From the August 2009 issue of Research Magazine • Subscribe!

August 1, 2009

When Florida Sizzled

Florida property in the 1920s was hot, but ill winds would blow.

During the winter of 1925, visitors to the new Florida town of Coral Gables were treated to a curious spectacle. There was former Secretary of State William Jennings Bryan, three-time presidential candidate and one of the best-known politicians in the United States, sitting under an umbrella touting the attractions of Florida real estate, including its ample access to what Bryan called "God's sunshine."

Bryan had been hired by George Edgar Merrick, Coral Gables' founder, to make daily pitches for the development. The famed orator, moreover, was followed by another crowd-pleaser, shimmy dancer Gilda Gray, who as American Heritage magazine recounted decades later, "shook her chemise with such gusto that it took the viewers' minds off the prices quoted for lots by salesmen circulating through the audience."

Florida in the 1920s was the scene of a real estate bubble that in some ways mirrors the property boom and bust that swept over much of the nation in recent years. In terms of overall significance, the Florida boom was a lesser matter, although its impact on that one state was severe and long-lasting. But in terms of sheer euphoria, twenties Florida at its height exceeded even the excesses of early-21st-century mortgage mania.

In the early 1920s, a growing number of people had automobiles they could drive to Florida, and disposable income they could spend there. Tourism picked up, and many visitors saw the appeal of owning property in the sun-drenched state. The business-friendly state government liked that kind of thinking, and gave it further encouragement by abolishing income and inheritance taxes in 1924.

To add to the fun, drivers didn't need licenses, and the 45 mph speed limit was the nation's highest. Plus the authorities showed no great interest in enforcing Prohibition, and good rum was just a boat ride away in Cuba and the Bahamas anyhow.

Florida's population surged. It was 968,470 in 1920, the census-takers had found, and by 1925 that number had jumped by about 300,000. Miami, a town of 30,000 at the decade's start, became a city with a population pushing into six figures. New towns and developments were springing up around the state. While Merrick was creating Coral Gables, the Mizner brothers were putting Boca Raton on the map, Carl G. Fisher was building Miami Beach and D.P. Davis was dredging Davis Islands around Tampa.

Property prices soared, and some people got rich. One woman who had bought a Miami lot for $25 in 1896 sold it during the boom, reportedly, for $150,000. Many prices tripled or quadrupled within a year. Buyers often attained lots solely in order to unload them quickly on somebody else; in many cases, they could barely afford the 10 percent "binder" that locked in the sale, let alone the property's full price. Sometimes, a parcel changed hands several times in a single day.

Newspapers became swollen with real estate ads, the Miami Daily News one day weighing in at 504 pages. Also swelling were the ranks of real estate agents, who were said to number 25,000 in Miami alone in 1925. And some of what was being sold was not exactly what was advertised. A subdivision called Manhattan Estates was promoted as being "close to the prosperous and fast-growing city of Nettie," which was somewhat optimistic in that Nettie did not exist.

William Jennings Bryan was far from alone in using rapturous rhetoric to tout Florida's charms. As 1925 drew to a close, the mayors of Miami, Miami Beach, Hialeah and Coral Gables jointly proclaimed a year-end "Fiesta of the American Tropics," complete with dancing in the streets and (as their capitalization-heavy announcement put it) "a glorious Pageantry of Sublime Beauty Depicting in Floral Loveliness the Blessing Bestowed upon us by Friendly Sun, Gracious Rain, and Soothing Tropic Wind."

The Fiesta Ends

By early 1926, sellers were having trouble finding buyers who would agree to the sky-high prices at which Florida real estate was now quoted. Meanwhile, rail freight lines to the state had become so clogged that railroad officials decided to move only food and fuel. That meant construction materials would be pricier and harder to get. The transportation problems were not made any easier when the Prinz Valdemar, an old Danish war schooner set to become a floating hotel, capsized off Miami and blocked its harbor.

Then, as journalist Frederick Lewis Allen recounted in his 1931 book Only Yesterday, "two hurricanes showed what a Soothing Tropic Wind could do when it got a running start from the West Indies." The first of these, known as the Great Miami Hurricane, made landfall between South Miami and Coral Gables on September 18, 1926. It devastated what had been some of the most in-demand real estate in Florida.

The boom was over, notwithstanding such brave talk as the claim of Miami's mayor that he saw "no reason why this city should not entertain her winter visitors the coming season as comfortably as in past seasons." Then, in September 1928, Hurricane San Felipe Segundo hit a bit to the north, making a mess of Palm Beach, Jupiter Island and Lake Okeechobee. Shuttered real estate offices were now a common Florida sight.

As bank failures in Florida spread, the state got a running start into the Great Depression, and soon there would be more dismal news as Mediterranean fruit flies ruined the citrus crop. For the rest of the country, though, the late 1920s remained a time of prosperity. Indeed, with Florida property no longer looking attractive, a lot of investors turned their attention instead to Wall Street, where stocks were soaring into 1929.

Postwar Revival

Florida's battered economy began stirring during World War II, as military bases and shipyards were expanded. After the war, the state was poised to benefit economically from a massive push of people and businesses into the Sunbelt. Air conditioning and interstate highways helped spur these migrations.

Florida's population grew 79 percent during the 1950s, the fastest rate of any state. Development proceeded apace in the 1960s, boosted by growing air travel, the space program and the construction of Disney World. Florida real estate regained a national cachet, although swampland scams splattered some mud on its reputation.

Towns that had first taken shape during the 1920s boom, such as Coral Gables and Boca Raton, were among the places that benefited from Florida's reviving economy of the postwar decades. While the bubble had included shoddy construction and outright fraud, it also created communities that stood the test of time. In Coral Gables, 1920s architecture, such as that of the landmark Biltmore Hotel, remains a major attraction.

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Kenneth Silber is the senior editor of Research. His work on science, economics and history has appeared in a variety of publications, including The Wall Street Journal.

He appears regularly on the Gabe Wisdom Show, broadcast via Talk Radio. To hear or download his recent broadcasts, go to www.researchmag.com/Pages/Research-Magazine-Podcasts.aspx.

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