Congratulations to Raymond Vickers, who received the Silver award in the Independent Publishers Book Awards (Finance/Investment/Economics category) for his book, Panic in the Loop: Chicago’s Banking Crisis of 1932.

Learn more about this award winning book here.

Lexington Books takes great pride in its unwavering commitment to publishing specialized research essential to advancing scholarship at a time when many academic publishers have abandoned this part of their programs. We continue to publish high-quality monographs and edited collections by established and emerging scholars, works that may not have a wide audience but make a significant contribution to scholarship in the humanities and social sciences. Browse our website to see the wide range of offerings

“Panic in the Loop is timely in view of the current financial crisis. Vickers uncovers the corruption, betrayal, and theft of public and private funds in 1932 Chicago and establishes a model for uncovering contemporary financial chicanery. Discussion of the Enron crisis gives the analysis contemporary value and validity and raises the specter of corruption behind the sub-prime mortgage façade. Scholars and students will find Panic in the Loop a worthy title for reading lists.”
-David O. Whitten, Auburn University, and author, with Douglas Steeples, of Democracy in Desperation: The Depression of 1893

“Rarely has the case for transparency in the regulation banks been made so well. It is hard to imagine that the bankers that caused the Chicago panic of 1932 would have been so brazen or the regulators so slow to stop them if their actions had been quickly made public.”
-Eugene N. White, Rutgers University

“An extraordinary and unusual book that makes an important contribution to our understanding of banking history and the general economic history oof the 1920s. The banking collapse in the Southeast is virtually unknown, even to specialists in banking and financial history. No one who is interested in the banking history of the United States will want to miss this book.”
— Eugene N. White, Rutgers University

David O. Whitten, Review. Auburn University
© 1996 OPA (Overseas Publishers Association) Amsterdam B.V.
Published in The Netherlands under license by Gordon and Breach Science Publishers SA.

Raymond B. Vickers is the physician who asks a patient if he would like to cut his family medical bills by 90 percent, extend his life-expectancy and that of his wife and children by perhaps a score of years, improve his and his family’s general health, cut clothing expenses, extend the life of household furniture, lower insurance premiums, improve the trade-in value of the family car and the resale value of the family home, and maybe even make himself and family more socially attractive. Of course the patient is eager for an opportunity to improve his life drastically, but hesitates because it must be expensive. But no, the doctor says, the change will save hundreds of dollars a year and thousands over a lifetime. And how does the patient win the jackpot? Stop smoking. The patient leaves the office, angry at being tricked.

Vickers is a social reformer of the first order, an anachronism, a man of reason in an age of insanity. His panacea is sunshine, the removal of the secrecy shrouding public documents pertaining to financial institutions, their operators, and regulators. Vickers is angered by contemporary financial dealings that repeat crimes society might be spared if it were fully informed about earlier events. Decades after Florida’s 1926 financial debacle Vickers was for years denied access to surviving state records-most have been destroyed to protect the guilty. Had the truth of the dealings and double dealings that led to the 1926 collapse been known and entered the historical record public losses from the savings and loan fiasco of the 1980s might not have materialized or would at least have been minimized. Elected officials insist that secrecy in public affairs benefits the commonweal. The news media reinforces that position and people in general accept it as social gospel, something that hardly makes sense on close perusal but must be accepted as a
matter of faith.

Vickers is convinced that regulators are pledged to protect the public, not shield corrupt operators of publicly chartered financial institutions. The reactions to Vickers’ presentations in an academic forum-Vickers is a practicing attorney and professor of history with an earned Ph.D.-offer insight into just how effectively the financial lobby manipulates the media. With skill that overshadows the tobacco lobby’s, banking and financial houses buy the support of academics who write business and economic histories. What is so rare as a seriously critical study of a bank or an investment house? Academics pride themselves on their freedom from control, but willingly accept financial support to write business histories then angrily assail critics like Vickers who question freedom where large sums of money are involved. Vickers can document at least one case of a banking history that has not been published and is unlikely to be because the author accepted payment that made the manuscript the property of the bank about which he wrote. Naively the professor believed the officials who assured him that he was free to write what he perceived as the truth. What they did not add was their freedom to seize the manuscript should they find his version of the truth offensive. I have seen Vickers present his arguments for open records and freedom of access to regulators’ files and have listened, amazed, as long-trusted colleagues argue that too much information about financial institutions is bad for the public. Without exception Vickers’ assailants are authors of banking histories who are indebted to the industry but who rankle at the suggestion they are biased toward their source of lucre.

