New York's `merci'

Just 10 years ago, Washington's response to New York City's desperate financial straits was interpreted by The Daily News as an urgent invitation to cease to exist. Washington later tempered its drop-dead attitude, lent the city money, and also guaranteed $1.65 billion in borrowings from city employee pension funds. Now New York has paid back all but a legally symbolic $1 million; it's an occasion to offer the nation an accounting. SoHo and Columbus Avenue are crowded with people; the Upper East Side is crowded with building cranes. But one doesn't have to know that to know the pulsing truth: New York has more than regained its health; it has surged back to life. America's taxpayers have not only been repaid but also have earned $35 million in commissions on a guarantee that never had to be tested.

The Treasury's investment in New York provided more than a handsome return on a non-cash, contingent liability. In the dark days of 1975, only a tiny band of lenders would take a chance on New York's creditworthiness. If, without Federal guarantees of new debt, the city had collapsed into bankruptcy, the courts would have had to assume control of expenses and revenues and the taxpayers would have had to contribute to a municipal funeral of unimaginable cost.

Throughout the world, investors in American municipal bonds would have assumed that if this richest of cities could not pay its debts, no other municipal promise was worth anything. The resulting tumult would have forced other local governments into the courts when they found themselves unable to extend maturing obligations. Washington could not allow such an event to overwhelm the municipal bond market. The city surely owes gratitude to the officials who shaped a sound rescue package and those who shepherded it through a suspicious Congress. . . .

The outlook from New York is vastly different today, as City Hall plans for more, not fewer police officers, and for cleaner, not meaner streets. The glow will not last indefinitely. In a democratic society in which people turn desires into demands, there is no end to financial crisis, only intermissions. But this healthy intermission is a fine time for New Yorkers to express some sentiments to their countrymen: pride, and appreciation. --3{et