The Great Depression (1929 to 1939) was an era of extraordinary decline in economic activity. The Great Depressions initiated in US but very rapidly affected the whole world.
Causes of Great Depression
There are many causes, listed below, which contributed in the severity of Great Depression (Hannah Rasmussen).
First World War
At the end of world war one (1914-1918) many countries were struggling for rebuilding. They had to pay their war debts which created economic problems for them.
Stock Market Crash
The decline in the stock market resulted in the dramatic decline of production and employment in US by the fall of 1929. The stock market fell 89% from its original. People lost their confidence in the economy.
Bankruptcy and Monetary policy
In 1930, 744 banks in US went bankrupt. Due to this depositor lost their savings. As other savers lost their confidence and demanded to withdraw their amounts particularly dollars from banks. Moreover, the federal government increased the interest rates to conserve dollars. This decreased the money supply resulted in bankruptcy.