Great Contraction (1929 - 1933)

The Great Contraction lasted from August 1929 to March 1933 and was the initial phase of the Great Depression. During which period the Federal Reserve failed to operate as a lender-of-last-resort - providing loans to otherwise solvent, but temporarily illiquid, commercial banks - resulting in the failure of otherwise solvent banks. GDP fell by about 30 percent, and unemployment reached around 25 percent.