Federal Reserve at 100

Since President Woodrow Wilson signed legislation to create the Federal Reserve on December 23, 1913, its purpose has been to prevent a financial crisis and to preserve prosperity. Washington Post articles and commentary explain and explore the 100-year history of wise and dubious policies, the individuals who formed these policies and its day-to-day impact on economic conditions, employment and money in our banks and wallets.Career opportunities for women in a traditionally male arena are considered through profiles. Student activities focus on areas over which the Federal Reserve has influence: the issuing of paper currency and establishing of interest rates. They are introduced to the American company that manufactures the paper on which all currency is printed. Activities also focus on interest rates and APR, making wise personal finance decisions, and designing commemorative paper currency.  
Additional Disciplines 
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On December 23, 1913, President Woodrow Wilson signed legislation establishing the Federal Reserve. Since its inception the Fed's purpose has been to prevent a financial crisis and to preserve prosperity.  There would be no more runs on banks as depicted in It's a Wonderful Life and monies would be available for investment after a devastating earthquake or a bumper year for crops. 


The Washington Post articles and columns reprinted and linked in this guide examine the approaches taken to meet these and other expectations — successes, blunders, disheartening failures and wise decisions. In recent years, the Fed has sought to foster maximum employment and price stability. Its policy has been to add to its holdings of agency mortgage-backed securities and longer-term Treasury securities in the billions of dollars per month. Bringing stability to the U.S. economy, and the world's, has been a complex undertaking.


As the Federal Reserve enters into its second century, the new chair of its Board of Governors not only has an impressive resume, but also is its first female leader. Career opportunities for women in a traditionally male arena are considered through profiles. Student activities focus on areas over which the Federal Reserve has influence: the issuing of paper currency and establishing of interest rates. They are introduced to the American company that manufactures the paper on which all currency is printed. Activities also focus on interest rates and APR, making wise personal finance decisions, and designing commemorative paper currency.  


February 2014

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Map It
Geography, Social Studies
Before reading "Happy Birthday, Federal Reserve," locate the Atlantic Ocean, Georgia and Jekyll Island on a map.

Find the locations of each of the Federal Reserve districts. In what area of the United States are most located? 

Before reading “Crane’s money maker,” find the following on a map: Massachusetts, Berkshire Mountains, Housatonic River, and Sweden.


Create a Timeline
Art, Economics, Mathematics, Reading, Social Studies
Using the information found in The Washington Post article, "Happy Birthday, Federal Reserve," create a timeline, beginning with Alexander Hamilton named first Treasury secretary and including the founding of the Second Bank of the United States. 


Connect Paul Revere to Paper Money
Business, Economics, Career Education, Social Studies, U.S. History
Read about a family-owned business that has supplied the paper for American money since the revolution when Paul Revere and Thomas Crane entered into a business relation. "Crane's money maker" reports on a challenge that has expanded the Made-in-America firm across the globe. "Denim scraps to dollars" explains the connection of Crane's business to the garment industry — and why it ended. Discussion questions in "Fine Cotton Paper for Dollars, Bahts and Wongs" accompany reading of Ylan Q. Mui's Business section article.

Teachers may wish to accompany this article with the Federal Reserve lesson, "Benjamin Franklin and the Birth of a Paper Money Economy."


Design Money
Art, Economics, Social Studies, U.S. History 
"ABC's of U.S. Paper Currency" defines basic terms related to paper currency. It is a useful resource for developing vocabulary and discussing articles. Teachers should review these terms before assigning the activity presented in "Currency Designs." Note that the activity asks students to design both face and reserve of a commemorative bill. One side is found on the activity reproducible.

Money in Literature
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Develop Economic Vocabulary
Economics, Personal Finance
Vocabulary used in Neil Irwin's "The Federal Reserve celebrates 100 years" are defined in In the Know. Review these terms before reading the article.

