Sorry Paradise

At the height of the Florida boom in the middle 1920--3 Miami frontage was worth more than any other land on the face of the globe. Justification of the prices at which this land was changing hands daily would have required fully-rented buildings 200 stories high. Nearby in the midst of this financial bedlam blossomed an incredible development--Coral Gables, a city of planned perfection that was to be no less than a "paradise on earth." Last week in Washington in its investigation of protective committees, the Securities & Exchange Commission wrote a few new chapters of paradisiacal history.

Like many another boom project, Coral Gables was an almost lifelong dream of a native Floridian. About the Century's turn a penniless, Nonconformist preacher left Cape Cod for the sake of his wife's health, setting out for Florida with his family and chattels in a horse & wagon. Near Miami he staked out a 160-acre grapefruit grove, named it Coral Gables, prospered enough to send his son George north to college. Son George Merrick wrote verse, won a short story contest, abruptly abandoned his literary career when his father died in 1912. Returning to Florida, he became obsessed with the idea of building the perfect city on the site of the grapefruit grove. For ten years he slaved as a real estate dealer, accumulating capital. By the time the boom began he had 4,000 acres with a few roads and other improvements just started. Overnight he found himself one of the richest men in Florida.

With a corps of the best engineers, architects, city planners he could hire, George Merrick built boulevards, parks, canals, fountains, lakes, swimming pools, golf courses, country clubs, hotels, homes, public buildings. Payrolls of Coral Gables Corp. were $200,000 per week and the advertising and publicity departments were each spending $2,000,000 per year. Any visitor with the remotest claim to fame was wined, dined and dunned with the Coral Gables gospel. Even William Jennings Bryan was persuaded to lecture on Coral Gables' bright sun and blue waters. And in one twelve-month period Coral Gables Corp. sold no less than $98,000,000 worth of property. Much of it was never paid for.

Then only 37, George Merrick was no ordinary promoter. He owned Coral Gables Corp. and dominated the municipality of Coral Gables. "I considered it my town," he said simply last week at the SEC hearings. "I founded it and it was dear to my heart."

For all practical purposes the city and the corporation were identical. Once the corporation gave the city a $100,000 check for back taxes that was by agreement never cashed. "It was done very commonly," said Mr. Merrick.

But what interested SEC officials the most was the sale of some $8,000,000 of city bonds, long since in default. As any money spent by the municipality directly or indirectly advanced Mr. Merrick's dream, Coral Gables Corp. often arranged for the sale of the city's bonds. For one issue the corporation paid the city 97-c- on the dollar, then resold the bonds to bankers at 92-c-, pocketing the loss because the proceeds were used to complete civic improvement promised lot-owners. Another $4,500,000 issue, which the corporation purchased from the city for a little less than par, cost the Merrick concern nearly $1,000,000 to market. A fee of $600,000 was necessary to persuade the bankers to take it at any price. Hundreds of thousands were lavished on promotion. Out of the goodness of his heart William Jennings Bryan gave 50 bond salesmen special fight talks. Today Coral Gables is a pleasant Miami suburb with a population of about 5,000. Taxes on vast sections of the city are uncollectible and only $329,000 has been paid on its public debt in the past four years. Of that sum, the bondholders got $64,000. The bondholders protective committee got the rest.

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