Urban Squeeze Plays: New York City Crises of the 1930s and 1970s

Abstract

During the 1930s, and again in the 1970s, New York City experienced serious fiscal crises during which the financial community openly exerted their power in the city. This paper analyzes those crises and the economic contexts in which they occurred. It will be argued that the essential causes of the most recent crisis were not subject to the control of the politicians in New York City and can be found in some of the systemic characteristics of United States capitalism. The paper will focus, specifically, on business cycles, nationally based secular trends which undermine city tax bases and expand revenue demands, the fragmented nature of local governments, the efforts by the capitalist class to expand profits by reducing benefits previously won by the workers, and on the response of the banking system to both secular and cyclical trends. All cities were subject to these pressures (and information on other cities is included), but New York was-especially hard hit by the last three factors. The "solution" to both of the city's crises helped to alleviate the economic problems in the financial community, but they impaired the overall economic health of the city.