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MAY 1 0 1985

Kids Take Interest
Excerpts from "Little bank, big problems," (Eileen McNamara, Globe article,
July 12, 1983} are reprinted courtesy
of The Boston Globe.

1//ustration by Robert Abbanat
McCall Jr. High Schoo l, Winchester, MA

In April 1983, state banking officials closed a co-operative bank in
Easton, Massachusetts . According
to examiners, the bank charged
borrowers usurious rates; close to
400 percent per annum.
Shortly thereafter, the bankers
asked their state representative to
file legislation that would exempt
the Easton bank and others like it
from certain restrictions imposed
by state banking laws. The measure met very little legislative
opposition, and on October 4,
1983, with the Easton bankers looking on, the governor of Massachusetts signed the bill into law .
On the surface, this chain of
events would seem to further confirm the populist belief that powerful banking interests exert undue
influence over lawmakers . In fact,
the story illustrates how a group of
determined citizens can join with
elected representatives to make the
political process work.

The Easton bankers were not
pin-striped, poker-faced denizens
of the boardroom . Rather, they
were sixth grade students, and
their bank was the HAL Middle
School Co-Operative Bank. (HAL
stands for High Ability Learners.)
According to an account in the
July 12, 1983 morning edition of The
Boston Globe:

Reason prevailed. On October 4,
1983 some six months after examiners first closed the HAL Middle
School Co-Operative Bank, Massachusetts Governor Michael
Dukakis signed legislation exempting educational program
banks from certain restrictions of
the Commonwealth's general
banking statutes.

With assets of $279. 60 at the time of its
un seemly demise, the student-run bank
was owned by 233 student shareholders
who had invested $1 apiece. The practice
that ran afo ul of state statutes involved
charging a penny-per-day in interest on a
maximum loan of 75 cents. . . . Seeking
legislative redress for what they charge is a
classic case of regulatory excess, the fledgling financiers filed a bill seeking exemptions from state banking laws for studentoperated banks with assets less that $500 .

Aided by their teacher, Mrs. Ann
Hoyle, the sixth graders asked
State Representative William B.
Vern o n of Man sf i e Id , Massachusetts to file legislation on
their behalf. The student bankers
then appeared before the Massachusetts legislature's Joint Committee on Banks and Banking to
make the case for why their bank
and others like it should be exempted from state banking statutes .
As television cameras rolled and
reporters scribbled notes, one of
the school bank's loan officers rose
to speak. Boston Globe reporter Eileen McNamara recounted his
testimony:
There is, he explained, the matter of milk
money or lunch money, left behind one hectic morning on a mad dash for the school
bus.
"What does a kid do then?" he asked
rhetorically, answering his own query befo re members of the Legislature's Joint
Committee on Banks and Banking could
respond. "They come to us, that's what."

How to Open a School Bank
The Massachusetts Banking Department has initiated a program
that will provide information to
assist the establishment of "school
banks" in elementary and secondary schools throughout the Commonwealth . The following passages are reprinted from A Guide to
Opening a School Bank, published by
the Massachusetts Banking Department. The free pamphlet outlines four available options as well
as some of the legal procedures and
requirements that must be followed in order to establish a school
bank. (Readers from outside Massachusetts should consult the
banking department in their states,
since guidelines may vary from one
state to another.)
Continued on Page 2

Federal Reserve Bank of Boston Vol. 9 , No. 4- December 1983

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Continued From Front Page

A Guide to Opening a School Bank

HIGH INTEREST

Option 1 A Bank Branch

At the request of any school, with school committee and
Banking Department approval, a local bank may set up a
branch office on school premises, staffed by students under
supervision of bank personnel. This approach is most suitable
for students at the high school level.

Option 2A School Bank

A group of students and teachers form an association, under
the sponsorship of a bank, to train young people in the basic
principles and practices of banking, by actual participation in
model organizations and operations designed as educational
progr.ams. The Commissioner of Banks has an oversight role
whzch includes both assistance and supervision . This
approach is suitable for students at all grade levels.

