Essay Sample on Michigan State: A Region of Achievements, Failure, and Calamity

Introduction

Many states have hit the headlines due to their many achievements and some due to their leaders' failures or different calamities. It has not been different when it comes to Michigan State. The state is situated in the United States' midwestern regions, and the name comes from a native dialect (Ojibwe), meaning large waters or a large lake. Due to the availability of natural resources and conducive climatic conditions, the region has hosted a lot of people, raising the region's demographics substantially. There are more than 10million residents in the region courtesy of the industrialization taking place within the lakeside. Over the years, the industries have been a source of livelihood for the majority residing within the region. The population in Michigan stands at the tenth populous states within the 50 states in the US. The capital city of the state is Lansing, while the largest city is Detroit. Metro Detroit is one of the populous cities in the state and carries the largest metropolitan economy.

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The Great Depression in Michigan

In United States history, the great depression hit Michigan harder than any other state in the region. The effect was felt from the year 1929-1939. The stock markets were flowing on well until October 1929 when the market crashed (Schmidt, 2019). The crumbling of the stock market brought an extensive panic to the investors, and that resulted in a deep decline in the industrial output, and hence the companies could no longer meet some of their obligations, and thus this prompted them to lay off a majority of the employees. The worst year happened to be the year 1933, which accounted for more than 15 million working individuals who remained jobless and almost half the banks in the region registering failure in running their duties (Schmidt, 2019).

The depression in the state brings incites to what could have led to the massive crumbling of the United States economy. For a period of 9years, from 1920, the US economy had expanded rapidly, and the total wealth of the nation doubled more than twice. The period was even named the roaring twenties. The stock market from New York and on Wall Street magazine had printed wrong speculations, and the conjectures were so enticing not to stake. From tycoons to the janitors and the cooks in the various industries, they all pumped in what they felt worth the risk, and as a result, there was an extensive and immediate arrival at the peak of the stock market as at August 1929. During this time, the states had started experiencing reduced production, and there was a decline in employment, a feature that saw stock prices left behind and thus much higher than their ideal prices. There were additional problems that presented themselves, such as low wages and increasing debts of consumers. The agricultural sector was not spared either as there was a drought, and the food prices were depreciating significantly. Banks had huge loans that could not be liquidated.

During this tenure, the American economy went to a mild recession in the summer of 1929. During this time, reduced consumer spending and goods started piling up for the mere reason of reduced buying a feature that led to companies reducing their production units. But again, against human understanding, there was a rise in stock prices. By the end of that year, the stock prices had reached the stratospheric levels where no statistician could promise justifiable future earnings.

Come the same year on the 24th of October, the paranoid and nervous investors started disposing of their shares, and there were records that in that only span, a record of 12.9 million shares was disbursed. This happened on a Thursday, where it was later named the black Thursday, and a subsequent wave took place five days later where there was a record of 16million shares sold on black Tuesday 29th of October the same year. Millions of the disbursed shares became worthless, and the majority of the investors who bought shares during this period were mercilessly wiped out completely. There was no longer consumers' confidence, and thus there was a reduction in the production rates of the industries a feature that saw a significant number of workers fired. The few who remained in their jobs experienced substantial pay cuts, and thus buying power was also shallowed down. The masses who were used to buy on credit were left in debt, and from that, the number of acquisitions and auctions elevated steadily. Foreclosures and repossessions were rampant during this period. The risk now was spread to other regions courtesy of the foreign exchange, mostly in the European regions.

Banks Statuses Under Different Presidents

Leaders were elected during this tenure, and at this point, the united states of America happened to be the only country that was industrialized in the world. President Herbert Hoover reassured the residents that the economy would get back to its normal state and run its course. This assurance seemed not practical as the issues went on getting worse over the subsequent three years (Cassis, 2017). By the year 1930, joblessness had crept in, and a population of 4 million Americans looking for a job could not find any, and thus by the year 1931, 6 million Americans had to suffer a similar fate. All this while there was a significant reduction in industrial production amounting to more than half. Breadlines and open cookeries became a common phenomenon in the streets of America. People could not afford rent, and this resulted in homelessness in the different cities in America. Farmers in the fields could barely harvest their products, and thus they left them to rot in the fields while some of the Americans were starving (Cassis, 2017).

There was double tragedy come the year 1930 when drought invaded the southern plains, and there were high winds and dust from Texas that killed people, livestock, and crops in the fields were destroyed. The natural calamity forced a significant number of people to move from their farms to cities in search of jobs hence elevating the number of unemployment in the cities. The year 1933, thousands of banks had closed, and they could no longer afford to meet their obligations, let alone serve the clients (Barro & Ursúa, 2017). This brought about a massive number of investors to lose confidence in the financial institutions' solvency and demanded a refund of their resources in cash. That also made the banks liquidate their loans to supplement their dehydrated cash reserves. At the lowest points of the financial institutions, the government administration under the captainship of Herbert Hoover pumped in resources to support the crippled banking institutions with government loans having an idea that the banks would loan businesses and thus hire their employees back, but that could not work. Hoover later realized that the government could not influence the economy at any cost through job creation and the likes of the citizens.

Conclusion

Come the year 1932, 15 million citizens were jobless, and the to the amusement of many, elections took place, and under the administration of Democrat Franklin D. Roosevelt, orders were to have the remaining banks to close (Barro & Ursúa, 2017). The president projected optimistic and calm energy who declared the only thing to fear was fear itself. The administrator was dedicated to reform the financial sector creating the federal deposit insurance corporation to protect the depositor's accounts. The securities and exchange commission has adjudicated the roles to regulate the stock markets and prevent any misuse that would have resulted in a similar crash similar to that of 1929.

References

Barro, R. J., & Ursúa, J. F. (2017). Stock-market crashes and depressions. Research in Economics, 71(3), 384-398.

Cassis, Y. (2017). Regulatory Responses to the Financial Crises of the Great Depression. Recalibrating Risk and Regulation after Oil Spillss Nuclear Accidents and Financial Crisess, 349-370.

Schmidt, J. H. (2019). The Role of Speculators in the Market Crash of 1929. Regent's University London-Faculty Centre for Applied Finance and Banking Working Paper Series.