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Alison Stewart: You're listening to All Of It on WNYC. I'm Alison Stewart. Let's continue our week-long partnership with DOC NYC. Nearly 50 years ago, the city of New York almost went bankrupt. A documentary called Drop Dead City, New York on The Brink in 1975 traces what happened. Ken Burns said of the film, "It made accounting sexy." It takes us back to 1975 when Mayor Abe Beame announced the city was in massive debt, debt that it seemed unable to repay. Cuts were made to the police and fire department. Sanitation workers went on strike and trash piled up on the sidewalks.

Cops handed out pamphlets to tourists declaring New York Fear City. When the threat of bankruptcy looming, Mayor Beame appealed to Governor Hugh Carey and the President Gerald Ford for help. As government officials and bankers gathered together to try and find a solution, ordinary New Yorkers worried that they would bear the brunt of the consequences. The documentary tells the story of this tumultuous year in our city's history, and one of the film's directors has a personal connection to the story.

Michael Rohatyn's father, Felix Rohatyn was chairman of the Municipal Assistance Corporation Forum to help save the city. Drop Dead City is closing night film festival, is the closing night film festival at DOC NYC. Tonight there will be an in-person screening and event with Michael and co-director Peter Yost that's happening at 6:30 at the SVA Theater. I'm joined now by directors Michael and Peter. Welcome.

Michael Rohatyn: Hello.

Alison Stewart: Hello.

Peter Yost: Thank you so much.

Alison Stewart: For your last name.

Michael Rohatyn: Yes, let's get that out of the way.

Alison Stewart: Let's do it.

Michael Rohatyn: I say Rohatyn. He said Roatyn. Just like Young Frankenstein, Frankenstein.

Alison Stewart: Listeners, we want to hear from you. What do you remember about New York's fiscal crisis of 1975? Were you a worker who was impacted? Did you strike? What do you think Mayor Beame did? Or how did President Ford handle the crisis? We want to hear your memories of New York City's financial crisis in '75. Give us a call. 212-433-9692, 212-433-WNYC. A documentary like this, you've worked on it for a while, Peter, but generally, why did this seem like a good time to revisit this moment in New York City's history?

Peter Yost: In the most obvious and perhaps least interesting sense, it's the 50th anniversary of all of this chaos. This was '74, '75, and here we are 50 years later. You do have that hook, and it is an anniversary and time to look Back. In a deeper sense, I think there's a lot of present-day resonance with what we're seeing today. This was a time where really the core of the movie and the core of this issue to our mind has to do with the deep question of what does a society owe its people? There's a moment in the middle of the film where Milton Friedman, the free market economist of the time collides with a more progressive lefty economist, Walter Heller, who's not as remembered.

They're really arguing over that exact question. Should the government be there to help people and lift them up, or should they get out of the way in a Reaganomic sense and let people pull themselves up? That question was really playing out on the streets of New York in a very vivid and even entertaining way. It sounds wonky. I think these are deep and important issues that have resonance today, as we all know, as we're debating versions of the same hourly at the moment.

We went out of our way and spent honestly many years making this film to try to get at those questions, but to do it in an entertaining way that really brings alive the characters of the street, the character of the city, and makes it vivid and fun for people, rather than necessarily a didactic policy examination. That said, at the core, I think there's some really impotant and relevant issues.

Alison Stewart: Your father was a key player, Michael, in this story. What do you remember about that time?

Michael Rohatyn: I remember all of it. It actually struck me the other day that I was 12 and it was completely a vivid, important event for me as a kid. I understood that there was drama. I understood that there were these big personalities, big issues, big stakes. The city was a vivid playground for a 12-year-old in those days. I remember a ton of it.

Alison Stewart: You have tons of news coverage, Peter, what was the tone of the news coverage about the 1975 fiscal crisis?

Peter Yost: It's a great question. I think, first of all, apart from tone, and I will answer that in one moment, what was striking from a filmmaking perspective was the fact that all of this stuff was shot on film. We had that to work with. It wasn't that fairly ugly '80s video stuff. This was shot on 16 millimeter by people that in many cases were really good cinematographers or camera people and were out there. The tone of it, I think, was surprisingly deep. One of the things that Michael's father was so expert at was, apart from being really quite intelligent and capable at what he did, he was an amazing communicator. He was really good at pithy sounds. Dismissive and superficial.

