|Fed resource:||Panic of 1907|
|Short description:||Suggestions for Using the Publication, "Panic of 1907," in the Classroom|
|Lesson time:||90 minutes|
|Materials:||a copy of the publication, "Panic of 1907" and a copy of a highlight marker for each student, Optional copy of "It's a Wonderful Life" video or DVD|
|Grades:||9, 10, 11, 12|
Economic History - Bank Panics, Business Cycles, Early Banking, Historical Figures
This publication describes how the banking panic of 1907 developed, spread, and was resolved. It includes a chronology and newspaper excerpts from the period. It uses the bank panic of 1907 as an example of the bank panic period from the 1860s to 1913, a time in United States history characterized by bank runs and an overall lack of confidence in the banking industry.
1. Ask students the following questions.
A. What would you do if you heard that your bank was going out of business? (Go to the bank to withdraw money, go online to withdraw money, switch to another bank)
B. What would you do if you heard that your bank was running out of money? (Try to withdraw cash for safekeeping.)
C. How might it affect depositors if they did not have confidence in the ability of their bank to give them access to the funds in their account(s) when they wanted them? (Depositors might choose to keep their money at home instead of depositing it in banks.)
D. What might happen to the bank? (Banks would have less money in accounts at the bank so they would have less money to lend.)
E. What might happen if some banks failed to give depositors access to their funds? (The customers of those banks would be very upset, and the customers of other banks might become worried and try to withdraw their funds, too.)
2. Explain that when people lose confidence in the banking system. The entire banking system could become unstable. People could choose to not deposit their money in banks. People could have difficulty obtaining loans from banks. Banks might not be able to make as many, interest rates might rise significantly.
3. Ask the students if they know of any safeguards that are in place to protect depositors and help maintain depositor confidence. (Answers will vary.)
4. Point out that there is an agency called the Federal Deposit Insurance Corporation (FDIC). The role of the FDIC is to insure depositors against loss up to $100,000 per person per banking institution.
5. Consider showing clips from the movie, “It’s a Wonderful Life,” that show how bank panics happen and/or impact people.
Working with the text:
8. Have students preview the content in the brochure by reading Part II Chronology on pages 12-13.
9. List the problems below on the board.
12. Divide the class into pairs. Tell each pair of students to summarize the cause, effect and/or solution of each of the six problems.
13. Model the first one for the students as follows.
16. Have students write additional newspaper headlines that might have appeared during this period.
|Submitted by:||Sara Messina
Federal Reserve Bank of Atlanta, Jacksonville Branch