 college and high school students who were protesting the Kent • State shootings and the Vietnam War at Wall and Broad Streets as the police watched. • Lindsay criticized the police for their inaction, triggering further union protests against • him on May 11 and May 16. Image from the May 8 riot

  5. CHAPTER TENDisaster and Rebirth • Lindsay’s Second Term (1969-1973) • The city under Lindsay is hurt not only by the flight of middle-class • taxpayers, but also by the loss of corporate headquarters fleeing to the • suburbs: in 1970, NYC had 125 of the headquarters of Fortune 500 • companies, but six fled the city that year. • In May 1971, Lindsay cut ties with the Republicans and registered as • a Democrat. • The New York Football Giants left the city for a swamp in New Jersey • in 1972. • Lindsay launched a brief and unsuccessful bid for the Democratic • presidential nomination for the 1972 election; he dropped out in April • after poor a poor showing in Wisconsin’s primary. The truism that an • NYC mayor can’t win higher office holds. • On April 4, 1973, the “twin towers” of the World Trade Center opened • for business. The lead architect had been Minoru Yamasaki of the • firm, Emery Roth & Sons. (Renowned tightrope walker Philip Petit • illegally walks between the two towers on Aug. 7, 1974.) Minoru Yamasaki (1912 – 1986)

  6. CHAPTER TENDisaster and Rebirth • Lindsay’s Second Term (1969-1973) • In 1973—his last year in office—Lindsay worked closely with comptroller Abe Beame • to balance the city budget in 1973, but to do so, they had to rely on “creative accounting” • and extensive short-term borrowing. Reliance on the latter was dangerous as it would • leave the city vulnerable if credit dried up. Officials looked upon the borrowing as a • “temporary” measure. The 1973 budget included $100 million of “special revenue” to • make the budget, which was an accounting fiction, but even with this, the budget still • projected a $221 million discrepancy. • One of the biggest indictments against the Lindsay administration’s competence was its • ignoring of the gigantic debt problem; it even added many costly items, like CUNY open • admissions for all NYC high school graduates and contractual benefits for municipal • workers. • Between 1965 and 1973, the city’s operating budget quadrupled, and outstanding debt • hit $8 billion. • Beame would later say that Lindsay left a $1.5 billion budget gap, but ironically, Beame • himself signed off on the budgets that did this.

  7. CHAPTER TENDisaster and Rebirth • Mayor Abraham Beame (1974-1977) • First practicing Jewish American mayor of NYC; born in • London to Polish Jewish immigrants; they were en route • to New York when he was born and settled in the Lower • East Side. • Became involved with Brooklyn Democratic politics • while working as an accountant after graduating from • Rutgers. • Served as comptroller once under Wagner (1961-1965), • and then ran for mayor in 1965 only to be defeated by • Lindsay. • Re-elected as City Comptroller as an independent in 1969 • and serves through 1973, and in retrospect would be • implicated in the financial mess Lindsay had worsened. • A clubhouse politician of limited skills, he faced fiscal • problems that were beyond his capacity to deal with. After • being defeated by Koch in 1977, his usual composure • broke down and he tearfully admitted that he had done the • best that he could have done.

  8. CHAPTER TENDisaster and Rebirth • Mechanics of the Fiscal Crisis • How did NYC end up in such deep doo-doo by 1974-1975? It took many years of mismanagement and “creative accounting” to reach this level of debt, probably dating to about 1961. Some factors included: • Overly optimistic forecasts of revenues • Heavy use of “anticipation notes,” especially for those that • anticipated revenue that never came • Underfunding of pensions • Use of capital funds for operating costs • Creation of illusory “special funds” to make up budget deficits • Writing checks late • Adapted from Roger Dunstan, “Overview of New York City’s Fiscal Crisis,” California Research Bureau Note, Vol. I, No. 3 (March 1, 1995): http://www.library.ca.gov/crb/95/notes/V3N1.PDF

  9. CHAPTER TENDisaster and Rebirth • Mechanics of the Fiscal Crisis • When Beame took office in Jan. 1974, the country was reeling from the • Nixon resignation and had entered an economic slowdown known as • “stagflation.” Beame seemed unbothered by the city having rolled over $1.5 • billion in short-term debt from the last budget. • In Spring 1974, the city’s financial shakiness began to frighten lenders as its • debt exceeded $13 billion and creditors demanded to inspect the city’s books; • what they found horrified them. • City comptroller Harrison Goldin was forced to accept an unprecedented • 8.586 percent interest rate for short-term loans in July. • On Nov. 8, 1974, the mayor announced the year’s budget made in June was • already $430 million in the red, and by December, the city was forced to pay • interest of 9.479 percent for its short-term debt; by Feb. 1975, the Urban • Development Corporation (UDC), which supplied state funds to the city, • collapsed, putting the state’s credit rating in jeopardy as well.