Alison Stewart: Thoughtful, though.

Peter Yost: Yes. He could come up with phrases to take the most. This was an incredibly complicated thing. It involved unions, it involved taxes, it involved all kinds of even very wonky financial questions, but he could simplify it for reporters or at least convey it in an understandable way. I think the reporters were local, of course, because New York is a news capital. They had a vested interest, they had a personal interest, and they had a real depth of understanding that not to slight all of the colleagues in the media today, but is relatively rare, shall we say.

I think one looks back at these things and there were deep substantive discussions on beautiful 16-millimeter footage with people with crazy hairstyles and crazy shirts, bringing alive the stuff that we just had to make the movie about.

Alison Stewart: Michael, what's a piece of archival footage that you were excited to have rediscovered?

Michael Rohatyn: Oh, my God. That is very hard. You should have sent that one earlier. Gosh, I just don't even know. I mean, the hardest part of the film was cutting out the archive that we would not use in favor of these beautiful little bits that we wound up being able to use. We had about 150 hours of archive that we looked at. I'm going to have to pass on that. I want the viewer to choose, and I don't want to influence them.

Alison Stewart: Going to pass? I'm going to pass.

Michael Rohatyn: I'm going to pass. It's a pass. I'm sorry.

Alison Stewart: Peter, let's talk about the basics. Why had the financial situation gotten so bad in New York City? For people who don't remember.

Peter Yost: It's, ultimately, they were spending more than they had, which sounds ridiculous.

Alison Stewart: But it's true.

Peter Yost: It is true. As those will see, and I can't use an expletive on the radio, but as they discovered rather early in this process and early in our film and our telling of it, there were no blanking books. Literally, there were papers all over. There were unbalanced checks. There was no real sense that what was coming in had anything to do with what was going out in terms of spending. Then we delved down because we couldn't resist ourselves a little more wonkily into the weeds of how that actually happened. It's true. There were overflowing closets. There were unbalanced checkbooks. It was like the worst time in one's own life, or the person you know who can't get their crap together and balance their own checkbook, but it was across the city.

Then there were mechanisms for how that happened, which included bond sales where they borrowed for capital expenses to build. Usually, one would do that and keep them separate, but if they were doing a big thing like a road or a bridge or that sort of thing, they actually would take that money and then just spend it for the yearly ongoing expenses of the city, basically, instead of putting that aside for what it was intended to be used for. They just dug themselves into a massive hole and nobody-- but if you don't really measure that, you're not in the hole. How that was discovered and what happened is essentially the thrust of the film.

Alison Stewart: One of my favorite scenes, and this is what I wanted to ask you about, there's a scene at the swearing-in of Abe Beame, and it shows John Lindsay for just a minute, and he looks over sheepishly like, "Oh."

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Michael Rohatyn: So glad you caught that.

Alison Stewart: I hope they don't look.

Michael Rohatyn: So glad you caught that.

Alison Stewart: Did Lindsay and the others know what they were leaving Mayor Beame with?

Michael Rohatyn: I think so. I mean, it was a collision of so many events. There was a huge population shift. There was a recession from the oil shock. There was terrible accounting. There was a lot of cynicism in Washington about how to leverage New York's problems. It was, among other things, the beginning of the culture wars, the demonizing of the coastal elites. It started here. Ford and Donald Rumsfeld and Dick Cheney found this a very useful club to hit the liberal establishment over the head with.

Nelson Rockefeller, who also we focused on his role over Lindsay. There are many who played a hand in this, but had Lindsay not had Nelson Rockefeller as governor, he would not have been able to spend as freely as he did. Nelson Rockefeller was incredibly ambitious with his building. Like a conservative liberal, like something that does not exist anymore. Was Vice President to Ford briefly and immediately thrown out in favor of Bob Dole? Anyway, I'm getting carried away with that part of it, but I find that also to be compelling.

