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  • January 2009
  • Case
  • HBS Case Collection

The Federal Reserve and the Banking Crisis of 1931

By: David A. Moss and Cole Bolton
  • Format:Print
  • | Pages:32
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Abstract

In early October 1931, in the midst of a global economic depression, the U.S. banking system was in crisis—with bank suspensions running at near record levels. At the same time, the broader economy was sputtering, and U.S. gold reserves had come under severe pressure after Britain abandoned its gold standard in mid-September. As pressure continued to mount, the leaders of the Federal Reserve faced several critical decisions. Should they adjust interest rates? Was abandoning the gold standard an acceptable option? Should they lend more freely to the nation's commercial banks? Or would this only ensure the sorts of financial excess that had gotten the country into trouble in the first place? Was it time to give in to the mounting pressure, or to hold firm?

Keywords

Decision Choices and Conditions; Financial Crisis; Central Banking; Business History; Crisis Management; Banking Industry; United States

Citation

Moss, David A., and Cole Bolton. "The Federal Reserve and the Banking Crisis of 1931." Harvard Business School Case 709-040, January 2009.
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About The Author

David A. Moss

Business, Government and the International Economy
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