What causes the Great Depression?

Answer 1

The Great Depression occurred when the economy failed. Banks were closing, and people were losing their savings, their jobs, and even their homes. The closing of many businesses put an unprecedented number of people out of work.

Factors that contributed to the Great Depression include the Stock Market crash, the over-investment in stocks by the public, the weakness of the agricultural sector, the lack of farmers' and workers' purchasing power, and the ineffective policies of the Hoover administration. With the stock market crash, the bank failures, and the loss of savings and homes, the entire economic cycle was depressed. Once the reduction in business activity began, it spiraled into a general collapse of the system of industry and finance. A simple answer is that investors had lost confidence in the system and became fearful of losing their own savings and wealth.

Coolidge prosperity did not extend to the masses of the Americans. Disparity of wealth was a major factor in the depression, because eventually people ran out of money to buy goods, produced by the masses. Buy now-pay later became a dominant part of the 1920s. Farmers were in a depressed economy before the Great Depression; mail-order houses and farm machinery companies went out of business. Farmers owned land they couldn't afford, they produced more and overproduction drove down prices. Foreign markets declined and farmers had no place to sell their product. The Fordney-McCumber Tariff (1922) and the Smoot-Hawley Tariff Act of 1930, raised tariffs on imports to the highest in American history. The McNary-Haugen (bill) Farm Relief Act would have provided that the US government purchase the surplus product of America's farms and dump that surplus on the world market at whatever price it would obtain. The idea was to raise the prices of America's agricultural products at home. Congress passed the bill twice and Calvin Coolidge twice vetoed it. Secretary of Treasury Andrew Mellon (the most powerful member of the Harding, Coolidge and Hoover cabinets), favored lowering income taxes on the wealthy and trickle-down economics: the theory (tested decades later in Reaganomics)was that if taxes are lowered for the wealthy, it will trickle down to the masses. The maximum tax rate for the wealthiest of 70% (during World War I) was reduced to 50% in 1921 then in 1926 to 20%. This contributed to the unequal distribution of wealth, one cause of the Great Depression.

Well, there was many reason's like the stock market crashed in 1929 and also another reason was the bank failure. Also another reason was the american policies.
are still a matter of active debute amoug economist

Answer 2

The causes of the Great Depression is debated by economists a lot. The most popular belief is that it was caused in 1929 by the crash of the stock market.