What were the underlying causes of the Great Depression?

The underlying causes of the Great Depression were a perfect storm of bad news. 

#1.  Agricultural overproduction.  During the 1920s technological innovations enabled farms to produce more and more crop for less time and labor.  However, this began to outpace the consumption of these crops, and as a result the price of these products began to drop.  In the past, farmers had compensated for lower unit prices with sheer volume, but by 1929 prices were so low, that producing enough volume to make up for the price was impossible.  In addition, if no one was buying the price didn't matter. 

#2.  Wealth concentration.  Although the 1920s had been a time of great urban prosperity, this prosperity was not spread evenly.  Although wages had been rising, they had not kept pace with inflation.  As a result, the power of people to buy goods was not keeping pace with the volume of goods produced.  When this happened either prices had to fall or wages had to rise.  Businesses did neither, as that would reduce their proficts.  As a result, consumers began to resort to credit, but that just created a bubble in the economy, as credit eventually has to be repaid, and the wages to pay it back didn't materialize. 

#3. Securities fraud came to light in the late 1920s.  Due to the rising profits of businesses caused by inflation outpacing wages, everyone wanted a piece of the action.  This attracted many unscrupulous characters who capitalized on everyones desire to own stock in the most successful companies.  Many of these schemers also offered options to buy stock on margin, where a loan was taken out to buy even more stock, and then the profit from the rising stock value paid back that loan, or was used to buy even more shares.  But in September, the fact that fewer people were buying goods caused a chain reaction. 

#4. Chain reaction: Farmers stopped buying, this caused the credit and margin purchases to default when expected gains were not realized.  With money no longer available spending dropped.  Declining spending reduced business revenues.  Businesses cut jobs to compensate for dwindling revenues, reducing incomes.  Reduced incomes led to even lower spending, and a vicious cycle erupted.  By 1932, unemployment was a staggering 25% (or more by some estimates), the stock markets were at only 10% of their August 1929 high, banks were closing in droves under threat of "runs," and the Great Depression had begun. 

What underlying issues ultimately led to the Great Depression?

The first issue was agricultural overproduction.  During World War I, there had been enormous demand from overseas, as some of the best farmland in Europe had been rendered unfarmable by the fighting, and many farmers had joined the military leaving their farms fallow.  When the war ended, the demand dropped.  New technology had also been invented in an effort to meet the demand from Europe.  These technologies included gasoline powered tractors, Tractor driven plows and other machines.  Mechanization further increased production, but high supply and low demand lead to lower prices.  In the past farmers has compensated by increasing production and making up for quality with quantity.  Unfortunately, this time the glut was too big, and unlike the past, they had debts to pay off from the cost of mechanization.  As a result many farm loans ended up under-water. 

The second issue was inflation.  Labor compensation did go up during the 1920s, but not as fast as consumer prices.  As a result, the "consumers" didn't have any money to spend, and industrial overproduction began to occur.  When this happens, industry has to start paying more or prices have to come down.  Unfortunately, neither occurred, leading to a very warped economy where a few were getting rich at the expense of everyone else. 

The third issue was unregulated securities.  With big corporations having huge profits, everyone wanted to get a piece of the action, and stock markets boomed.  Unfortunately this boom was largely a reflection of the rich getting richer, and the poor getting poorer.  Although some middle-class gains were made, many were only able to afford securities with loaned money, money that they would pay back as profits were realized, this is the fatal flaw of career gambling.  And of course where there's money trading freely, there are scammers.  Ponzi schemes were rampant usually claiming those who were using the loans, who were unable to buy securities from reputable dealers. 

In October 1929, this all came to a head.  Farm loans foreclosing caused agricultural securities to fall.  The number of these securities on loan caused the downturn to spread across the securities markets.  As securities began to fall, income that had masked declining consumer spending vanished, and consumer spending fell.  This caused even more securities to lose value, and soon a vicious cycle of cutbacks began.  When the cycle finally bottomed out, 25% of Americans were Unemployed, up to 80% were underemployed, and business profits were almost non-existant.