IN MAY 1959, New York State Comptroller Arthur Levitt Sr. met with a group of financial executives at the downtown office of Goldman Sachs & Com pany. This was the first meeting of the new Investment Advisory Council, which Levitt had assembled to guide him as he transformed the state's $1.2 billion retirement portfolio. With the bankers' encouragement, he planned to sell the pension's extensive municipal bond holdings and to reinvest the receipts into corporate securities. The sell-off would have farreaching consequences for school districts across the state. Over the previous de cade, New York comptrollers had subsidized the construction of public schools by purchasing school bonds with pension funds. Following the advisers' counsel, the New York State Employee Retirement System (NYSERS) sold off most of its municipal bonds and increased its holdings of corporate bonds and stocks. This shift in investment strategy marked the Note: This essay began as a chance conversation in Firestone Library and has evolved into its pre sent form through the encouragement of numerous colleagues and friends. It has benefited from the sharp editorial work of the staff at Capitalism and the constructive feedback of anonymous reviewers. We would also like to thank
During the legal battles that followed the 1954 Brown decision, the de jure-de facto binary became the key legal distinction used to define the limits of school desegregation. In recent years, historians have labeled de facto segregation as an evasive and misleading “myth.” However, the concept had a long political career before it became a subterfuge. In fact, civil rights activists first invented the concept in an attempt to force legal recognition of segregated schools outside of the South. But in an ironic turn of events, school officials, judges, lawmakers, journalists, and ordinary citizens later appropriated the phrase to deny responsibility for the color line. Thus, what began as an allegation of racial discrimination ultimately became an impenetrable defense of legal innocence. This article recovers the decade of fierce public debates surrounding northern school desegregation by tracing the evolution of de facto segregation from allegation to defense to myth.
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