Florida's Shakedown

In Florida last fortnight 25 banks failed. Causes: 1) Halterophora capitata; 2) aftermath of punctured land-booms; 3) gossip. Relative importance of these causes was difficult to determine. It appeared, however, that banks heavily laden with uncollectable land-boom notes found their debtors further handicapped by activities of Halterophora capitata. Exaggeration of conditions then produced disastrous bank runs. Deposits in the closed banks totaled more than $34,000,000.

Halterophora Capitata, informally known as the Mediterranean fruit fly, arrived in Florida mysteriously, probably late last year. Some say it may have traveled in the straw around the liquor-bottles on a rumboat. It is a fly which settles in any kind of fruit except watermelons and pineapples, or in vegetables if fruit is not handy. One fruit fly will lay 800 eggs. An orange, lemon or grapefruit in which 800 little fruit flies are hatching soon becomes a horrible, maggoty thing. Since last May, when a U. S. Department of Agriculture representative bit into a flyblown orange and gave the alarm (TIME, May 6), there has been little or no production on thousands of rich Florida acres.

The damage was done not so much by the fruit-fly itself as by destruction of crops to stamp the insect out of Florida. Thousands of trees have been cut down. Fruit has been destroyed. In infested areas, no new crops can be planted. No fruits can be exported from any part of Florida without the most rigid inspection. Even motorists, driving through the infested districts, are stopped at county borders while busy officials squirt insecticide over cars, coats, baggage. Even personal luggage is opened and the contents liberally squirted. To a protesting motorist, one official remarked: "Well, lady, we have $4,000,000 to spend and we got to do something with it."

Land Boom. The land boom aftermath consists in the principal of notes, made in boom times, falling due and not being paid. Frozen assets in the shape of uncollectable paper have put many a Florida bank in a tight position.

Gossip. So soon as one or two banks closed their doors, came rumors that the whole banking structure of the State was on the point of collapse. Many a nervous depositor rushed to his bank, clamored for his money, brought on the very disaster that he feared. The bank failure climax came last week when Citizen's Bank & Trust Co. of Tampa closed its doors and carried down with it nine subsidiary banks. Between fruit flies, bad notes and wild rumors, a wholesale panic appeared imminent.

Remedy. Quick, decisive action came from the Federal Reserve System, from C. Breed Taylor, deputy governor of the Federal Reserve Bank of Atlanta. Out of storm-clouded skies over Tampa dropped an airplane from Atlanta carrying one million dollars in cash. Nervous Tampa depositors, entering their banks, saw in tellers' cages great stacks of crisp, green, reassuring bills. Soon, by rail and motor, arrived an additional $4,000,000. "The banks," said Federal Reservist Taylor, "will have all the money they need."

Rallyings. Public officials rallied the people. Said Ernest Amos, State Controller of Florida: "The people have, Samson-like, brought down the temple upon themselves . . . but . . . this is the dark hour just before the dawn."

White-mustached Senator Duncan U. Fletcher (up for re-election in 1932) observed that in his time Florida had survived a yellow fever epidemic, two severe freezes, the land boom collapse, the hurricanes of 1926 and 1928. Said he with State spirit: "Florida is but experiencing a shaking down to solid foundations. . . . The days of prosperity and unbounded progress are but a little way ahead of us!"