Paradise for Sale
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New owners, particularly those with ARMs, discovered that they were “upside down” as residential values dropped below the face value of the mortgages. When they attempted to renegotiate their mortgages with lending institutions, most discovered that to be impossible since they had been bundled with other mortgages and sold and resold many times. Who now held them was virtually impossible to discover. Lending institutions that had made subprime mortgages were left with abandoned pieces of property as homeowners abandoned loans that they could never repay. These “toxic” assets skewed the balance sheets of banks and savings and loan companies to the negative side. Lending practically ceased, and all real estate sales ground to a halt. The federal government announced the creation of its “Making Home Affordable” plan in March 2009, committing $50 billion to homeowners and mortgage companies for loan modifications. Some 360,000 homeowners and forty-eight mortgage companies signed up to participate in the first three months of the program. The million homeowners across the United States are eligible for assistance.
Companies did not escape the crash of 2007–08. The credit they depended on dried up. The automobile industry suffered a double hit as gasoline prices rose to 1979 levels and buyers could not be found for the low mileage, highly polluting cars Detroit manufactured. Foreign automobile manufacturers, more technologically advanced, offered hybrids that were partially powered by electrical motors and delivered more miles-per-gallon and lower rates of carbon dioxide emissions. In desperation, two of the “Big Three” manufacturers, General Motors and Chrysler, approached the federal government for bailout money. The difficulties the auto manufacturers faced were similar to those faced in all other industries. Consumers weren’t buying, companies were losing money, layoffs and downsizing were the order of the day—all of which triggered another spiral. Soon companies in all areas began to agitate for bailout money.
The American economy was in a tailspin. It was 1929 all over again, but with major differences. Unlike the Hoover administration, today’s political leaders appear determined to move quickly to avoid further damage to the economy. In the final three months of his tenure, President George W. Bush, reacting to predictions of a financial meltdown that would extend to the world’s markets, engineered the $700 billion Toxic Asset Recovery Program bailout financed by American taxpayers. His successor, Barack Obama, accepted the Bush plan as his own and pushed to implement it. The TARProgram was a public relations disaster from the beginning, particularly after dying banks paid employees huge bonuses for having sold the very assets that caused the crisis in the first place, and taxpayers reacted loudly. The program remained in place, and only a few banks opted to eschew the money in favor of staff bonuses.
The automobile manufacturers, who came by private jet to Washington, also stirred up a hornet’s nest of public outrage. Taxpayers, who had less to lose if the automobile industry collapsed, reacted to this display of ostentatious spending—especially when the CEOs were begging hat-in-hand for relief—with tremendous anger. Although Congress demanded serious corporate reform and downsizing as conditions for assistance, it agreed to make $25 billion available in loans to the corporations. Better than 1929, when there was no bailout!
At this writing (September 2009), the collapse of 2007–08 has been mitigated somewhat as the bailouts by the federal government—and those of other governments around the world—take hold, but even now the future is uncertain. In Florida, home sales are on the rise, but more than two-thirds of all sales are short sales as financial institutions liquidate their toxic assets. Homeowners who have managed to hang on find themselves with property that has been devalued by about 40 percent yet face increased taxes as governments raise levies to compensate for decreased values. Governments, struggling to pay for infrastructure improvements and services contracted for in the boom three years ago, try to downsize personnel and limit spending. Unemployment figures rise monthly, and the conventional wisdom is to accept the fact that joblessness will continue to rise, but attention should be placed on how slowly it rises. Foreclosures are also on the rise, but once again, conventional wisdom stresses how slowly they increase.
Yet, there is a glimmer of defiance and hope. There are believers. The Miami Corporation, a corporate entity of the Deering family holdings, recently announced that it was converting a large part of its ninety-foursquare-mile Farmton Tree Farm property in Brevard and Volusia Counties into residential sites. Under a fifty-year plan, the first twenty-three hundred homes will be in Brevard County, along with two million square feet of commercial, manufacturing, professional and retail space. The Viera Company, apparently unfazed by the depression economy, added its voice to the ranks of the optimists when it announced the construction of fourteen hundred new units in Viera. However, a quick reminder is in order. George E. Merrick, faced with falling sales for his Coral Gables development, announced the $250 million South Seas Islands of Coral Gables just a few months before he went bankrupt. He, too, was a believer.
