Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

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
The best gadgets for your next business trip Hotels often lack the resources business travelers need to work efficiently. But fear not: These six gadgets will turn any hotel room into a temporary office. More
Must-have gadgets for business travelers For many business travelers, commuting through airports and enduring flights is the worst part of any trip. Thankfully, these seven gadgets help make life on the road -- and in the air -- much easier. More
Best cities for first-time homebuyers A recent Zillow analysis on the best markets for first-time homebuyers finds that the best deals are in the Southeast and the Midwest. More

Special Offer