Losing Trust In Banks

During the Great Depression, the relationship between the government and public changed forever. The individualism and Social Darwinism of the 20’s gave way to a new dependence on government programs and an expectation that the government should regulate the economy and help those in need. The relationship between the public and banks also changed. The booming economy of the 20s’ led people to buy on credit. Americans trusted in the banks and in the seemingly stable economy.

However, after the great stock market crash, Americans rushed to take their money out of the banks they no longer trusted. Bank failures were partially caused by so many people losing faith in their banks at once and withdrawing all the currency the banks needed to survive, leading them to close and lose many people’s money. 

This is an interdisciplinary lesson, using both history and ELA standards. In this lesson, students will read primary sources about banking from right before the Great Depression, during the height of the Great Depression, and towards the end of the Great Depression. Students will analyze the rhetoric of the documents and how it is used to achieve purpose.

Essential Questions

What role does analysis have in historical construction?
Why is time and space important to the study of history?

Objectives

Students will:

  • Better understand the bank failures during the Great Depression  by reading primary and secondary sources.
  • Evaluate how information is presented to the public by examining primary sources.
  • Analyze the language used in a text by closely reading a primary source. 

Suggested Instructional Procedures

  1. Either the night before for homework or in class, have students read the background article about the bank panic in Philadelphia. 
  2. Split students up into three groups and give each group one of the primary sources (Bankers Trust Pamphlet, FDR fireside chat, Greenfield radio address). 
  3. Have students read the document together in their group, taking note of the language used. Students will fill out a worksheet about the documents with their group.
  4. Each group will present their worksheet to the class.
  5. As a class, students should talk about the similarities and differences in the documents and how the public’s relationship with banks changed during the great depression.
  6. For homework, have students write a speech or an article adressing the public about why they should trust banks again after the Great Depression. Students should underline the specific language they use to achieve their purpose. 

Vocabulary

Bankruptcy: A case filed under chapter 11 of the United States Bankruptcy code.  The situation is caused when a person or corporation’s financial obligations exceed their ability to pay.
Deposit:  A transaction involving a transfer of funds to another party for safekeeping, e.g., a customer places funds in a checking or savings account; the customer is a “depositor.”  The bank uses these deposits to make loans to other people and receives interest from those taking out the loan.   In this way, the bank can give back the depositors their money and make a profit on the interest.
Directors: People elected by shareholders to manage a company.
FDIC:  Federal Deposit Insurance Corporation - Federal guarantee or insuring of bank deposits up to $2,500 in 1934 (ceiling is $250,000 per bank in 2011).
Liquidation: The selling of assets and the paying of liabilities in anticipation of going out of business.
Reorganization:  Formal bankruptcy may result in reorganization and continued operation of the firm or it may require liquidation and distribution of the proceeds.
Run: A run on a bank is when many people withdraw money at one time, usually because they think the bank is not going to have enough money to repay them their deposits at a later time.
Solvency: The ability to meet all obligations and debts.
Stockholders:  People who own a company by paying for a piece of the company (stock).  They are able to elect the directors and they receive profits (dividends) when a company makes money
Trust: An arrangement in which someone's property or money is legally held or managed by someone else or by an organization (such as a bank) for usually a set period of time