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Davis Loses His Islands

December 15, 2011 | By | Reply More

 Continuing Story of D. P. Davis – Davis Loses His Islands

by Rodney Kite-Powell

Curator, Tampa Bay History Center

 

Florida real estate in the mid-1920s seemed like a sure investment. With very little

money down, one could purchase a great deal of land, then turn around and sell it for a profit –

without ever making a mortgage payment. This type of land speculation was the engine that

drove the land boom. Unfortunately for those involved, the engine was about to run out of gas.

In 1926, there were over 850 companies and individuals listed in the Tampa City

Directory under its various real estate listings. The realtors hawked properties in Hillsborough

County and west Central Florida, with a few touting investments in South Florida. Eighty-two

of these companies placed real estate ads in the directory’s special advertising section, up from

seventy-four in 1925. The land boom was still alive, but economic signposts of 1926 began to

suggest a turn in another direction. The year began with news of slow real estate sales, a

condition which did not worry Davis or most other Florida developers. But as the temperature

increased from winter into spring, so did Davis’ problems. Instead of receiving an expected four

million dollars in second payments on Davis Islands property, only $30,000 in mortgages

payments arrived. Both Davis Islands and Davis Shores had sold out by this time, and resales

were moving slowly. In short, Davis had a serious cash flow problem.

Con men had so infested the Florida real estate market, stealing millions of dollars from

hapless investors across the United States, that potential buyers grew very skittish. Northern

banks, too, grew weary of Florida investments. This stance against any Florida real estate

investments soon spread across the country. The state of Ohio passed “blue sky” laws that

forbade “certain firms” from selling Florida land in Ohio. This view was shared by a Chicago

investment banker who claimed that “this Southern land boom is a fertile field for pirates of

promotion.” Though not a “pirate of promotion,” Davis’s luck changed as well, with more and

more investors defaulting on their loans, starving him of much needed cash.

Davis was not alone in his fall from realty grace. The entire Florida real estate market

began a steady decline in 1926 and outside observers were quick to point that out. The New

York Times reported a “lull” in the Florida market in February. By July, the Nation claimed that

the real estate business in Florida had collapsed. “The world’s greatest poker game, played with

building lots instead of chips, is over. And the players are now … paying up.”

Davis Shores continued to draw away all available resources, resulting in slower

construction on Davis Islands. An overall shortage of building materials made matters worse.

Davis had little choice but to sell his Tampa investment.

The failure of a project on the scale of Davis Islands spelled potential catastrophe for

Tampa, both in terms of pride and prosperity. A considerable number of important people

bought into the islands and now the situation looked bleak. Though it is not known which bank

or banks Davis utilized for deposits and credit, it can be assumed, given his problems with Dr.

Louis Bize, that it was not the Citizens Bank and Trust Company. Two more likely choices were

First National, which had direct ties with Jacksonville and, potentially, with the Milam brothers

(Davis’ partners), and Exchange National Bank, where Peter O. Knight served as a vice

president.

Either way, Knight, who at the time was president of Tampa Electric Company, had an

intense interest in keeping Davis Islands afloat. Despite stories to the contrary, the dredging

project was far from completion, roads awaited paving and large improvements such as the pool

and the promised bridge still lay years in the future.

Knight convinced the Boston engineering firm of Stone & Webster, owners of Tampa

Electric, to purchase Davis Islands. Stone & Webster formed a new subsidiary, Davis Islands

Investment Company, which in turn purchased Davis Islands on August 2, 1926. Davis received

forty-nine percent of the stock in the new company, which he immediately used as collateral on a

$250,000 loan so work could continue on Davis Shores. This amount proved far too small to

plug the gapping holes in Davis’ St. Augustine financing – Davis Shores was simply too

expensive.

Davis was left with few options. He booked passage on the luxury liner Majestic with a

diverse cast of characters, from his lawyer and mistress to his eleven-year-old-son. Davis did

not complete the voyage to France, but instead fell overboard in the middle of the Atlantic

Ocean. Why, or how, this happened remains a mystery.

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