Option 3 A Grade School
Bank

Students in grades four through eight may establish and
operate a school bank with the approval of the superintendent
of schools and the local school committee of the city or town
where the bank will be located, or, in the case of private or
parochial schools, with the approval of the governing board.
These school banks may have a maximum of $500 in assets,
and are required to liquidate and distribute their assets at the
end of the academic year.
There are further conditions and restrictions that must be
prescribed by the Commissioner of Banks, which are available
upon request.

Option 4 School Savings
Programs

With school committee and Banking Department approval,
any school may make arrangements with a local bank for the
collection and deposit of school children's savings. This function has been in practice for a number of years, mostly at the
elementary school level.

POSSIBLE
BANKING
ACTIVITIES

Possible activities could include savings accounts, small
loans, charge accounts and personal money management.
Practical experience could be acquired in such areas as
accounting, record keeping, consumer regulation, banking
~gislation, administration, and economics.

FOR FURTHER
ASSISTANCE

The Massachusetts Banking Department looks forward to
being of assistance to you. Georgeann Abbanat, General
Counsel (617) 727-3139, and Sue Hickey, Assistant Supervisor of Bank Examinations (617) 727-3141, are available to
consuft with school personnel. The Department is pleased to
have this opportunity to work with you in developing a
student bank program.

the LEDGER

2

Editor: Robert Jabaily
Graphics Arts Designer: Ernie Norville

Photography: Wilson Snow
Johannah Miller

Th is newsletter is published periodically as
a public seroice by the Federal Reseroe Bank
of Boston . Th e reporting of news about
e co n o mic edu cation pr og rams and
materials should not be construed as a
specific endorsemen t by the Bank . Further,
the material con tained herein does not
necessarily reflect the views of the Federal

Reseroe Bank of Boston or the Board of
Governors. Copies of this newsletter and a
catalogue of other educational materials
and research publications may be obtained
free of charge by writing: Bank and Public
Information Center, Federal Reseroe Bank
of Boston , Boston , MA 02106, or by
calling: (61 7) 973-3459.


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• School banks are nothing
new. In 1914, a student-run
savings bank opened at
Lynn English High School
(Lynn, Massachusetts),
under sponsorship of the
school's Commercial Department. On its busiest
days in 1926, the Lynn English Bank accepted close to
$3, 000 in deposits from
more than 1400 students .
The highly successful student-run bank kept its windows open until World War
II; readers can learn more
about it by reading "Banking Nickel by Nickel" (lead
article, Ledger, Vol. 4, No. 4,
November 1977).
• You 're the Banker is the name
of a simulation game created by the Federal Reserve
Bank of Minneapolis. The
game allows players to
assume the roles of community bankers who must
decide to grant or refuse
loans to bank customers.
Pla yers' decisions affect
their customers' economic
well-being and the local
community's overall economic health . You 're the Banker
may be played by as many
as 30 people and is available
to New England schools
and organizations on a free
loan basis. (Users pay only
return postage and insurance .) For more information
please contact: Publications, Public Services Department, Federal Reserve
Bank of Boston, Boston,
MA 02106

Multi-Media
The Basics of Foreign Trade and
Exchange, written by Daniel
Rosen, published by the Federal
Reserve Bank of New York
and
International Economics, a multimedia teaching package created by
the Federal Reserve Bank of New
York
Otherwise well-versed citizens
of the United States often lack a
~asic understanding of international trade and foreign exchange.
Even those who want to learn more
sometimes don't know where to
start. The only sources of information seem to be occasional television news spots, economic textbooks, and articles in scholarly
journals.
The Basics of Foreign Trade and Exchange is an excellent new publication from the Federal Reserve Bank
of New York that fills the information vacuum. Author Daniel Rosen
uses a clear style and well-chosen
e_x amrles to explain why internation~ trade takes place and how
foreign exchange markets facilitate
this trade.
As Mr. Rosen notes in his introduction, the 16-page booklet
doesn't cover all the intricacies of
the international financial system.
It simply aims to help people better
understand some of the basics
underlying many of the economic
news items in recent years.
Free copies of the Basics of Foreign
Trade and Exchange are available
from the Public fnformation Department, Federal Reserve Bank of
New York, 33 Liberty Street, New
York, NY 10045. (Charges for some
bulk orders.)

