Florida's Boom, Bust Made Harry Kelsey a Survivor (PBP) 9-2-84Boo Bust V1
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Harry Seymour Kelsey knew how
to spot a trend.
First there was the fast -lunch busi-
ness. He got into it -almost by acci-
dent, but nevertheless developed the
concept into a chain of 112 restau-
rants, bakers and commissaries.
Then there was the '20s Florida
land boom. He began buying land in
1919, and his Kelsey City — today's:,
Lake Park -- is believed to be the
first zoned community in Florida.
Finally, there was the bust. If Kel-
sey's 1925 sale of most of his proper-
ty had not fallen through, he would
have been largely out from under
before the collapse in land values of
early 1926 — plus the hurricanes of
that year and 1928 — retarded Flori-
da development until World War II.
I If bust and blow weren't enough,
Kelsey also .had problems with the
Internal Revenue Service. The gov-
ernment took the $1.6 million he re-
ceived from sale of today's Intra-
coastal Waterway and applied it to
back taxes, and Kelsey. was for six
years under nder a federal indictment that
included,criminal charges. Even so,
he fared better than many of the
boom -time. developers. Although he
lost millions, he managed to rebuild
his fortunes somewhat through such
venture's as patent dealing and a
pharmaceutical firm._
He was; looking to. get back inte
Florida real estate, with a develop-
ment west of Miami named Utopia,l
when he died in 1957,
Harry Seymour Kelsey was born
March 26, 1879, in Claremont, N.H.
When he was quite young the family I
moved to a farm near Springfield,
Mass.,. where he learned about farin
work. but also received a better -than -
average education at public schools,
Wesleyan Academy and the Connect-
icut Literary Institute.
After a time as a linotype operator,
he got into real estate and soon be-
came one of Springfield's more
prominent young brokers.
Most of his deals appear to have
been remunerative. It reportedly was
one of the less -successful ones, how-
ever, that led him into the restaurant
business.
.............. ........
Yesterdays
Bill McGoun
Specifically he was left, after 4
trade, with a large stock of unsalable
restaurant equipment. Perhaps hi:
experience as a busy businessmai
had led him to see the need for Z
quick -lunch restaurant. In any case
he leased a store in Springfield and in
1904 opened his first restaurant.
The concept caught on, and before
long Kelsey headed a $4.5 million -a -
year business with outlets in many
major U.S. cities.
But Kelsey soon became restless.
He had the vision to conceive a busi-
ness empire and the drive and charis-
ma to build one, but not the patience
to run one. Often he would never visit
one of his restaurants again after the
ribbon -cutting. Thus, when the inter-
ests that would make his holdings
into the Waldorf chain offered him $3
million, he sold.
His interest in Florida 'develop-
ment began in the opening day's of
1919, when he visited Palm Beach to
rest up after a bout of pneumonia and
to see the building lot a f riend had
bought f or him at auction.
He arrived on New Year's Day and,
two days later, his friend introduced
him to a broker named Harry
Greene. Evidently, it didn't take
much persuading; according to Kel-
sey himself, "That morning I bought
44,000 acres of land about 10 miles
west of (the ocean) known as the Old
Barr Estate.".
Overthe next two years, Kelsey
invested heavily of his- restaurant
proceeds in Florida land. Among his
holdings were the future sites of
Palm Beach Gardens, Lake Park and
North Palm Beach, as well as some
14 miles of oceanfront between Mi-
ami and Jupiter. The latter included
what now is Golden Beach, a portion
of Pompano Beach, the oceanfront
section of North Palm Beach and the
Seminole Golf Club pr operty.,
Once again Kelsey was in the fore-
front. The prosperity set off by the
end of World War I was manifesting
itself in many ways, and one of those
was the rush to Florida. A new era
had dawned, and the bad experiences
of those caught up in'the drainage
land boom of a decade earlier had
been forgotten.
Many of the developments then be-
ing planned — such as George Der-
rick's Coral Gables, Joseph Young's
Hollywood-by--the-Sea and D.P. Da-
vis' islands in Tampa- Bay — were
aimed at the well-to-do or retirees.
Kelsey City was to be different.
