Back to Lesson 11
Making Money |
Unit 1: An Age of Extremes
Topic 2: Gilded Age Populism Lesson Module 12
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Next to Lesson 13
Gold and Silver |
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 the problems farmers faced in the 1890s.
3. I can show how farmers' problems in the 1890s affected the rest of the country so severely.
4. I can analyze the economic factors of the financial depression in the 1890s.
5. I can evaluate the decisions made about the economy in the 1890s
1. I can define historical, political, economic, social, and historical vocabulary necessary to understanding the lesson.
2. I can explain the problems farmers faced in the 1890s.
3. I can show how farmers' problems in the 1890s affected the rest of the country so severely.
4. I can analyze the economic factors of the financial depression in the 1890s.
5. I can evaluate the decisions made about the economy in the 1890s
Lesson Mission
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Teaching Activity - Guided Reading
The Depression of 1893
When Grover Cleveland stepped into the presidency for the second time, he walked into a beehive. It was 1893, and he got stung by a depression. Remember, in those days, anytime you wanted to exchange your paper money for gold or silver, you could. But the supply of gold in the Treasury was way, way down. When Americans realized that, it created a money panic. People began turning in paper money for gold. Everyone preferred gold to silver. The gold reserve was being emptied. Then the stock market went zooming down. (So many people were selling the shares they owned in companies that the companies quickly lost value.)
Everyone Suffers
Farmers had been in trouble for at least five years, what with droughts, a grasshopper plague, and falling prices. Now the rest of the nation began hurting. Badly. When farmers stopped buying goods, because they had no money, manufacturers began to suffer. Soon the banks were in trouble, too. The banks took farms from farmers who no one was buying farms. That put the banks in trouble.
Say MOR-gidge
When a farmer borrows money from a bank to buy a farm (or when anyone borrows money to buy a house or piece of land), the money he borrows - his debt - is called a "mortgage." It is a form of loan. (Many farmers who do own their farms completely - outright - may take out mortgages on them anyway, in order to buy expensive equipment or seeds for next season's planting.) The farmer has to pay back the bank for the loan in installments, a little at a time. If the farmer can't make his mortgage payments - if he defaults - the bank forecloses; it takes the farm instead of the payments. Now the bank has to sell the farm to someone else to make back the money it lent to the farmer.
The Chain Reaction
In the first nine months of 1893, 172 state banks, 177 private banks, and 47 Savings - and Loan associations closed. By the end of the year the total was 500 banks. More than 15,000 businesses failed. And that was just the beginning. Railroad earnings were way down, and then the unthinkable happened: railroads began closing. The Union Pacific, and the Atchison, Topeka and Santa Fe were two of the 156 railroads that folded. Mines were shut down, steamers stayed in port, factories closed their doors, and companies went bankrupt. Many of the people who had worked in those banks, railroads, and factories were out of work, which made the depression more frightening.
Homeless and Out of Work
Farmers could usually eat, but unemployed city workers were desperate. Unemployment in 1894 is said to have been higher, in relation to the country's population, than at any time in our history. It was worse in some areas than others. The manufacturing states of Pennsylvania, New York, and Michigan were hit hard. One out of four people in Pennsylvania was reported out of work. In Michigan the figure was 43.6 percent. Nationally, one out of every five workers was said to be idle. In Chicago, Illinois 100,000 men were sleeping on the streets.
Even those who had jobs faced cuts in pay and work. What was going on in America? Was this the land of promise? A journalist described life in the Appanoose County mining camp near Cincinnati, Ohio: The 500 mine families in this locality...have little to eat...and their clothing...is in utter tatters. All have a sickly appearance. Many have been confined to bed with illness. The popular magazine Review of Reviews reported the following: "Carpenters, brick masons, stone workers, plasterers, and various other crafts depending upon finding work in house construction are experiencing...five or six months of inactivity," Tariff Laws Backfire
Congress passed a high tariff law (remember, a tariff is a tax on goods that are imported from abroad). That high tariff helped the business trusts by keeping foreign competitors out of the country. But it made goods expensive for most people. In addition, foreign countries, like England and France, weren't going to sit back and accept the tariff. They got even by not buying American wheat and corn. That, of course, hurt the American farmer again. First farmers had to pay high prices for home produced goods that didn't have to compete with outside imports. Then they couldn't find markets to sell their crops because foreign countries were mad at them. And the high tariff stopped most imports from abroad, so the government got less income from taxes on foreign goods, just when the nation needed more money.
Anger and Confusion
The business trusts weren't the only ones who wanted high tariffs. Most industrial workers believed that tariffs protected their jobs by making foreign goods more expensive than American: made goods. Without foreign competition, things made here were more likely to sell. But the farmers were mostly Populists, and they were enraged by the high tariffs and high prices. The bankers and industrialists thought the tariff was needed to protect American industry and jobs. It wasn't easy for anyone to know who was right.