Panic in Paradise: Florida’s Banking Crash of 1926 is Vickers’ first complete investigation of financial fraud on a grand scale. He is currently investigating other deceptions conceived and directed by men (most of Vickers’ villains are male) held in high esteem because their fraudulent activities are hidden from public view by laws that prevent access to public information, secrecy designed to protect the guilty because the guilty own the officials with the power to pass such laws.

The Florida crash grew from grandiose plans to turn the Sunshine State into a  semi-tropical paradise of planned communities designed to attract investors and generate profits. Financing projects like Boca Raton required huge sums of money without the strings that usually accompany it. Investors insist on prospectuses and regular accounting, but bank depositors can be duped into thinking their money is available on demand-the Bankers Financing Company of Jacksonville was presented as a deposit insurance system to 170 financial institutions when in fact there was not a dime set aside for depositor insurance (p. 143)-while it is tied up in development projects. Investors carefully monitor their profits and losses with an eye to selling out if expectations dim, but bank depositors who have no idea their money is being used to finance risky enterprises sleep contentedly, thinking the state regulators are protecting their best interests. Who would guess that regulators could be cheaply bought? If an investment fails, the banker need only divert assets of the bank into another institution under his control and declare bankruptcy. Losses are sustained by depositors, who are blamed for the collapse of their bank because they lacked faith in it and asked for their money. Meanwhile the banker who cost depositors their money continues operations from another bank or banks as the game goes on uninterrupted. Secrecy keeps the public from knowing who and what institutions are to be trusted.

The trick to big money in 1920s Florida was banking. The men who controlled the banks had access to vast sums of money at little cost and no risk. Gaining control of banks meant including public officials in the scam, spreading the gain around, reducing the risk of investigation, and eliminating the danger of conviction and punishment. If this sketch sounds outrageous, ask how many people have been jailed in the 1980s and 1990s for the great savings and loan heist that bilked billions of dollars from Americans, most of whom still have no idea how or why they are paying the tab while obscenely rich rogues are invited to address business schools on entrepreneurship.

Vickers presents his evidence in detail and with substantiation. Part 1, “Promoter Bankers,” comprises three chapters on the promoters, their connections with banking, and how they controlled their regulators. The great Florida feeding frenzy did not flourish in a vacuum. Vickers carefully places the schemes and dreams of the Sunshine State promoters in the context of American history-the roaring twenties, the interwar years, the automotive age, the decade of agricultural depression that paved the way for the industrial depression of the 1930s. Americans then, much like Americans in the 1990s, had no dream, no great goals to attain. The
challenges of the twenties, like the challenges of the nineties, were not attractive, did not lend themselves to quick understanding and devotion. Illegal alcohol in the twenties, like unlawful drugs in the nineties, defied solution and sent reformers in search of riddles with answers. National heros were scarce in the society that had conquered the frontier at home, and abroad had made the world safe for democracy by winning the war to end wars. Florida real estate promoters offered a dream to a society in search of one. Fuel up the family Ford and venture to America’s paradise where planned communities would offer everything leisure-seeking, sunworshipping citizens could desire. “Tales of quick profits caught the attention of the nation. Even William Jennings Bryan, the former secretary of state and threetime Democratic nominee for president, made more than $500,000 by speculating  in his adopted state. Bryan became a believer in Florida” (p. 19). In an era when a Ford automobile could be purchased for less than $300 (p. 18), $500,000 was a fortune.

Vickers begins his story with Addison Mizner, the creator of Boca Raton, who launched his visionary empire with the financial support of celebrities attracted to his grandiose ideas. When that well soured, he tapped deposits of the Palm Beach National Bank, which he and his partners acquired and plundered, aided and abetted by Florida bank regulators. Mizner was not a lone corsair terrorizing Florida. James R. Anthony and Wesley D. Manley led a fleet of nearly two hundred banks against honest financiers in Florida, Georgia, New York, and New Jersey. Rather than fight bank regulators, Anthony and Manley piped them aboard and
created an invincible armada under a single banner, the Jolly Roger.

