This Is What Happened During The Great Florida Real Estate Bubble

directly maybe not as familiar to people. Oh okay, well, I remember doing the catfish farming bubble, so I'm excited about what this one could be, right, Like, that's the thing. So obviously people know about like the Internet bubble and a few um you know, maybe they think about the tulip bubble, which will also be talking about in the later episode. But as you pointed out, you know, several

weeks ago we talked about the bubble and catfish. It's a good reminder that bubbles are all over the place everywhere throughout history, and not typically in the sort of major areas that we think of. Yeah, and uh, I'd like the fact that we're actually doing this one because it follows on from the stock market bubble one that we did last week quite nicely. It's something that actually happened I think in the nineteen twenties before everyone got

really into stocks. But people always talk about the stock market bubble of the nineteen twenties. They kind of forgot about this one, right exactly, So you're hinting at what it is. So it's last week. We talked a lot about the stock market bubble of nine, but a few years earlier in that decade, in the twenties, there was an extraordinary, fascinating bubble in Florida real estate. And of course Florida has had numerous booms and busts throughout the years.

That's sort of part of what makes Florida Florida, including recently in the financial crisis, Florida got built up and then hit really hard. But this is definitely one of my favorite bubbles, and uh, you know, I think there's a lot of lessons for people even still today and analyzing how this built up and how it eventually collapsed. We're going to have to rank our favorite bubbles on a one to ten basis. I think after we finished that'll be let's do that at the end of the series.

Every al Right, Well, I'm looking forward to this one because I think we have a really good guest for it as well. Right, Joe, I'm very excited about our guest today. Today we're going to be talking to are A Moore Parks. She's a historian, she's an author, she's a Florida preservationist, basically the perfect person. She knows Florida, probably better than just about anywhere else. She knows this story and probably the perfect person to glean some insight

into this extraordinary period of sort of financial and American history. Great, let's do it so without further Ado, let's bring in Ava Areva. Thank you very much for joining us. Well, thank you for inviting me. I look forward to it. Before we just started with the uh you know, talking about this period in Florida history. Tell us how you your experience, How did it becoming a sort of preservationist and historian with Florida's history? How did that become your

main interest? Okay, I was a school teacher, teaching history at high school and in the faculty room there was a notice of six credits toward a master's degree of for teachers, and I applaud and was accepted and was fortunate the doctor Charlton to both the major Florida historian of the day got me interested in doing a master's on the earliest community in South Florida, which was Cocoa Grove, and that's where it all began. Uh, and I never

stopped researching after that. Are Joe knows that I like to start um at the beginning of things whenever we talk about certain historical events in our podcast. So when we're talking about this real estate bubble in Florida in the nineteen twenties, walk us through how it actually got started. Well, we call it the boom in Florida. We don't call it the bubble. It's so it's the great boom of

the nineteen twenties. And in many many ways, George America, who have done my most recent work, UM moved into what was then called the back country and started selling lots and what he described as Miami's master suburb. And Uh, he had the first sales in n and he expected a couple of hundred or five thousand people showed up, And in many ways that began the frenzy, I guess we should say, of buying up of the back country,

buying up different areas of South Florida. UM, the Everglades started at twenty seventh Avenue, which is hard for people to believe today. North of the Miami River, all of that had to be reclaimed everglades land, So there was a lot of vacant land, and that made Miami area the perfect candidate for this bubble or boom as yourn. So you mentioned this character, George Merrick, who created this community, Coral Gables, and he was a real estate development It

had way more interest from buyers than he anticipated. What was it about his vision? What was it about his salesmanship for buying up real estate in South Florida that really attracted people at such an intense level. Well, he was a master salesman and not an enormous amount of advertising.

As grandfather Think had become very wealthy manufacturing patent medicine called Thinks Magic Oil, and he taught George, and he was the one that convinced the Merricks to move to South Florida after they were in Duxbury, Massachusetts, after the terrible freeze. So they bought this land in the back country and actually raised grapefruit, and George sold grapefruit from

a mule cart as a third jenior old boy. And but he dreamed about what he might be able to do with us a hundred and sixty acres the original hundred sixty acres and his father had bought before moving on. Just to touch on something you said, his father was a salesman for sort of it was called Fink's Magic Oil.