Robert J. Samuelson reviews the jargon of economics — its ability to communicate reality and its failure to accurately express current conditions. While reviewing traditional definitions and emerging terminology, in "What to call this economy?" he gives an overview of the cycles of the last 50 years. Ask students to annotate Samuelson's column. This would include:
• Underline terms and Samuelson's definitions
• Box quotations
• Highlight dates
• Write questions that they would like answered in the margins

Learn About the Federal Reserve
Economics, U.S. History, Government 
Washington Post economics reporter Neil Irwin has written The Alchemists: Three Central Bankers and a World on Fire, a history of the Federal Reserve. "Happy Birthday, Federal Reserve" is a Business section article based on his book. The article focuses on the beginning of the Fed.

Give students "The Federal Reserve From 1913 to Today," discussion questions to accompany the Irwin article and an e-Replica search.

Robert J. Samuelson's "The Fed at 100" may be read at the same time. The Post's economics and business columnist examines the Fed's 100-year "cycles of success and failure" in meeting its purpose.

Role Play: Significant Individuals
Drama, Economics, Social Studies, U.S. History
View The Post’s Gallery, “The Federal Reserve celebrates 100 years,” major events that shaped the Federal Reserve. After this overview, read to learn the role the individuals listed below played in the founding of American financial policies and the Federal Reserve. Use this understanding of the history of the organization and of each individual to write scripts in which the different individuals interact, some give soliloquys, and a narrator ties the scenes together.

Sen. Nelson Aldrich
First Name Club
Timothy Geithner
Carter Glass
Alexander Hamilton
F. Augustus and Otto Heinze
President Andrew Jackson
John Pierpont Morgan
Benjamin Strong, Jr.
President Woodrow Wilson

Meet the Modern Fed Chairs
Economics, Government, U.S. History 
Alan Greenspan served as chairman of the Board of Governors of the Federal Reserve from 1987 to 2006. The Washington Post's Bob Woodward wrote about him in Maestro. Greenspan wrote about his term and the American economy in works including The Map and The Territory: Risk, Human Nature and the Future of Forecasting (2013). Post Business and Economics columnist Steven Pearlstein reviewed this Greenspan book in "Alan Shrugged," in the Outlook section, October 20, 2013.

Read Washington Post coverage of Ben Bernanke and Janet Yellen. January 31, 2014, was the last day of Bernanke's eight-year term as chair of the Federal Reserve. Post Business reporter Ylan Q. Mui described him as "the man credited with saving the U.S. economy — and, in turn, the world — from the next Great Depression."  Janet Yellen, vice chair and past president of the Federal Reserve Bank of San Francisco, began her four-year term as chair on February 1, 2014.  She is the first woman to hold this position. 

What was the national and international economic situation as each recent chair left office and the other took office? How great is the influence of the chair on the actions taken by the Board of Governor of the Federal Reserve? Steven Pearlstein wrote in his book review: "Those who have followed [Greenspan's] career know that is was Greenspan who gave the green light to bank consolidation, Greenspan who advocated new global rules that would have reduced bank capital reserves and Greenspan who blocked efforts to crack down on abusive subprime lending." What  influence do other members of the Board of Governors have?

Conduct an e-Replica search to learn more about current decisions of the Federal Reserve. You might begin with "Fed to scale back stimulus by $10 billion" written by Ylan Q. Mui. This December 19, 2013, article covers the influence of the Federal Reserve's announcement that in early 2014 it would begin to "wind down its trillion-dollar stimulus program." The vote of confidence "sent stock markets soaring to record highs." A monitor of the Federal Reserve would also provide follow-up to news coverage at the end of Bernanke's term and the beginning of Yellen's.

Read About the Federal Reserve

Form an Opinion
Economics, Journalism, U.S. History
Columnists become columnists by developing their reporting skills and style and becoming experts in specific fields. Read two columns by Robert J. Samuelson: "The Fed at 100" and "What to call this economy."

Annotate his structure and content in the wide margins of "The Fed at 100."


Take Interest
Business, Economics, Mathematics, Personal Finance, U.S. History 
Among its responsibilities, The Federal Reserve works to maintain full employment. Raising and lowering the interest rates are approaches to doing this. For background, review "The Fed, the Banks and Interest Rates." This resource also introduces the annual percentage rate or APR.

