Stony Brook University
Levittown Board of Education pamphlet announcing a school bond election, 1954.
press. Most importantly, the consultants prepared a prospectus for the district— often called an“ Official Statement”— and circulated it to potential investors.
Filled with numbers and tables, these documents offered a snapshot of a district’ s fiscal condition: its property wealth, enrollment trends and debt levels. They also contained elements of narrative, especially in attempts to project a prosperous future. For example, Levittown contracted with the Governmental Statistical Corporation for its bond issues. In an Official Statement, the consultants described Levittown as“ a suburban residential area with growing commercial enterprises.” They highlighted that“ virtually every house in the community has been financed through Federal Housing Administration insured mortgages.” In the event of defaults, the FHA would step in to cover the property taxes. Levittown bonds were secure, the consultants told investors, because the federal government stood behind every mortgage.
On the other side of the transaction, investors relied on credit rating firms to gauge bond issues. In assigning letter grades to local governments, Robert C.
Riehle, vice president of Moody’ s Investors Services, said that his company“ assesses a community’ s prospects in comparison with neighboring communities.” The bond dealers and investment banks that peddled municipal bonds needed to differentiate between tens of thousands of local governments, and letter grades allowed for quick comparisons. Despite the high stakes, Moody’ s employed only 12 analysts to evaluate municipal bonds nationwide. By necessity, the analysts made judgments from afar using abstract metrics. Riehle said that Moody’ s primarily based its ratings on“ ratios and other statistical comparisons” from financial data. For Moody’ s analysts and, by extension, the investors who relied on their ratings, school districts were just numbers on a spreadsheet.
It is remarkable how unpersuasive creditors found the depiction of Levittown as a suburban idyll. When Levittown floated a $ 1.17 million bond in May 1949, Moody’ s flagged the district as hazardous. Noting that it had“ grown by leaps and bounds in the last few years,” the analysts called it an“ unseasoned residential area” with“ an element of insecurity.” When the analysts looked at charts of soaring enrollment and low housing prices, they foresaw danger. Moody’ s thus stamped Levittown with a rating of Baa, or“ lower-medium grade.” This shaky rating translated into aboveaverage interest costs. Levittown sold the issue to bond dealer Roosevelt & Cross for a bid of 2.7 % interest. This rate added $ 358,000 in interest payments to the $ 1.17 million issue, increasing the total costs by 31 % over the 20-year life of the bond.
Levittown’ s blemished reputation contrasted sharply with the fate of wealthier districts. Great Neck floated a $ 2.47 million bond the day before Levittown in May 1949, making for an ideal comparison. An older elite suburb, Great Neck was four times wealthier than Levittown, a difference Moody’ s analysts recognized in their charts. Great Neck’ s enrollment was also soaring, but the analysts judged a higher debt load“ within the paying capacity of this upper middle class community.”“ The area was well developed some years ago,” they continued,“ and although it has experienced some added growth recently, it has no pressing problems.” Moody’ s thus rated Great Neck one notch higher at A, or“ higher medium grade.” The Levittown and Great Neck credit reports appeared
18 FINANCIAL HISTORY | Fall 2025 | www. MoAF. org