*

The Federal Reserve Bank of
New York also distributes International Economics, a multi-media
activity package designed to teach
senior high school and freshman
coll_ege students the simplified
basics of why nations specialize
a_nd trade, absolute and comparative advantages, foreign exchange
rates, and the role of the central
banks in foreign exchange markets. The package contains two
full-cola~ filmstrip_s with two
seven-minute aud10cassettes,
easy-to-understand background
information plus lesson plans, a
glossary, and four spiritduplicating activity masters.

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Orders for International Economics
should be sent to: Public Information Department, Federal Reserve
Bank of New York, New York, NY
10045. The cost is $31.50 per package (20% discount on orders of
three or more). Make checks payable to Federal Reserve Bank of
New York.

Innovative
Classroom
A "Bread and Butter" Issue

A national task force was established by the U.S. Department of
Agriculture in 1981 to foster a better public understanding of the nation's food system and related
issues. Although the effort is
national in its scope, each state -is
responsible for developing its own
unique "Ag in the Classroom" curr~cul um materials and applications.
Ne~ring the cl~ssroom testing
stage is a new curnculum unit entitled, "Agriculture in Massachusetts." Eventually this comprehensive, integrated resource
will be available to teachers of
grades K-12.
The first phase is being developed for grades 4-6 by Dr. Barbara Koesch of Amherst, Massachusetts who has been employed
by the State Committee to design
t~e m~ terials. The first unit emphasizes Massachusetts' Agriculture
as a Dynamic Industry" and provides an educational opportunity
that deals with both the economics
and natural sciences associated
with our requirements for food.
Issues related to concerns for the
environment, ecology, geography,
and allocation of natural resources
and capital may be woven into the
lesson plans by the teacher.
The curriculum is intended for
use in urban and rural schools; it is
not a vocational "how-to-do-it"
sequence. Students will be able to:
identify how farmers use each of
the four factors of production;
identify major agricultural products of Massachusetts; and describe the Commonwealth in terms
of land formation and land use, soil
types, climate, water resources,
and vegetative growth. Other New
England states, especially Vermont, are getting similar efforts
underway.
1

Last May, Commissioners Lawson and Winthrop, of the Commonweal t h's Departments of
Education and Agriculture, enthusiastically endorsed the forthcoming program in a joint letter to
scnool principals .
Henry Hicks, former coordinator
of social studies in the Needham
(Massachusetts) Public Schools
and one of the founders of the Massachusetts Council on Social Studies,_ is a member of the program's
curriculum committee. Chairing
the general committee is John Sterling, State Director of 4-H Programs, University of Massachusetts-Amherst.
Massachusetts' new program
will be presented in a workshop at
the Northeastern Conference on
Social Studies, February 29 - March
3, 1984.
-Contributed by
Alford S. Peckham
Federal Reserve Bank of Boston

New England
Update
The Joint Council on Economic
Education is an independent, nonprofit, nonpartisan educational
organization incorporated in 1949
to encourage, improve, coordinate, and service the economic
education movement. The Joint
Council's principal medium for expanding and improving economic
education is a network of state
Affiliated Councils and Centers for
Economic Education.
Some readers, however, may
still be unfamiliar with these organizations, so listed below are the
addresses and telephone numbers
of Councils and Centers in the New
England states. Readers who live
outside New England can find out
the addresses of their state Coun~ils and Cen~ers by writing to: Pubhe Information Department, Joint
Council on Economic Education,
1212 Avenue of the Americas, New
York, NY 10036.
CONNECTICUT

