Lesson 28: Money Panics and the Establishment of the Federal Reserve System

Several students perform a play that illustrates how an unregulated banking system contributed to a number of severe money panics in the late nineteenth century. The students then read a passage about the establishment of the Federal Reserve System and identify features of the new system that improved banking stability and the availability of credit. The Federal Reserve System was the United States' first central bank. It provided protection against bank failures by creating new reserves.

Concepts:

Bank, Bank reserves, Central banking system, Federal Reserve, Fractional Reserve Banking System, Money, Money panic
National Content Standards in Economics:
  • Standard #10: Institutions
  • Standard #11: Money and Inflation
  • Standard #16: Role of Government and Market Failure