Go to THE MARKETS page in the main news section of The Washington Post.  Review the chart found under the heading "Interest Rates." Discuss the categories and the numbers related in percentages. What does this information tell readers? Give students "THE MARKETS: Interest Rates" from this curriculum guide. Compare and contrast the rates from two election months (2010 and 2012); September 11, 2011; the week Ben Bernanke retired as chair of the Federal Reserve's Board of Governors; and the week that Janet Yellen became chair. Add the most recent percentages. What do these numbers reveal about the economy?

Explain the Debt Limit
Economics, Government, Journalism, Social Studies
Journalists inform their readers, explaining complex topics. For more background, read "The Explanatory Journalist," guidelines to fulfill the role of the explanatory journalist. This handout is found in the Budget and Manage Health Care curriculum guide.

The American government has maintained a debt limit since its beginning. This is upper limit, or ceiling, that the United States is allowed to borrow to meet its financial obligations. These obligations include Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds and other payments. Read the U.S. Department of Treasury explanation of the debt limit. The official Department website provides press releases, reports and Q&As to cover aspects of this topic. 

View "The federal debt explained in 2 minutes"  and read a variety of sources. Decide on one aspect to explain to your school community. Prepare for a print, video or radio format. 


Recognize Financial Education Day
Business, Career Education, Economics, Personal Finance

The Federal Reserve and local Federal Reserve banks host events, workshops and lesson presentations and student programs on Financial Education Day. Check the Federal Reserve website for current information. Read the BUSINESS section of The Washington Post for current events and topics to include in activities.

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In The Know 

Agricultural  Related to farming

Existing or acting separately from other things or people; having the right or power to govern itself



A certificate of indebtedness issued by a government or a publicly held corporation, promising to repay borrowed money to the lender at a fixed rate of interest and at a specified time

Bond Market

The environment in which the issuance and trading of debt securities occurs. The bond market primarily includes government-issued securities and corporate debt securities; facilitates the transfer of capital from savers to the issuers or organizations requiring capital for government projects, business expansions and ongoing operations.


Budget Deficit Refers to national budgets; occurs when government spending is greater than government income in a given year. A yearly deficit adds to the public debt.
Budget Surplus Refers to national budgets; occurs when government income is greater than government spending in a given year.     
Central Banking System

A nation’s central bank that is established to regulate the money supply and oversee the nation’s banks. In the United States the Federal Reserve is the central bank.


Collateral  Something of value (often a house or a car) pledged by a borrower as security for a loan. If the borrower fails to make payments on the loan, the collateral may be sold; proceeds from the sale may then be used to pay down the unpaid debt.  
Currency Paper money issued by the government
Economic Elasticity Ability to adjust the supply of money to demand

Careful, thrifty management of resources, such as money, materials, or labor; process or system by which goods and services are produced, sold, and bought in a country or region

Federal Budget

The taxing and spending plan of the national government

Federal Reserve The central bank of the United States. Its main function is controlling the money supply through monetary policy.
Federal Reserve System The Federal Reserve System divides the country into 12 districts, each with its own Federal Reserve bank. Each district is directed by its nine-person board of directors. The Board of Governors, which is made up of seven members appointed by the President and confirmed by the Senate to 14-year terms, directs the nation’s monetary policy and the overall activities of the Federal Reserve.
Fiscal Policy

Changes in the expenditures or tax revenues of the federal government, undertaken to promote full employment, price stability and reasonable rates of economic growth 

Monetary Policy

Changes in the supply of money and the availability of credit initiated by a nation’s central bank to promote price stability, full employment and reasonable rates of economic growth

Plutocrat Someone who becomes powerful because he or she is rich
Social Security A federal system of old-age, survivors’, disability and hospital care (Medicare) insurance which requires employers to withhold (or transfer) wages from employees’ paychecks and deposit that money in designated accounts
Social Security Trust Fund

Account used when contributions made by workers and employers exceed the amount currently needed to fund the Social Security system and those retired workers currently collected Social Security benefits. The monies held within the fund are invested in interest-bearing federal securities in order to increase while being held in trust.

