Back to Lesson 10
The People's Party |
Unit 1: An Age of Extremes
Topic 2: Gilded Age Populism Lesson Module 11
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Next to Lesson 12
Hard Times |
Focus Activity - Determining a Purpose for Reading
Lesson Outcomes
Outcomes are what you (the student) will be able to do after the lesson is over.
1. I can define historical, political, economic, social, and historical vocabulary necessary to understanding the lesson.
2. I can explain why there was a shortage of money in circulation in the 1880s and 1890s.
3. I can explain why the shortage of money in circulation added to the economic woes of farmers and poor people.
4. I can compare and contrast the the gold standard and silver standards.
5. I can justify the Populist Party push for a more democratic money system.
1. I can define historical, political, economic, social, and historical vocabulary necessary to understanding the lesson.
2. I can explain why there was a shortage of money in circulation in the 1880s and 1890s.
3. I can explain why the shortage of money in circulation added to the economic woes of farmers and poor people.
4. I can compare and contrast the the gold standard and silver standards.
5. I can justify the Populist Party push for a more democratic money system.
Today's Mission
- Teaching Activity - Guided Reading: Read the Topic 2 Lesson 11 Module: Making Money
- Team Activity - Discussion Questions for the Topic 2 Lesson 11 Module: Making Money
- Individual Activity - Topic 2 Lesson 11 Making Money Pass Off Quiz
- Lesson Module Check List: Did you complete the Topic 2 Lesson 11 Module: Making Money
Teaching Activity - Guided Reading
What is Money?
Let's think about a checkbook. Write a check for $100. Now, can you get it cashed? You can if you have $100 in the bank. A check is just a promise to pay money that you already have. Dollars (paper money) printed by the government are like that check. They are our government's promise that it has something of equal value. That something used to be gold.
The Gold Standard
In the 19th century, anyone in the United States could exchange paper dollars for gold coins. (Most people didn't bother to do that because gold is heavy and paper is convenient.) A country that backed its money with gold (that's called a gold standard) usually had a sound currency. The price of gold had to be fixed for this to work. The government said how many dollars it cost to buy an ounce of gold and stuck to that. Now other nations would accept its currency instead of lumps of gold or other real goods because they knew that they would be able to use the currency to buy things. No one wants money from a nation that will not guarantee its currency.
The Problem With Gold
But a country on the gold standard can't print a lot of money. Gold is scarce, and it is finite - only a certain amount exists in the world, so there is only a limited amount to go around. If you were on the gold standard, you couldn't print more money than you had gold to back it with in your bank vaults.
Greenbacks
During the Civil War, Abraham Lincoln needed money and he needed it quickly. There wasn't enough gold. He issued a special kind of money, called "greenbacks." There was no gold to back them. The government gave its promise to pay the value of the greenbacks. Because people had faith in the government - and the value of its land and people - they accepted the greenbacks.
Inflation
But that extra money in circulation created inflation. Inflation means rising prices. The more money people have, the more they can pay for goods and services. The people selling the goods put their prices up. Then it takes more money to buy something than it did before. So the more dollars there are in circulation, the less each dollar is worth.
Deflation
After the war, Lincoln's greenbacks were gradually taken out of circulation. In 1873 the nation returned to the gold standard. There was less money around. That caused deflation. That was natural, too. There wasn't much money to pay for things, so people couldn't sell them. There were goods but no demand for them. Prices dropped. When there's no demand, prices drop until goods are cheap enough for people to start buying them again. (Depressions happen when many people are out of work, and so broke that they don't buy things no matter how Iow prices go.)
The Silver Proposal
Falling prices meant less income for people like farmers, who needed to get a fair price for their produce. So farmers were unhappy. They wanted more money in circulation. But there wasn't enough gold to let the government print more bills. The farmers thought the government should use silver to back its currency-in addition to gold. Naturally, silver miners also wanted the government to buy silver to back dollars. They wanted a silver standard.
A Surplus
In 1878, Congress listened to the farmers and miners. It voted to buy silver to back the nation's currency. People now had a choice: paper dollars, gold, or silver coins. At the same time, the Treasury - where the government keeps its money - had a surplus: gold and silver piled up, because the government had more money coming in (from tariffs and taxes) than it was spending. Since it now had a lot of gold and silver, the government could print more money. Prices went up - including the price of farm produce. It was a time of prosperity and excellent harvests; many farmers associated good times with the new silver coins (though there was really a lot more to it than that).
