The value of Florida real estate soars to giddy heights, homes doubling and tripling in price, bare lots in planned developments selling out and flipping before the ink is dry on the closing papers. Homeowners and investors alike plunge into new financial products, caught up in the frenzy of speculation. Fortunes grow even faster than buildings rise.
And then it all crumbles like sandcastles in a hurricane.
Does that sound like the housing crash of 2008, in which Florida was one of the hardest-hit states after flying high?
Well, yes. But that was just one more repeat of an old story. Florida was the scene of an even more outlandish boom about a century ago, one that might have had even more dire consequences than the recession that followed the 2008 crisis. That era is the subject of Christopher Knowlton’s absorbing new book, Bubble in the Sun: The Florida Boom of the 1920s and How It Brought on the Great Depression.
Knowlton, who has written for Fortune, the New York Times and the Wall Street Journal and worked in the investment business, brings expertise, deep research and a brisk style to the book. It’s a dauntingly complex slice of history, but he examines it with clarity and insight, not to mention lots of juicy dish about the personal lives of some of the high rollers.
In 1915, Miami’s population was only about 10,000 people, and the Miami Herald had a staff of three reporters. Only a decade later, in 1925, the city was booming so enormously that the Herald’s rival, the Miami Daily News, published “a 504-page edition in twenty sections, loaded with real estate ads and weighing 7.5 pounds.” One Miami real estate office, Knowlton writes, sold $34 million worth of real estate in a single morning — and that’s in 1920s dollars.
The Florida land boom “would prompt the country’s greatest migration of people, dwarfing every previous westward exodus. ... Six million people flowed into the state in three years." Florida’s Legislature obligingly got rid of the state income tax and inheritance tax in 1924, making the state “an alluring tax haven overnight.”
Knowlton explains the complicated reasons for the boom, which include such factors as the then-new availability of automobiles, mortgages and consumer credit as well as a national trend toward suburbs and away from cities and rural areas. Railroad magnates like the two Henrys, Plant and Flagler, had made Florida accessible and built playgrounds for the rich, but the boom of the 1920s drew a much broader swath of Americans.
Much of the book centers on a handful of powerful and imaginative developers and the Florida communities they created: Carl Fisher and Miami Beach, George Merrick and Coral Gables, Addison Mizner and Palm Beach. Colorful characters all, they soared to fantastic heights of wealth and lost everything.
Also among them was Tampa’s own D.P. Davis, who looked at a couple of uninhabited mud-flat islands in Hillsborough Bay and saw “a veritable Venice at one’s home-door,” as one brochure for Davis Islands put it.
Davis rambled around the country as a young man, working a variety of jobs. He made a little money on a development in Miami, where, Knowlton writes, he was “particularly taken with (Carl) Fisher’s use of dredgers to haul sand from the seabed to convert sandbars into brand-new islands or new waterfront property that could be sold for a premium.”
In 1924, he returned to Tampa, bought Big Grassy Key and Little Grassy Key, and hired a dredging firm to “remove nine million cubic yards of sand from Hillsborough Bay” and pile it up to make dry land. A month later, buyers stood in line for 40 hours waiting for him to open his office, and they bought all 300 lots available, at an average cost of $5,610, in three hours.
Later that year, Knowlton writes, Davis, “feeling especially cocky,” announced he would marry the next queen of Gasparilla, whoever she was — and he did. Neither the marriage nor Davis’ next grand development idea, in St. Augustine, worked out as well as Davis Islands had. In 1926, Davis set sail for Paris with his young mistress, intending to divorce his wife (who was already in Paris awaiting him). Somewhere in the mid-Atlantic, he went overboard — fell, jumped or pushed, no one knows. His body was never recovered.
Knowlton sketches many of the other players in the boom, such as “Handsome Jack” Taylor, who built the Roylat Hotel and Pasadena-on-the-Gulf (now Stetson University College of Law and Pasadena Estates), only to abandon them abruptly, leaving behind parrots and a small band of monkeys that lived on an island in a golf course lake.
He writes a mini-biography of Marjory Stoneman Douglas, beginning with her days as the society reporter for the Miami Herald and following her path to champion of the Everglades. The environmental damage to that unique place had its roots in the 1920s boom.
Some of the people who wanted in on the boom were ambitious or naive, or both, but others were outright crooks. You might not be surprised that the con artist for whom the Ponzi scheme was named practiced a version of his pyramid ploy in Florida.
Charles Ponzi arrived in 1925, having already served a five-year sentence in Massachusetts for one of his infamous pyramid schemes. He went right back to fraud in Florida, selling tiny parcels of swampland outside Jacksonville and promising investors a 200 percent return in 60 days. Arrested and convicted again, he “faked suicide, shaved his head, grew a mustache, and donned a sailor’s cap,” sailing out of Tampa on a freighter. But he couldn’t resist bragging about his scam to a shipmate and was arrested as soon as the ship reached New Orleans.
Whether they were development moguls, fraudsters or ordinary people looking for a place in the sun, almost no one came out of the crash whole. Knowlton details its causes, which included the devastating 1926 hurricane that nearly flattened Miami, and its repercussions. He argues that the boom’s collapse had as big a part in causing the Great Depression as the stock market crash of 1929, and in Bubble in the Sun he makes a fascinating case for that analysis.
Bubble in the Sun: The Florida Boom of the 1920s and How It Brought on the Great Depression
By Christopher Knowlton
Simon & Schuster, 411 pages, $30