While the best part of the lesson is student engagement, it’s also a great teaching tool for empathy. Students have to grapple with how people lose their jobs, but also about how businesses--usually banks--make bad decisions that lead to financial catastrophe.
Finally, it provides a nice framework to refer to when you discuss subsequent recessions. Or, when you’re trying to review the material and you can refer to the exact student who was the banker who had to send his/her hired thugs to call-in a loan; it helps to jog students’ memories.
Here’s the set up for my Great Depression unit. Feel free to ask questions in the comments section if you don’t understand how it works.
Characters:
Banker 1
- invests in the market responsibly
- pays back debts
Banker 2
- bad investments
- bad loans
- bankrupt when panic sets in
Business person
- needed a loan to expand his business
- they take on an employee (character below)
- when times get tough the employee gets fired
- people (including former employee) now can’t afford goods and price falls
- tariff rates also lead to
- price drops and deflation occurs
Employee
- has a job until the employers loan gets called in
- then fired and unemployed--with no way to get a loan
Citizen 1
- can buy on margin
- can invest in one bank
- can run on the panics when panic sets in
Citizen 2
- Just took out a loan to buy a house (or expand a small business)
- bank comes knocking
Farmer 1
- takes out a loan
- prices fall
Farmer 2
- drought/dust bowl and displacement
The Government (usually teacher)
- invests heavily to win WWI
- pulls back on investment
- increases interest rates (Fed)
- increases tariff (Congress)
- Hoover’s government vs. FDR