Kelsey, who by then was living in
Boston, hired the Boston planning
firm of Olmstead Brothers — design-
ers of Central'Park — to lay out his
town. Tourist courts and trailers
were banned. Areas were allocated
for homes, recreation, business and
industry. It was to be a city for those
who worked.
The industrial zone was in the west
end of town, near the Florida East
Coast (FEC),Railway. Included were
the Kelsey City Nursery, sand, lime
and brick plants, decorative stone
and tile works, a rubber tire factory,
a model dairy farm and a lumber
,mill fed from more than 20 miles of
track in to t1he pine woods to the west.
As for government, a municipal char-
ter was granted in 1923.
. "Kelsey City .had everything," re-
calls Bryan Poston, who was born
there in 1925. "There was a ballroom,
brick factory, an icehouse and ice-
cream plant, automobile showrooms
on Park Avenue-, a lumberyard cut-
ting 200,000 feet of pine and cypress
a day, . banks, theaters, restaurants,
playgrounds and parks.' 9 .
As for the name, the founder insist-
ed that it was a surprise to him. "I
was in Boston after I purchased the
land and I read in the papers of an
account by real estate brokers who
said Kelsey City was to be founded. It
was the first I knew of it. They named
it, too."
As the boom progressed, the rela-
tively stable developers such as Kel-
sey, Young, Merrick and Miami
Beach's Carl Fisher were joined by
others who seemed to have no visible
assets other than dreams and adjec-
tives. Picture City, a planned com-
munity near Hobe Sound that was to
include a $1 million motion picture
studio, never amounted to much
more than a water tank and today is
Aec� Rt:>
PA5_1E_ 1
marked by nothing except pairs of
Sales techniques were no more re-
strained than were the ads. Consider
Advertising was so heavy that the
Miami News published an issue of
aging concrete lamp posts along the
west side of SR AlA,
this description of Young's promotion
.504 pages, which at that time was a
Nearby Olympia did little more
as described in History of Hollywood
record. The Miami Herald's ad busi-
than provide a name for the comma-
byVirginia Ten Eick:
ness for the year also .set a record.
nity until it eventually was changed
« This was open season for all those
Freight piled up at Jacksonville
to Hobe Sound. The central hub . of
who had a nest egg and an apprecia-
and other points. By the time the
Olympia, which was laid out to re-
tion of the good things in life. The
railroads realized what was happen-.
semble , Olympic arena, is now the
salesmen blazoned banners from
ing, it was too late to make headway
Sound ballfield complex.
their offices. They jumped onto the
against the ever-increasing flood of
.Hobe
And then there. was Indrio, in north
running boards of cars entering town
goods. On Oct. 29 an embargo was
St. Lucie County. A series of ads in
bearing foreign license plates, drop-
declared south of Jacksonville on ev-
Time magazine showed architect's
ping Hollywood pamphlets on. the
erything except food or items for.
rendering of "proposed" plazas, bath-
which special permits had been ob-
ob-
tained.
ing casinos and railway stations and
"suggested treatments" of homes in
laps of astonished passengers, ac-
companying the literature with ra-
The effect on construction _ soon
the adapted Mediterranean style of
pidlike talks and effusive greetings.
was evident. A lot in West Palm
Coral Gables. This version of "Amer-
"They sent out `bird dogs' (incon-
Beach that was supposed to be the
ica's Most Beautiful Home Town"
spieuous persons ... who would spot
site of "one of ' the most magnificent
never got, beyond the "proposed"
likely prospects, interest them in
apartment buildings in the South" in -
stage, and it wasn't the only one in
Hollywood development, and steer
stead became the graveyard of hun-
that category. On one occasion, -in a
them to the salesmen. Bird dogs re-
dreds of crated. bathtubs - the only
parody of a Florida broker's spiel,
ceived a 2 percent commission on the
item to arrive. before the embargo.
humorist Will Rogers referred to a
ultimate sales)."
A business spiral such as that on
town -to -be as being "next to our pro-
Stories of tremendous profits were
the Gold Coast requires an ever -in -
posed ocean."
legion, and further fueled the mania.
creasing inflow of money in order to
Other cities filled in areas that had
A Palm Beach tract that sold for
maintain its momentum, even when
been little more than laid out during
$800,000 in 1923 supposedly was
down -payments are cheap and op -
previous development.
worth $4 million just two years later.
tions cheaper. A downturn about the
Towns were being, reincorporated.
