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Farmer Boy, Chapter 28

Social Studies
Bank History 
Mr. Thompson didn’t trust banks. He carried his money around with him. Father didn’t look at this favorably, even calling him suspicious and stingy. Do you think Mr. Thompson is justified in his distrust of banks? Let’s look at a history of banks.

Banks are establishments that lend, exchange, hold, and/or transfer money. Many societies throughout history broke down because of dishonest banking systems. Gold was taken out of coins, and inferior metals were put in their place. Bankers shaved the edges of the gold coins, and used the shavings to melt down and make new coins, leaving the original weighing less than what it should. Bankers rigged their scales to represent dishonest numbers, or used faulty weights to counter the coins on the scale. The greed of bankers have destroyed many a nation.

Banks have been dated back to 2000bc Babylon, where they were a monopoly of the temples. There were banks in Ancient Greece and Ancient Rome too. The dishonesty of the Roman bankers is what led in large part to the fall of Rome. Up until the 13th century bankers were private individuals, monasteries, and churches, all of which were often corrupt. As time went on, wealthy European families opened banks to accept deposits, make loans, and coin money.

As more people came to the New World, colonists tried to set up a variety of banks. England, however, did not want to lose financial power and outlawed all the banks. After the Revolutionary War, private banks began to pop up in New York City and Boston. In an effort to stabilize the currency, the nation-wide banking institution in the country was formed in 1791, called the First Bank of the United States. It had eight branches. Still remembering how much control a nation-wide banking system could have over the people, having just lived under the yoke of the English bankers, the states moved to dissolve this bank and open privately owned banks instead. By 1816, there were 246 privately owned banks.

The problem was, however, that these banks would issue notes without restriction (i.e. they would print more money then they had backing) that resulted in inflation (notes being worth less than their face value).

So in 1816, another nation-wide bank was started, the Second Bank of the United States. The bankers severely mismanaged the funds, and a huge economic crisis took place in 1819. People who had kept their money in the banks had lost most if not all of it. Maybe Mr. Wilder hadn’t heard about this.
Andrew Jackson saw the harm in having a centralized banking system, and refused to renew the Second Bank’s charter. Private, local banks again popped up, but they gave too much credit, allowed for too much inflation, and fraudulently made risky land investments, leading to an economic panic in 1837, and a depression from 1837 to 1843. Again people lost most if not all the money they had in banks. This was during Mr. Wilder’s childhood; maybe he wasn’t familiar with this bit of history.

From 1847 to 1860, the number of banks increased from 715 to 1562. The systems of banking deposits and use of checks developed at this time. Fraud was widespread, with more than 5,000 kinds of counterfeit bank notes in circulation. Maybe Mr. Thompson had reason to be suspicious.

The National Banking System was established, and by 1866 there were 1,582 national banks and 297 local banks. A dual banking system did not work, leading to yet another economic crisis from 1873 to 1878, and another from 1883 to 1885, another from 1893 to 1895, and an economic panic in 1907.

While many people lost large amounts of money during these years, this was small potatoes compared to the economic collapse beginning with the stock market crash of 1929, which led to the temporary closing of all United States banks and a revamping of the Federal Reserve System. Only time will tell what the effects will be of too much credit, mismanaged funds, and risky land investments.

So, do you think Mr. Thompson is justified in his distrust of banks? Why do you think Mr. Wilder has so much faith in the banking system in spite of its history of failure? Here are some quotes from famous people about the banking institution:
"Give me control of a nation's money and I care not who makes the laws." -Mayer Amschel Rothschild
"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling the money and its issuance." -James Madison
"Banking was conceived in iniquity and was born in sin. The Bankers own the earth. Take it away from them, but leave them the power to create deposits, and with the flick of the pen they will create enough deposits to buy it back again. However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of Bankers and pay the cost of your own slavery, let them continue to create deposits." -Sir Josiah Stamp, bank president in 1920’s and 2nd richest man in Britain.
"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. ... This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." -Alan Greenspan, Chairman of the Federal Reserve 1987-2006
Science
Trees 
In this chapter the ash (Fraxinus) tree was mentioned. The species found in New York are white ash and black ash. The leaves are deciduous, compound, and opposite. They have winged seeds that are shaped like canoe paddles. It is a large tree, growing up to 80 feet, with a long straight trunk. The wood from the ash tree was commonly used for tool handles, vehicle parts, baseball bats, and the curved parts in furniture. Research the ash tree further and complete notebook page.

Machines 
They used a new, fine machine for bailing hay. From the description, we know it is a combination of wheels and levers. These are called simple machines and they work together to make what is called a complex machine.

Wheel – Wheels help things to move, by rolling instead of dragging, making it easier and quicker to move. (We will learn more about wheels in the next chapter)
Axle – An axle is another simple machine. It is the shaft on which a wheel is mounted and on which it turns.
Gear – A gear is a type of wheel with teeth.
Lever – Levers help your muscles as if they were stronger. Levers can be short or long. They can be curved or straight. Sometimes two levers are used together, such as a pair of pliers, and other times they can be used by themselves, such as a long stick used to pry on something. The longer the lever, the more “leverage” you have.

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