Vickers devotes the three chapters of part 1 to the major characters in the drama of deceit and to explaining the plot. Part 2, “Regulatory Complicity,” exposes the machinations of the regulators to conceal the fraud behind the real estate collapse then condemn bank depositors for causing their own losses. In July 1926, as banks closed their doors by the dozen and developers’ empires in the clouds materialized as undrained swamps, “T. R. Bennett, Georgia superintendent of banks, proclaimed: ‘The trouble … is not with the banks, it is with the people … agitators and hysterical people are doing incalculable harm'” (p. 78).

The technique was simple and straightforward. The developer and his partners secured a charter for a state (and sometimes federal) bank. Obstacles to chartering were overcome by bringing powerful politicians into the company. Once established the developers drew off depositors’ money in unsecured personal loans for themselves, supporting politicians, and bank regulators. These loans were rarely repaid. Bank officials raised funds for the development project by selling their bank shares in the project then repurchasing the shares at original price if the market value had increased but otherwise leaving the shares with the institution. It was not unusual to leave the bank with paper that represented nothing, for the funds were invested in an ancillary company that either had no assets or had liabilities vastly outweighing its assets. When a bank or development company faced receivership, the bandit operators diverted anything of value to another bank or company they owned, leaving in its place worthless paper. Bank examiners reported insolvent banks to their superiors (regulators) without effect. Insolvent banks operated for years, financial time bombs waiting to detonate.

When the public lost confidence in a bank and demanded their deposits, insolvency quickly revealed itself. Tellers were instructed to discourage withdrawals, even refuse to return depositors’ funds. Patrons were rudely greeted by gruff bank officials only until the doors could be locked and the shades pulled. But receivership did not end the deceit. Because the bank records were secret, regulators could appoint receivers who had unsecured loans with the bank they were supposedly putting right. Politicians’ unpaid loans were written off and the depositors absorbed the losses. Attorneys and receivers assigned themselves princely fees for their skulduggery, fees approved by the regulators they protected by keeping the source of the bank’s drainage a secret to be interred with their reports. Most states have destroyed the documents that would bring such financial chicanery to light.

Are states better off to elect or appoint their bank regulators? Vickers assigns two chapters to comparing the appointment system adopted by Georgia and the election system still used in Florida-Florida alone among the fifty states elects its bank regulator. He concludes that although abuses flourish under both systems, appointed comptrollers are easier to replace than elected ones, who can build a power base by abusing their office. The public only hears the accolades from the bankers because the fraud is a state secret even when documented.

The third and final part of Vickers’ study reports the financial duplicity that accompanied the post-panic reconstruction. The second wave of bandits found plenty of booty for their efforts. Even U.s. Vice-President Charles G. Dawes, the recipient of a Nobel Peace Prize, participated in the profit-taking from the Florida collapse in the post-panic years. Dawes and his brothers gained control of the
Mizner empire, siphoned off the assets, and left the offal for the bankruptcy courts to distribute to the depositors in Mizner-connected banks.

Chapter 7, “The Mad Banker,” relates the story of Manley’s efforts to avoid the loss of stolen wealth and the prosecutors’ drive to convict offenders. Manley did not willingly become the lightning rod for his fellow corsairs, who were all too eager for him to shoulder the blame and public antipathy that belonged to them all. No easy target, he refused to follow the lead of men who had killed themselves
rather than face trial, public humiliation, perhaps even the loss of plunder. Feigned madness may have caused Manley more pain than simple prosecution would have, but it certainly bought him time and a unique place in the history of pirates.

Chapter 8 is not as fascinating as the tale of Manley’s madness, yet it cannot but rankle honest citizens to read about u.s. Senator Lawrence Sherman, his friends, and associates. Sherman used his position and contacts to slip under the umbrella of secrecy and deceit and join the looters of the remains of Florida banking after the panic of 1926. Vickers titles the chapter “Senatorial Privilege,” but might just as well have called it Hyenas Feed in Florida.

