2 of 10
BACKNEXT
Great Depression
 Great Depression
The U.S. economy was already in a recession in 1929, when newly appointed New York Fed President George Harrison (not the guitarist from the Beatles) decided he wanted to curb an emerging stock bubble. He convinced the Fed to raise interest rates, instead of letting stocks run their course.

Two months later, the stock market crashed, starting the Great Depression.

The rise in interest rates had affected the economy, like sticking a needle in a balloon rather than letting the air out slowly. The Fed had choked off economic growth, collapsing the entire financial system.

To make matters worse, the Fed raised interest rates again following the crash, and failed to increase the money supply to combat deflation. People started stashing their cash under mattresses instead of in banks, turning a bad recession into a full-blown crisis.



NEXT: Great Recession
Last updated March 24 2011: 3:05 PM ET
More Galleries
'My biggest retirement mistake' Five CNNMoney readers share stories about saving that you can learn from. What they would do differently if they had another chance. More
Inside a $60,000 vacation of a lifetime Private jet tours around the world are growing in popularity, with a number of companies cropping up to take travelers on luxe, bucket-list trips. Here's a look at one 17-day journey, run by TCS Expeditions, that will take 78 people to some of the most lusted-over destinations. The price: $60,000 per couple. More
Don't want a bigger iPhone? Here are 6 alternatives Apple's next-generation iPhones are set to be the largest ever. But for those of us who don't want to give up any more space in our pockets, here are a few smaller options. More

Special Offer
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.