The Billion Dollar Congress
The economic health of a nation many different, things, and some things were going on in this nation's capital that would prove unhealthy for the U.S. economy. For instance, during Cleveland's first presidency the nation began building a new navy of steel ships. The government paid extra high prices for Andrew Carnegie’s steel. That helped Carnegie, but it didn’t help the economy. Those high prices were paid by the American people.
Then, when Benjamin Harrison was president, Congress went on a spending spree. It was called "the billion-dollar congress”. It gave away most of the surplus in the form of pensions to Civil War veterans. It also raised tariffs (taxes on imported goods) so high that the government's income from those taxes almost disappeared people weren't willing to buy expensive foreign goods. That was the end of the surplus. Interest Rates
Soon money was scarce again and there was deflation. Farmers were earning less money because prices were dropping. That really hurt the farmers who had borrowed money for farm equipment. Many lost their farms. Because money was in short supply, people who had money to lend could charge a lot of interest to those who wanted to borrow it - even though the price of other goods was falling.
Deflation is hard on people who have borrowed money. They have less income but they still have to pay back loans at interest rates based on the old, higher prices. The Populist leaders understood this. Since they were speaking for debtor classes (people who have borrowed), they wanted more money in circulation. They supported the bimetal (silver and gold) standard. A Democratic Money System
Then the Populists came up with a radical suggestion. They wanted money to be backed by crops that would be put in government storage. It would be money based on real production - not gold or silver.
The Populists went even further. They felt the money supply should be controlled, not as it was in the 1890s - by private financiers like J. P. Morgan - but by an elected board. They were asking for a new monetary system that would create money "in the name of the whole people." Respectable thinkers called the Populists idealists. Their central concept - a democratic money system - was a huge break with tradition. The financiers hated the idea. Most Americans didn't understand it. The Federal Reserve System
In the 20th century some of those Populist notions became law. A Federal Reserve System came into being, with a board (independent of political parties) that controls the supply of money. It had many elements of the plan the Populists proposed.
The Federal ReserveClick here to watch a video that explains what the Federal Reserve is and how the Federal Reserve got started.
Team Activity - Small Group Discussion
Discussion Question 1:
After we finish question 1, you will need to scroll down to see the next question. |
Tool Box
Remember, anything in the Tool Box could be on the Topic 2 test!
People To KnowAbraham Lincoln: 16th U.S. president during the Civil War who issued greenbacks or paper money that was not backed by anything valuable to help pay for the war
Populists: people who belonged to the Populist Political Party in the Gilded Age. It was the political party of the common person like the farmer and factory worker and worked to make lives for the average worker by first promoting the bimetal standard, then proposing the crop standard, and finally the democratic money system. Andrew Carnegie: the owner of Carnegie Steel - the monopoly in the Gilded Age on all steel produced in the U.S. - who charged extra high prices to make a new navy of steel ships for the government under Cleveland's presidency debtor classes: working people who have borrowed money Benjamin Harrison: the president who spent the nation's surplus and put us into debt. J.P. Morgan: the leader in American banking during the Gilded Age Vocabulary To Knowgold standard: when a currency is backed with gold
currency: money guarantee: a promise that a certain amount of money has the same value as the valuable substance that is backing it. Most money was backed by rare substances such as gold. For example $1200 = 1 oz. of gold finite: a limited amount Greenbacks: money that was not guaranteed by a valuable substance that was issued by Abraham Lincoln to help pay for the Civil War circulation: the money that is being used among inflation: rising prices - when the value of your money goes down and it takes more money to buy things deflation: falling prices - when there isn't much money to pay for goods, so the demand for goods goes down. Because of this, people stop buying things. Merchants can't sell their goods. They have to lower their prices until they are low enough for people to afford them. depression: A long period during which the economy is poor and goes through deflation; however, instead of the economy recovering when merchants lower their prices like in deflation, people are so broke that they don't buy things no matter how Iow prices go. income Money that an earned exchange for providing a good or service silver standard: when currency is backed by silver surplus: when the government has more money coming in than it is spending tariffs: a tax on goods imported in to the country from another country taxes: a fee charged by the government on goods or on a person's