A reading of Panic in Paradise is numbing. How could so many men have so few scruples among them? Why does the public continue to accede to secrecy for financial records and investigations when time and again that secrecy has cloaked fraud on a grand scale? Why are Vickers and men and women like him who call for sunshine laws and open records damned as villains for questioning the integrity of people who violate public trust? Why does the public tolerate grandiloquent swindlers who cost the commonweal billions, yet vent its spleen over welfare recipients whot combined as a national host, receive entitlements that total a fraction of the savings and loan booty? Why do people smoke cigarettes in light of the current knowledge of their ill effects?

David O. Whitten is editor of Business Library Review.

Raymond B. Vickers. Panic in Paradise: Florida’s Banking Crash of 1926. Tuscaloosa: University of Alabama Press. 1994. Pp. xvi, 312. $34.95

This is a story of mismanagement, fraud, government corruption, and cover-up in the banks of Florida and Georgia from 1926 to 1929. Raymond B. Vickers tells a classic tale of evil bankers deliberately channeling depositors’ funds into their own development projects while bribing government officials to help hide their crimes. Vicker’s  message, however, is that the real criminal in this story is neither the bankers nor the officials. The real criminal is the secrecy laws that allowed these activities to remain hidden for more than sixty years.

One of the most interesting aspects of the book is the author’s own role in “putting the criminal away.” An attorney, economic historian and past assistant comptroller of the state of Florida, Vickers had to use all of the skills of these jobs to develop his book. In addition to the usual problems of archival work, the author faced the state’s comptroller’s opinion that the release of the records “was a crime.” Vicker’s legal efforts and skillful use of publicity caused the reversal of that decision.

The basic story is that Florida’s land boom of 1925 attracted a group of dubious visionaries who resorted to sleight of hand to anticipate the good things that were surely coming. Among them were Addison Mizner, as well as two bankers who provided financing for Mizner, w. D. Manley and J. R. Anthony. The actions of these characters, which were sanctioned and concealed by Florida’s state banking commissioner, Ernest Amos, are blamed for the widespread bank failures that plagued Florida and Georgia in 1926.

When a lawsuit was filed accusing Mizner of fraud, the action precipitated a run on the bank controlled by Manley and Anthony. A run began on affiliated banks when that bank closed. Within two weeks, the run spread into Georgia. Failures there caused another wave of failures in Florida. While Amos tried to reassure the depositors by concealing problems, 150 banks closed. Amos apparently motivated by more than public interest, had received numerous bank loans. The sealing of liquidated banks records was a final attempt to cover up the illegal activities and relationships that existed.

The main story is supplemented by information about other bribed government officials and deal about legal proceedings. It lacks, however, any coverage of the resulting economic effects or even real proof that the events described actually were the cause of the failure of the banks. As in more recent situations, much of what went on would not have been noticed if growth in the economy had continued instead of slowing.

This book details an essential element of the history of Florida’s land boom. It is a useful building block in constructing the history of the Great Depression and reveals the rather typical complexity of bank failures. It presents a case for sunshine laws and for appointed, rather than elected, bank supervisors. Anyone interested in any of these areas will want to add this book to their collection.

Lynn Pierson Doti, Chapman University

Panic in Paradise: Florida’s Banking Crash of 1926. By Raymond B. Vickers.
Tuscaloosa: The University of Alabama Press, 1994. Pp. xvi, 312. $34.95

Raymond B. Vickers demonstrates, as others before him have demonstrated, that the savings-and-loan debacle of the 1980s was a case of history repeating itself. His description of the Florida banking crash of 1926 applies equally well to the S&L mess: “insiders looted the banks they pledged to protect. THey tried to get rich by wildly speculating with depositors’ money, and when their schemes failed so did their banks” (p. 5). Florida banks, which often were controlled by real estate developers or their partners, fueled the state’s real estate boom, and many failed when real estate prices sank. The complicity of bank regulators who, often for personal gain, acted in the interests of favored bankers rather than in the public interest, made the situation worse. Vickers reconstructs the web of developers, bankers, and regulators who conspired to rob depositors of millions of dollars.

Part 1 of the book focuses on the developers and bankers who funded the Florida boom. The story centers on Addison Mizner, promoter of a grandiose Boca Raton development, and J.R. Anthony and W.D. Manley, who controlled the leading banking chain of Florida and Georgia. Mizner actively sought investors, including bankers from whom he borrowed large sums. Anthony and Manley speculated in the stock of numerous Florida and Georgia banks , including the Palm Beach banks that loaned heavily to Mizner. These “promoter-bankers” profited from buying banks, lending themselves large sums of money, then selling out before their schemes were revealed. Anthony and Manley were also experts at co-opting state banking regulators by contributing heavily to their campaigns and lending them large sums of money in exchange for the granting of new charters, regulatory forbearance, and the secrecy of potentially damaging examination reports.