That was his grandfather. And so when we think of like in the old days, these sort of salesman with their you know, now we call him snake oil salesman, but the sort of cure all cure all tinctures and cure all oils. One can imagine that these sort of the salesmanship involved in selling those old oils may have passed through to George to uh sell real sale real

estate in Florida as this sort of paradise. Plus the grandfather think was a Methodist circuit riding minister prior to becoming a stank old salesman, and his father was a Yale educated UH Congregational minister in New England. And the terrible freeze where they lost their child. Grandpa Fink had been to the brand new community of Miami and told Solomon and Althea, George's parents about buying land in the

back country. And so Solomon Merrick, the educated man, ended up buying this wilderness uh and moved out in what was called the back country of Coconut Grove. So walk us through what was the sales pitch for buying um Florida property at that time, Like I imagine, you know, they were pitching probably to all types of people, not just people who were already in Florida. So what were they telling them to entice them to buy into that market. Well,

um speculation and a lot of open land. Uh. And George Merrick I think had as much to do with creating the boom nationally because he advertised in national newspapers about Coral Gables and was unheard of at the time. So people came down not then other um vacant land, other homesteads, and the whole area was homestead and Uh. That tells you how vacant, I mean, how unpopulated South

Blarida was. And so other owners of these hundred and sixty acre homesteads began to also develop them into subdivisions with romantic names, and they too began to advertise in the papers. I find it interesting you're talking about Merrick's father being a minister, because Merrick himself while he was selling property. And this is something that I learned recently. He recruited to help him sell property. William Jennings Bryan one of the great orators of the era. He's famous,

of course her in for President. He's famous for his Cross of Gold speech, for his role in the Scopes Monkey trial, himself religious minister, and so there seems to be the sort of crossover between the salesmanship involved in selling property as well as the sort of salesmanship involved in UH preaching. So I agree with that a dent. And I think that Merrick again was a genius when it came to marketing, and I think he learned a lot of it from Grandpa Fink and his father UH.

And then hiring William Jennings Bryant was just unheard of at the time. So Jenny's blind became one of his major salesmen to selling coral gables, both locally and nationally. So in addition to these big name salesman like William Jennings Bryan, you also had this network of young men called binder boys, and they would go out and try to get people to put down payments on houses. Right. They would sell quote binders, which were laid down payments

and for a certain price. So you would get a binder on a piece of land and you would pay for it later. And they made a lot of money doing that, and unfortunately a lot of them that was a lot of that. The binders helped create the fall or the end of the boom because people were not able to pay them off after the stock market crash and after the bank failures and everything else. So the binder voice not only promoted the boom, they also helped

end it. Let's talk about some of the you know, some of the things that characterized you called a boom, might call it a bubble. But in any boom, there's sort of glaring examples that in retrospect seems like people behaving completely irrationally. What were some of those things, like what were sort of the price jumps that we would see on a plot of land from first purchase to flip to the next flip and so on. Well, it would go out dramatically. As I said, the hundred sixty

acre homesteads were basically free. I think it costs about fifteen dollars to apply, and so a lot of the land began as homesteads and then it was subdivided and sold off, so the price increases the exorbitant to the owner in the beginning, and as the boom grass, the prices kept going up up up, I mean in the cables that was particularly true. Uh George Merrick wanted to build beauty for the middle class. Uh and not he did not start out building this grand fancy pan subdivision.

That only happened because it was so popular and people kept paying more and more and more. The Binder Boys they became so prevalent that they had to be like they were like just selling out on the sidewalk and selling out on the street everywhere, and they actually had to pass ordinances to sort of get them indoors so

that people could get through the streets. Like how crazy and frenzy did the Bonder Boys phenomenon guests well, the downtown Miami eras where the Bonder Boys would solve the streets. And if you look at some of the pictures all the many of the first high rise buildings in Miami were built in this era too, So some of the early pictures of downtown Miami, the streets are just full of people and the sky is full of medals. You know,

skyscrapers going up. So it was an incredible period of time and people as I grew up bunch later than that, but my people were still talking about dull boom and everybody knew they were talking about the nineteen and they were literally when you say the streets were filled with people, is literally people coming down from the rest of the country on the streets meeting up with the Binder boys and making real estate transactions right there and site unseen,

like not really knowing anything about the real estate they were buying right something that was true. And there were busses though. George Berrick had a fleet of buses that brought people in even in from the north into Coral Gables to sell them. So he he tended to show them and he created He had a first professional landscape architect, Frank Button, did big plans and when you go into

