Read Page 148 in your text book. Take note of the words in italics. Think about why Americans decided not to wait and save money.

When you have finished reading, answer these questions on a piece of paper.

• In the 1920’s, if Americans did not have enough money to buy something, what would they often do?
• Why did Americans decide not to wait and save money but to spend it?
• Name 2 things that Americans were frequently spending money on.
• What does it mean to buy things on “credit”?
• What is the purpose of “installments”?

Check your answers!

1. If Americans did not have enough money to buy something, they would often buy it anyways.

2. Americans decided not to wait and save money but to spend it because money seemed plentiful. Wages were high and it was easy to borrow money. They did not stop to think about the future.

3. Possible answers: cars, stoves, washing machines.

4. Buying on credit means buying items using an amount borrowed from a bank or business.

5. Installments are when you payback the bank in small payments the credit you had borrowed from them

If you missed more than 1 question, go back and repeat the reading and try again.

Read page 149 in your book. Take note of the bold words. Think about the cause and effect relationships that you see taking place.

Answer these questions on a piece of paper.

• What happened to the banks when people could not make their installment payments?
• More goods were made than people could buy.  What effect did this have on the factories?  On the factory workers?
• People were losing their jobs.  What effect did this have on the banks?  
• What do the words “deposit” and “withdraw” mean?
• What happened when people went to withdraw their money from the bank?

Check your answers

1. When people could not make their installment payments the banks received less money.

2. Since there were more goods than the people could buy, the factories were not able to sell all that they had made. They then had to lay off workers because they could not afford to pay them, so factory workers lost their jobs.

3. Since people were out of jobs, they could not pay their installments and so the banks were losing money. American people had even less money to spend on items.

4. Deposit means to put money into the bank. Withdraw means to remove money from the bank.

5. When people went to withdraw their money from the bank, the banks did not have enough money in the vaults to give the people.

If you missed more than 1 question, go back and repeat the reading and try again.