Part 2 expands on the role of state and federal bank regulators. Vickers shows that the Comptroller of the Currency, as well as top bank regulators in Florida and Georgia, know of the risky and fraudulent activities of banks in the Anthony-Manely chain, but did little to stop them. Examiner reports documenting such activities and indicating the precarious positions of many of the banks were kept secret and brought no enforcement action. When Mizner went bankrupt and runs began on banks owned by Mizner’s associates, the chief regulator in Florida blamed depositors and rumors for the collapse of state banks, and declared insolvent banks to be healthy.

Part 3 explores the aftermath of the banking collapse. It documents the fates of the principals involved, including the legal proceedings against Anthony, Manley, Ernest Amos, chief bank official of Florida, and T.R. Bennett, Georgia’s superintendent of banks. One of the more intriguing chapters examines how, with the assistance of the Comptroller of the Currency, Joseph McIntosh, then Vice-President Charles Dawes and his brothers came to acquire the assets of the Mizner Development Corporation to the detriment of depositors in the failed banks that had lent money to Mizner. Though a relatively small part of the Florida episode, the event illustrates Vicker’s argument that the banking debacle was largely the product of fraud, secrecy, and political influence.

Vickers reconstructs the web of bankers, developers, and regulators involved in the Florida calamity, drawing evidence from numerous sources, including previously unavailable examination reports and other documentation form the state and federal regulators. Many states, including Georgia, have destroyed their banking records from the 1920s, whereas others have fought vigorously to keep them secret. Vickers shows, however, that these documents are tremendously important for understanding the banking debacle and makes a strong case for full disclosure of financial institution activities, including examination reports listing insider and delinquent borrowers, and the dealings of bank officers, directors, and regulator agencies.

Many researchers, myself included, have focused on the role of deposit insurance in explaining the S&L collapse of the 1980s. As structured, deposit insurance removed much of the incentive for depositors to monitor the activities of their banks, while giving banks an incentive to assume excessive risks. Vickers shows, however, that the absence of deposit insurance is not enough to ensure depositor monitoring, because of the difficulty of obtaining and evaluating accurate information when bankers, regulators, and even the press are in cahoots to misinform the public.

The book has few weaknesses. It includes some material that seems irrelevant, such as lengthy discussions of banker opposition to an income tax in Florida and of the activities of former Florida supreme court justices, as well as other material that appears more innuendo than fact. These are minor, however, compared to the rich new history of the Florida banking debacle and insights it gives to other such episodes. THe book will thus be of considerable interest to students of banking panics and failures in any era.

David C. Wheelock, Federal Reserve Bank of St. Louis

Vickers, Raymond B. Panic in paradise: Florida’s banking crash of 1926. Alabama, 1994. 312p bible index afp ISBN 0-8173-0723-0, $34.95

Vickers, layer and historian who served for several years as assistant comptroller of Florida, has written a detailed history of the banking crash in Florida in the 1920s to serve as the basis for a tract to influence current bank regulatory policy. Basing his study on a wide variety of primary and secondary sources, Vickers argues that the major bank failures reflected situations arising from various toes of fraud that were permitted by bank secrecy and the failures of regulatory policy. Drawing analogies to what he regards as similar circumstances in recent ears, the author argues for a “banking-in-the-sunshine law” requiring full disclosure by banks and regulatory agencies. The story of bank operations in the ’20s is well told, and the interesting personalities are well described, but there is less attention given to the conditions in the local and national economy that also influenced the banking system. This book will be useful to economic and business historians studying the 1920s, to advocates of banking reform, and to all interested in reading about the social and political conditions of the interwar period. Upper-division undergraduate through professional.
– S.L. Engerman, University of Rochester

A historian sheds much-needed light on Florida’s abrupt shift from boom to bust.
By William Warren Rogers
Special to the Democrat

TItle: “Panic in Paradise,” by Raymond B. Vickers
Publisher: Tuscaloosa: University of Alabama Press; $34.95

The dramatic and pioneering book by Raymond B. Vickers – lawyer, former assistant comptroller of Florida and PH.D. in American history – makes important contributions to Florida and American economic history.

