USA Government And Causes Of The Great Depression

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Great Depression
The great depression was a world’s economic collapse of 1929 that lasted for 10 years. The turmoil began when the trading enterprises sold 12.9 million shares of stock in a day. The prices at the stock market tripled and within four days, the stock prices dropped by 23%. Even though many scholars note that the great depression happened as a result of the stock market crash. However, other events that led to the crash included political, social and economic factors. The essay herein elaborates on the factors that caused the great depression and the actions taken by the USA government to solve the problem.
Causes of the Great Depression
The major causes of the great depression were viewed through the economic environment at the time. There were underlying weaknesses and imbalances in the economy, which were ambiguous and obscured by the boom and speculation of the euphoria of the 1920s. The trading trends at the Wall Street led to its crash on October 29th, 1929. At the beginning of the crash, more than nine thousand banks experienced huge losses due to their inabilities to save since investors withdrew all their savings from the banks. Besides, the stock markets performed poorly, that resulted to loss of $ 40 billion dollars. For example, the Fed increased interest rates to preserve the value of dollars, which led to the restriction of the access of money for different enterprises. In addition, about 100,000 businesses failed to progress during the time due to consistent losses they incurred (Holderness, Kroszner and Sheehan 435).
On the other hand, the social causes of the great depression were escalated by the boom psychology and the high speculation of the euphoria in the 1920s. Consumers spending increases with the increased investment to ensure the increased boom. However, there was a disparity in the wealth gain as the employees’ wages never increased. This brought unequal wealth distribution, hence there was a greater gap between the rich and the poor. The middle and lower class suffered while the upper classes were never concerned about the inequality of wealth distribution (Coppock 205).
On a separate note, the great depression was also worsened by the political factor. There were weaknesses in the political and financial institutions which could not cope well with the downfall of the economy before 1930. The governments never took any action to rectify the downturn in businesses, instead, it allowed for the impersonal market forces to correct some of the economic problems (Eichengreen and Temin 183).
Roosevelt and the USA Government Action
The USA government took action to solve the problems of the depression through industrial regulations, a new mode of taxations, ensuring better public works, enabling the social insurance, enabling the social-welfare services, and deficit spending to ensure economic stabilities. Furthermore, President Roosevelt signed a new deal that created social and economic based programs that aimed at ensuring the nation's recovery from the depression. The deal elevated the role of federal government and ensured reformation i...