The Year the Big Apple Went Bust

by Fred Ferretti

Book by Ferretti, Fred.

Hardcover

First published January 1, 1976

Reviews

[Carolyn]

Financial crises are fascinating because they teeter on the edge between reality and unreality. Certainly the money involved is real — as real as the concepts of debt, bonds, obligations, credit ratings, existing on paper but backed by legal force, are real. But the “crisis” is actually a crisis of faith. One day in 1975, banks were willing to lend to New York City. The next day, even though little had actually changed, they were not, and the floor dropped out from under the city.

Exactly how and why a tipping point like this is reached is mysterious and not exactly logical. In The Year the Big Apple Went Bust (1976), Fred Ferretti, a New York Times city hall reporter, gives an almost day by day, at times hour by hour account of the unraveling of confidence in the city’s finances that is exhausting to read. The head-spinning cycle the city underwent multiple times in 1974 and 1975 starts with dire predictions that the city will soon no longer be able to borrow to pay its bills, promises to tighten the belt with layoffs, public backlash to cuts, unions fighting back ferociously to save their members’ jobs, ending with everyone celebrating the jobs being saved—and the city’s finances unchanged (“The only gain was temporary euphoria,” Ferretti writes).

Eventually, the banks stop lending to New York as a result of this fiscal "chaos" and their representatives gain control over the city’s finances through the creation of various oversight boards that strip away the mayor’s power. At times in 1975 the city was mere hours away from defaulting. Ultimately it took a combination of the unions’ pension funds investing more than $2 billion in the city, state and federal loans and other measures to pull the city away from the brink of bankruptcy.

Ferretti does not hold back on the politicians who failed to help the city during the crisis. In fact almost everyone in the book is a villain, to Ferretti, even the people who did help. The players in this drama, if they are competent, are out for political gain. If they are well-meaning, they are impotent. His greatest contempt is reserved for Gerald Ford. Ford famously refused to help the city apparently thinking it would bolster his conservative image to be tough on liberal New York. Ferretti calls out the cruelty of this stance. A typically evocative line from Ferretti: "Ford, in his narrow quest for election, gave the city in sacrifice on the altar of national conservatism."

I can’t honestly recommend this book. A lot of it reads like an angry screed; the rest is just a chore to get through. For example, Ferretti reproduces in full entire speeches various politicians gave at key moments of the crisis. I’m sorry, but life is short, and nobody wants to read political speeches. This is a crazy book, raging mad at everyone and consequently probably not very fair. Someone needed to tell Ferretti no.

[Frank Stein · Rating 3 out of 5]

A day by day recounting of the New York Fiscal Crisis of 1975, by a Times reporter who was there at the scene. The book does give one a sense of the daily terror of imminent default that bedeviled the city for the whole year; for instance, a last minute financial gimmick with the city's pension system caused the city's budget director to ominously announce that "The city is solvent - today." At another point the United Federation of Teacher's president Albert Shanker held up his union's investments in city's bonds unless he received a promise to not audit their most recent contract. Negotiations were carried on until past midnight and President Ford was informed that the city was moments from default when finally Shanker relented. Every day was a new crisis and every day the city survived by the skin of its teeth. It was certainly high drama, even if much of it was performed in the dry language of accountants.

Still, the author didn't make all this financial skulduggery any clearer by constantly confusing his timeline and barraging the reader with reports of millions or billions of dollars with little context. I doubt there's a better narrative story out there of the crisis, but that doesn't make this one good.