The turn inward towards Kansas, towards the Middle States. Let's clobber New York and the New York Times with this thing. I want to answer one thing, though, that you just asked me before, which is what's my favorite footage? The man on the street stuff, to me, is just sublime. The people that are interviewed are so candid and so honest and so on-- they're just uncynical. They're not used to being recorded, and they're very pure and great. Just I love that stuff.

Alison Stewart: The accents. What happened to New York accents?

Michael Rohatyn: I know.

Peter Yost: Exactly.

Michael Rohatyn: Incredible.

Alison Stewart: My guests are Michael Rohatyn and Peter Yost. The name of the film is Drop Dead City, New York on the Brink in 1975. We want to hear from you. What do you remember about New York's fiscal crisis of 1975? 212-433-9692. We have some callers for you.

Michael Rohatyn: Good.

Alison Stewart: Let's talk to Pat from Springfield, New Jersey. Hi, Pat.

Pat: Hey, folks. I was a student, I was 15, 16 years old. I just remember there were 60 kids in my homeroom in 1975. Maybe we just jammed in, but I was telling the screener that at no point in my life had I ever been more proud of being a New Yorker that the teachers, God bless them, came in with war paint, saying, "We're New Yorkers, whatever this is right now, we're going to get through." We just shuffled and went through it all.

The thing I remember most, and no, I can't wait to see the film. HBO did a thing recently called The Deuce, which was the worst of the '70s and stuff. My son-in-law asked me, "Hey, was the city really that dirty? Because the set decorators went crazy on it." I said, "He couldn't even come close to what it was really back then."

Peter Yost: So true.

Pat: Yes, it was a tough time. Again, that man in the street thing, the sense of camaraderie and city knew if it was going to happen, it was going to be us and nobody else.

Alison Stewart: Thanks so much for calling.

Michael Rohatyn: I love you for saying that. Totally agree.

Alison Stewart: Let's talk to Alicia from Queens. Hi, Alicia, thanks for calling All Of It.

Alicia: Hi, how are you doing?

Alison Stewart: Doing okay.

Alicia: I was a police officer at the time and I was working as a white shield detective in the detective bureau going towards my detective shield when I got laid off. It was the first time they'd ever done anything like that in the history of the police department. The city tried to get some jobs in the transit and other places where they had some openings. I did work for transit on the midnights for a couple of months, and I decided I didn't want to do that. I just stayed home.

About a year later, they called me back and they hired some people back slowly. The thing was, I could not go back into detective bureau. I had to start all over from the beginning again, going back on patrol and working my way back into the detective bureau. I wrote all kinds of letters to see if I could get my job back, but it didn't work.

Alison Stewart: Wow. Thank you so much for sharing your story, Alicia. Yes, let's talk about the strikes. What roles did the major unions play in the city's crisis?

Michael Rohatyn: I mean, absolutely central. The city had this enormous municipal workforce. The municipal unions were their own category of unions. There's the steelworkers union, there's the teamsters union, but there were also the transit worker union. There was the sanitation workers union, the fire, the police. The consequences of a failure for the city, of a bankruptcy for the city was immediate for them. They would all, arguably, if the city went into receivership, which was discussed, was a theoretical possibility, all of those union contracts would be nullified and would have to be renegotiated. That would be the end of collective bargaining and essentially the end of unionism for that category of unions.

I hope I'm getting this right. Maybe a caller will call me out on it, but I think that that's it in broad strokes. The unions then. They were the very first to suffer layoffs. They fought with each other about the layoffs. They tried to negotiate separate deals with City Hall. We had a mayor, Mayor Beame, who did not want to do any of this. He was an old-fashioned liberal. His idea was to employ people, not to fire them. He hated it. He tried to-- even the accounting for the layoffs was sketchy. They would lay people off and then they would hire them back. The banks who were the-- after all, you better convince them, they were very unconvinced.

Eventually, though, the unions-- to just bring it back around. The unions really saved the city. They invested in the bonds. These were risky bonds. This was the pension money of the unions, and it was in a very existential way, it was for their own sakes, but they completely stepped in and saved the city.

Alison Stewart: I wanted to concentrate on the sanitation union and the police union. I'm with Peter. I remember it just being gross for a little while. It was really bad when they went on strike. Tell us a little bit more about the sanitation union.

