People wanted to buy all sorts of things what they couldn´t afford during the WWI,so they started to take loans and they were not able to pay them back later.Also USA was producing too much and there were huge leftovers,because people weren´t able to buy so much.People in the US thought that nothing bad could ever happen there,I think it was the main reason.

It was greed! The boom in the late 1920s led hundreds of thousands of Americans to invest heavily in the stock market. A significant number were borrowing money to buy more stock and shares. You have to imagine that over 8.5 billion Dollars was out on loan. That was more than the entire amount of currency circulating in the U.S and as stock prices rose it encouraged even more people to invest on borrowed money. On October 24, 1929 the Dow at its highest ever, the market finally turned down, and panic selling started. That was the start!

There were half a dozen causes. I can only remember three. The one you always hear about was speculation in the stock market, but perhaps the biggest reason was protectionism. In 1930, President Hoover signed the Hawley-Smoot Tariff Act into law despite please from one thousand economists not to do so. This law almost immediately cut world trade in half and threw millions of people out of work worldwide. It was not seen as a cause of the 1929 depression because it happened in 1930. However, it was already certain to be signed, and that was known in 1930, so capital fled businesses that were doing international trade. A second cause was a liquidity crisis at the Credit Anstalt in Vienna. I'm not familiar with that but it was probably related to the two to four per cent deflation we had at the time. There wasn't much reason to invest money if it would be worth 4% more just sitting in a safe or mattress somewhere!

Largely overconfidence in what was assumed to be an ever-growing stock market. Too many people bought too much stock on margin. The "bubble" was bound to burst, and did, taking the entire economy with it.

After WW1 people in america were getting richer and buying luxury goods like cars and fridges, and they were also buying stocks and the prices just kept going up. But after a while everyone already had a fridge and a car so the factories didn't sell as much as before. The shares started to drop in value because the factories weren't selling as much. People started to panic and sell their shares at the same time. Factories then didn't have enough money and people lost confidence in banks and also money.

That isn't a question that you can answer simply. You don't get a crash that big without a lot of factors coming into play. Every economist you talk to would probably give you a different answer. My take on it, and I am definitely not an economist, comes from listening to my grandparents, great grandparents, great aunts and uncles and reading to fill in the gaps. 1. There was a new technology at the time that everyone wanted. People en masse borrowed to buy that new technology. Building that new technology pushed the economy to new heights, but because it was expensive and people borrowed to buy it, the economy was all on paper. Eventually, everyone who wanted that technology had it and the economy started to slow. That technology? The automobile. 2. Because the economy was booming, people borrowed money based on their income to build bigger houses than they could afford. The rich were building huge neo-colonials, and even the poor were building nice little bungalows. Drive around your town and notice the houses built in the twenties. 3. Post-war boom. The economy boomed after WWI, based on the confidence of the victor and the usual pent-up demand for goods. 4. The weather. Through the latter part of the twenties and all of the thirties, the weather was doing the same things that it is now. They had a drought in the midwest and southwest that deepened into the dustbowl. Farmers were borrowing to buy seed year after year and not harvesting crops to cover the debt because there was no rain. Into the thirties, they began getting one hurricane after another that caused massive destruction and left whole regions impoverished. There were some pretty famous hurricanes in that period. There was one that hit Long Island. Katherine Hepburn was famously shipwrecked on her family's attic floor in that one. There was one that hit Florida and killed thousands. There was one that went up the Missippi and left the river valley flooded for, I believe, a whole year. 4. There was trouble in the world economy. WWI had left much of Europe in ruins. Germany was in ruins and force to pay reparations. There was no Marshall plan to rebuild. Germany was starving, which left them vulnerable to being wooed by any crackpot who would promise to feed them. 5. Many major institutions, like railway lines, steamboat lines, and streetcar lines were already teetering on the brink because of loss of ridership to the automobile. This probably doesn't sound like much, but remember your Monopoly board? The B & O, the Reading Railroad, The Pennsy were all major economic powerhouses at the time. You take the major players out of the economy and the economy falls. 6. Finally, there were runs on banks. As the media (radio and newspapers at that time) started reporting more and more bad news, rumors started spreading that banks were going to close, taking people's life saving with them. Long lines of people formed in front of banks, waiting to withdraw their money. As most of a bank's holdings are loaned out to buy houses and cars, they don't have the cash on hand to honor those withdrawals, so they were forced to close. It became a domino effect that lead to bank after bank closing and declaring bankruptcy, but not until after they had foreclosed on houses and thrown the homeowner out. Watch It's a Wonderful Life for a good example of what happened to banks. 7. In the end, the Stock Market actually trades in confidence. Yes you are buying a share of a company, but that share is only worth something as long as that company exists. If the company goes bankrupt, your stock is a piece of paper. If you don't believe that company is going to survive, you will try to sell that stock before it tanks. When enough people start believing that a company is going to tank, they flood the market with the stock and the stock price plummets.

All great answers. There was a lot of insider trading where stock prices were artificially raised to lure in the public. As it grew, the paper values cause the economy to remain artificially high and investors bought with the paper revenue off rising stock values. When skittish overseas brokers started asking holders to pony up cash, they sold stock to pay. The large sales started everyone to panic and sell of stock. Something like 30 million shares were sold off, which was really a big deal. (obviously) The “wealth” simply vanished. The panic caused everyone to pull their investments as to offset losses.

I noticed great answers, all pretty much correct however the one piece that is missing is the that nearly a third of the Currency in circulation was counterfeit not to mention stocks and bonds, and Identity theft is nothing new ...worthless script is worthless script and having a National Debt in the trillions is of no help ... just like the stock market if it has no value ... you can have all the worthless script you want to print up Germany did it throughout the 20's and 30's simply stop pawning it off on us and the easiest way to commit I.D theft is the buying and selling of Loans between banks on an international scale ...and still the Debt is not paid to whom you borrowed the principle from in the first place, this goes further than just mis-management ... ~Nemo~

Many factors likely contributed to the collapse of the stock market. Among the more prominent causes were the period of rampant speculation (those who had bought stocks on margin not only lost the value of their investment, they also owed money to the entities that had granted the loans for the stock purchases), tightening of credit by the Federal Reserve (in August 1929 the discount rate was raised from 5 percent to 6 percent), the proliferation of holding companies and investment trusts (which tended to create debt), a multitude of large bank loans that could not be liquidated, and an economic recession that had begun earlier in the summer. http://www.britannica.com/EBchecked/topic/566754/stock-market-crash-of-1929#tab=active~checked%2Citems~checked&title=stock%20market%20crash%20of%201929%20--%20Britannica%20Online%20Encyclopedia

The lack of regulatory agencies was greatly responsible for the collapse of the Stock Market in 1929. People were buying a lot of stock on margin which entailed using borrowed money for investment purposes. Due to the lack of money in circulation at that time, many banks started to call in these loans in order for their institutions to remain solvent. The calling in of many loans and mortgages caused prices to drop and many investors who thought that they had fortunes found out that they had nothing in a very short period of time.