Levittown Public Library
Construction of Division Avenue High School in Levittown, 1949.
Advertisement for Levittown school bond, 1956.
The Wall Street Journal on the same page of the Moody’ s catalog, allowing investors to compare them like merchandise in a store window.
A syndicate of six investment banks purchased the Great Neck bonds for 2.3 % interest. In other words, Levittown paid a premium of 40 basis points( or hundredths of a percent)— 2.7 % compared to 2.3 % in Great Neck— for the perceived riskiness of its bonds. The difference might seem marginal, but these disparities would compound over time. Districts that received higher rates would pay more in debt service; higher repayment costs would in turn diminish their credit rating, leading to even higher rates in future issues. Debt finance rewarded the strong and punished the weak, amplifying the initial wealth disparities over time.
Overall interest rates also crept upwards during the 1950s. In an effort to contain rising inflation, the Federal Reserve raised its federal funds rate from 1.07 % in 1954 to 2.95 % in 1956. These rates established a floor for lending throughout the economy, and the hike accordingly raised bond rates. Over that period, the median school bond interest rate marched upward in lockstep with the federal funds rate, jumping from 2.13 % to 3.12 %.
Levittown encapsulated the fallout from higher rates. In 1956, the district floated a $ 5.55 million bond to finance a new high school and three elementary schools. In their credit report, Moody’ s analysts noted that Levittown’ s debt load had become“ so heavy … as to suggest
a hazardous investment environment.” The winning bid, from a syndicate of 17 banks, was for jaw-dropping 4.3 % interest. This rate added $ 3.61 million in interest payments to the $ 5.55 million issue, increasing the total costs by a whopping 65 % over the 30-year term. Back in 1952, Levittown sold a smaller issue for 2.7 %. If the 1956 issue had sold for the 1952 rate, it would have saved the district $ 1.38 million in interest costs— enough, officials calculated, to build an entire elementary school. Instead, those funds would be diverted to bondholders.
Despite all the new construction, overcrowding remained severe in Levittown. Over 15 years, the district built 11 elementary schools, two junior highs and three high schools, which together enlarged its bonded debt from zero in 1947 to $ 22 million in 1961. Nonetheless, the double sessions persisted for those entire 15 years because the enrollment kept outpacing classroom space. The district simply could not build new schools fast enough.
By disrupting daily routines, double sessions impinged on entire households. Half-day shifts made for weary students and overworked teachers, but mothers arguably shouldered the greatest burdens. Half-day schedules required mothers to shuttle kids to and from school incessantly, prepare meals at odd times and manage childcare during the time without classes. One civic group protested:“ Home life revolves around numberless meals and snacks at all times.” As a result,“ Mother … has become a harassed short-order cook.” The Levittown Press lampooned the routine with a cartoon showing a mother collapsed in exhaustion after multiple drop-offs, pick-ups and snacks. The caption read:“ POOR MAMA! She’ s suffering from a very bad case of split-sessionitis.”
Suburbanites thus found their children squeezed into makeshift classrooms and divided into half-day shifts. With no direct aid from Washington, districts grew increasingly dependent on Wall Street. By attaching onerous fees and interest payments, municipal debt made school construction more expensive. It also subjected governments to credit rating, which allowed investors to compare districts from afar like pieces of merchandise. Investors charged higher rates for poor districts like Levittown than for wealthy districts like Great Neck, and the disparities between such places widened with each bond sale. Meanwhile, the credit crunch increased interest rates for all borrowers. In managing the pressures of school construction, local officials struggled to balance the dictates of creditors with the threat of a taxpayer revolt.
Michael R. Glass is an assistant professor of history at Boston College. He is the author of Cracked Foundations: Debt and Inequality in Suburban America( University of Pennsylvania Press, 2025), from which this article has been adapted.
www. MoAF. org | Fall 2025 | FINANCIAL HISTORY 19