[PDF]The Money Connection

The Money Connection curriculum package is the copyrighted property of the Federal Reserve Bank of San Francisco.
No admission charge or rental fee can be affixed to any of the package's materials and the materials cannot be edited in
any way. Money Connection is for educational use only. Teachers are encouraged to reproduce the package's materials
for educational purposes.




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UNIT 4B- Activity 4B.1



The Loan Application:

You are now loan officers at a local bank. Your job is to decide whether to loan money to a borrower who has
asked for a loan. First, write the name of your bank. Next, fill in the rest of the information you know about the
borrower. After you've filled in everything, you must decide whether to approve the borrower's loan.



R.nv First Bank of Big Bucks



Borrower.



Sara



Purpose of loan COmpUter



Assets



$500.00 Bicycle



Weekly Income $5.00/week



Weekly Expenses [_



-0-



Loan Amount O O O O

(Payable in 1 2 months) ^l,UUU



Weekly payments



$166.66



LOAN APPROVED?





YES


•



NO



Reasons: Sara doesfi't havB
enough income and assets
to malunless her parents help her.



Write three questions that you would
like to ask the borrower:

1- Are you willing to give up all
your allowance?



2- How are you going to pay
interest?



3. Are your parents going to
helpyouwith the monthly



payments?



I
I
I

I




TEACHER'S GUIDE



Introduction


1


About the Video


1


About the Guide


1


About the Poster


1


Curriculum Links


2



Background Information
The History of the Federal Reserve

Before and After the Viewing
Introducing and Reviewing the Video in the Classroom

Unit 1 Early Money and Banking in America

Unit 2 Structure of the Federal Reserve



Unit 5



10



18



Unit 3 .. Manager of Money and Credit in the Economy 23



Unit 4A The Banker's Bank 28



Unit 4B A Bank Regulator 33



. The Money Connection Shuffle Game 37



Glossary 43



Money Connection Word Search Puzzle 45



Answer Sheets 46-50



Additional Resources 5 1



UNIT 4A- Activity 4A.1



Annie wants you to help her spend all or part of her birthday money for the items pictured below. Can you help
her fill out the checks for the right amount of money and balance her checkbook? You may write up to four
checks, but make sure the total amount you spend is less than or equal to the amount she has in her checkbook.




Annie
Any Street
Atlanta, Georgia



ro. Tower Records



n... 6/30/97

Amount



115



$16.07



^ Sixteen & 07/00



EAST COAST BANK

Atlanta, Georgia- member FDIC

Memo



Signature



Annie Becker



0012345 00029384 488273



Annie
Any Street
Atlanta, Georgia

TO: Stereo Centra




Date-


7/15/97 ^^^


Amount


$ 70.94




$ Seventy & 94/100










EAST COAST BANK

Atlanta, Georgia- member FDIC

Memo Signature
0012345 00029384 488273


Annie Becl




Annie
Any Street
Atlanta, Georgia

ro.KlDZ-ZINE



Date



7/25/97



117



Amount



$15.63



^Fifteen & 63/100



EAST COAST BANK

Atlanta, Georgia- member FDIC

Memo



Signature



Annie Becl


0012345 00029384 488273



Annie

Any Street

Atlanta, Georgia Date _




118


TO: Amount


$




$






EAST COAST BANK

Atlanta, Georgia- member FDIC

Memo Signature
0012345 00029384 488273







Annie's Checking Account Balance from Previous page: $29Si_



Do you think Annie should spend all of her
$100.00? Why or why not? |

//7 t/i/s example, Annie decided to spend
most of hier money. Students may decide to
save rathiertiian spend thieir money



Check #


To


Credit


Debit


Balance




From Grandpa Becker


100.00




129.31


115


Tower Records




16.07


113.24


116


Stereo Central




70.94


42.30


117


KIDZ-ZINE




15.63


26.67


1












ABOUT THE VIDEO



The Money Connection is a lively, two-part
video (approximately 17 minutes) designed to
introduce fourth through sixth grade audiences
to the Federal Reserve System. The fast-paced,
news show format combines historical
photographs and live-action footage with
interviews and animation sequences for a close-
up look at the history and important respons-
ibilities and functions of the Federal Reserve.

Teachers may show the video in its entirety or
in two parts. Parts I and II are divided by a
"brain break" to allow the teacher to review the
concepts presented in the first segment prior to
viewing Part II.

Part I spotlights stories such as "The Oldest
Bank Depositor in America" to uncover some of
the early history of money and banking in the
United States. The segment also examines the
Federal Reserve's structure and responsibilities
related to controlling the amount of money
available for spending in the economy.

Part II finds the Money Connection news team
investigating stories such as "Who is Destroying
400 Million Dollars Every Day and Why?" to
spotlight the Federal Reserve's role in destroying
old currency and distributing new coin and
currency. Another story features the signing of a
professional baseball player to describe the
services the Federal Reserve provides for
commercial banks.



