Learning economics on Christmas vacation: What’s a bank run?

December 25, 2015

In education we miss out on most information technological innovation. Textbooks were notoriously dull when books were the chief medium found in schools. Schools took 60 years to make progress in showing film. Television, which started out commercially as a great education tool — what was arguably the best orchestra in the U.S. used to play every Sunday on NBC way back when. Then video, then computers, then the internet and personal data devices penetrated modern life, but not yet schools.

So I am always pleased to hear after Christmas break the questions high school economics and history students came back to class with, especially after “having to watch” that hoary and venerable old movie, “It’s a Wonderful Life.” Frank Capra’s film cuts through the fog on some important history and economics issues.

Not that you find it used much in U.S. schools. What follows is a blog post I did for my U.S. history blog some years back, to answer some of those student questions.

New York -- a classic

George Bailey (played by actor Jimmy Stewart) works to deal with a run on the Bailey Savings & Loan Association in Bedford Falls, New York — a classic “run on the bank” — in the 1946 movie, “It’s a Wonderful Life,” by Frank Capra. Image from Warner Bros., via Our Values blog.

“What’s a bank run?”

Whenever we get to the Great Depression, somebody asks about bank runs. What is a “run on the bank?” Why would people suddenly rush to get their cash out of the bank? And why can’t the bank just pay it out?

Frank Capra showed and explained it best, probably, in his 1946 film, “It’s a Wonderful Life.” But first, my weak attempt:

Banks don’t keep all the money deposited there in the vault. Banks make money by loaning out to others the money put on deposit. The people who get the loans must pay interest on the loan, and that allows the bank to pay interest on the deposits people put there (precious little today — my first account paid 5.25% on my first $5.00 deposit; today you’re lucky to get 1%, and you have to have a sizable minimum, generally. But I digress . . .).

So, if you and a hundred other people each deposit $100 in the bank, the bank turns around and loans out as much as they can. Of the $10,000 deposited, say, they loan out $9,000 to the guy who lives next door to you, so he can put an addition on his house. He’ll pay it back, with interest.

But, that loan means that there is only $1,000 left in the vault. Generally a 10% “reserve” will cover all the cash transactions a bank makes in a day. That is, if they have 10% of their total assets sitting in the vault, making no new money for them, it is highly unlikely that in a normal day there will be a demand for more than about $1,000 of that $10,000 on deposit. (The actual reserve amounts vary; last time I looked, several months ago, the Federal Reserve Board required member banks to hold about 7% of their total assets in cash on hand.)

You can begin to see why a bank run is a problem. If, in one day, every depositor showed up and demanded their deposit, the bank couldn’t pay them all. This is a death sentence in the banking world, for a bank to be unable to meet obligations, and generally that would mean that the bank would be out of business. But of course, that’s rather unfair to the bank — they have their money (your money, really) loaned out to dozens of other people. When those loans come in, the bank will have the cash to pay.

A run on the bank puts a kink in those careful, conservative calculations of how much cash a bank needs to have on hand to cover all the transactions of a day.

Banks fear a run. That’s what killed banks in 1932 and 1933, in the last year of the Hoover administration. Even a good bank could be doomed by an unjustified run — no bank could repay all of its depositors, in cash, on any one day.

Roosevelt’s bank holiday, just a week after his inauguration, stopped the runs for that week. The Federal Deposit Insurance Corporation (FDIC) insured deposits, so that even were there a run on a bank, a depositor could get his or her money back. Those measures essentially stopped runs on banks for decades.

Frank Capra’s 1946 movie, “It’s a Wonderful Life,” tells the story of a man who manages a small town savings and loan association, which is similar to a bank in that it accepts deposits and loans money, but different from a bank in that it is chartered for the benefit of its depositors, or members, and not for a bank corporation. In fact, the antagonist in the film is the town banker, Potter, who does what he can to bring the savings and loan to ruin.

In one memorable scene, a rumor that the savings and loan is about to fail prompts dozens of the members to make a run — indeed, there is also a run on the bank at the same time. Jimmy Stewart explains to the members why he can’t pay everybody . . . but he also has an infusion of $2,000 cash he plans to cash for his honeymoon. This is what a bank run looks like, with a smart banker (savings and loan manager in this case) who can keep his organization going:

This film clip is undoubtedly copyrighted by the current owners of the film’s intellectual property. I wish they would make it available for classroom use without heavy copyright fees, in the interest of the public.

It’s another case of a fictional film portraying history better than any history book, and economics, too. Licensing the film for classroom use costs more than teachers can pay — plus, in the dog-eat-teachers world of the War on Education, few administrators stand the use of fiction in history and economics classes. That’s before a teacher even gets to the issue of whether there is technical support to show the film.


