Speculative excess: Heavy margin buying inflated stock prices well beyond fundamentals through the 1920s.
Banking panics: Without deposit insurance, waves of bank runs wiped out savings and froze credit.
Contractionary policy response: The Federal Reserve is widely criticized (notably by Friedman and Schwartz) for tightening rather than expanding the money supply as banks failed.
Smoot-Hawley Tariff: The 1930 tariff act raised trade barriers, shrinking international trade and worsening the global downturn.
Effects
Unemployment near 25% at the Depression's worst point, around 1933.
New financial regulation: The Glass-Steagall Act, the FDIC, and the SEC all trace directly to this era, reshaping American banking and securities law for decades.
The modern social safety net: Social Security, unemployment insurance, and other New Deal programs established a federal role in economic security that persists today.
A generation-long recovery: The Dow Jones Industrial Average didn't return to its 1929 peak for roughly 25 years.