The Lemonade Crisis (Explaining the Bailout to Children)

The Lemonade Crisis or How to Explain the Bailout to Children


Jimmy, Jamie, Kenny, Stan, Dick, Chuck and Sandy as “The Lemonade Stand Kids”

Easy Al and Ben as “The Grocers”


Summer came early to Bankington Heights and the neighborhood kids were all excited for their vacation.  The previous summer, Jamie, Jimmy, Stan, Dick, Chuck and Kenny had watched a slightly older kid from the block named Sandy make an absolute fortune with his lemonade stand.  Sandy had the idea to operate not one, but several lemonade stands all over town and to sell pretzels and newspapers as well.  By the end of that summer, Sandy took all the cash he made and built the biggest treehouse any of them had ever seen.  This summer, the race was on to see who could follow in Sandy’s footsteps and run the best lemonade stand in Bankington Heights.

Jamie and Chuck were lucky in that they’d worked for Sandy during the previous summer and had a good understanding of what made his lemonade business work.  Kenny admired the fact that Sandy’s stands were all over town and sold more than just lemonade.  Jimmy, Dick and Stan didn’t really care much for lemonade at all, but were determined to sell as much of it as possible, regardless of the quality or taste.  As the weather started to get warm, the kids got started and began to open up for business.

All the kids started with about the same amount of money, provided by their parents.  This was frustrating because they were all stuck buying the same materials to construct their stands and the same ingredients to make the drink itself.  Even though it was hot out and the grown-ups in town were buying lemonade each day, the kids noticed that because they were competing with each other, they were barely making enough to keep operating, let alone the amount needed to expand.

One day, Jimmy came up with a new idea and went down to Easy Al‘s grocery store to talk to the neighborhood grocer, Al.  Jimmy convinced Al to front him double the supply of lemons, sugar and ice cubes he usually used on a given day and to allow Jimmy a little extra time to pay him back for his investment.  When Stan and Dick figured out how Jimmy was able to open a second stand down the street,  they went down to Al the Grocer’s and made similar arrangements.

Kenny and Chuck were more interested in how Al the Grocer was making money.  By fronting supplies to the lemonade stand kids, he was selling more supplies total and charging more for the fronted lemons and sugar than for those bought with cash.  Kenny and Chuck got into the game and began to give Stan, Jimmy and Dick whatever extra cash they could scrape up to see if they could make a little extra with every new stand the kids were able to open.  Jamie got into the game, too, and now the neighborhood kids could open up stands on every corner in Bankington Heights.

One day, Al retired from the grocery business and left the keys to the store to his nephew, Ben.  Ben had trouble understanding all the deals that Al had made with the neighborhood lemonade stands, but he did not want to cause any trouble, so the arrangements continued.

By July, midway through the summer, Kenny and Chuck had 10 lemonade stands each and were selling potato chips, bubble gum and offering shoe shines as well as cold drinks.  Jimmy, Stan and Dick were also operating many stands, but rather than making their own lemonade, they were mixing pitchers from the other kids’ stands and offering them as a new type of lemonade mixture.  When supplies of lemons were running low, Jimmy and Stan simply mixed in more sugar to make up for it and no one in town seemed to notice.  Curiously enough, even though they were competing, very often the kids would buy lemonade from each other and either drink it themselves or resell it to the grown-ups who came by.

As the weather began to cool off, the grown-ups stopped coming by as frequently and people in Bankington Heights seemed to have lost interest in lemonade entirely.  Stan, Jimmy, Dick, Kenny, Jamie and Chuck had not yet made enough money to cover the many new stands they had opened, and the cost of building that treehouse or buying that new bike seemed as out of reach as ever.  The kids went down to the grocery store, but each time, with less and less money as lemonade sales continued to disappear.  One day,  Jimmy went down to Ben’s store and Ben had to say no to fronting Jimmy the ice cubes he so badly needed for his stands.  Ben told Jimmy his best bet was to let Jamie take over his stands and then, and only then, would Ben be able to make the ice cubes available.  Jimmy said ok and spent the rest of the summer indoors watching TV.

When the rest of the kids saw what happened, they ran down to talk to Ben, but when the grocer started to unravel the records of who owed what to whom, he started to decline requests for more sugar, lemons and ice cubes.  The stands were now empty of customers and supplies as the summer drew to a close.  Half the kids now owed more money to each other or the grocer or their parents than they could ever have possibly imagined.  The other half were taking over the empty stands as Stan and Dick also quit and went inside.  Ben tried to help those who had taken over the empty lemonade stands, but no amount of providing them with lemons or sugar could change the fact that the people of Bankington Heights just didn’t want any more lemonade.

Eventually, Chuck and Kenny gave up, too and the kid with the most lemonade stands in town by September was Jamie.  Sandy dropped by the old neighborhood and looked on approvingly as Jamie began the process of turning those lemonade stands into hot chocolate stands.  Just in time for the cold weather, the grown-ups started to come back and they bought hot chocolate from the only stands left in the neighborhood.

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