  10. CHAPTER TENDisaster and Rebirth • Mechanics of the Fiscal Crisis • Gov. Hugh Carey took office on Jan. 1, 1975, and was thrown • into dealing with the city’s fiscal crisis. Carey was from • Brooklyn, and sympathetic to the city’s problems. • In April 1975, the city ran out of money to meet its obligations, • including payroll. The city’s underwriters, Merrill Lynch and six • other large banks, refused to sponsor any more securities issues. • Carey rescues the city from collapse with a state-sponsored • emergency loan in April; pushing Beame to the side, Carey would • engineer “monthly miracle” rescue packages for the remainder of • the crisis. • In May 1975, President Ford announces that no help for the • city was forthcoming from the federal government. • Carey helps to return financial stability by pushing the state • legislature to create the Municipal Assistance Corporation • (“Big MAC”) in June 1975, which ultimately helps to keep the • city afloat by selling $10 billion in municipal bonds. • In September, Carey oversees legislation that creates the • Emergency Financial Control Board (EFCB), which imposes • “financial martial law” over the city, putting all aspects of the • budgeting process under tight state control. Gov. Hugh Carey in 1977

  11. CHAPTER TENDisaster and Rebirth Cover of the “Fear City” pamphlet readied to be distributed to tourists by the leadership of the police and fire unions during negotiations to make drastic cuts in May and June of 1975.

  12. CHAPTER TENDisaster and Rebirth • Mechanics of the Fiscal Crisis • By the fall of 1975, Big MAC bonds had become shut out of the market, forcing city • pension funds to buy them, which their overseers viewed as jeopardizing their futures. • On Oct. 17, 1975, with the city is on the brink of bankruptcy, Mayor Beame signs a • petition declaring the city’s insolvency, but he does not have to invoke it due to a last- • minute deal; Al Shanker, head of the teachers’ union, agrees to have the teachers’ • pension fund invest in city bonds, thereby allowing the city to pay its bills temporarily. • Mayor Beame once again asked President Ford for a federal bailout, but Ford’s • hardline stance remained unchanged, delivering the following line: “The people of this • country will not be stampeded. They will not panic when a few desperate New York • officials and bankers try to scare New York’s mortgage payments out of them.” This • speech prompted the “Ford to City: Drop Dead” Daily News headline on Oct. 29. • In part due to international pressure from Both President Giscard of France and • Chancellor Schmidt of West Germany who told President Ford they were worried • about the city’s bankruptcy on the international banking system, Ford changes his • tune in November and encourages Congress to pass a federal bailout package, which • at last brings a degree of stability back to NYC’s finances, but also brings about a • period of severe austerity that continues through the Koch administration. • A key difference between NYC in 1975 and Detroit in 2013: Gov. Hugh Carey lashed • the fate of the city to the fate of the state; Michigan has not dared to do so.

  13. CHAPTER TENDisaster and Rebirth • Felix Rohatyn (1928- ) • Prominent investment banker at the firm of Lazard • Frères. • Headed up the Municipal Assistance Corporation (MAC) • during the 1970s NYC fiscal crisis. • “Big MAC” was a consortium of private financial • advisers that sought to provide assistance in securing • financing for fiscally strapped New York City. • In exchange for refinancing, MAC was able to impose “austerity” measures on the city government, just as the • IMF, World Bank, and EU now do to their member states. • Rohatyn formulated the “Blighted Areas Plan,” • empowering map to target neighborhoods for • redevelopment. Had the effect of “redlining” these areas, • cutting off loans for homeowners and businesses in these • areas. With residents removed, the areas could be rezoned • for other more profitable uses. • U.S. ambassador to France from 1997 to 2000.

