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By Root 1013 0

starts is hard to trace; the results are highly visible. No doubt, this issue, like so many others in New York, underscores how uneconomic it is to do business in the city. Storekeepers can’t afford the insurance premiums; profit-making companies can’t afford the risks. Savings banks, however, are nonprofit institutions, and in many neighborhoods with ample local deposits, they are still not making loans. Curiously, Citibank—very much a profit-making commercial enterprise—announced on November 21, 1977, that it intended to make more liberal home mortgages in three Brooklyn neighborhoods, with down payments of 10 rather than 25 percent required. Asked why, a vice president of Citibank, who requested that his name not be used, said, “We think that in the short run there will be some opportunity cost for the bank [a loss or lower profits]. We think this loss is relatively modest compared to the ultimate social gain.” Well, was this a public relations decision? “I would quantify it as being 20 percent public relations,” was the answer. “Ten percent good intentions, and 70 percent a belief that, in the long run, there will be a return on the investment.”

Presumably, in years past, Citibank and others could have made the same decisions, accommodating both their bottom line and neighborhood mortgages. They didn’t. And Jean Loretto was not the only one to pay.

Nixon’s the One

There were two sets of posters in the 1968 and 1972 Presidential campaigns. The first—“Nixon’s the One”—was paraded by his supporters to extol his record. The second—“Nixon’s the One!”—was paraded by his opponents and featured a pregnant woman pointing mockingly to her stomach. Nixon will, no doubt, be remembered as “The One” who gave us Watergate, Cambodia, Chile, the saturation bombing of Vietnamese villages and a spate of awful books, including his own.

But New Yorkers should also remember him as the President who, in historian Richard Wade’s words, “abandoned the notion of compensatory spending for our cities and instead switched to per capita aid, which favored the burgeoning suburbs.” The heart of the Republican party is suburban, and that’s where the Republican President redirected federal aid. Richard P. Nathan and Paul R. Dommel of the Brookings Institution show how:

In 1968, 62.2 percent of all federal grants for cities went to cities over 500,000 population; the corresponding figure for 1975 was 44.3 percent. On the other hand, the shares for cities of under 500,000 population rose. Cities of 100,000–499,999 population received 17.5 percent of all federal grants to cities in 1968 and 22.9 percent in 1975; the shares for cities under 100,000 rose even more, from 20.3 percent in 1968 to 32.8 percent in 1975.

Under Nixon, the federal government refused to spend funds approved by the Congress and declared a moratorium on Section 236 housing subsidies.

During the Kennedy and Johnson administrations, the federal share of city budgets jumped from 4.5 percent in 1961 to 14.6 percent in 1969. In 1967, federal aid to New York City leaped by 87.3 percent. Contrary to popular New York mythology, during most of the Nixon and Ford administrations federal aid continued to grow. But much more slowly. When taking inflation into account, the Temporary Commission on City Finances found, for instance, that the “overall adjusted growth rate of 12 percent for the 1971–1976 fiscal period was about one-tenth the real rate of increase experienced during each of the two previous five-year periods.” The federal government’s share of the city’s budget actually declined in fiscal 1974 and again in Ford’s last year. (The state’s did, too.)

Federal aid, ironically, contributed to the city’s own downfall. As aid multiplied in the sixties, and as the local economy was expanding, the city could come up with the matching funds required. But when federal aid slowed and the local economy nosedived, New York was trapped. “A critical series of decisions was the acceptance of federal programs forced on us during the Johnson years,” observes former Deputy Richard Aurelio (1969