Though the two events are lumped together so often as to be indistiguishable, I don't believe the 1929 Crash caused the Depression.
It certainly wasn't the SOLE cause, but I don't think it can be dismissed as A cause. Similarly, the New Deal was less important in stabilizing the economy than WWII, but it's generally accepted that it helped.
At any rate, whether or not the market crash caused the Depression, I think we can agree it was very bad financial news.
Shortly after the Crash, Congress passed several reactionary bills, the most notable being the Smoot-Hawley Act, which sharply increased tariffs on imports and led to a series of similar bills being passed by other countries. This all had the effect of squelching overseas trade and the doubling of the US unemployment rate within a year.
The dilemmas of global trade are enough to warrant an entirely different thread (or several -- we've already got China is Fucking Scary) -- as you say, raising barriers to imports can hurt American jobs, but obviously lowering them can too.
Another primary cause was intentional inflation that the US government pushed by printing more and more money in the years after WWI. The reasons for this were many--mainly they wanted to restore solvency to Britain--but it had the effect of producing an unrealistic and unsustainable boom in the US.
We've had more than one bubble in the past decade, between dotcoms and housing.
Forgive me if I'm being overly pedantic here, Thad, but I just reread America's Great Depression, a book written in the 60s which talks about exactly what we're going through now: the low ebb of a "credit cycle" caused by the Federal Reserve (a government-controlled bank) setting the interest rate too low for too long, discouraging savings and spurring speculation in risky markets (stock exchanges and mortgage-backed securities, for example). As much as I would like to feel that those irresponsible investors back in '29 were getting their comeuppance--it's a very strong and important market factor in a laissez faire economy--I truly feel that the blame lies in government intervention in the financial sector.
Not mutex. Government meddling and irresponsible business practices can and do exist side-by-side.
The problem with the notion of "investor comeuppance" is that when the investors go down, they take everyone else with them. If this happened in a vacuum and only the guilty were punished, hey, great, but that's not the way it ends up working out.
