Background for Teachers:

After the stock market crash of October 1929, the faith that people had in financial institutions was severely shaken. Banks experienced serious crises during the Great Depression. Depositors became worried about the security of their money, and withdrew their savings and closed accounts. Often spurred by rumors and fear, large numbers of depositors demanded their withdrawals in a short span of time. Most banks did not have the cash on hand to manage such a large number of requests, and when people were told that they couldn’t get their money, the rumors and fears became justified. The subsequent run on banks and savings institutions across the country caused many banks to close their doors permanently.

Urbana, Illinois was not immune to the rumors of imminent bank failures, and by 1933, two Champaign banks had been forced to close due to “runs” by panicked depositors. By March of 1933, the fear became so great that the Urbana Association of Commerce had created the Bank Emergency Committee. In an effort to keep the Urbana banks solvent, the committee suggested several solutions, including having the mayor declare a bank holiday (which he had done successfully in 1932). Instead of closing the banks again, the Bank Emergency Committee decided to print “Urbana Money,” which would be backed dollar for dollar by U.S. Currency. This plan allowed the banks to meet the demands of emergency withdrawals, while at the same time, Urbana citizens could use Urbana Money in any Urbana business to buy goods and services. Employers were encouraged to pay their employees at least in part with Urbana Money.

Note to Teachers:

The possibilities for incorporating lessons about Urbana Money into history and social studies classes seem endless. The documents that have been included with this can be used as a group or individually. The suggested lessons might work best after students have been introduced to the stock market crash of 1929, the causes of the Great Depression, and some of the economic vocabulary.