The three main causes of the Great Depression were as Follows:
The Stock Market Crash of 1929
Bank failure
The Roaring Twenties
The Stock Market Crash was a crisis because people had unevenly so when prices suddenly fell people freaked out and tried to sell all of their stocks and it clogged the market because everyone was selling and no one was buying.
Bank failure was a big issue because the banks were loaning out more money than they actually had and loaned out all of other people's money so the people who were saving went to get their money out of the bank after the market crashed and found that there was no money left in their accounts because the banks had loaned all of it out. Now a days the banks can loan out 20 percent of what you invest with an interest on what they loaned out so you get you money back and they make money.
The Roaring Twenties was a complete disaster because people thought they had all this money to freely spend upon the creation of credit so they used credit to buy houses and cars without making any down payments and they ended up spending money that they never had in the first place.
These are all so significant because they were all economic instabilities that could have been avoided if the government had regulated the bank activity more and someone had been around to advise people not to panic simply because stock prices took a huge hit.
1.) Stock market crash of 1929 - Many believed erroneously that the stock market crash that occurred on Black Tuesday, October 29, 1929.
2.) Bank Failures - Throughout the 1930’s over 9,000 banks failed. Bank deposits were uninsured and thus as banks failed people simply lost their savings.
3.) Reduction In Purchasing Across The Board - With the stock market crash and the fears of further economic woes, individuals from all classes stopped purchasing items. This is then lead to a reduction in the number of items produced and thus a reduction in the workforce.
