This month marks the 70th anniversary of the stock market crash of 1929, an event widely regarded as the beginning of America's 12-year Great Depression. How did this tragic time affect Michigan—and could it happen again today?
The crash of '29 hit Michigan harder than almost any other state, devastating the auto industry and throwing thousands out of work. Auto production in 1929 was over five million vehicles, but after the crash that number plummeted by two million.
Smaller auto companies went out of business and sales among the Big Three dropped sharply. General Motors founder Billy Durant weathered the crash but later went bankrupt buying back stock as the market continued to plunge throughout the Depression.
What caused the crash? Most economists now agree it was the policies of the Federal Reserve, which first stimulated growth by lowering interest rates and offering easy money, then choked off the boom by raising the rates sky-high.
Today, Michigan's economy is no longer solely dependent upon the auto industry, but it's still affected by Washington politicians. Policy makers should learn from the government interventions that sparked the Great Depression and make sure to never repeat the same mistakes.
For the Mackinac Center, this is Joseph Lehman.