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The "Roaring ’20s" and the Crash of 1929
Bruner, Robert F.; Miller, Scott Case F-1908 / Published October 8, 2019 / 38 pages.
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Product Overview

In April 1930, US Treasury Secretary Andrew Mellon reviewed recent stock market events as he prepared to enter a meeting of the Federal Reserve Board, which he chaired. In September and October 1929, the US stock market had fallen about a third, and then recovered somewhat. In response to the turmoil, the Federal Reserve (Fed) had lowered the discount rate in five steps from 6% to 3.71%, and market rates of interest across a range of debt securities had followed. Now, given the recovery in the stock market, Mellon wondered what further guidance to give to the Fed, and what actions to recommend to the president and to Congress. What were the lessons of the recent market turmoil? What policies should the Fed pursue? Answers to such questions depended on agreement about the issues to be resolved. Advice streamed in from business, politicians, the press, and pundits of all kinds, and hinged on interpretations of the recent turmoil, which ranged from a standard cyclical correction to an international crisis. This case, which has been taught successfully in Darden online and in-person classes, presents the events leading up to the Great Depression and explores a range of responses and interpretations by participants, contemporary observers, and scholars of economics and history.


Learning Objectives

The main teaching opportunity in this case is to explore the concept of an equity market "bubble" and its attributes, causes, and consequences. The task for the student is to assess evidence supporting and opposing views about the origins of the boom and crash. A second objective is to introduce the sequence of events that led to the Great Depression (see the complementary cases in this module) and to motivate a discussion of its causes.

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  • Overview

    In April 1930, US Treasury Secretary Andrew Mellon reviewed recent stock market events as he prepared to enter a meeting of the Federal Reserve Board, which he chaired. In September and October 1929, the US stock market had fallen about a third, and then recovered somewhat. In response to the turmoil, the Federal Reserve (Fed) had lowered the discount rate in five steps from 6% to 3.71%, and market rates of interest across a range of debt securities had followed. Now, given the recovery in the stock market, Mellon wondered what further guidance to give to the Fed, and what actions to recommend to the president and to Congress. What were the lessons of the recent market turmoil? What policies should the Fed pursue? Answers to such questions depended on agreement about the issues to be resolved. Advice streamed in from business, politicians, the press, and pundits of all kinds, and hinged on interpretations of the recent turmoil, which ranged from a standard cyclical correction to an international crisis. This case, which has been taught successfully in Darden online and in-person classes, presents the events leading up to the Great Depression and explores a range of responses and interpretations by participants, contemporary observers, and scholars of economics and history.

  • Learning Objectives

    Learning Objectives

    The main teaching opportunity in this case is to explore the concept of an equity market "bubble" and its attributes, causes, and consequences. The task for the student is to assess evidence supporting and opposing views about the origins of the boom and crash. A second objective is to introduce the sequence of events that led to the Great Depression (see the complementary cases in this module) and to motivate a discussion of its causes.