On December 15, 1978, the city of Cleveland, that proud industrial giant on the Lake Erie shore, met the ultimate financial disaster: default. It became the first major American city since the Great Depression to fail to repay its note holders on time. Cleveland's story offers lessons for us all. Cleveland's crisis of municipal government and finance reflected a crisis of its soul. In the last quarter-century the city lost half its manufacturing jobs and nearly half its people. In 1970, with fiscal trouble clearly lying ahead, Carl Stokes, a Democrat and the first black mayor of a major American city, named a blue-ribbon committee of bankers and businessmen to study Cleveland's problems. With the city near collapse, Dennis Kucinich's finance director, Joe Tegreene, discovered a new nightmare: to pay day-to-day expenses, the Perk administration had taken 30 million dollar from the proceeds of long-term bond funds obligated for repairing roads and bridges and for other capital investments.