The Great Contraction is Milton Friedman

Milton Friedman

Milton Friedman was an American economist, statistician, academic, and author who taught at the University of Chicago for more than three decades...

's term for the recession which led to the Great Depression

Great Depression

The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...

.

The term served as the title for the relevant chapter in Friedman and Schwartz's 1963 work A Monetary History of the United States. The chapter was later published as a stand-alone paperback

Paperback

Paperback, softback or softcover describe and refer to a book by the nature of its binding. The covers of such books are usually made of paper or paperboard, and are usually held together with glue rather than stitches or staples...

 entitled The Great Contraction, 1929-33 in 1965.

Friedman labelled it thus because he believed that the depression lasted so long due to the Federal Reserve's mismanagement. He argued that the Reserve contracted the monetary supply dramatically, prolonging the Depression, which Friedman claims could have been over by 1931.

Economists such as Paul Krugman

Paul Krugman

Paul Robin Krugman is an American economist, professor of Economics and International Affairs at the Woodrow Wilson School of Public and International Affairs at Princeton University, Centenary Professor at the London School of Economics, and an op-ed columnist for The New York Times...

 refer to the similarly named (and sometimes confused with) Great Compression

Great Compression

The Great Compression refers to "a decade of extraordinary wage compression" in the United States in the early 1940s. During that time economic inequality as shown by wealth distribution and income distribution between the rich and poor became much smaller than it had been in preceding time periods...

 as a period during which economic equality rose due to the progressive tax

Progressive tax

A progressive tax is a tax by which the tax rate increases as the taxable base amount increases. "Progressive" describes a distribution effect on income or expenditure, referring to the way the rate progresses from low to high, where the average tax rate is less than the marginal tax rate...

policies instituted during the years of WWII and the policies of the Roosevelt Administration.