Coral Gables today, these plans are still intact. So even though George amery go we had eight years he planned, he had the first planned trimunity and uh, that's why it continues to be, you know, very valuable real estate today even though it lost everything there for a while. I like the anecdote that the binder boys, you know, when they would get paid a down payment on a property, it was all by check, so it would take them

a while to get the actual money. So what they would do is they would take their um their binders over to hotels and restaurants and clubs and use those to get credit in the meantime until the check cleared. Kind of creates this nice image of the boom times and all these binder boys out partying in Miami with the money that they haven't yet received. It was a wild and crazy time, and uh there were nightclubs, and there were prohibition uh escape issies, even though prohibition you know,

was in effect not very much an affection Miami. So I'm just curious, you know, when it came to the people who were actually buying the properties. Give us some sense. How many of them were in it because they were actually excited about the prospect of developing this previously unused land, and how many of them were in it just because they were looking to make a quick book. Well, I

think there was plenty of each. It's hard to give exact numbers because some of the people that came down to make a quick book kind of fell in love with the area state, So a lot of or lost everything and had to stay. You had a combination of the two when the boom ended and after the hurricane. Say, there was this horrible hurricane in and that pretty much stopped the quote boom. Uh, it just proctly blew Miami away. But George Merrick continued to pour his money into Coral

Gables after the hurricane. So you can't say that it completely stopped a lot of people, do I I disagree with that point of view. It really stopped in twenty eight and they literally threw George out of Coral Table and he lost everything he put, every study had and trying to keep it going after Okay, so the bust really came for sure by nine when the stock market crash you know, happened to and then that killed it off.

I want to talk a little bit more about the bust in a second, but one thing I wanted to go back to. You mentioned that George Merrick at one point got his own fleet of buses to bring people down would be buyers. Something that I read is that at one point the craze to buy property in Florida got so intense that they actually had to limit the number of passengers who came in by rail and highway so that they could make room for food and other provisions to get into the state to feed the people

that were actually there. Was getting so clugged? Am I remembering that correctly? Yes, you are. It's hard to even imagine today. We've never seen anything quite like za boom as as we call it. We've had the booms. In fact, I was born here and and I frequently say I've lived in maybe seven different Miamis because we've had a series of these quote booms or uh speculative period where

we keep changing who we are. I like that. I like that idea that like the boom and bus cycle, is there just sort of almost definitional to uh, to what Florida is all about at this point? Absolutely, I would I would certainly agree to that. Particularly Miami. Ums has been so true here in my life. I've been through booms and bus Uh. I've watched it happen, you know, are before we move on to the trigger of the bust? Uh, what's your favorite anecdote from the boom period of this time?

Is there one thing that sticks out in your mind? Well, um, you know that It's really hard because I've just known so much. I think the idea that that George had the Spanish theme, it's it's kind of ironic it today we have somebody Spanish speakers and the majority of people in Miami now or you know from from Latin America. This certainly was not true. We were mostly what everybody called crackers, which were the southerns who populated Miami prior

to the boom and uh, the crackers were everything. And one of the quotes that was in the New York paper is the only thing lacking, uh in Coral Gables were the Spaniards themselves. And that's kind of ironic. What do you think about today? Because George named all the street names see after Spanish and then later Italian cities. So he saw the history. He was a history book. He saw the history of Florida. Were getting way back with postibly on as what we should be thinking about

in that era. I see the boom town. So it's all very fascinating, honestly, and let's uh, let's talk about the bad stuff and how it eventually came to an end. So you mentioned the role that the six hurricane had. The hurricane didn't kill the market outright, but it was sort of the beginning of the end. How bad was the hurricane, like sort of put it in context and then talk about, you know, sort of the immediate hurricane

aftermath for the market. Well, it's still it was down as one of the worst hurricanes in South Florida history. The hurricane was another one that was a lot of flooding. But the twenty six hurricane, and we in all our history say it really did stop the boom. Uh So we went into the great depression before the rest of the days we led. Our great depression began really in twenty six. And it was George uh that for his

fortune he was today be a billionaire. He poured his fortune back into trying to keep the quote boom and keep corl Gables a lot. So when the three amount of eight, he didn't have anything. And when he died he was only fifty five. His estate was less than three or four hundred dollars. So that gives you the idea of how the boom killed people's personal money on the bus rather kills the personal fortune of most of

the people that had come down during the boom. So what happened afterwards, because you know, if I think back to the most recent real estate boom that we had in the US, that would be just before two thousand seven, two thousand eight, um. The aftermath of that was, I mean incredibly emotional for many people. And you had lots of people who were kicked out of their house. But if a lot of the Florida properties were being bought

for speculative use, uh, you know what happened. People just lost money or where their people sort of out on the street. In South Florida. Well, a lot of people did lose their homes. And there's some similarity between the speculatives booms of the nineteen twenties and and the other booms. A lot of people got the idea that they could make money on Florida real estate as so they purchased as as the prices went up, they continued to purchase,

even with more expensive prices. And then when the next bust came and the prices dropped, they couldn't pay the mortgage and so they lost their homes, They lost their property. So it is definitely a pattern boom bus, boom bus, boom bus in Miami history. And so George Merrick, you said, he basically ended up broke. He was at one point the modern equivalent of a billionaire. He ended up with

about four d dollars. The timing of the when people sort of declared in your mind the boom, as you call it, did it end with the stock market crash? Of did it end a little bit before that? When is the sort of period where you know you sort of book ends the boom, Well, it kind of ended with the hurricane of as far as most everybody but George, And as I said, he poured his his fortune into trying to keep Coral Gables going and he did not succeed.

