Tulipomania - Mike Dash [102]
Ch’ang-ch’un is in northern China, just north of the fortieth parallel and only two thousand miles from the valleys of the Tien Shan. The mania virus had come home at last.
*Even the most common and mundane objects can become rare and costly in certain circumstances. During the Second World War, when military supplies naturally took priority, U.S. servicemen would go to great lengths to obtain bottles of Coca-Cola. On one occasion a single bottle of the drink, worth five cents, was auctioned on the Italian front for $4,000.
*The equivalent of about $18,000 today.
*It would be wrong to see the Dutch tulip mania as unique. Similar booms—by which economists mean exceptionally rapid rises in prices—and bubbles (booms in which a commodity’s price quite outstrips what it is actually worth to anyone other than a speculator) have occurred all over the world throughout the last four hundred years. The objects of speculation vary from the obvious—stocks and shares, land and oil—to the unusual. In the United Provinces themselves there was a boom in investment in the passenger canal system begun in 1630—a genuinely useful development in the transport system that made many men rich— and during the 1670s a bubble involving the erection of elaborate public clocks.
Of all bubbles, however, the one that perhaps resembles the tulip mania most closely was the Florida land boom of 1925. Like the tulip, Florida was exotic, and before 1925 the state was difficult to get to and both unhealthy and swampy. Gradually, however, the construction of new roads and railroads and the draining of the swampland, together with the guarantee of fine winter weather, made it more attractive, and some rich Americans invested in vacation homes in the Miami area. Poorer people were attracted by their example, and local real estate agents were quick to exploit the rising demand for property.
Stories began to circulate concerning the fantastic profits that could be made by buying and selling land in Florida. The famous lawyer William Jennings Bryan bought a winter home in Miami in 1912 and sold it in 1920 for a profit of $250,000. Later on lots purchased for $1,200 could be resold a few months later for $5,000. A lot purchased for $2,500 was resold for $7,800, then $10,000, $17,500, and finally $35,000—the last purchaser being the man who had sold it for $2,500 and had lived to regret doing so. At Snapper Creek Canal land worth $15 an acre in 1913 sold for $2,000 an acre in 1925, and in central Miami land once worth $30 per acre became worth $75,000. Eventually land in Miami became more valuable than property on Fifth Avenue in New York. Much of it was bought on payment of a small deposit by speculators who planned to resell it before their next payments became due.
Money poured into the state. In a twelve-month period beginning in the autumn of 1924, bank clearings in Miami rose from $212,000 to over $1 million, and land transfers tripled. An edition of the Miami Daily News published in the summer of 1925 ran to 504 pages, almost all of it real estate advertising—a world record at the time. It was said there were two thousand estate agents in Miami alone, employing 25,000 salespeople.
The crash came in the autumn, as crashes often do. Speculators had badly overestimated the real demand for land. The number of winter visitors to the state was only a tenth of what had been predicted. People began to default on their loans, and a man who had sold land for $12 an acre and seen successive purchasers pay $17, $30, and $60 an acre was dismayed to discover that all had failed to pay more than their initial deposit, leaving the land to revert to him. From the summer of 1926 the crisis had caused several Florida banks to fail as clearings fell from $1 billion in 1925 to $633 million a year later and eventually to a mere $143 million in 1928. In the latter year, The Nation wrote, “Miami will