What was a major factor that contributed to the start of the Great Depression?

The stock market crash of 1929 is widely recognized as a pivotal moment that significantly contributed to the onset of the Great Depression. On October 29, 1929, known as Black Tuesday, stock prices plummeted, wiping out billions of dollars in wealth and leaving investors in a state of panic. This sharp decline in stock values led to a loss of confidence in the economy, which caused people to cut back on consumer spending and business investments. As the financial sector grappled with the impact of the crash, banks failed in increasing numbers, resulting in a credit crunch that further exacerbated the economic downturn.

The effects of the stock market crash rippled throughout the economy, contributing to widespread unemployment, decreased production, and a significant contraction in economic activity. It created a cycle of declining demand and falling prices, which deepened the economic crisis and led to the Great Depression, a period marked by severe economic hardship and widespread unemployment that lasted throughout the 1930s. The crash is often viewed as both a catalyst and a symbol of the economic fragility that characterized this era, illustrating how intertwined financial markets and the broader economy are.