He ended up actually being postmaster. Uh. He applied of the reason very smart. He applied for the postmaster and got a job as Miami postmaster. And he was only fifty five when he died. So uh, it's a very sad story in a way. But when you look at Coral Gables today, his planning I was brilliant. And someone says, you don't need it define to tell you when you had a Coral Gables because of his planning that he

did back in the nineteen twenties during the boom. You know, there's a quote that uh, I think it is right. I can't remember it exactly, but I read it somewhere recently and they were saying, like, the key to all bubble is you have to have a tremendous story that then just gets taken too far, but the fundamentals have to be really good. And what it sounds like, I think with Florida, and part of the reason he keeps coming back is that the fundamentals actually really are good.

Like it is a very beautiful place. It's one of the some of the best weather in the entire country. The beaches are beautiful. As you mentioned, his community of Coral Gables was very well designed. So while it may have like gotten completely carried away and a bunch of people lost their heads with speculation, the key thing I think to go it seems to go back to is that the underlying fundamentals are in fact very strong and he was not wrong to be, you know, sort of

selling what he was selling. No. I think that one of the major influences was a lot of vacant land. Um you know, people had not the railroad did not come down here until nine And you think about the rest of the nation up to uh and and there were. You know, when Miami was incorporated, there were three thirty people here in e in the city of Miami, so it started booming. The railroad created maybe one of the first booms when it got here, and then it just

kept continuing. It's just a history of boom and buff Joe. I think that's a nice place to leave it. I think that is a perfect place to leave it. I love I'm really glad you brought in the railroads there at the end, because I do think that you know that that's sort of a constant theme with bubbles, is some new technology or to enable the sort of capital to flow, and obviously the railroad being a key source of capital from the rest of the country, are of

a more parks. It was delightful to talk to you, so great to get your perspective, and uh, I really appreciate it. Well, I'm glad you're doing this because people need to understand that we're the capital booms. I guess I love that boom capital of the world. Thank you very much. Thank you. I don't know about you, Tracy, but I really like talking to our just now. Yeah, I gotta say I feel like I know a lot more about Florida than I did when I started this podcast.

But I thought the point that you were just making towards the end that you know, fundamentally there has to be a story to justify every bubble. I think that's a really important one. And you can see it in Florida. You know, you had the advent of the cars, so people could actually drive down to Florida and see the beautiful weather and you know, the coconut trees or the orange trees or whatever. Uh. You had a bunch of people who were becoming newly wealthy and had lots of

leisure time to take vacations. Uh, and you could see why they would be interested in Florida real estate. No, absolutely, like every you know, it's like you sort of sell Florida as this wonderful paradise within the US. But the truth is it kind of is like it's beautiful and great beaches and now especially today, now that air conditioning is widespread, it's very uh, very comfortable to be in and so yeah, people got carried away, obviously, but the

fundamentals are pretty great. And you know, I remember last week we're talking to Scott Nations, uh and he about stock market bubble is and one of the things said is that each stock market bubble kind of has a

new financial contraption. So whether it's portfolio insurance in the eighties or the trust funds of the nineties twenties, and so, you know, you think about the new technologies that we're emerging for real estate, whether it's the emergence of these down payments, these binders, the trains, the broad people, and it's sort of similar themes across all bubbles. Yeah, I

think that's right. And also the network of salesmanship that went into this, right, you had the newspaper advertisements, Uh, you had who was that guy at William William Jennings Bryan. That's one of my favorite little nuggets. Because everybody knows the Cross of Gold speech, everybody knows the trial over the teacher who taught evolution that they made that play about. But the fact that as part of his career, one of the things he did was go to Florida and

hawk real estate during the twenties. I think it's probably something that a nobody knows, but be really fits into the road or theme that if you can preach religion really well, you could probably sell property as well, do you think many of the bankers around nowadays selling E. T F and things? I think they have experienced in preaching. I don't know, but probably they should consider recruiting from churches.

You know that there may be an untapped market of potentially good salesman out there, so maybe there's a future lesson for them. All right, Uh shall we end up? Let's do it there. We have more episodes in our Bubbles series coming up and you'll have to ah, stay tuned to find out what they are. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway, and I'm Joe Wisn't All. You could follow me on Twitter at the Stalwart and you can follow our producer Sarah

Patterson on Twitter at Sarah pett with two teams. Thanks for listening.