In 1975, New York City was deep in debt. The city was defaulting on its loans and at risk of being completely bankrupt by 1976. The city had run a deficit since 1961, and by 1974, it was $13.5 billion in debt. The banks cut off the city in the beginning of 1975, and by April, New York City was out of money. Mayor Abe Beame and other city political leaders then had to turn to the state and federal governments for a bailout, where they were met with various levels of resistance. City leaders argued that the economic collapse of New York City would have unknowable and terrible consequences for America’s and the world’s economies, and therefore a federal bailout was of the utmost importance. Other political leaders begged to differ.

President Gerald Ford, in particular, took umbrage with this argument.

President Ford maintained that, no, while there might be risk and some temporary fluctuations in the financial markets, the greater risk to the American people was “provid[ing] a Federal blank check for the leaders of New York City” and not pushing for a “long-run solution to the city’s problems.”¹ Ford and his advisors maintained that New York City had become an indulgent welfare state with its advanced social services, its network of municipal hospitals, and, most extravagant of all, its free college tuition. For Ford, CUNY “seemed the ultimate symbol of municipal largesse, the embodiment of its most utopian promises.”² The federal government insisted that the city needed to make major changes and shift towards economic austerity first, before they came asking for federal funds. Ford declared, “I can tell you now that I am prepared to veto any bill –that has the purpose of a Federal bail-out of New York City to prevent a default.”³

National Press Club Speech of President Gerald Ford. October 29, 1975. Jack Bigel Papers. Baruch College Archives, William and Anita Newman Library. Click here for full item record.

After many appeals and promises to reduce spending by Mayor Beame and other city politicians, ultimately, President Ford did sign the New York Seasonal Financing Act of 1975 -a bill (H.R. 10481) passed by Congress, which allowed New York City to borrow $2.3 billion in a fiscal year to be paid back by the end of that same fiscal year at a 1% interest rate. It also mandated New York City balance its budget by June 1978. This act passed after many testimonials from experts and financial advisors, who corroborated the claim that there would in fact be catastrophe if New York City defaulted. Also essential to getting this bill passed was New York State Governor Hugh Carey, who agreed to loan the city state funds in exchange for control over the city’s finances. This resulted in the creation of the Municipal Assistance Corporation (MAC) and the Emergency Financial Control Board (EFCB).

For more information about MAC and the EFCB, see the MAC Collection and the Jack Bigel Papers at the Baruch College Archives.

New York City Seasonal Financing Act of 1975, Senate Bill, 1975. Municipal Assistance Corporation for the City of New York Collection. Baruch College Archives, William and Anita Newman Library. Click here for full item record.

In an effort to reduce its deficit and spending, New York City implemented a 3-Year Financial Plan in 1976, which included:

• Reducing the City’s payroll with mass layoffs
• Mandating refusals of collective bargaining agreements that included wage increases
• Introducing new taxes and higher tax rates
• Developing new systems for accounting and financial control

Staff Memorandum on New York City’s Progress Under the New York City Seasonal Financing Act of 1975 (P.L.94-143). Baruch College Archives, William and Anita Newman Library. Click here for full item record. For digital copy of whole memorandum, click here.

Notably, for the purpose of this exhibition, the 3-Year Financial Plan included of major cuts to CUNY’s budget and the imposition of tuition for the first time in the university’s history. This exhibition investigates the outcome of these budget cuts and how the administration, faculty, staff, and students handled this “end of an era.”

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1. Gerald Ford, “Remarks by the President to be delivered at the National Press Club,” October 29, 1975, 3. ↩︎
2. Kim Phillips-Fein, Fear City: New York’s Fiscal Crisis and The Rise of Austerity Politics (New York: Metropolitan Books, 2017), 100.  ↩︎
3. Ford, “Remarks by the President to be delivered at the National Press Club,” 4. ↩︎