For the first time in its history, more people left Florida in 2008 than took up residence. Perhaps historian Gary R. Mormino hit the nail on the head in an interview in August 2009 when he referred to the state as a Ponzi scheme. “Since the 1950s, Florida has been attracting about a thousand people every single day, 85 million tourists last year. Our entire structure, our tax structure, is built upon growth,” he said.
And the mantra has always been, “growth will pay for itself.” No one ever really, I think, gave serious attention to the fact [of] what will happen when a thousand people stop coming? And, that’s what I meant by the Ponzi scheme, that yesterday’s homeowners will pay for today’s newcomers. And, the newcomers stopped coming about two years ago.
Is it really over?
A Brief Note on Sources
The boom of the 1920s is one of the most written-about subjects in Florida history. Most of the books and articles about the boom are localized in their focus and fail to deal with the entire state, but all of them are wonderful sources of information. Works by Paul S. George, Arva Moore Parks, Donn Curl, Stuart McIver, Gene Burnett, Theodore Van Itallie, Lindsay Williams, Hampton Dunn, Jerrell Shofner, Charles E. Harner and others provide invaluable information culled from interviews and the libraries of local historical societies. The growth of the Internet has produced a prodigious number of primary and secondary sources on events, locations and individuals who figured prominently in the period. Of particular interest to the researcher are two contemporary books that offer special insights into the “official” explanations of the boom and the later bust. Written in 1925, Frank Parker Stockbridge and John Holliday Perry’s Florida in the Making (Kingsport, TN: Kingsport Press, 1926) offers nothing but assurances that the real estate boom will continue, while their So This Is Florida (Jacksonville, FL: J.H. Perry Publishing Company, 1938) says very little about the boom or bust. Interesting, to say the least. T.H. Weigall’s Boom in Paradise (New York: Alfred H. King, 1932) offers a firsthand account of Miami in early 1926 and the George E. Merrick development of Coral Gables.
In 1984, the Harcourt, Brace, Jovanovich Company had the good sense to publish David Nolan’s Fifty Feet in Paradise: The Booming of Florida, which is the best overall book about the boom and the following decades through the early 1980s. Gary Ross Mormino, a Tampa historian of the Florida experience, took up where Nolan left off and published Land of Sunshine, State of Dreams: A Social History of Modern Florida (Gainesville: University Press of Florida, 2005) to bring the story of Florida’s development up to date. There have been many changes since 2005, and the Florida Mormino wrote about has morphed once again into something new. Hopefully, the next edition will include another chapter to keep Land of Sunshine current. Both Nolan and Mormino write in a conversational, flowing style that makes their books easy to read and appealing to the public. These two books are terrific—essential—primers for anyone interested in the social and economic history of Florida during the last three centuries.
Critical to understan
ding the complex financial deals that provided the credit necessary for development in the 1920s is Raymond B. Vickers’s Panic in Paradise: Florida’s Banking Crash of 1926 (Tuscaloosa: University of Alabama Press, 1994). Vickers documents the unethical and illegal dealings of bankers and developers who controlled the state’s financial institutions and the failure of federal and state regulators to stop the looting and pillaging of them. Vickers’s book also makes it possible to understand some of the more recent financial misdeeds that sent the savings and loan institutions crashing in the 1980s and the banks and investment firms in 2007–08. The old adage that there is nothing new under the sun certainly applies to financial institutions.