ABOUT THE GUIDE



The Teacher's Guide contains supplemental
background information, five teaching units, a
glossary, and a list of additional resources for
educators. Before and After the Viewing
discussions prepare students for viewing the
program and reviewing the concepts presented.

Units 1 through 4 are each tied to one of the
major news stories presented in the video. Unit 5
is a summary unit which reviews the concepts
presented in the video and earlier lessons.
Activities within the teaching units are arranged
so that each helps prepare for the next.
However, many of the activities can be used
independently.



ABOUT THE POSTER



The Money Connection poster is designed to be
used as a teaching tool for discussing the
history of American money and banking.
Historical Snapshots provide focal points for
discussing the major turning points in our
money's history NewsBriefs can be used to
recap the Federal Reserve's primary
responsibilities. The Guide's Background
Information, Glossary, and Historical Timeline
are helpful resources for developing the
classroom discussion.



Each teaching



Vocabulary



includes the following sections:



Key vocabulary is highlighted to enhance
students' understanding of the concepts
presented in the unit.



Viewing Segment



The viewing segment describes the Money
Connection news story associated with the unit.



Discussion



A discussion section recaps the major points
presented in the viewing segment to enhance
students' preparation for the unit's activities.



Activities



Activities contained in each teaching unit use an
interdisciplinary, active learning approach to
maximize the Guide's usefulness in the
classroom. The teaching units integrate critical
thinking, role-playing, simulation, math,
reading, and writing skills to capture students'
imagination and interest in learning about the
topic. Then and Now activities integrate
historical thinking skills.



Learning Extensions



Learning extension activities are located at the
end of each unit.





CURRIC


ULUM LINKS










Unit 1


Unit 2


Units


Unit 4 A


Unit4B


Units




Early Money
& Banking
in America


Structure

of the

Federal Reserve


Manager of
Money and Credit
in the Economy


The Banker's
Bank


A Bank
Regulator


The Fed Facts
Shuffle Game


Social Studies


•






•


•


•


Economics


•


•


•


•


•


•


Language Arts


•










•


Geography




•


•


•




•


IVIathematics


•




•


•




•


Creative Drama


•




•


•




•


Life Skills


•






•




•



UNIT 2 - Activity 2.2



Imagine you're in an airplane cruising over your city,
your state, or even the whole country. What would you
see? Some of the things you might see are: people going
to work or going shopping; businesses like gas stations,
pizza parlors, grocery stores, and movie theaters; houses.



freeways, big cities, small towns, and farmland for growing the
fruits and vegetables we eat. That's the economy! As part of its
job, the Federal Reserve watches over the economy of each
Fed District and the economy of the whole country to control
the flow of money to make the economy go 'round.




Pick a state to karn more about, outline it on the
map, then fill in the blanks.



State:



Products:

In the three boxes,
write the names of
three products made
in your state and draw
a picture of each.



California




Resources:

What resources are
used to make these
products? List at least
three resources used
to make each product.



1. educated worl
2. equipment

3. materials such as
metals and plastics



1. water

2. farmland

3. tractors



1.


movie equipment


2.


movie studios


3.


movie stars



UNIT 2 -Activity 2.1




Philadelphia



(DE

Washington D.C.



1. The main banks of the 12 Federal Reserve
Districts are listed below. Write the name of
each city and its Federal District number in the
correct place on your map.



1 - Boston, MA

2 - New York, NY

3 - Philadelphia, PA

4 - Cleveland, OH

5 - Richmond, VA

6 - Atlanta, GA



7 - Chicago, XL

8 - St. Louis, MO

9 - Minneapolis, MN

10 - Kansas City, MO

11 - Dallas, TX

12 - San Francisco, CA



2. Which Federal Reserve District do you live
in? 12th Outline your Federal Reserve

District with a colored pen.

Name the states located in your Federal

Reserve District:
Alaska, Arizona, California, Hawaii, Idaho,

Nevada, Oregon, Utah, Washington

(also includes Guam, American Samoa,
Northern Mariana Islands)



3. Which is the largest Federal Reserve
District? 12th District

4. The Board of Governors watches over
the Federal Reserve System. Write the
name of the city where the Board of
Governors is located on the map.

5. List some of the jobs that each of the
Federal Reserve main banks and branches
do in their Districts. (Hint: According to
Frannie, the weather person in the
Money Connection, what jobs are done
by the Federal Reserve Bank of San
Francisco and its Branches?):

examine banks

clear checks

store money for banks

shred old Federal Reserve Notes

distribute new coin and currency

use computers to transfer money



6. New coin is sent to
the Fed banks from the
U.S. Mints located in
Denver and
Philadelphia.
New Federal Reserve
Notes are sent to the
Fed Banks from the
U.S. Bureau of
Engraving and Printing
in Washington, D.C,
and its printing plant in
Fort Worth, Texas.
MarJc these locations on
your map.




