|
Key West Goes Bankrupt
By Stuart McIver
 |
Let’s go back to 1934 when the island of Key West was baking 'neath a scorching July sun and Conchs wondered where their next job and even their next meal was coming from. Per capita income was down to $7 a month. The city, $5,000,000 in debt, hadn't paid its employees in weeks. Garbage, lovingly warmed by a tropical sun, lay uncollected in the streets.
Enter Julius Stone, Jr., an unlikely and at the same time perfect choice to solve the dilemma. Stone held a Ph.D. in organic chemistry from Harvard, was a wizard at playing the stock market (at least until 1929), and a member of a wealthy Ohio family of manufacturers. He was also a New Deal administrator and before his contradictory career ended, a lawyer, con man, embezzler, tax cheat and fugitive from the law. He brought many of these diverse skills into play to transform the poorest city in America into a world-famous tourist Mecca.
|
 |
Once Florida's largest city, the Conch Capital had seen its population plunge from 26,000 to 12,000 in 24 years. The cigar industry—11,000 jobs—had moved to Tampa and the sponge diving trade to Tarpon Springs. The era of shipwreck salvaging, the nefarious pursuit which once made Key West America's richest city in per capita income, was long gone. Even the Navy was moving out after more than a century. Its biggest hotel and the only railroad serving the town were both bankrupt. Eighty percent of the Conchs were on welfare.
The city celebrated the Fourth of July, 1934, by declaring itself bankrupt. Key West surrendered all its legal powers to the state. Florida had problems of its own, so it passed the island kingdom off to the federal government.
|
 |
The timing couldn’t have been better. America’s New Deal president, Franklin D. Roosevelt, had put into motion a program called the Federal Emergency Relief Administration (FERA). Florida Governor David Scholtz asked that FERA's southeast director handle the Key West problem personally. The director’s name was Julius Stone.
Something about the challenge appealed to the imaginative, creative and totally high-handed Stone. Probably, he was intrigued by the enormity of making the nation's biggest loser a winner again.
Stone had a million dollars worth of FERA funds to play around with. He also had authority to do it his way. He brought in a staff of 11: engineers, architects, city planners, a lawyer and a publicity man.
|
 |
The city was a mess. The garbage in the hot, tropical paradise had to be taken care of right away. Stone's first move was to recruit unpaid volunteers, some 4,000 of them, to clean up the city. Unhampered by any environmental considerations, he had them simply dump garbage and trash into the ocean.
While the cleanup was taking the Conchs’ minds off their troubles, he set about studying the three options set before him. One was simply to apply FERA funds to relief payments, which would include food and medical care for the city for a five-year period. That would cost $2,500,000 and would solve nothing in the long run. There would still be no jobs, no tax base, no hope.
The second option, estimated to cost $7,500,000, would be to admit that Key West simply didn’t work, then pay the cost of evacuating everybody on the island to the Tampa Bay area, where the cigar and sponge jobs had gone. Too costly, he concluded, and too likely to trigger armed insurrection from the individualistic Conchs.
|
 |
The third way was to find some means of creating jobs so the Conchs could stay on their island and still make a living. Stone looked at the blue waters, the rustling palms, the sunsets. What he saw was a tropical island that a tourist could reach without an ocean cruise ship. America’s Bermuda, that's what he saw.
Stone even started wearing Bermuda shorts to work, hoping others would follow suit. One day one of his volunteers showed up for work in his drawers. His explanation: “If Julius Stone can come to work in his underwear, so can I.”
Julius set his volunteers to work renovating some 200 guest houses, building thatched huts on the beaches, painting and cleaning up restaurants, bars and nightclubs and remodeling the bankrupt Casa Marina Hotel so it could reopen. Streets were landscaped and coconut palms were planted. A municipal sewer system replaced outhouses, work was resumed on a highway to link the island to the mainland by automobile and repairs were speeded up on the Key West Airport. An aquarium was built on Mallory Square.
|
 |
Artists from the WPA Federal Arts Project were brought in to do watercolors and paintings. These were used on postcards and tourism brochures, then placed in restaurants and other businesses to make them more appealing.
Within a year unemployment was cut by two-thirds and business at hotels and restaurants boomed. Two years after the program started a proud Key West was able to resume the basic task of governing itself again.
Stone was not without critics. Labeled the “'Kingfish,” he was blasted in conservative papers and columns as a dictator. A killjoy Sarasota paper, offended by Stone’s support of an enlivened nightlife in Key West, called the program “NCER— Night Club Emergency Relief.”
|
 |
Mightily impressed with his own importance, he once said: “With a scratch of my pen I started this work in Key West and with a scratch of pen I can stop it – just like that!”
No doubt about it, Stone was an arrogant, high-handed administrator. Many things he did were illegal and it is apparent that he continually bypassed democratic procedures. He made deals that FERA guidelines did not permit. If he wanted it done, he just did it.
“I got away with it,” he said years later to write for The New Yorker, “because we were so far off no one knew what we were doing ... also because I chose a time when [Harry] Hopkins (FERA boss) was on a long vacation.”
|
 |
Stone’s tactics wouldn't work in Miami’s case. They were possible in part because conditions were so dire in the depression that people were willing to unite behind unorthodox new approaches. Something had to be done and everybody knew it. Nobody worried about taxes, they worried about breakfast.
Energy these days seems to be channeled largely into bickering, playing it safe and coming up with comfortable solutions when actually there might not be any that are comfortable.
Still, when things look dark in the Magic City, just remember it took the Kingfish only two years to turn the poorest city in America into one of Florida’s most delightful destinations. Why would you think great things wouldn’t also lie ahead for Miami? |
Article appeared in South Florida History, Volume 24, No 3, Winter 1997. The contents of South Florida History are copyrighted ©1997.
Pictures are from tourism pamphlets in the Historical Museum's collections.
View more WPA pictures of Key West
|