First, it challenges the traditional interpretation that the end of Florida’s prosperity in the 1920s resulted from the failure of the land boom. The view of historians, economists and others has been that bankers were blameless for the dramatic decline in real-estate values.

The recession that followed created a monumental banking panic in 1926 that extended to Georgia. Bankers, helpless to stem the tide, were defended by Comptroller Ernest Amos, who, as head of the state’s banking operations, blamed the economic debacle on “the public”.

Problems were compounded by a crippling railroad strike and a devastating hurricane, as customers made relentless runs on banks, leaving uninsured depositors with millions of dollars in losses.

Florida was left vulnerable to future devastations: an even more serious hurricane in 1928;  the arrival of the Mediterranean fruit fly in 1929, which temporarily devastated the citrus industry; and on-going failures of stat and national banks.

Finally, and for varying reasons, the economic crisis hit the entire country with the catastrophic collapse of the Wall Street stock market in 1929.

Until now, the standard analysis of the 1926 panic has not indicted banking officials or the state’s bankers. Vickers’ book does.

Backed by original research, Vickers points out that conservative and honest bankers survived both panic and depression, but that many Florida bankers exploited the financial institutions they were suppose to defend. They did so, basically, by speculating wildly with the cash entrusted to them, and with the protection of the state officials.

Vickers contends further that, almost without exception, all of the Florida bank failures can be attributed to conspiracy to defraud and insider abuses.

The author’s revelations are so dramatic – he names and cites multiple examples – that they are sure to invite challenge and already have, as in “The Florida Land Boom: Speculation, Money, and the Banks” (Westport, Connecticut, 1995) by William Frazer and John J Guthrie Jr.

Even so, Vicker’s pioneering book is not just for scholars. It is a well-written, compelling account that is given added veracity by a second contribution Vickers makes to historiography.

Aided by the Florida Historical Society, individual historians and newspaper publicity, he forced a reinterpretation of Florida’s bank secrecy law (dating to 1926). That statute closed vital records to those seeking them for research,. Once bank records of the 1920s became open to Vickers, he utilized their contents as the basic data for his book.

His book should find a place on the shelves of all Floridians interested in the colorful history of their state. Whoever said that economics is the “dismal science” was wrong.

William Warren Rogers is a professor emeritus of history at Florida State University.

Reviewed by Simon Barker-Benifield

Willie Sutton may have known about a lot about robbing banks, but he missed a golden opportunity in Florida in the 1920s. Some of the people doing the robbing then didn’t even bother to wear masks. They didn’t need to: the owned the banks. When they finished stealing, the banks collapsed.

If you think a comprehensive history of a banking crash that happened 70 years ago would be interesting but irrelevant today, think again. The parallels between what happened in the late 1980s are too close for comfort. Then, as now, there were bad loans and loans that went bad (there is a difference). There was insider dealing, political payoffs, regulatory abuse, rankly unsafe speculation and plain, old-fashion theft.

For example, the mayor of Lake Worth, A.D. Clark, made sure the city used his bank to hold its funds. Then he used neural half of the bank’s capital to speculate in hotel development. The bank collapsed. There was , of course, no FDIC insurance for the depositors then.

Vickers has a nice sense of detail. Take the tale of a banker’s wife who ran up a bill equivalent to 10 percent of the coital of one of her husband’s banks. Her husband, when tried for fraud, attempted to plead insanity as his defense.

Vickers is a lawyer when he is not teaching history at Florida State University. He is also a former Florida banking regulator and knows his business.

One of his substantial accomplishments was just getting the records from the 1920s. His story of industry attempts to keep records sealed is not reassuring because, for the most part, those efforts have been successful. In 33 states records have been destroyed after having been sealed for years. Most recently, the state of Washington and Alabama destroyed their bank records from the 1920s and 1930s.

Vickers says depositors would be able to make more informed decisions if they had more information available. That is debatable. One of the lessons of the 1980s was the inability of honest, competent bankers to guess what was going to happen next in their loan portfolios – and they were keeping the books.

Simon Barker-Benifield, a Tiimes-Union business writer, spent seven years in banking.