Solvency The ability of a company to meet its long-term financial obligations

Sources: Economics & Personal Finance Resources for K-12;  Economics Glossary;  Investopedia.com

ANSWERS. The Federal Reserve From 1913 to Today
1. Answers will include: a) a national bank would stabilize the economy and credit; necessary to exercise constitutional powers; b) a national bank would give undo power to the mercantile North; c) a national bank is unconstitutional. 
2. Banks fail when people try to withdraw more money from a bank than it has available. Refer to the bank rush scene in It’s a Wonderful Life when citizens all want their money. If this takes place in bank after bank, a vicious cycle has been created and banks fail. Lending slows so much, economic depression results.
3. Following the San Francisco earthquake in 1906, insurers needed access to dollars and residents couldn’t access their deposits. A bumper crop and economic boom resulted in companies wanting more cash to invest in new ventures. A weak supply of dollars resulted in rising interest rates and withdrawals. The United Copper stock tumbled; investors rushed to pull their deposits out of banks related to F. Augustus Heinze. Other banks became unwilling to lend funds to other banks. John Pierpont Morgan interceded.
4. A central bank with a network of banks around the country. These central banks accepted promissory notes as collateral for cash. The national board of directors would set the interest rate on the loans. Although the initial legislation proposed by Senator Aldrich and others that followed failed, in 1913 agreement was made on
• A central bank was needed to backup the banking system,
• Decentralized regional banks were needed, and
• Governing would be shared by politicians, bankers, and agricultural and commercial interests.
5. Teachers should visit the Library of Congress website that gives an explanation of the cartoon's allusions and visual commentary. 
6. "The government, of course, hadn't solved the problems of panics. It had just gained a better tool with which to deal with them."
7. There are 12 Federal Reserve districts. They are located in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. The Board of Governors is located in Washington, D.C. The chairman of the Board of Governors leads the 7-member Board of Governors.
8. Answers will include setting and implementing the monetary policy of the U.S., controling interest rates, and overseeing the banking system.
9. Answers will vary.
10. Answers will vary. 

ANSWERS. From Cotton Paper for Dollars, Bahts and Wons
1. Paul Revere kept his horse in a stable at Crane’s paper mill. Colonists needed to know they would be paid to serve in the American Revolution. Revere asked Crane to craft bills of credit to give soldiers.
2. Only one — Crane paper company
3. a. high-tech 3-D security features, b. paper, c. high-tech 3-D security features, d. prints bank notes, e. paper;
4. The blend of 75 percent cotton and 25 percent linen results in a smooth and durable material.
5. Drafting paper, stock certificates, carbon copy paper and official letterhead;
6. He sponsored legislation to prevent foreign-owned companies from supplying paper for U.S. currency and limited any contracts to four years.
7. Electronic technology changed the need for several key products; security concerns and counterfeiters’ use of technology required they change.
8. The change began with Sweden’s Riksbank contract to print its kronos and other countries.
9. Outside investors, CEO to a non-family member, new products and improved security technology, and manufacturing technical materials;
10. Responses will vary. 

District of Columbia Public Schools Academic Content Standards 

Government. Students analyze the causes and effects of the Great Depression and how the New Deal fundamentally changed the role of the federal government.

1. Describe the monetary issues of the late 19th and early 20th centuries that gave rise to the establishment of the Federal Reserve and weaknesses in key sectors of the economy in the late 1920s. (E)

2. Describe the explanations of the principal causes of the Great Depression and the steps taken by the Federal Reserve, Congress, and presidents Herbert Hoover and Franklin Delano Roosevelt to combat the economic crisis and mass unemployment. (P, E)

Historical and Social Sciences Analysis Skills. Historical Chronology and Interpretation

1. Students compare the present with the past, evaluating the consequences of past events and decisions and determining the lessons that were learned. (Grades 9-12)


Learning Standards for DCPS are found online at http://dcps.dc.gov/DCPS/In+the+Classroom/What+Students+Are+Learning

Maryland Academic Content Standards 

Government. The Foundations and Function of Government.