Powers of Ten – Charles and Ray Eames’ brilliant, before-its-time film

May 23, 2015

Images from

Images from “Powers of Ten,” 1977 edition. From IconEye

AMNH’s “The Known Universe” is a cool film. Putting up that last post on the film, I looked back and noted that when I had previously written about the brilliant predecessor films from Charles and Ray Eames, “Powers of Ten,” the Eames films were not freely available on line.

That’s been fixed.

I like to use films like this as warmups to a year of history, and as a reminder once we get into studying the history of space exploration, of just how far we’ve come in understanding the universe, and how big this place is.

Of course, that means wer are just small parts.

The Eames’s genius showed the scale of things, from a couple picnicking in a park, to the outer reaches of the universe, and then back, zooming into the innermost reaches of a human down to the sub-atomic level.

There’s a series of these films; this one, published on YouTube by the Eames Office, was done in 1977, one of the later versions.

How can you use this in class, teachers? (I recommend buying it on DVD, as I did; better sound and pictures, generally.)

Film information:

Uploaded on Aug 26, 2010

Powers of Ten takes us on an adventure in magnitudes. Starting at a picnic by the lakeside in Chicago, this famous film transports us to the outer edges of the universe. Every ten seconds we view the starting point from ten times farther out until our own galaxy is visible only a s a speck of light among many others. Returning to Earth with breathtaking speed, we move inward- into the hand of the sleeping picnicker- with ten times more magnification every ten seconds. Our journey ends inside a proton of a carbon atom within a DNA molecule in a white blood cell. POWERS OF TEN © 1977 EAMES OFFICE LLC (Available at http://www.eamesoffice.com)

At the Eames Office Youtube site, you may find the film in with Mandarin Chinese, German, and Japanese translations (no Spanish?).  If you’re unfamiliar with the work of this couple — you would recognize much of the stuff they designed, I’m sure — check out a short film on an exhibit on Ray Eames (which has concluded, sadly):

More:

The very recognizable, famous Eames Chair, from Herman Miller. Ideally, you can sit in your Eames Chair while watching

The very recognizable, famous Eames Chair and Ottoman, from Herman Miller. Ideally, you can sit in your Eames Chair while watching “Powers of Ten.” Herman Miller image.


Typewriters of the moment: Billy Wilder’s

November 27, 2014

At A Certain Cinema: Billy Wilder and I.A.L. Diamond at work on the screenplay for Irma la Douce

At A Certain Cinema: Billy Wilder and I.A.L. Diamond at work on the screenplay for Irma la Douce

Billy Wilder’s reputation as a great film director would not be possible, but for the typewriter. It is fate, perhaps, that we find several photographs of Mr. Wilder with various typewriters.  In the photo above, he’s pictured working with I. A. L. Diamond, “Izzy.”  The pair collaborated on at least 17 different screenplays.

Hollywood Legacy's Pinterest site: BILLY WILDER and frequent screenwriter partner, I.A.L. DIAMOND.

This one is clearly a Royal; Hollywood Legacy’s Pinterest site: “BILLY WILDER and frequent screenwriter partner, I.A.L. DIAMOND. “Izzy” is seated at the typewriter, with Wilder standing, as usual. Wilder liked to “think on his feet” and was a notorious pacer. Wilder & Diamond wrote 17 films together, including: SOME LIKE IT HOT, THE APARTMENT, LOVE IN THE AFTERNOON, IRMA LA DOUCE”

Wilder’s scripts often featured writers and others who used typewriters.  He had almost a fetish for featuring typewriters in his movies.  How could we not like a guy who loved typewriters like that?

From the great Oz Typewriters site:

From the great Oz Typewriters site: “Wilder died in Beverly Hills on March 27, 2002. Here is what is on his tombstone”


History of physics, in four minutes

November 22, 2014

Isaac Newton and a friendly bird, on the verge of discovery; still from the film,

Isaac Newton and a friendly bird, on the verge of discovery; still from the film, “Physics,” by Asa Lucander.

History teachers, physics teachers, you should use this film.

In amusing animation — perhaps a throwback to earlier animations, but good and amusing — produced by Åsa Lucander @ 12foot6, for the television Science Club series on BBC2, hosted by Dara O Briain (who does the narration).

Credits:

Physics – Short animation, which was part of the Science Club series on BBC2 hosted by Dara O Briain,
© BBC

Directed by: Åsa Lucander @ 12foot6
Produced by: 12foot6
Art&Design: Åsa Lucander
Additional Art: Marc Moynihan
Stop Motion & Compositing: Julia Bartl
Animation: Kim Alexander, Marc Moynihan, Anna Fyda, Barry Evans, Lucy Izzard, Simon Testro, Phoebe Halstead, Michael Towers
Sound: Laura Coates

For my money, this should be a valuable classroom tool.  In four short minutes the film covers most of the really great advances in physics, suitably for world history or U.S. history.  It’s clear enough in its presentation that physics students should find it a useful review.  Or more likely, they’ll understand what we’ve been trying to teach them, for the first time.