The real estate market decline and the subprime mortgage meltdown have claimed victims big and small, from the mammoth Citigroup and Bradenton’s Coast Bank to families’ equity in their homes.

It all has a familiar ring to a Tallahassee lawyer and historian named Raymond Vickers.

Vickers studied the Florida land boom and bust of the 1920s, and came up with a different story from the one told for decades by historians.

“Fraud and abuse” by banking insiders wrecked the economy then, he says, and he suspects that the same thing happened during the recent rise and
fall of real estate, as well as during the savings and loan debacle in the 1980s.

Greed is the common denominator in the standard 1920s boom histories and Vickers’ revision, but he says the problem was much deeper than that. It was a violation of trust on the part of bankers and developers that often was criminal in scope, he wrote in “Panic in Paradise” (University of Alabama Press, 1994), which Florida Southern College history professor James M. Denham hails as one of the five best books written on Florida history in the past two decades.

After analyzing previously secret bank-examination records, Vickers wrote that unscrupulous bankers created a financial climate in which the South Florida boom could flourish. Specifically, bankers were in bed with real estate developers, while bank regulators, including Florida comptroller Ernest Amos, were kept quiet with unsecured personal loans. Amos, who was later indicted, actually trumpeted the health of the banks when he knew they were in deep trouble.

“It was the reason for the real estate collapse,” said Vickers, a banking attorney who was Florida’s top appointed bank and securities regulator in the 1970s, and who earned his doctorate in history from Florida State University in 1990. “Fraud and insider abuse was the reason, and the reason for the current collapse is fraud and insider abuse. I don’t think anyone has focused on that.”

In the historical community, Vickers has his supporters and detractors. One of the detractors, University of Dayton economics historian Larry Schweikart, says Vickers’ premise is wrong because business ethics were different in the 1920s than they are today, and that it was common for businessmen to start banks to fund their ventures. “Insider deals were the lifeblood of banks well into the post-depression era, when it was then considered to be a bad thing,” Schweikart said.

But in claiming that the bankers “looted” the banks for personal gain, Vickers scoffs at Schweikart’s argument. “Thou shalt not steal,” he reminds, is not a new concept.

What history books say

Maybe you’ve read about the 1920s Florida boom, in the many picture books by popular Sarasota author Jeff LaHurd, or the 1984 classic “Fifty Feet in Paradise,” by David Nolan. Vickers wouldn’t dispute much of their accounts.

Yes, Florida real estate soared in value after World War I as Americans became wealthier and more mobile than ever, and marketers and advertisers became more adept at selling slices of “paradise.” “It’s June in Miami!” proclaimed the billboard that Miami Beach developer Carl Fisher hung in New York’s Times Square in the winter of 1920.

In the profit-mad America of the Roaring Twenties, millions came to explore and invest. Hundreds of thousands stayed, as the boom, which started in Dade County, spread up both coasts and even caused the creation of new subdivisions in the state’s interior.

“Florida became Florida in the 1920s,” said Gary Mormino, a professor of Florida studies at the University of South Florida’s St. Petersburg campus. “That is, the Florida that we recognize today and despise or love, the fast-paced Florida, the romantic, exotic Florida, symbolized by the tempo of Miami Beach and the decadence of Palm Beach and the architectural wonders of Sarasota — that’s all a ’20s phenomenon.”

Easy credit and stories of fast profits by everyday people brought an influx of investors and speculators to Florida. They traded binders (documents that reserved for 30 days a piece of property for a small deposit and were easily resold) and deeds for building lots, many of them underwater or undeveloped, it turned out. But it was a house of cards, a “classic speculative bubble,” leveled by deadly hurricanes in 1926 and ’28, negative publicity back North, and a transportation crisis in the winter of 1925-26 that kept building materials out of the state when they were needed the most.

“It was the parable of the eternal sucker … who makes all booms and is always caught in them,” wrote Burton Rascoe in the foreword to the 1932 book “Boom in Florida” — a remarkably candid account because its Miami-based author, T.H. Weigall, lived through it.

