Short and sweet, exactly why did the economy collapse in the Great Depression?

Trevor M: Short and sweet, exactly why did the economy collapse in the Great Depression?
For my final exam, I need to talk somewhat about how it collapse. But how exactly how did it collapse? Please don’t respond with just “oh, everyone pulled their money out of the stock market.” True, but why did they all do it? I need to know exactly what set everyone off.

Answers and Views:

Answer by sk_quest
Part of it has to due with the fact that we gave money to Germany so that they could pay their reparations to England and France. England and France owed us money and sent the money they got from Germany to us. We got our money back basically and there was no growth.

Internally, people invested in the stock market for the same reasons they do now; to try to make money.

Answer by dnamaj
People were using credit too much and buying things they didn’t need. Pretty soon everyone was in debt and the second the stocks went down, everyone pulled their money out. Then the run on the banks happened where because there was not enough money and the country was in too much debt, people were not able to get their money. Everyone became broke=the Great Depression.

Answer by Robert R
They didn’t ‘pull it out’, they lost it. They were allowed to buy stocks for as little as 10% down. When things started going downhill, they started ‘calling in’ the other 90%, and nobody could pay it. So almost all stocks became almost worthless and businesses starting failing and laying off people. Fired people have no money to spend, so more and more businesses closed, and it was a downward spiral from there…

Answer by LittleKandiRaver
The Great Depression was the worst economic slump ever in U.S. history, and one which spread to virtually all of the industrialized world. The depression began in late 1929 and lasted for about a decade. Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920’s, and the extensive stock market speculation that took place during the latter part that same decade. The maldistribution of wealth in the 1920’s existed on many levels. Money was distributed disparately between the rich and the middle-class, between industry and agriculture within the United States, and between the U.S. and Europe. This imbalance of wealth created an unstable economy. The excessive speculation in the late 1920’s kept the stock market artificially high, but eventually lead to large market crashes. These market crashes, combined with the maldistribution of wealth, caused the American economy to capsize.