  14. CHAPTER TENDisaster and Rebirth • Roger Starr (1918-2001) • Worked at his father’s contracting firm that obtained many city contracts, such as for school construction. • Joined a housing panel advising Mayor Robert F. Wagner, was appointed • chairman of the Rent Guidelines Board by Mayor John V. Lindsay, then served • Mayor Beame full time from 1974 to 1976, as a fiscal crisis unfolded. • Sought “free market” solutions to housing and poverty crises, saying that New • Yorkers had been spoiled by its “civic liberalism” of excessive social welfare and • bloated public sector. • Develops the idea of “planned shrinkage”: cutting off public services to the • poorest and most blighted areas, in effect letting them die off. • Said the rural blacks and Puerto Ricans should not allowed to come to NYC. • Previously, it was possible to train them to work in industrial/manufacturing jobs, • Mayor Beame disavowed the “planned shrinkage” concept, while City Council • members called it ‘”inhuman,” ”racist” and “genocidal.’’ • U.S. Representatives Charles Rangel and Herman Badillo call for his ouster. • Rangel calls “planned shrinkage” “Third-World policy coming home.” • Starr stepped down in Sept. 1976, but is made a conservative editorialist for • the New York Times from 1977 to 1992 and a professor at NYU.

  15. CHAPTER TENDisaster and Rebirth • “Planned Shrinkage” under a Different Name • Starr’s plan of service cutbacks was ultimately carried out under less ominous names like “urban renewal.” • Service cutbacks, disinvestment, and ongoing job-loss in the 1970s economic recession accelerates decline of “blighted” areas; leading to the abandonment of 200,000 buildings between 1967 and 1977, with 130,000 between 1975 and 1977 alone. • Landlords often realized they could make more money from insurance by setting fire to buildings. • Murder was so common above 125th Street that it cops began calling them “misdemeanor” homicides, where killers would get excessively light sentences. • Working-class and middle-class whites leave in droves for New Jersey, Westchester, and Connecticut, but the poor people of color remained. • “Tourist bubble” created around Midtown and downtown financial district.

  16. CHAPTER TENDisaster and Rebirth • “The Abandoned Movie Set” • Underserved areas as “apocalyptic yet fecund” for new artistic and cultural innovations: mainly hip hop and punk. • Return of Hollywood movie shoots on location in NYC. • “Fear City” is an explosion of local “cultural production.” • Crumbling infrastructure and bad job market create an environment for artistic invigoration: birth of “downtown” art and music scene. • Bronx loses 300,000 people between 1967 and 1977, and becomes poorer than rural Mississippi by the 1980 census. • Hip-hop a response to the grim environs: freedom, spontaneity, and having a good time. Origins in block parties. • “Writing” a visual expression of the hip hop sensibility. • Four elements: rapping, DJing, “writing,” and break-dancing. • Return of the “New York movie”: Midnight Cowboy (1969), The Out-of-Towners (1970), Mean Streets (1973), Taking of Pelham 1-2-3 (1974), Death Wish (1974), Taxi Driver (1975)

  17. CHAPTER TENDisaster and Rebirth Marshall Street in the South Bronx in the 1970s (New York Times)

  18. CHAPTER TENDisaster and Rebirth Bristow and E. 170th Street, South Bronx, in the 1970s

  19. CHAPTER TENDisaster and Rebirth “The Abandoned Movie Set” “All the animals come out at night - whores, skunk pussies, buggers, queens, fairies, dopers, junkies, sick, venal. Someday a real rain will come and wash all this scum off the streets. I go all over. I take people to the Bronx, Brooklyn, I take 'em to Harlem. I don't care. Don't make no difference to me. It does to some. Some won't even take spooks. Don't make no difference to me.” - Travis Bickle, Taxi Driver (1975)

  20. CHAPTER TENDisaster and Rebirth • David Berkowitz (1953 - ) • “Son of Sam” serial killer who terrorized NYC in from the summer of 1976 to the summer of 1977. • Arrested in August 1977 after eight shootings. • Claimed he was told to kill by a demon that had possessed his neighbor’s dog.

  21. CHAPTER TENDisaster and Rebirth • Edward Irving “Ed” Koch • (1924 - ) • Served in U.S. House in a district representing parts of Manhattan from 1969 to 1977. • Elected mayor as a “Reform” or “Capital Punishment” Democrat in 1977. • Oversees a period of economic resurgence in New York in the 1980s.

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