What was the primary cause of the Great Depression?

The primary cause of the Great Depression is best attributed to a combination of the stock market crash and bank failures. The stock market crash of 1929 marked a dramatic plummet in stock prices, severely impacting investor confidence and leading to widespread panic selling. This event alone set off a chain reaction that destabilized the economy.

Following the crash, many banks, which had invested heavily in the stock market or had made risky loans, faced insolvency as they could not recover their losses. The resultant bank failures caused people to lose their savings, leading to decreased consumer spending and further exacerbating the economic downturn. With banks collapsing, credit dried up, businesses could not secure loans to operate or expand, and unemployment rose dramatically.

While excessive government spending and World War I expenses contributed to economic conditions, they did not directly trigger the Great Depression. Similarly, natural disasters did affect agriculture during the 1930s, particularly the Dust Bowl, but those were not the primary catalyst for the widespread economic collapse that defined the era. The combination of the stock market crash and bank failures is thus established as the core reason behind the onset of the Great Depression.