What made the Great Depression so 'great' was the fact that it affected the whole world, irrespective of whether the countries were rich or poor. The aftereffects of this cataclysmic global crash continued to be felt by people all over the world for several more years. In fact, many economists date the end of the Great Depression to 1941, the year in which the US entered the World War II. Over these years, the world went through several economic tribulations.
No one really can name the one, defining cause of the Great Depression. It is widely accepted that, like most mega-disasters, it was caused due to a combination of factors. The economies around the world generally work with a 'what goes around, comes around' pattern; there are economic upswings and downswings all the time. The decade before the Depression saw about 3 instances of economic upswing and then contraction, and it is a well-accepted facet of the way the economics of a country works.
The emergence of the Great Depression is largely credited to a lot of economic and monetary policies that took place over the decade preceding it. Your interpretation and explanation of the causes will vary depending on whether you belong to the Keynesian school of thought or the Monetarist school of thought. However, the fact remains that it was definitely due to a combination of factors.
Events During the Great Depression
Herbert Hoover becomes the President of the United States, and within the first year of his tenure as the President, the Black Tuesday of October 29, 1929, sees the stock market hit an almighty crash. Investors lose $16 billion over the month, an astronomical number in that time (and in modern times as well, for that matter).
Gross National Product falls by 9.4%. The rate of unemployment goes up from 3.2% to 8.7%. 6000 people of New York City are on the streets selling apples at 5 cents a piece.
Various part of the US are marred by food riots, as several grocery stores get ransacked and their food items get stolen. Foreign workers, especially Mexicans, face the ire of the American workers as they appear to be 'stealing' American jobs. Gross National Product goes down by a further 8.5%; unemployment goes up to 15.9%.
The Depression continues to sap the US economy. The Reconstruction Finance Corporation is set up, and lends $2 billion to various banks, insurance companies, and other institutions. Gross National Product falls by another 13.4%. 23.6% of the people are unemployed, as the Government continues its non-interventionist, laissez-faire policy. Stocks had lost 80% of their 1930 values. Riots and discontent spread throughout the country, as World War I veterans march into Washington and ask for the dues promised to them during the War. The Army is called upon to disperse the dissidents.
The Government finally decides to intervene, and raises the tax rate for the highest earners in the country from 25% to 63% in order to redistribute wealth. The move is viewed as a little too late, and Herbert Hoover is replaced by Franklin Delano Roosevelt towards the end of the year.
Approximately 11,000 banks are shut. The National Industrial Recovery Act is signed, creating the National Recovery Administration. The NRA is created to oversee the construction of roads and other national infrastructure, and boost employment. As a result, the economic contraction goes down a shade, the free fall of the Gross National Product is arrested, with a dip of 'only' 2.1% and a slight rise in unemployment to 24.9%.
The reforms start bearing fruit, as the Gross National Product rises for the first time in the 1930s by a healthy 7.7%. The unemployment falls to 21.7%.
The Works Progress Administration, another Government initiative to boost employment, is started. Another year of robust economic growth sees the Gross National Product grow by 8.1% and the unemployment rate falls further to 20.1%. The Social Security Act is passed and retirement benefits are paid to senior citizens.
Roosevelt is rewarded in the election for his successful efforts in staving off the Depression with a second term as President. The tax rate for the highest earners is hiked up to 79%. Economic recovery continues, with an increase in the Gross National Product by 14.1% and the unemployment falling to about 16.9%.
A mini-recession comes up in the US, but the Gross National Product still goes up by 5%, and the unemployment falls to 14.3%.
The recession from the past year springs up as the Gross National Product falls by 4.5%, and unemployment rises to 19%.
1939 - 1941
World War II starts, and the US sees an increase in the production of arms and ammunition to such an extent that the Depression is all but eradicated from the economy. Production goes up by a whopping 50%, which sees a phenomenal increase in employment and economic activity, and hence the Gross National Product as well.
The Great Depression was undoubtedly one of the greatest economic crises ever―very possibly the greatest the world will ever face―and efforts are continuously being made by policymakers all over the world to avoid such a huge catastrophe.