Wall Street History
Florida and the 1920s
Over four years ago I first ran the following and thought it was
appropriate to revisit the topic today. Plus I added a few
anecdotes from a new source.
There has been a lot of talk recently about a potential bubble in
the real estate market. And it’s not about just the U.S., as
Britain, which has a far stronger history of booms and busts in
this area, appears to be near a major peak as well. But as Alan
Greenspan and the Federal Reserve do all they can to keep the
refinancing and housing booms in place, I thought the following
tale would be interesting, that of the surge in Florida real estate
in the years prior to the 1929 crash. What follows is largely from
the work of the great market historian, the late Robert Sobel, and
his book “The Pursuit of Wealth.”
In the late 19th century Florida was mostly undeveloped. Then
Standard Oil tycoon Henry Flagler took an interest, constructing
a railroad on the east coast that he hoped would lead to increased
tourism. Flagler opened the first hotel in Miami, the Royal Palm,
in 1897 and by his death in 1913 the “state of the future” was
beginning to take shape, particularly as the citrus industry took
Around this time a New Jerseyan, John Collins, arrived on the
scene. He tried his hand at growing coconuts, bananas, and other
fruits, but nothing was working out so he returned home. He did
leave behind daughter Katherine and her husband Thomas
Pancoast to look after the family interests. It was Pancoast who
then decided that Miami Beach, specifically, offered great
opportunities, but he needed to find a way to make it more
Pancoast wanted to build a bridge, but needed capital and a
partner. One day a fellow by the name of Carl Fisher was
speedboating in the area and stumbled upon some of Pancoast’s
holdings. Fisher was in the auto industry (though it’s not the
same family as today’s Fisher Auto Body) and he was a co-
founder of the Indianapolis Motor Speedway. Carl offered to
finance the bridge and then he advertised home sites in the area.
Miami Beach was “a place to escape from winter,” his ads read,
and he promised electricity and telephones, city water and
sewers, golf and fishing. Of course initially we were talking
about raw land, nothing more. But by 1915, Fisher, Pancoast and
Collins organized the town of Miami Beach.
World War I benefited Florida because the wealthy vacationed
there instead of Europe. The boom was coming and Fisher and
company initially focused on the rich, but with the advent of the
automobile and the surge in Model Ts, Florida now seemed open
to middle class America, too, particularly as highway
The real estate boom, though, started slowly but by 1922 there
was a surge in new investment. Land prices began to skyrocket.
It didn’t hurt that Miami was the jumping off point to Havana
and Bimini. And why was this important? Whisky, my friends.
Cuba and Bimini were prime spots for whisky smugglers who
could buy, for example, a case of 24 fifths of Scotch for $24 and
resell it to tourists in Miami for $100-$120. They in turn would
resell it up north for $20 a fifth. [Source: Sobel]
But back to real estate, most of the activity was along a 100-mile
stretch from Palm Beach to Miami Beach. Futuristic developers
were able to turn their ideas into reality. George Merrick, for
example, designed the upper middle class suburb of Coral
Gables, a completely planned community on the outskirts of
Miami that included country clubs, canals, shopping areas,
transportation and more.
As for Carl Fisher, he was busy selling lots; $3 million worth in
1923, then $8 million in ’24 and $12 million in ’25. Others met
similar success. Those who bought in ’23 could sell for 5-6Xs
their original investment just two years later.
“Why stop at one lot?” asked the real estate agents. “Buy
several, sell off a few, and the rest would be free.” And, similar
to today, agents back then accepted as little as 5% down, on
binder, then took another 25% before the deal closed. But since
the second payment often took months, by the time it was
required the property could have doubled in value. This same
process might be repeated several times. Robert Sobel says “It
was as though a massive profit-laden chain letter had been set in
Following is a real example of the advertising touting the
opportunities, with emphasis provided as it was originally
“This is a straight-from-the-shoulder message to MY FRIENDS.
GET IT AND GET IT QUICK! I had to make a rush trip to
New York, and believe me, I am glad to be back in time to get
my friends in on the BEST THING YET NOW GET THIS
QUICK! When I discovered Lake Stearns I know I had found
the best land in Florida. With me is Mr. Walter T. Spaulding,
President of the Spaulding Construction Company of New York
and Miami, a nationally known constructor. He put his OWN
money into this proposition and will handle the construction of
all utilities at Lake Stearns.
“MR. WALTER DUNHAM, a man of great vision, will direct
the selling campaign of this property to the public.