Several biographies provide excellent sources of information and insights into the personalities of boomers. Mark S. Foster’s Castles in the Sand: The Life and Times of Carl Graham Fisher (Gainesville: University Press of Florida, 2000) is invaluable in understanding the creation of Miami Beach. Less valuable but still useful is Polly Redford’s Billion-Dollar Sandbar: A Biography of Miami Beach (New York: E.P. Dutton & Co., Inc., 1970). Practically useless from a factual standpoint but filled with anecdotes is Alva Johnston’s The Legendary Mizners (New York: American Book/Stratford Press, Inc., 1942). Johnston was infatuated with the life and lifestyle of Wilson Mizner, Addison’s younger brother, and his book is primarily an encomium to him. Michael J. Boonstra’s thesis, “D.P. Davis and the Florida Land Boom” (master’s thesis, California State University Dominguez Hills, 2002), is a good start in exploring the life of this legendary developer. The life of George E. Merrick is covered in Kathryne Belden Ashley’s out-of-print George E. Merrick and Coral Gables, Florida (Coral Gables, FL: Crystal Bay Publishers, 1985). Glenn Hammond Curtiss’s life is covered in Cecil R. Roseberry’s Glenn Curtiss, Pioneer of Flight (Syracuse, NY: Syracuse University Press, 1991). David C. Weeks authored the definitive biography of John Ringling in Ringling: The Florida Years, 1911– 1936 (Gainesville: University Press of Florida, 1993).
Robert E. Snyder and Jack B. Moore offer a great deal of information, both textually and in pictures, in their Pioneer Commercial Photography: The Burgert Brothers, Tampa, Florida (Cocoa: Florida Historical Society Press, 2007). Donn Curl and the Boca Raton Historical Society recently published a pictorial history of Addison Mizner’s prized Boca Raton Inn, The Boca Raton Resort & Club: Mizner’s Inn (Charleston, SC: The History Press, 2008), which provides a good look at the architecture and operation of the Mizner Development Corporation.
The role of golf in the explosion of development in the 1920s is explored in Richard Moorhead and Nick Wynne’s pictorial history Golf in Florida, 1886–1950 (Charleston, SC: Arcadia Publishing, 2009). An expanded text-driven book is scheduled for publication at a later date. The Moorhead Collection of historical pictures and postcards is large and growing.
Florida is blessed with a number of photographic and documentary archives. The Florida Historical Society Library in Cocoa has an extensive postcard collection, which covers the 1920s. In addition, it has a number of original advertisements for the period and a collection of period magazines, including American Motorist. The Florida Historical Society Library is also home to the Mosquito Beaters, a community reunion organization with Florida photographs dating back to the 1880s. The Mosquito Beaters, particularly Grand Sachem George Leland “Speedy” Harrell, are a wonderful source of firsthand accounts of Sunshine State developments from the 1920s to the present.
The Historical Association of Southern Florida in Miami, which counts George E. Merrick as one of its founders, also possesses a marvelous archive of period photographs and other materials. So, too, does the Florida Photographic Archives in Tallahassee. The Tampa-Hillsborough County Library System holds the bulk of the Burgert Brothers Photograph Collection, while the Special Collections Department of the University of South Florida Library also has a significant number of Burgert Brothers photographs in its Hampton Dunn Collection.
These are merely starting points for any researcher on the 1920s or real estate development in the Sunshine State. We are deeply indebted to them all.
About the Authors
Nick Wynne is executive director emeritus of the Florida Historical Society. He obtained his PhD in history from the University of Georgia (1980) and taught at several southern universities. He has published seven books on Florida history, many of them with Arcadia Publishing, including Tin Can Tourists of Florida, Florida in the Civil War, Florida’s Antebellum Homes and Golf in Florida, 1886–1950. In addition, he has won several awards for his books, including the James J. Horgan Award for Best Florida Fiction for Juveniles. He is also the author of a forthcoming novel, Pirkle Hall or Sister Mary Magdalene and the Church of the Archangel Rodney. He and his coauthor, Richard Moorhead, are proud graduates of Telfair County High School in McRae, Georgia—class of 1961.
Richard Moorhead is a retired sales executive with the Ethicon, Inc. division of Johnson and Johnson. He currently is president/CEO of Richard Moorhead Associates, LLC, a medical sales, sales management and marketing executive search firm. A graduate of Valdosta State University and Webster University, he lives with his wife, Sandy, in Winter Park. An avid golfer, he is the coauthor of Golf in Florida, 1886–1950. Along with Nick Wynne, he is the coauthor of Floating Fortress: Florida in World War II, which will be published by The History Press in 2010.
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