BACKGROUND INFORMATION



Spending the money in your wallet, writing a
check, or going to the bank for a loan are such
intrinsic parts of our everyday lives that it is
hard to imagine what life would be like with-
out these conveniences. Today, our money and
banking system inspires confidence, but it
hasn't always been this way

Money and Banking in
Colonial America

The American colonists were limited to using
European coinage, barter, and commodity
money as their primary means of exchange
prior to independence from British rule.
Plagued by foreign coin shortages and the
disadvantages of barter and conmiodity
money, many colonies began minting coins
and issuing their own paper currency by the
end of the 17th century This was a rudimen-
tary solution. People lacked faith in colonial
currency and the colonies' authority to issue
money was intermittently repealed by their
British rulers.

Colonial banks did not function like modem
banks. They didn't receive deposits from the
public or make loans. Instead, they issued
paper currency backed by land or precious
metals such as gold. Merchants and other
individuals, rather than banks, were the
primary sources of credit in colonial America.



The United States Experiments
with Central Banking

The origins of central banking in America
began with the ratification of the
Constitution in 1789. Secretary of the
Treasury, Alexander Hamilton,
conceived the idea of a federal banking
system for our country to solve the
nation's money problems after the War
of Independence — but not without a
conflict. His plan called for the
creation of a federal bank to provide
credit for government and businesses
and a much-needed national currency
The federal bank would act as the
government's fiscal agent and provide a
safe place to store government funds.




First Bank of the United States
(1791-1811)



Secretary of State Thomas Jefferson, rep-
resenting the country's agrarian interests who
favored "state powers" over federal authority,
led the opposition to the plan. Jefferson
argued that the Constitution did not
expressly authorize the government to charter
a national bank or issue paper currency
Hamilton, supported by the Federalist Party
and northeastern business interests, won the
debate and the First Bank of the United States
was chartered in 1791.

A bill to recharter the First Bank failed in
1811. Without a centralized banking and
credit structure, state banks proliferated,
issuing a multitude of paper currencies of
questionable value. Attempting to solve the
country's economic problems. Congress
chartered the Second Bank of the United
States in 1816. President Andrew Jackson
declared the Second Bank unconstitutional
and vetoed its recharter in 1836.



Free Banking Era

The Free Banking Era followed the demise
of the First and Second Banks of the United
States, marking a quarter century in which
American banking was a hodgepodge of
state-chartered banks without federal regu-
lation. By 1860, there were nearly 8,000 state
banks, each issuing their own paper notes.
"Wildcat" banks typified some of the more
unscrupulous banks. These banks were
located in remote regions — more accessible
to wildcats than people — making it difficult
for customers to redeem their notes for
precious metals.

Money problems resulting from the Civil War
prompted the passage of the National
Banking Act in 1863. Although this legis-
lation created a uniform national currency
and dictated that only national banks could
issue bank notes, it lacked a strong central
banking structure.

The Banking Panic of 1907
— Congress Creates the
Federal Reserve System

As the industrial economy expanded, the
weaknesses of the country's banking system
became more acute. For the century prior
to the creation of the Federal Reserve, bank
panics or "runs" were a common occur-
rence. Most banks did not keep enough
cash on hand to meet their customers'
immediate demands for funds. Bank panics
ensued when customers lost confidence in
their banks upon hearing the news of a
bank failure, even if their own banks
weren't in financial trouble. Fearful
customers would run to the bank to
withdraw money, triggering a succession of
bank failures because banks couldn't meet
depositor's sudden demand for cash. A
particularly severe panic in 1907 fueled the
reform movement which prompted Congress
to establish the Federal Reserve System in
1913. President Woodrow Wilson signed the
Federal Reserve Act on December 23, 1913.



Federal Reserve Structure

The Federal Reserve System divides the
nation into 12 Federal Reserve Districts. Each
District has a head office bank and all have
branch banks except for the Boston and
Philadelphia Reserve Banks. The Twelfth
District in the western United States
encompasses the largest geographical region.
In 1913, the majority of the country's
economic activity took place in the eastern
United States which accounts for the greater
number of Federal Reserve Districts and
Banks in this part of the country

The Board of Governors, headquartered in
Washington, D.C., supervises the Federal
Reserve System which is nicknamed the
"Fed." The seven board members are
appointed by the President of the United
States, with Senate approval, for 14-year
terms. The Federal Open Market Committee
(FOMC) is the Fed's most important policy-
making body. The FOMC sets monetary
policy for the country The FOMC is
comprised of the seven members of the Board
of Governors, the president of the Federal
Reserve Bank of New York, and four other
Reserve Bank presidents who serve on a
rotating basis.

Independent Within
Government

In 1913, Congress structured the Fed to be
"independent within government" to insulate
monetary policy decisions from political
pressure. Although the Fed is accountable to
Congress, the System operates from its own
earnings rather than from congressional
appropriations. The appointment process for
the Federal Reserve's seven member Board of
Governors provides another safeguard against
political influence. Board members' 14-year
terms are staggered so that one term expires
on January 3 1 of each even-numbered year.
This prevents a United States President from
filling the Board with appointees. The lengthy
14-year terms of office, which are much
longer than the terms of elected officials, also
help to prevent undue political influence.
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