Science gets left out of history courses way too easily.  Here’s a quick way to stick it back in.

Tip of the old scrub brush to Fast Company, where I found the film and details.  Fast company also created this 3 second excerpt, in MP4 format, which you may find useful somewhere:


1943 War Department film, “Welcome to Britain”

February 8, 2014

Reader and veteran librarian Judy Crook sent a Tweet alerting us to a recent release from the U.S. National Archives, “A Welcome to Britain, 1943.”

It’s a fascinating little film, if 38 minutes is still “little.”

Yes, that’s Burgess Meredith playing the soldier. I haven’t confirmed whether he was actually enlisted, but he often played soldiers or people at war — in 1945, playing war reporter Ernie Pyle, for example. In the 1950s, the House Committee on Unamerican Activities (HUAC) claimed Meredith had consorted too closely with communists, and he was blacklisted for years including a seven-year drought of work.

When this film was made, the Soviet Union was an ally of Britain and the United States.  How times change.

This is a training film made by the War Department (later renamed “Defense Department”), to acquaint U.S. soldiers with what they would confront in Britain.  Why did soldiers need such training?  You can guess, perhaps.   258

Teachers, can you use this film in history class?  Is the discussion on civil rights, about 20 minutes at 25:30 in, instructive in the history of the time?

From the National Archives’s description on YouTube:

Published on Feb 5, 2014

Creator(s): Department of Defense.~. Armed Forces Radio and Television Service. (1954 – ) (Most Recent)

Series : Information and Education Films, compiled 1943 – 1969
Record Group 330: Records of the Office of the Secretary of Defense, 1921 – 2008

Access Restriction(s): Unrestricted
Use Restriction(s): Restricted – Possibly
Note: Some or all of this material may be restricted by copyright or other intellectual property restrictions.

Scope & Content: This film introduced soldiers to Britain and told them what to expect, how to behave and how not to behave in Britain during World War II. It includes footage of military cameramen and black soldiers.

Contact(s): National Archives at College Park – Motion Pictures (RD-DC-M), National Archives at College Park, 8601 Adelphi Road, College Park, MD 20740-6001
Phone: [omitted here]

National Archives Identifier: 7460305
Local Identifier: 330-IEF-7

http://research.archives.gov/descript…

What else hides in the vaults of the Archives?


Lost history: Groucho Marx died on August 19, 1977

August 19, 2013

1958 Publicity photo of Groucho Marx from the television program You Bet Your Life.  NBC Television-NBC Photo/Photographer:  Elmer Holloway

1958 Publicity photo of Groucho Marx from the television program You Bet Your Life. NBC Television-NBC Photo/Photographer: Elmer Holloway

36 years ago?  Grouch Marx died on August 19, 1977? 

cropped version of Image:Grouchoicon.jpg - &qu...

The man became an icon, though too few know the great history behind the icon. “Self-made caricature of Groucho Marx” Wikipedia image

 

That means that not only have your high school history students probably never seen much, or anything, of Groucho Marx and his comic genius; it means their parents don’t know him, either.

What a great tragedy.

Groucho Marx brought genius to American comedy films, to radio, and then to television.  His genius was of a sort that does not age, but remains fresh to audiences of today — get a group of teenagers to view Duck Soup or A Day at the Races and you’ll find them laughing heartily at even some of Marx’s more cerebral jokes.  It is symbolic that the films that brought writer Norman Cousins to laughter, and a lack of pain, were Marx Brothers movies (in the day when one had to rent a projector to show the film, long before VCR).  Cousins went on to a grand second career talking about hope in healing, starting with the book, Head First: The Biology of Hope and the Healing Power of the Human Spirit.  I recommend these films to anyone seriously injured or ill, or recovering.  We got VHS, and then DVD copies of several of the films when our kids were ill, with great effect.

Groucho Marx should be in the pantheon of great Americans, of the 20th century, if not all time, studied by children in high school, for history and for literature purposes.

Groucho’s been gone for 36 years, and we are much poorer for his passing.

More:

Groucho grills Ray Bradbury and a woman named Leticia on You Bet Your Life in a 1955 episode:

English: Groucho Marx & anonymous blogging

“I intend to live forever, or die trying.” ― Groucho Marx (Wikipedia image)


Typewriter of the moment: Stanley Kubrick’s

June 6, 2013

Stanley Kubrick's typewriter on Instagram, from sophireaptress.

Stanley Kubrick’s typewriter used in “The Shining” on Instagram, from sophireaptress.

It’s an Adler, but Instagram isn’t built for details, you know?

The typewriter is probably on display at the Los Angeles County Museum of Art’s Kubrick Exhibit, which closes June 30, 2013 (hurry!).

More:


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