When Banks Closed Their Doors: teacher key

How Banks Work, grade 10 edition, written for 10th grade. Banks lend out much of the money savers deposit. The story runs from state bank notes through the Federal Reserve, runs and closings to deposit insurance.

Read the book. Print this page for the key.

Questions and answers

1. What did the National Banking Acts aim to create?
   • A stable, uniform currency (answer)
   • A new kind of credit union
   • A federal deposit insurance fund
2. What did the Banking Act of 1933 separate?
   • State-chartered banks from federal ones
   • Commercial and investment banking (answer)
   • Savers from people who borrow
3. What must a bank pledge to borrow from the discount window?
   • Zero reserves
   • Collateral (answer)
   • A new charter
4. What came well before the 1929 stock market crash?
   • The banking holiday
   • Deposit insurance
   • Bank trouble (answer)
5. What does it mean that a bank was suspended?
   • They were merged into the Fed
   • They were closed to inspections only
   • They stopped operating (answer)

Words

• collateral: pledged property
• reserves: money held back
• charter: bank's permit
• suspended: stopped operating
• securities: tradable investments