2. The student will analyze historic documents to determine the basic principles of United States government and apply them to real-world situations (1.1.1).

a. Describe the purposes of government, such as protecting individual rights, promoting the common good and providing economic security

3. The student will evaluate roles and policies the government has assumed regarding public issues (1.1.3).

• Public issues: Environment (pollution, land use), Entitlements (Social Security, welfare), Health care and public health (costs, substance abuse, disease), Censorship (media, technology), Crime (prevention, punishments), Equity (race, ethnicity, region, religion, gender, language, socioeconomic status, age, and individuals with disabilities).

b. Analyze the decisions made by government on domestic issues and their effect on society, such as entitlements, socioeconomic status, individuals with disabilities, welfare reform


Economics.  Students will develop economic reasoning to understand the historical development and current status of economic principles, institutions, and processes needed to be effective citizens, consumers, and workers participating in local communities, the nation, and the world.


3. The student will evaluate the effectiveness of current monetary and fiscal policy on promoting full employment, price stability, and economic performance (4.1.4).

• Business cycle, monetary policy (Federal Reserve actions) and fiscal policy (Legisltive and Executive actions) and their effect on economic performance, full employment, and price stability.

• Tools of monetary policy (Federal Reserve System — FED) include the reserve requirement, interest rates, and open-market operations (buying and selling of government securities).


e. Determine how the executive branch influences economic by using the tools of fiscal policy including increasing and decreasing taxes and tariffs and/or spending  (Unit 4)

f. Describe how the Federal Reserve System uses the three tools of monetary policy, including open market operations, changes in the discount (interest) rate and changes in the reserve requirements to influence the economy


The Maryland Voluntary State Curriculum Content Standards can be found online at http://mdk12.org/assessments/standards/9-12.html

Virginia Academic Content Standards 

Economics and Personal Finance. The student will demonstrate knowledge of how monetary and fiscal policy influence employment, output, and prices by

a) describing the purpose, structure, and function of the Federal Reserve System;

b) describing government’s role in stabilizing the economy;

c) describing sources of government revenue; and

d) explaining balanced budget, deficit and national debt. (EPF.7)


Economics and Personal Finance. The student will demonstrate knowledge of the role of government in a market economy by

a) identifying goods and services provided by government to benefit society;

e) explaining that taxes and fees fund all government-provided goods and services. (EPF. 8)


Government. The student will demonstrate knowledge of the process by which public policy is made by

a) examining different perspectives on the role of government;

b) describing how the national government influences the public agenda and shapes public policy;

c) describing how the state and local governments influence the public agenda and shape public policy;

d) describing the process by which policy is implemented by the bureauracy at each level;

e) analyzing how individuals, interest groups, and the media influence public policy. (GOVT. 9)


Standards of Learning currently in effect for Virginia Public Schools can be found online at www.doe.virginia.gov/testing/sol/standards_docs/index.shtml

Common Core Standards 

Craft and Structure. Determine the meaning of words and phrases as they are used in a text, including vocabulary specific to domains related to history/social studies. (CCSS.ELA-Literacy.RH.6-8.4)


Literacy in History/Social Studies, Science & Technical Subjects. Compare and contrast treatments of the same topic in several primary and secondary sources. (Integration of Knowledge and Ideas, CCSS.ELA-Literacy.RH.9-10.9)


Literacy in History/Social Studies, Science & Technical Subjects. Integrate and evaluate multiple sources of information presented in diverse formats and media (e.g., visually, quantitatively, as well as in words) in order to address a question or solve a problem. (Integration of Knowledge and Ideas, CCSS.ELA-Literacy.RH.11-12.7)


Literacy in History/Social Studies, Science & Technical Subjects. Integrate information from diverse sources, both primary and secondary, into a coherent understanding of an idea or event, noting discrepancies among sources (Integration of Knowledge and Ideas, CSS.ELA-Literacy.RH.11-12.9)


Common Core standards are found online at http://www.corestandards.org/