1. What really caused the Great Depression? Warm UP: What is a budget? What is it used for? What are the pros and cons? spoiler alert...LT: I can describe the impact of a collapsing US banking system in causing the Great Depression. DOK: 1-3; S. 2

2. role play... -eight small groups -roles are farmers, teachers, construction workers, railroad workers -budget worksheet and one calculator per group, also budget scenario cards -READ the directions at the top of the page and complete columns on the budget sheet for 1928 -when you’re done, the budget card should be read. Then complete the columns for 1933 and answer the questions LT: I can describe the impact of a collapsing US banking system in causing the Great Depression. DOK: 1-3; S. 2

3. Spokesperson *Tell worker’s income in 1928, read the worker’s 1933 card, discuss the family’s budget changes *Handout 3.1, Discuss in groups: -In 1933, when your income decreased, why did the percentage of your income spent on housing and perhaps other items increase? -Did you spend the same dollar amount on forr in 1928 as you did in 1933? -What tradeoffs did you make in order to feed yourself and/or your family? What did you have to give up? -How would these spending decisions affect the economy? -you retained your job, but 25% didn’t have one. What effect did this have on spending? -If you were unemployed, what choices might you have had to make? -If you had additional family members come to live with you in 1933, what happened to the income per person, per capita income, for your family? LT: I can describe the impact of a collapsing US banking system in causing the Great Depression. DOK: 1-3; S. 2

4. during the Great Depression *The country experienced deflation, prices decreased by nearly 30% *At first this seems good, but then businesses get less revenue, * So then they fire people because they can’t afford to pay them...so unemployment was 25% and wages fell *because the people had less money, they bought less...borrowers couldn’t repay loans, banks failed… BAD CYCLE! LT: I can describe the impact of a collapsing US banking system in causing the Great Depression. DOK: 1-3; S. 2

5. Quick Review *What are some of the theories that have been advanced over the years regarding the cause of the Great Depression? *What were the negative impacts of the stock market crash? *What problems did the Smoot-Hawley Tariff of 1930 cause? *What does being on the gold standard mean? *What explanation regarding the cause of the Great Depression has stood the test of time? *What was the main reason that explains why the money stock fell during the Great Depression? LT: I can describe the impact of a collapsing US banking system in causing the Great Depression. DOK: 1-3; S. 2

6. Bank Reserves *in the budget activity, people had lost their savings because banks in the community failed. *Banks take in deposits. Bank reserves=deposits not loaned out *US has fractional reserve banking...only keep a fraction of deposits on reserve *People who borrow, use the money *Because only a fraction of deposits are kept on reserve, NOT EVERYONE CAN GET ALL $ OUT ON SAME DAY LT: I can describe the impact of a collapsing US banking system in causing the Great Depression. DOK: 1-3; S. 2

7. Time Travel: free trip today welcome to the 1930s -You are living in a community with three banks -get your card, get your money, bankers come to the front -bankers will be in business as soon as the rest of you do what your cards say Discuss LT: I can describe the impact of a collapsing US banking system in causing the Great Depression. DOK: 1-3; S. 2

8. Second Federal Bank Fails! *this means the bank ran out of cash and can’t honor withdrawal requests. -How much did banker have in reserve at beginning? *Who wanted to or did withdraw? Come on up- total how much the group withdrew or wanted to- -How do you feel about your money if you have money in the Third State and First Community Bank? What are you going to do? LT: I can describe the impact of a collapsing US banking system in causing the Great Depression. DOK: 1-3; S. 2

9. WITHDRAW!!!! -people were withdrawing money! more than the bank has in reserves! *Who had loans from Second Federal that you weren’t able to pay? How much were they? *Second banker: What would have been different if they had made their payments? LT: I can describe the impact of a collapsing US banking system in causing the Great Depression. DOK: 1-3; S. 2

10. Bank Failures -occur when banks can’t meet demands for withdrawals -banks then fail or suspend operations -either way, customers lose confidence -if customers all make a “bank run,” then they all take it out, if it spreads to other banks it becomes a panic, and then it can cause more failures... LT: I can describe the impact of a collapsing US banking system in causing the Great Depression. DOK: 1-3; S. 2

11. Money supply/stock -amount of money available, -people remove money from bank: money supply shrinks -then people are able to borrow less -people buy less -businesses sell less -prices go down, revenues go down -unable to employ workers or pay less -workers buy less and can’t repay loans -more banks fail, supply of money and credit shrinks... LT: I can describe the impact of a collapsing US banking system in causing the Great Depression. DOK: 1-3; S. 2

12. Discussion -What is a bank failure? -What is a bank run? -What is a bank panic? -How did bank panics contribute to the collapse of the nation’s banking system and a reduction in the money stock? LT: I can describe the impact of a collapsing US banking system in causing the Great Depression. DOK: 1-3; S. 2

13. Closure -hold some books- Bank of the US Fails Stock Market Crash in 1929 Smoot-Hawley Tariff of 1930-Protectionist Policies Outflow of Gold from US Banking Bank Panics and Suspensions LT: I can describe the impact of a collapsing US banking system in causing the Great Depression. DOK: 1-3; S. 2

14. Assessment...3.7...Do it -the last card is missing- write a concluding statement for the broadcast. LT: I can describe the impact of a collapsing US banking system in causing the Great Depression. DOK: 1-3; S. 2

15. Simile... -Groups, chart paper, quote… *Identify how a bank panic is like a brush fire. -DRAW a diagram illustrating your group’s ideas and appoint a spokesperson to explain the description LT: I can describe the impact of a collapsing US banking system in causing the Great Depression. DOK: 1-3; S. 2