Grade Level: 7-12
Subject: Social Studies/Economics
On
Sunday, September
28, 2008, U.S. congressional leaders and the president's
administration announced that they reached a possible
agreement to fix the nation's spiraling financial
crisis. The deal would allow the U.S. Treasury
to buy $700 billion in bad debts from failing banks
and other financial institutions. The move would
help prevent a widespread breakdown of the nation's
economy. It would also be the largest financial bailout
in American history.
The crisis is complex, but it is largely a result of what are referred to as "subprime" loans. Basically, brokers dealt out loans to people who had a high risk of not being able to pay these loans back, especially when adjustable interest rates started rising. Many of these people have defaulted on their loans and lost their homes. This means that the flow of money into the banks that hold these loans has been reduced to a trickle. This is causing banks and other financial institutions to fail. Some have already been bought out by other banks or by the federal government.
Most people agree that the banks must get federal aid to stay afloat. This move is not only good for the banks themselves, but it is critical to keeping America's economy running. The bailout is merely a short-term fix, however. More work must be done to make the financial system stable in the long term.
The current crisis is certainly not the first time that the United States has weathered an economic downturn. The Stock Market Crash of 1929, the Great Depression that followed, and the New Deal that helped get the country back on its feet were even more challenging than today's situation.
During this lesson, you will do some then-and-now investigations and comparisons. You will start by learning about the important events in and around the 1930s—reading news articles and reviewing key events. You will also get a chance to examine today's financial crisis, as well as the fixes the American government proposes and implements to improve the nation's current economic security.
Reflecting on the Crash
Like
today's financial crisis, the economic crash of 1929
was complex and rippled waves of instability through
much of the nation. However, the 1929 crash happened
much differently than today's subprime loan mess.
Investigate what happened through the news articles published by The New York Times daily newspaper over five days surrounding the major crash. These articles are collected in a 1999 Web special, Looking Back at the Crash of '29. Read the introduction on that page, and then continue to the next page, Then, as Now, a New Era. As you read through the articles, work with classmates to identify terms, entities, and other references you do not readily understand. Rotate who researches a set of terms to divide up the work, and create a classroom glossary of these terms that everyone can review as needed.
Back on the special's main page, click through the news headlines listed on the right-hand side of the introduction text. After reading each article in this collection, write three to five sentences that summarize the article and label it with the date. Start with Monday, October 28's Wall Street Hums on the Day of Rest to Catch Up on Work. Continue by reading the articles published on Tuesday, October 29: Stock Prices Slump $14,000,000,000 in Nation-Wide Stampede to Unload; Bankers to Support Market Today, Decline in Crowds in Trading Rooms, and Telephone Calls 5% Above Normal.
On
October 30, read about how Stocks
Collapse in 16,410,030-Shared Day, but Rally at Close
Cheers Brokers; Bankers Optimistic, to Continue Aid. Discover
why Reserve
Board Finds Action Unnecessary, Crowds
at Tickers See Fortunes Wane, and Leaders
See Fear Waning. Also, read about how Phone,
Radio, Cable Beat All Records, why Brokers
Believe Bottom Is Reached, the Comment
of Press on Crash in Stocks, and how Women
Traders Going Back to Bridge Games; Say They Are Through With
Stocks Forever.
On October 31, you will read that Stocks Mount in Strong All-Day Rally; Rockefeller Buying Heartens Market; 2-Day Closing Ordered to Erase Strain and about why Exchange to Close for 2 Days of Rest.
The November 1 news reads, Stocks Up Again on Flood of Buying; Discount Rate Cut Here and in London; Back to Normal, Reserve Board Finds, Brokers See End of Stock Hysteria, and Reserve Board Sees Speculation Curbed.
Based on what you have read so far, including the introductory summary, brainstorm with classmates a "Then" and "Now" list. The "Then" list should highlight the main points about what happened around 1929, and the "Now" list should highlight comparable main points about what you know of today's crisis. Examine and analyze the two lists. What are some similarities? What are some differences?
The Timeline of Recovery
The
stock market crash of 1929 marked not only the end of
an extremely prosperous decade, but also the beginning
of a new decade. For many Americans, the next decade
brought significant challenges and changes. To
get an overview of what happened during this era, visit
the online exhibit America
in the 1930s. The exhibit includes several interesting sections,
but for this lesson you will devote your attention to
the Timeline.
Read the introduction, which explains the timeline's
legend. You will focus on the Politics and Society category.
Twelve years are covered in the timeline. Your job will be to use large index cards to record each key event that you deem related to the nation's economic security. You can do this for every year on your own, or you and your classmates can split into an even number of teams (up to 12) and assign years to cover. (Note that 1934 is especially heavy with key events, so this year may need the attention of more than one team.) Whichever method you decide upon, the entire era—from 1929 through 1940—should be covered. Events will likely include government actions—from social programs to military funding—or relate to businesses, workers, or consumers.
After you identify each key event in the year(s) you are responsible for, complete some additional, supporting research and summarize on the index card what exactly that event was about and why it mattered. Also, research any terms or references you do not understand. Add the definition to the classroom glossary you started in the previous section of this lesson.
After the reviews are completed, tack a string or piece of yarn along a wall and label a sequence of points with the years 1929 through 1940. Hang each key event card next to the year it represents. As a class, review each recorded event. Discuss how the events relate to each other, within the same year and from year to year.
If you have time, the New Deal Network houses a wealth of primary sources from this era and is worth exploring. The Documents, Photographs, and Features provide excellent insights into the lives and livelihoods of Americans during this period.
Newspaper Activities
Review current news articles in The Sacramento Bee related to economic security in the United States. Also, review archived articles over the last six months or longer. Similar to what you did for the 1930s timeline project, use your newspaper to identify and summarize key events related to the current financial situation. Develop a second timeline of events, including photos and the actual printed news articles, as desired. As you and your classmates post key events to the timeline, discuss the relationships between events. Also, compare and contrast the "Now" timeline to the "Then" timeline of the 1930s.
You may also want to re-examine the then-and-now lists you and classmates created in the first part of this lesson. List additional main points about today's crisis you may have discovered after researching the topic more thoroughly for this activity.
Online Lessons
Each week The Bee publishes a new online lesson for teachers, students and families who use the Internet and newspaper as learning resources. The lessons are tied to current events in the news and help learners extend their knowledge on a wide range of topics. Click here to return to the table of contents.