But most histories of the boom were written before “Panic in Paradise.” These texts don’t mention banking and banks, except as victims of the real estate crash, because Florida bank records were sealed by Amos after his indictment, and kept secret until Vickers fought to get access to them. Now, records of solvent banks are kept secret in perpetuity, said Vickers, who has represented more than a hundred banks in his legal career, while the records of banks that fail are locked away for 50 years. Vickers had a hard time getting access, six decades after the fact, to the records of Florida banks that failed in ’26 (he succeeded by threatening to sue and marshaling support among historians and the media), and could not get Georgia’s
records at all.

Armed with the secret bank records, Vickers wrote, “Heretofore, the banking calamity (of 1926) has been blamed on the collapse of the Florida land boom. It was believed that a precipitate drop in real estate values created a regional recession that caused the unprecedented number of bank failures. Previous studies have not analyzed the cause of each bank failure, and thus bankers and their regulators have not been regarded as the primary problem. …

“Using government documents, which stayed secret for sixty-three years, I have determined why so many banks failed in Florida during the 1920s. The sad story told by these records is that insiders looted the banks they pledged to protect. They tried to get rich by wildly speculating with depositors’ money, and when their schemes failed, so did their banks.”

Vickers shows that from early in the 1920s, bankers were in control, particularly J.R. Anthony and W.D. Manley, who headed a chain of banks in Florida and Georgia; they were key figures in the wheeling and dealing. Bank officials partnered with developers, such as Coral Gables founder George Merrick. Meanwhile, bank regulators were given unsecured personal loans by the bankers in an attempt to keep them talking up the health of the economy and looking the other way when examiners’ reports showed shady dealings, Vickers wrote. And political support was plentiful. At one time, all five Miami city commissioners were bankers.

“This linkage between bankers, promoters and politics led to a reckless expansion of the economy, which inflated real estate values to irrational levels,” Vickers wrote.

Formula for deception

In a review of Vickers’ book for the Business Library Review, Auburn University Prof. David Whitten, now retired, summed up the scheme:

“The developer and his partners secured a charter for a state (and sometimes federal) bank. Obstacles to chartering were overcome by bringing powerful politicians into the company. Once established, the developers drew off depositors’ money in unsecured personal loans for themselves, supporting politicians, and bank regulators. These loans were rarely repaid.

“Bank officials raised funds for the development project by selling their bank shares in the project, then repurchasing the shares at original price if the market value had increased, but otherwise leaving the shares with the institution. It was not unusual to leave the bank with paper that represented nothing, for the funds were invested in an ancillary company that either had no assets or had liabilities vastly outweighing its assets.

“When a bank or development company faced receivership, the bandit operators diverted anything of value to another bank or company they owned, leaving in its place worthless paper. Bank examiners reported insolvent banks to their superiors (regulators) without effect. Insolvent banks operated for years, financial time bombs waiting to detonate.”

At the middle of much of it, Vickers wrote, was Addison Mizner, who created the Mediterranean Revival style of architecture that is still popular in Sarasota and elsewhere in the state, but also floated his Boca Raton dream development on a sea of “worthless paper.” When he went bankrupt, his creditors received a tenth of a cent on the dollar (an engineering firm that was owed $30,764 walked out of court with $30.76).

Mizner’s personal culpability is refuted in the biography “Boca Rococo,” written by Caroline Seebohm and published in 2001. She says Mizner may have known about wrongdoings, but he was the artist and creative spirit of the Mizner Development Corp. and couldn’t tell one side of a ledger from the other. But could the same be said of his swindling brother Wilson? (See sidebar.)

Sarasota’s banks

Vickers’ book, which apparently had a limited impact among historians when it came out, is subtitled “Florida’s Banking Crash of 1926.” It is no secret that many banks crashed as the real estate boom went bust, but it was believed that they failed because of it. In fact, they were the cause, wrote Vickers.

Although Vickers said he did not see a single case of bank failure that was not linked to fraud and abuse by the bankers, it cannot be said that all banks were crooked in Florida. And, not all of them failed in 1926. Three of Sarasota’s banks didn’t fail until 1928, with depositors recovering from 18 to 42 cents on the dollar. In 1933, the Ringling Bank and Trust Co. went into voluntary liquidation, with Edith Ringling, widow of the founder, Charles Ringling, nobly reimbursing depositors in full ($250,000) out of her own funds.

But such virtue was rare among the bankers Vickers studied.

Next week: Raymond Vickers calls for an end to bank secrecy.