The real estate boom in the 1920s was nationwide (Field 1992). Suburbs, whose accessibility was increased by the automobile, were developed rapidly, but there was also a building boom in American cities. New York’s skyline was penetrated by a bevy of new
Skyscrapers, including the world’s tallest, the Empire State Building (nicknamed the Empty State Building in the depression). The real estate boom reached its most outlandish form, however, in Florida (Vanderblue 1927; Vickers 1994; Frazer and Guthrie, Jr. 1995). Prices for building sites rose rapidly, and hucksters of all types descended on Florida to make their fortunes buying and selling land. It was claimed, for example, that a property in Palm Beach, Florida, that sold for $800,000 in 1923 was broken into lots that were resold for $1.5 million, and that by 1925 the land was worth $4 million (Allen 1931, 276). The speculative frenzy was lampooned by the Marx brothers in the movie Cocoanuts (1929). The pace of construction was dizzying. At one point the railroads embargoed nonperishables such as building materials so that they could transport sufficient food to feed the large number of people drawn to South Florida. The boom was based on fundamentals—Florida’s wonderful climate, and the decline in travel costs brought about by the automobile—but things had clearly gotten out of hand. Finance was readily available. Florida banks, aided by lax bank regulation, provided much of the capital. It was possible, moreover, to finance new developments with tax-exempt municipal bonds made attractive by the rise in tax rates during the war. During the spring and summer of 1926, however, the bubble began to deflate. The winter tourist season had been disappointing and the signs of overbuilding were everywhere. In September 1926 a powerful hurricane devastated Miami, the heart of the boom, wrecking construction sites, and perhaps wrecking beliefs about an earthly paradise as well; the Florida Land Boom was over. In its wake, a devastated banking system was left that failed to recover before the depression. Still, the effects of the Florida Land Boom were limited. The next speculative extravaganza would be played on the biggest stage of all: Wall Street.
A scene from the movie Cocoanuts—a spoof of the Florida Land Boom—starring the Marx brothers.
Source: Historical Statistics 1975, Series X479 and X495.
World History
