Bubble in the Sun
The 1920s Florida land boom and its collapse.
Summary
Knowlton covers the Florida land boom of the 1920s and its collapse, arguing that it was a significant contributor to the conditions that produced the Depression rather than a regional curiosity. He follows the developers who built the state: Carl Fisher at Miami Beach, George Merrick at Coral Gables, Addison Mizner at Boca Raton, and Henry Flagler's earlier railroad that made the peninsula reachable.
The mechanics of the boom are the substance. Land was sold on binders, meaning a small deposit gave the buyer the right to resell before the balance was due, which meant a purchaser could control property with almost no capital and flip it repeatedly within weeks. Prices were quoted on subdivisions that had not been surveyed and lots that were underwater. Northern buyers purchased sight unseen from newspaper advertisements. Banks lent against the inflated valuations and Florida banks were heavily concentrated in the same collateral.
The collapse came from several directions at once: the railroads embargoed freight because the lines could not handle the volume, a ship sank in the Miami harbour channel and blocked it, buyers stopped arriving, and then the 1926 Miami hurricane and the 1928 Okeechobee hurricane destroyed property and killed thousands. Florida banks failed in waves from 1926, three years before the national crash.
Knowlton also covers the environmental consequences of draining the Everglades. The book is popular history and its macroeconomic claim, that Florida contributed materially to the national banking collapse, is asserted more than demonstrated. The boom mechanics and the developer biographies are well reported.
Key takeaways 7
- Florida land was sold on binders that let a buyer control property with a small deposit and resell before payment was due, which allowed speculation with almost no capital.
- Lots were sold sight unseen to northern buyers from newspaper advertisements, on subdivisions that in many cases had not been surveyed or drained.
- Florida banks concentrated their lending in the same inflated land collateral, so the collapse took the banking system with it.
- Florida bank failures began in 1926, three years before the national crash, and the state's contraction preceded the national one.
- The boom ended from several simultaneous causes including a rail freight embargo, a blocked harbour, and two catastrophic hurricanes.
- Developers financed infrastructure from lot sales, which meant a slowdown in sales immediately stopped construction and destroyed the value of unsold inventory.
- Draining the Everglades to create sellable land caused environmental damage whose costs were borne publicly long after the developers had gone.
Who should read it
Investors interested in the mechanics of a land speculation cycle and in a regional bust that preceded the national one.
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