Team Activity 1:
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Tool Box
Remember, anything in the Tool Box could be on the Topic 2 test!
People To KnowGrover Cleveland: the president of the United States during the Depression of 1893
Populists: a political party from 1891–1904 considered the party of the common man. It wanted secret ballots, women's suffrage, a graduated income tax, more paper currency, financial help for farmers, protection from unsafe and unfair business and production practices, state control of railroads, and an end to big business monopolies Vocabulary To Knowabroad: in or to foreign countries
bankrupt: unable to pay one's debts business trusts: monopolies or an agreement among competitors to set high prices to get rid of competition defaults: failure to pay a debt 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 low prices go. exchange: giving paper money in return for a certain amount of gold that has the same worth foreclose: when a bank takes away a mortgaged property because the borrower failed to make mortgage payments. foreign competitors: businesses in other countries who are trying to sell the same products as the U.S. imports: goods bought from other countries and brought into the U.S. income: the money you are paid for performing a job. installments: when a large payment is made in small payments over an extended period of time. manufacturing: to make from raw materials by hand or by machinery money panic: (financial disaster) when people fear that their money is about to lose value - (the amount of gold that can be exchanged for paper currency in less than it was when it was first exchanged.) - so large masses of people run to banks to immediately exchange their paper currency for gold so they will not lose money. mortgage: the debt you pay on a loan used to buy a house or piece of land shares: also known as stocks - A unit of ownership in a company. Stocks are sold by companies to raise money. When a person buys stock in a company, he or she owns a tiny part of that company. When a company is doing well (that is, selling a lot of goods or services and making a lot of money), the value of the company goes up. The price of the company's stock goes up, too. Then, a stockholder can sell his or stock and make a profit. When many stock prices stay low for a long time, it is a sign of a weak economy. stock market: A place where stocks, or part-ownerships in companies, are bought and sold (see "Stock"). The famous New York Stock Exchange(NYSE) is the biggest stock market in this country. There, people can buy or sell stocks in more than 2,000 different companies. If a person wants to buy or sell stock in a company, he or she can go to the exchange. Or, he or she can call a stock broker, a person whose job it is to buy and sell stocks. tariff: taxes on imports (foreign goods) to make them more expensive unemployed: those without a job Places To KnowPennsylvania
New York
Michigan
Illinois
Ohio
England
France
Events To Know1893: The Panic of 1893: in 1893 when people feared that their money was about to lose value - (the amount of gold that can be exchanged for paper currency in less than it was when it was first exchanged.) - so large masses of people ran to banks to immediately exchange their paper currency for gold so they would not lose money.
Other Things to KnowHigh Tariff Laws: Laws passed in 1890 called the McKinley Tariff Bill that raised tariffs on foreign goods to an all-time high to keep foreign business out of the U.S. and help the U.S. industrialists. It hurt the American farmer because now goods they needed to purchase to farm were now more expensive because U.S. producers, with no competition could charge as much as they wanted to for products. In addition, foreign countries were mad at the U.S. about the tariffs, so they stopped buying U.S. wheat and corn. So farmers not only worried about higher prices of products they needed but less income from selling crops to other countries.
Treasury Department: The part of the federal government that manages the nation's money. Once the President and Congress agree on a budget for the nation, it is up to the Treasury to raise enough money for the items on the budget and then oversee the spending. One way the Treasury raises money is by collecting taxes from people and businesses. Another way is by selling savings bonds and notes to investors. (Have you ever received a U.S. Savings bond? Those are sold by the U.S. Treasury.). The Treasury Department is very large. It has 12 sections, or "bureaus." One is the U.S. Mint, which prints all U.S. money. Another is the Internal Revenue Service, which collects taxes. Loan/Lend: Money borrowed from a bank. People take loans in order to pay for new homes, new cars, college tuition, home improvements, and other things. Companies often take loans in order to expand their business (for example, a restaurant owner might borrow money in order to open another restaurant). Banks are willing to lend money to people and businesses because they expect to get back the amount of the loan plus a fee called interest. (See "Interest"). Collecting interest is how banks stay in business. Foreclosure: A process in which homeowners lose their property because they have failed to make mortgage payments. Homeowners often borrow money from a bank to pay for their new home. (See "Mortgage"). They are expected to repay part of that money each month. If they fail to make the monthly payment, they might first receive a warning from the bank. When they miss many payments and have not worked out an agreement with the bank, the house might go into foreclosure. That means it becomes the property of the bank. |
The Depression of 1893 JeopardyIf we finish discussion early, Let's Play The Depression of 1893 Jeopardy. To play at home, click on the Jeopardy icon to the right.
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Individual Activity -
Lesson Module 12: Hard Times Pass Off Quiz
Make sure you pass off before October 18th with a 100% to get credit for Lesson Module 12: Hard Times. You have 3 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 12: Hard Times
Activities for Topic 2 Lesson 12 Module: Hard Times
- 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 Lesson 12 Module: Hard Times. Congratulations! |
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