A poor woman who had bought land
time of the embargo led the develop -
as cities. Older unincorporated set-
near Miami in 1896 for $25 sold it in
ment community to counter with a
tlements were obtaining charters so
1925 for $150,000. Paris Singer, the
massive publicity campaign extol -
they either could have the services
sewing machine heir, paid $1.75 mil-
ling the virtues of Florida and attack -
provided in the new communities. or
lion in 1925 for 250 lakefront acres,
ing as "malicious untruths" the warn -
avert annexation by them. And other
adjacent to Kelsey City that had gone
Ings of those who were saying it
cities .were virtu.all,y springing from
for a few hundred dollars several
couldn't last.
the ground.
years previous.
By February 1926, Trust Co. of
As the 1920s began the area had ;
In November 1925, Kelsey
Florida was offering 8 percent com-
only nine incorporated municipal- I
branched out in a different direction.
pound interest, about 2 percent above
ities, the oldest of which was West
He bought the Florida East Coast
the prevailing rate, on- first-mort-
Palm Beach (1894). Others were Forth
Canal, an inland waterway that had
gage bonds in an effort to attract
Pierce (1901), Delray Beach andc
been dug from Jacksonville to Miami
sufficient investment capital..
Palm 'Beach (1911), Lake Worthe
starting in the late 1.9th Century but
More ominously, large Northern
(1913), Stuart (1914), Okeechobee;,
never had fulfilled its promise due to
banks were tightening up on credit.
City (1915), Pahokee and Moore HaA
dredging and silting problems.
'Before long the balance had swung
ven (1917).
Kelsey planned improvements to
and the magnificent houses of cards
Boynton Beach got its charter ini;
the toll waterway that would enable
began tumbling down.
1920, followed by Lantana in 1921,:
it to accommodate at least 50 large
As the capital stopped flowing,
Riviera Beach in 1922 and Kelsey)
freight barges.
binder boys and buyers began de -
City in 1923. Boca Raton and Jupiter
Kelsey's. waterway was not to be.
faulting en masse. As Allen puts it,
came into corporate being in. 1925,
Neither was his. causeway. Both
"There were cases in which the land
Greenacres City, and Gulfstream in
would fall victim to the Great Bust, a
not only came back to the original
1926, Sewall's Point in 1927 and Belle
downward spiral helped in its early
owner, but canis back burdened with
Glade in 1928. !
stages by the very transportation
taxes and assessments which
W.J. (Fingy) Connors, who had
problems that led to the canal plan.
amounted to more than the cash he
made a fortune bossing stevedores on. {
As boom -time construction acceler--
had received for it; and furthermore
the Buffalo docks, bought everything f
ated, the stands of native lumber
he found his land blighted with a half -
available between Canal Point and
were exhausted. There was plenty of
completed development."
Okeechobee City -- roughly 12,000 1,
sand and gravel for concrete, but no
Small developers were ruined, and
acres in all --- and linked his holdings
cement. Besides, the process for
larger ones were set back. Some per -
to the coast with a toll road from 20-
mass-producing concrete blocks had
sons felt the collapse would be a long -
Mile Bend to Okeechobee City on the
not yet been perfected and hand fab-
range blessing, as it had weeded out
right-of-way of today's U.S. 98. It
rication . was too slow.
fly-by-nights and would allow firms
would have been the first road from
The only gays to obtain building
such as Kelsey's to resume growth at
the lake to the coast had not the road
supplies were over the single-track
a saner level.
that today is SR 80 to Belle Glade
FEC, or by sea. And the two com-
They reckoned without the Big
been completed just months. earlier,
bined were inadequate.
Wind.