Dr. Edward L. Hamblin
Executive Director
CONNECTICUT JOINT COUNCIL
ON ECONOMIC EDUCATION
U-55 University of Connecticut
Storrs, CT 06268
(203) 486-2327
Continued on Page 4
3

Ronald Daigle
Director
GREATER HARTFORD CENTER FOR ECONOMIC EDUCATION
Marcus White Hall, Room 103
Central Connecticut State University
New Britain, CT 06050
(203) 827-7626
A. Harris Stone
Director
CENTER FOR ECONOMIC EDUCATION
Southern Connecticut State University
VERMONT
501 Crescent Street
Daniel W. Gregg
New Haven, CT 06515
Executive Director
(203) 397-4226
VERMONT COUNCIL ON
Edward Brennan
ECONOMIC EDUCATION
Interim Director
120 State Street
CENTER FOR ECONOMIC EDUCATION
Montpelier, VT 05602
University of Connecticut at Stamford
(802) 828-3111
Scofieldtown Road
Stamford, CT 06903
(203) 322-3466, Ext. 70 or 66
Dr. Edward L. Hamblin
Director
CENTER FOR ECONOMIC EDUCATION
U-55 University of Connecticut
Merlin D. Bishop Center
Storrs, CT 06268
(203) 486-2327
MAINE

Robert J. Mitchell
Executive Director
MAINE COUNCIL ON ECONOMIC EDUCATION
22 Coburn Hall
University of Maine at Orono
Orono, ME 04669
(207) 581-1467
Dr. Ann E. Pooler
Director
CENTER FOR ECONOMIC EDUCATION
Shibles Hall
University of Maine at Orono
Orono, ME 04469
(207) 581-2448

MASSACHUSETTS

James F. Connors
Executive Director
ECONOMIC EDUCATION COUNCIL OF MASSACHUSETTS
14 Beacon Street, Suite 613
Boston, MA 02108
(617) 227-6691
Eleanor Tedesco
Director
CENTER FOR ECONOMIC EDUCATION
Boston University
605 Commonwealth Avenue
Boston, MA 02215
(617) 353-9283
George G. Watson, Jr.
Director
CENTER FOR ECONOMIC EDUCATION
The Lincoln Filene Center
Tufts University
Medford, MA 02155
(617) 628-5000, Ext.353
4

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Robert Rosenthal
Director
CENTER FOR ECONOMIC
EDUCATION
Conferences and Institutes Division
Stonehill College
North Easton, MA 02356
(617) 238-1081, Ext. 251
Robert D. Crofts
Director
CENTER FOR ECONOMIC
EDUCATION
Salem State College
Salem, MA 01970
(617) 745-0556, Ext. 2517
Dr. Robert Hemond
Director
CENTER FOR ECONOMIC
EDUCATION
American International College
Springfield, MA 01109
(413) 737-7000, Ext. 305
Dr. Nancy E. Harris
Director
CENTER FOR ECONOMIC
EDUCATION
Worcester State College
Worcester, MA 01602
(617) 793-8000, Ext. 8584
Dr. Carol McDonough
Norman Benson
Co-directors
CENTER FOR ECONOMIC
EDUCATION
University of Lowell
Lowell, MA 01854
(617) 452-5000
NEW HAMPSHIRE

Carter B. Hart, Jr.
Program Chairman
NEW HAMPSHIRE COUNCIL ON
ECONOMIC EDUCATION
State of New Hampshire Dept.
of Education
64 North Main Street
Concord, NH 03301
(603) 271-3609
RHODE ISLAND

John M. Sapinsley
Executive Director
RHODE ISLAND COUNCIL ON
ECONOMIC EDUCATION
Rhode Island College
Providence, RI 02908
(401) 456-8037
Dr. Peter Moore
Director
CENTER FOR ECONOMIC
EDUCATION
Rhode Island College
Providence, RI 02908
(401) 456-8037