“These two associates and I are going to PUT THIS OVER, and
YOU are COMING IN ON IT. YOU are coming in with me on
the fist $150,000 we are going to put in because you KNOW ME
and believe in my judgement. I want $5,000 out of you for this
proposition. NOW DON’T WRITE ME. I WON’T HAVE
TIME TO SCRATCH A PEN. I have given you the facts and am
offering you a FINAL OPPORTUNITY to get in RIGHT NOW.
SEND ME YOUR CHECK and I will put it in the BANK. This
is a personal message from me to YOU. You want to make some
REAL MONEY now. Get in and come on while the
PROPOSITION IS HOT.”
In 1925, an estimated $1 billion flowed into Florida projects.
Some of this capital was from Wall Street speculators, who saw
it as an opportunity to make more than they already were in
stocks. Small town America was cashing in its savings and
buying up lots in Florida. Europeans also arrived, particularly
when stories emerged that Miami Beach was the next Monte
From Maury Klein’s “Rainbow End: The Crash of 1929”:
“At the peak of the boom in 1925 some 75,000 people clogged
(Miami’s) overcrowded streets, including 25,000 agents working
out of 2,000 real estate offices .
“(Writer Gertrude Mathews Shelby) sniffed at once ‘the smell of
money in Florida,’ which ‘became ripe and strong last spring.
The whole United States began to catch whiffs of it. Pungent
tales of immense quick wealth carried far.’ .
“It was the stories that drew them (from everywhere in the
country). One man picked up ocean frontage for a quarter an
acre and sold it for a million; another reluctantly took 1,200
worthless acres on a debt and couldn’t sell it at $10 an acre until
the boom delivered him a whopping $1.2 million. A returning
soldier traded his overcoat for 10 worthless acres near the beach
and soon found it worth more than $25,000. A poor woman who
had bought a Miami lot back in 1896 for $25 sold it during the
boom for $150,000 .
“Once on the scene, Shelby found it hard to keep her perspective.
‘Again and again I declared that I had no intention to buy, but
nobody let me forget for an instant I was a prospect.’ But how to
resist an epidemic? ‘At home I do not even play penny ante.
Buying stocks on margin would never occur to me. Yet, like
thousands of others, I suddenly became feverish to speculate.’
Within a month she had made $13,000 on a small purchase. At
one point a reputable firm offered her a city lot for the
surprisingly low price of $1,000. She looked into it, found a
large hole in the form of a rockpit, and reflected ‘on the
credulous millions who buy lots from plats without ever visiting
the land!’ One salesman, surprised by her questions about a
$3,500 lot, informed her that ‘those things don’t matter. All
Florida is good. What you are really buying is the climate. Or
the Gulf Stream.’ .
“Everywhere the stories intoxicated (Shelby) as they did others.
‘When I saw the sort of people who were making actual money,’
she admitted, ‘my hesitation appeared ridiculous.’ A salesman
told her scornfully, ‘The people who have made real fortunes
check their brains before leaving home. Buy anywhere. You
can’t lose.’ But when she returned home, her $13,000 profit
vanished with a telegram saying, ‘Deal off. Title defective.’
Still Shelby thought the boom had ‘many months at least to run.’
The Florida fever had created, in John Kenneth Galbraith’s
words, ‘a world inhabited not by people who have to be
persuaded to believe but by people who want an excuse to
But by 1926, prices were leveling off and a cold wave that
winter dampened enthusiasm. Property values in and around
Miami were dropping for the first time. Sales slowed and bank
activity fell off sharply. “The Florida boom has collapsed,”
wrote a writer for The Nation in July. “The world’s greatest
poker game, played with building lots instead of chips, is over.
And the players are now cashing in or paying up.” [Maury
Then on September 18, disaster struck .HURRICANE!!!!!
Now the last major storm to hit Florida had been back in 1910,
but there was little to damage then. It was different this time.
Between 370 and 390 died (I read different figures), over 5,000
were injured, and property damage was estimated to be in the
neighborhood of $80 million, a considerable sum for that time.
Reconstruction resumed almost immediately, however, but then a
second big hurricane hit in 1928 and the land mania was
officially over. Of course it all would have ended a year later,
anyway, thanks to the Crash and the Depression.
One final note, that famous crook, Charles Ponzi, scammed more
than a few poor souls himself selling underwater, mosquito
infested lots in Florida in the 1920s, all while on bail pending
appeal of his Ponzi scheme.
Wall Street History returns next week with a few more thoughts
on real estate utilizing my vast library.