income to pay for things the country needs like roads, bridges, the military, fire departments, police departments, and teachers prosperity: a time of good fortune economy: The way a country manages its money and resources (such as workers and land) to produce, buy, and sell goods and services. Goods are products like cars, computers, or even corn. Services are duties performed by one person for another, such as teaching and transportation. The United States has a free-market economy. That means people can freely buy and trade goods and services. The price of each good or service is determined not by the government but by demand. Demand is a measure of how many people want to buy a particular good or service. spending spree: when a person spends a lot of money on many things in a short period of time pensions: when a person sets aside a portion of their income each month and the portion of money is matched by their employer (the person they work for) and is saved for retirement (when the employee stops working when they become elderly) veterans: a person who served a career in one of the armed forces or has fought in a war for his or her country interest: The fee for using someone else's money. For example, if a person borrows money from a bank to pay for college, he or she pays back the amount borrowed plus interest. On the other hand, if a person deposits money in a bank savings account, he or she gets to collect interest from the bank. The bank is allowed to use the person's money temporarily. In return, it must pay the customer interest. Interest is almost always calculated as a percentage or rate. interest rates: The percentage at which interest is charged or paid. For example, imagine that you borrow $100 at an annual interest rate of 4%. At the end of one year, you will owe $104. You calculate the interest by converting the percentage to a decimal, then multiplying it by the amount borrowed: .04 X 100 = 4.00 Sometimes interest is added on every day or every month, but it is basically calculated the same way. bimetal standard: currency backed by silver and gold radical: very extreme idea beyond what is normally accepted monetary system: anything that is accepted by the people of a country as a standard of value and a measure of wealth Places To KnowU.S. Treasury: the department of the U.S. government responsible for printing money, collecting taxes, and managing U.S. bank accounts
Events To Know1878
Issues to Knoweconomic health: in a healthy economy, demand for goods and services if high. Businesses flourish as they work to keep up with that demand. In a weak economy, demand is low and businesses suffer.
billion dollar congress: the U.S. Congress under President Benjamin Harrison that gave away most of the surplus in the form of pensions to Civil War veterans and raised tariffs so high that the government's income from those taxes almost disappeared and caused people to stop buying expensive foreign goods. This Congress put our nation into debt. Other Things to Knowdemocratic money system: having a money system controlled by a board who represented the common person instead of by private financiers
Federal Reserve System: a board (independent of political parties) that controls the supply of money that was proposed by the Populist Party and made law in the 20th century |
Discussion Question 2:
After we finish question 2, you will need to scroll down to see the next question.
After we finish question 2, you will need to scroll down to see the next question.
Discussion Question 3:
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After we finish question 3, you will need to scroll down to see the next question.
Discussion Question 4:
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After we finish question 4, you will need to scroll down to see the next question.
Discussion Question 5:
After we finish question 5, you will need to scroll down to see the next question.
After we finish question 5, you will need to scroll down to see the next question.
Small Group Activity: Making Connections
Each person in the group needs type this activity but you may discuss the answers in your group and look back to the reading for help. You may do it as many times as you like. Remember to save time for your Lesson 11 pass off activity though!
Each person in the group needs type this activity but you may discuss the answers in your group and look back to the reading for help. You may do it as many times as you like. Remember to save time for your Lesson 11 pass off activity though!
Individual Activity -
Passing Off Lesson Module 11: Making Money
Make sure to pass off before October 18th with a 100% to get credit for Lesson Module 11: Making Money. You have three times to pass off. So make sure you pay attention in class and reread! You may use the reading for pass - offs. Your highest grade is the grade that will be taken.
Reflection Checklist -
Did You Complete Lesson Module 11: Making Money
Activities for Topic 2 Lesson 11 Module:
- Did you read the lesson?
- Did you answer the discussion questions for the Team Activity?
- Did you make a 100% on the quiz?
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No?
Why Not? Get it done! |
Yes?
Victory is Yours! You have completed Topic 2 Lesson 11 Module: Making Money! Congratulations! |
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