Peter Yost: Sure. As Michael said, these unions, at the time, they were essentially all-powerful. As the caller mentioned, they couldn't believe as a police person that they would be laid off. That was true pretty much across the board. The sanitation union didn't take this lying down, needless to say, and were fairly aggressive. As the footage suggests, literally in your face about it, they had wildcat strikes, which essentially, in the summer, meant leaving the stuff on the street indefinitely.

Michael Rohatyn: 30,000 tons a day.

Peter Yost: Yes, 30,000 tons--

Michael Rohatyn: In July.

Peter Yost: Right.

Alison Stewart: I remember.

Peter Yost: Yes. That's called leverage. There were things like this that were all over. We do largely forgotten little moments like, "Oh, yes, New York City actually does have drawbridges to get in and out of parts of the city." All it took was literally a handful of drawbridge operators to go on strike-

Michael Rohatyn: With the bridges up.

Peter Yost: -with the bridges up and walk away and take "a long lunch break", and the city is essentially paralyzed. The leverage points, if one thinks about it, there are all kinds of ways that we, of course, cooperate as a collective. New York is beautiful in many, many ways. It's a metaphor and it's a reality of collective craziness. If somebody wants to mess with it, they really can, and the unions at that point had a lot of leverage. Ultimately, the story-- and Michael's father was key part of this. It's really also a story of coming together.

I think that's a resonance for today, too, at a time where, needless to say, two people of opposing ideology seemingly can't be within 100 miles of each other. This was a time for better or worse. Yes, people came to negotiation sessions, as we see in the film, with guns. It wasn't soft and it wasn't cuddly, but it was effective. It was in your face, in the New York way. People of differing perspectives and different politics and different economic interests, bankers, unions, teachers, garbage men, everybody, government, people across the board had to get in a room and come up with a solution. That's ultimately the story of the film. I think that is the takeaway from this.

It was going over a cliff, and we all pulled together. Just to go back to the first caller's sense of that he has a memory of the time that's still warm and affirming. I think it probably comes from that. It's a little bit like war, in a sense, not to make light of it, but you're in a foxhole together and you get it done.

Michael Rohatyn: I just want to add to that that there was also an enormous amount of population flight in those days. One of the key factors that precipitated this, the loss of tax revenue. It's really fair to say that the city was left to fend for itself with the people who remained. Those people are not polite to each other and they are disputatious and there are many interests. It was extremely far-fetched to imagine that this group of people in the pressure of a decline, of a spiral, could sort it out, and they did.

Alison Stewart: Our last moment, Michael, if you could ask your father Felix a question. What's a question you would have liked to ask him in a moment like this. Take your time.

Michael Rohatyn: You're asking me tough questions today. I would ask him if he liked the film.

Alison Stewart: What would you want to know from Felix Rohatyn?

Peter Yost: From Felix? I'd be curious for his take, which I think would be sobering on where we are today compared to then the lack of statesmen like himself. It's not a hagiography, I should say. I mean, this is not like a celebration of Michael's father, even though I'm an admirer of him and was before and even more knowing after him. I think he and countless people in this film embodied, I think, the best side of civics, in a sense. These were people who again got together and used their skills to cross their ideological lines--

Michael Rohatyn: We should name them. Hugh Carey, who was the governor, a huge figure. Victor Gotbaum. Al Shanker. Victor Gotbaum, head of DC 37. Al Shanker, head of the United Teachers Federation. These were giants. I'm not saying that in a-- I mean everybody uses those kinds of words, but it's at times like this where there's everything on the line and everything is at risk that you see who really steps forward. Those are the guys.

Alison Stewart: The name of the film is Drop Dead City, New York on the Brink in 1975. It's screening tonight at 6:30 at the SVS Theater as part of the DOC NYC Festival. Michael Rohatyn and-

Michael Rohatyn: Thank you.

Alison Stewart: -Peter Yost, thanks for being with us.

Peter Yost: Thank you so much.

Michael Rohatyn: Thanks.

Alison Stewart: Coming up, you'll hear about a new movie called The Black Sea. We'll talk about it with its co-directors, Crystal Moselle and Derrick B. Harden, who also stars in the movie. That's coming up after the news.

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