"The whole strip of coastline from
During the summer of 1925, ex-
Just as Kelsey was building a laun-
Palm Beach southward was being...
pecting the usual seasonal slump, the
dry for his city, the great hurricane
rapidly staked out into- 50 -foot lots,"
railroads cut back on operations to
0 Sept. 17-18, 1926, roared north -
said Frederick Lewis Allen in his
devote more manpower to laying
westward through Miami, splintering
book OnlyYesterday, still one of the
new track. But the binder -boy eupho-
the. lower Gold Coast and killing 300
best accounts of 1920s' mania. "The
ria. was upon the land, and business
to 400 people when Lake Okeechobee
fever had spread to Tampa, Sarasota,
continued unabated through the sum-
breached its dike at Moore Haven.
St. Petersburg and other cities and �
finer months.
Damage was not that heavy on the
towns on the West Coast. People were
coast north of Pompano Beach, but
scrambling for lots along Lake Okee-11
the black headlines in Northern
chobee, about Sanford, all througr
newspapers scared off potential resi-
the state ... " ,j
dents.
And Kelsey had additional prob-
lems all his own. According to
Charles Branch, who was general
manager of Kelsey's East Coast Fi-
nancial Corp., they stemmed from
Kelsey's dislike for day-to-day busi-
ness operation. He turned most of the
detail work of Kelsey City develop-
ment over to others.
Branch says that when he took the
East Coast job. in 1925, an associate
asked him, "When are you going to
start stealing from the old man (Kel-
sey)?'Everyone else is."
More seriously, according to
Branch, Kelsey signed his tax returns
without ever , reading or checking
them. And, according to the Internal
Revenue Service, those returns seri'_
ously understated his income.
When Kelsey sold the canal to the
state in 1927, his proceeds were
seized and applied to back taxes. And
when the government found out that
his cost of acquiring an oceanfront
tract had been overstated by a factor
of 10, more drastic action was taken.
Not only were liens of $800,000
against East Coast and $200,000
Against Kelsey filed, but Kelsey was
indicted on criminal charges.
Kelsey managed to stay in busi-
ness, and eventually won dismissal of
the indictment on the basis that the
error was an inadvertent misplacing
of a decimal point, but the effect of
the entire affair OD land sales was
catastrophic.
The worst single blow-, however,
came Sept. 16, 1928. Almost two
years to the day after the 1926 storm,
another hurricane roared ashore, this
one headed straight west thro u*gh
West Palm Beach. The damage to
Kelsey City was estimated at $1 mil-
lion in material terms, but the dam-
age to the city's image was incalcula-
ble.
NOR7)f p" BEO
Mum' WPW
WWJJv
Born in New Hampshire in 1879, Harry
Seymour Kelsey knew -how to spot a
trend and built his fortune on them. His
career began with a fast -lunch business
that expanded to a chain of 112
restaurants, bakeries and commissaries
and gave him the capital to invest- in
1919 in the Florida land business. His
Kelsey City — today's Lake Park — is
believed tto be the first zoned community
in Florida.
Kelsey tried to rebuild, but there
was no more money "and I had to let
the whole thing go." The "whole
thing" included most of the original
holdings. Exceptions included the
Seminole Golf Club, which he had
sold in 1926, and the canal.
The buyer was Sir* Harry Oakes,
who like Kelsey was 'a New England-
er. But Kelsey was quiet and Oakes
flamboyant. Sir Harry had become
enormously wealthy — 'his worth
once placed at $200 million —
through a gold mine in Ontario, and
had become a baronet courtesy. of
King George VI in 1939, (he had be-
come a British subject in 1915).
Oakes was brutally murdered
the crime remains unsolved — at his
Nassau home in 1943, but his corpo
rations carried on. Over the years
some $12 million was poured into,
Kelsey City, which in 1939 was re-
named Lake Park, with not too much
to show for it.
As for Harry Kelsey, he returned to
New England and busied himself
with his patent trading and pharma-
ceuticals. 'Except for a visit at the
city's request in 1950' he saw little of
the community thatonce bore his
name except as he passed through by
train on his way to winters in Miami.
. During the boom, he had begun a
development near Sanford that
quickly collapsed due to water prob-
lems, and he maintained an interest
in the Orlando. area in addition to his
Utopia project.
He died in Orlando Nov. 27, 19579
and was buried in Springfield where
he had built the fortune that, fell vic-
tim to slump and storm.
VILLAGE OF NORTH PALM BEACH
HISTORIAN