What contributed to the onset of the Great Depression?

The onset of the Great Depression can be attributed to a combination of factors, and one of the most significant was the interplay of stock market speculation, bank failures, and agricultural challenges like droughts. In the years leading up to the Great Depression, there was rampant speculation in the stock market, leading many investors to make risky investments based on inflated stock prices. When the market crashed in 1929, it triggered a widespread loss of confidence, not only in stocks but also in the banking system. Many banks, heavily invested in the stock market or over-leveraged due to loans that could not be repaid, failed, resulting in the loss of savings for depositors and a further contraction of economic activity.

At the same time, agricultural distress, particularly due to severe droughts like those seen in the Dust Bowl, had devastated farming operations in key regions. This loss of agricultural output exacerbated the economic situation, plunging farmers into poverty and reducing their ability to spend and contribute to the economy. Together, these factors created a perfect storm that led to the prolonged economic downturn of the Great Depression, highlighting the interconnectedness of financial practices and environmental conditions in shaping economic health.