By Patrick N. Allitt, Emory University
The Wall Street crash and the ensuing Great Depression were the result of the maldistribution of income throughout the American population. The years from 1929 through 1933 witnessed a downward spiral of economic shrinkage. Were the people deceived by speculative bubbles? Was the US government responsible for individual bankruptcies?
No One Was Spared
The collapse of the Florida land boom in 1926, when land values fell by an enormous percentage overnight, was a premonition of worse things to come. Minimal government regulation of the stock exchange and the development of unsound financial practices created unrealistic expectations among speculators in the 1920s.
The collapse of share prices on the Wall Street stock exchange in the fall of 1929 was traumatic, because it ruined many influential people and destroyed the savings of thousands more, who had let themselves be deceived by false hopes. Its causes continue to be debated by historians right up to the present.
This is a transcript from the video series A History of the United States, 2nd Edition. Watch it now, on Wondrium.
George Merrick and the Land Boom in Florida
The US economy witnessed boom conditions in the 1920s. These conditions encouraged the development of misleading ideas, and particularly, speculative bubbles. The Florida land boom was a great example of one of these things. It could have provided a warning, although in practice, it seems not to have done this. Florida had a warm climate all through the year. The railroad connections had been completed into Miami by the early 20th century.
The first two and a half decades of the 20th century were a period of rapid growth for Florida, primarily as a vacation and retirement place. The promotional brochures encouraged people to speculate and to buy land in Florida: “where the whispering breeze springs fresh from the lap of the Caribbean, and woes with elusive cadence, like unto a mother’s lullaby.”
One of the entrepreneurs who helped develop Florida was George Merrick, a former Congregationalist minister who conceived and built the town of Coral Gables as a kind of imitation of Venice. He turned the drainage canals in this area, which had once been swampy, into canals, and imported some gondoliers from Venice to ply their trade on these drainage canals.
The Exponential Rise of Population in Florida
One of the things, incidentally, that had made the settlement of Florida possible, was the fact that in the early 20th century, mosquitoes had been identified as the vector of malaria. Consequently, as mosquito suppression policies were developed, malaria itself became much less of a problem. Until that had been done, projects like the building of the Panama Canal would have been impossible, and so would the mass settlement, especially for retirees of a place like Florida.
Miami’s population was about 30,000 in 1920. By 1925, though, it had more than doubled and stood at 75,000. One day in 1925, the Miami Daily News had 504 pages of real estate advertisements, an enormous boom in land. At first, and this is a classic characteristic of booms, people are very careful about what kind of land they’re going to buy. They want to make sure that they’ve got, usually, sea-front property or places where towns are, in fact, being developed.
The Unscrupulous Property Business
Gradually, though, the idea spread so widely in the whole of America that Florida land was a fabulous opportunity, and you could hardly miss by buying it and watching its value rise; speculators started to buy it without going to look at it. Unscrupulous developers began to claim that they were selling coastal land, which actually was far inland, and was, itself, swamp for which there were no drainage plans.
Now, so long as the market was rising, speculators could sometimes buy a patch of this intrinsically worthless land, hold on to it for a while, and then sell it again to some other unsuspecting buyer and make a handsome profit from it. Gradually, though, there was a departure between the reality and the illusion, which was sustained by a rapidly rising market.
The Catastrophic Hurricanes
This whole process of buying and selling of land came to a jarring halt in 1926, when two hurricanes in quick succession swept through the Miami area. They caused 400 deaths, and left 50,000 people homeless, one of the great natural catastrophes of the 20th century. Of course, this was a crushing blow to the idea that Florida is a place of gentle weather and soothing breezes.
Property prices collapsed, and many areas, which were in the process of being developed as resorts and retirement communities, were left completely unfinished. Here’s an excerpt from an article from The Nation that was published in 1927. The journalist witnessed one of these resorts that was in the process of being developed, and then suddenly had been abandoned because all the relevant people have gone bankrupt:
Dead subdivisions line the highway, their pompous names half obliterated on crumbling stucco gates. Lonely white way lights stand guard over miles of cement sidewalks where grass and palmetto take the place of the homes that were to be. Whole sections of outlying subdivisions are composed of unoccupied houses, past which one speeds on broad thoroughfares as if traversing a city in the grip of death.
Nature’s ire pushed the US economy towards a disaster which gradually engulfed many countries, affecting millions.
Common Questions about the Collapse of Florida Land Boom and the Great Depression
The property prices collapsed in Florida in 1926 when two hurricanes in quick succession swept through the Miami area. They caused 400 deaths, and left 50,000 people homeless.
George Merrick, a former Congregationalist minister, conceived and built the town of Coral Gables as a kind of imitation of Venice. He turned the swampy drainage canals in this area, into canals, and imported some gondoliers from Venice to ply their trade on these canals.
Florida had a warm climate all through the year. The railroad connections had been completed into Miami by the early 20th century. Mosquito suppression policies had been developed which controlled the spread of malaria in the region.