Key West surrenders in bankruptcy

By John L. Guerra
Staff Writer, Key West History

For the first time since 1822, when John Simonton had begun selling parcels of his undeveloped island to William Whitehead and John Fleming, Key West in 1934 had no major industry or employer, save the U.S. Navy--and that WW1.

The city government had laid off most city employees, and fire and police continued to work without pay on promise of compensation once the city found money to pay them.

At least 80 percent of the city's able-bodied workers were out of work, idling on porches and drinking in the hidden bars and backroom joints. Men loitered along the docks awaiting the next ship to unload while others drank themselves into the bushes at Front and Duval streets.

In 1934, however, the harbor was mostly undeveloped, weedy shoreline was lined with dilapidated warehouses and crumbling docks. The Singleton Docks were an exception, with the Turtle Kraals (Dutch for corral) and busy turtle cannery employing some men. Men who went out in search of turtles in small boats brought their prey in for sale to the cannery.

Many of the streets were paved, but most streets and lanes were still dirt paths without rain gutters or sidewalks. Except for homes owned by wealthy Key Westers, many homes were unpainted, coming apart and surrounded by unkempt yards behind leaning and broken fences. Then there were the small, grey shacks that had lay empty once their residents fled the city for better economies elsewhere.

The city government was so broke that trash collectors, who hadn't been paid in months walked off the job, leaving growing piles of trash and rotting refuse in the streets.

Key West the city was broke and deeply in debt. Some characterized it as the "brokest," most hopeless small town in America during the Depression. Isolated, without a renewable resource to export to other states and overseas, the city was on its death throes by 1933.

The city's sponging and cigar industries were remnants of their former might; the U.S. Coast Guard had moved out, and the local military base, boisterous with 200-foot-long blimps during World War I, closed after the war and the land was returned to the Oversea Railway.

Three major hurricanes, in 1909, 1910 and 1919, combined with dwindling industry, caused 14,000 jobs to vanish from the city. By 1928, the city's cigar manufacturing plants had gone from 69 to fewer than 30. Between 1920 and 1929, 5,000 people had moved out.

Local property owners owed the city more than $1 million in property taxes. Then there was the $2.6 million bond pus interest the city and county owed for building the lightly used overseas road. The interest alone on the bonds was $300,000. The city also owed $113,000 in back pay to garbage, police and fire employees; and $150,000 it had borrowed for operating expenses (the electric company had long since shut off the town's street lights for nonpayment).

In March 1933, President Calvin Coolidge, who had fought against broad social spending to break the Depression's back, lost his job. Following his inauguration, Franklin D. Roosevelt pushed legislation through Congress that created the Federal Emergency Relief Administration to get money to states and communities.

Several months later, Congress passed the Works Progress Administration and Civil Works Administration enabling legislation. The federal programs sent money to towns to pay the unemployed to fix roads, dig sewage systems, build parks, paint public buildings and make other improvements to local infrastructure.

Key Westers stood in long lines awaiting handouts of food from federal representatives. The government handouts--cheese, bread, butter, milk, and at rare times, pork and beef--was the primary source of food for many families with children.

Harry Hopkins, long-time FDR fixer, was put in charge of distributing $250 million to stricken communities around the nation for relief projects.

The FERA money started to arrive in Key West in late summer 1933.

The federal money employed only a few hundred men at first, putting them to work building the new open-air Key West Aquarium below Front and Fitzgerald streets on Mallory Square. Other teams of workers repaired and landscaped the Key West golf course, city hall, the Monroe County Court House, and the city docks. The construction wasn't top quality, as work plans were made quickly to get work started as soon as possible. The aquarium, for instance, was built on unstable soil, and cracks appeared in the stone and concrete aquarium tanks. Painting in buildings was uneven and rushed. But as 1933 ended, CWA and FERA was paying out $18,000 a week to nearly 1,000 workers. The city was glad to be back at work and optimism came back. The money was temporary, but the good feeling of getting paid was a boom to moods and households nevertheless.

Temporary: A word that became reality when the CWA's administrators in Washington, D.C., adopted new guidelines that cut the hours of paying work in Key West and elsewhere. In January 1934, fewer workers could make money. In March, FDR dropped CWA completely and temporary jobs went from 1,000 workers to fewer than 400. This was a dark time indeed. Workers slumped home, losing the only paychecks they'd gathered in years.

Key West wasn't going to die a quiet death, however. Local CWA leaders found themselves facing thousands of unemployed locals at two meetings at which the populace begged the New Dealers not to abandon them to the wolves. Please, they pleaded, tell Washington to make Key West an exception. We have no hope.

"Key West People Face Starvation, Governor Is Told," went the July 5, 1934, headline in the St. Petersburg Evening Independent.

According to the article, the city commission and the Monroe County Commission sent resolutions to the Florida Gov. David Sholtz declaring they were too broke and "could no longer carry on the functions of government, leaving the population in a dependent and distressed condition."

The resolutions also asked the Sholtz to take over the governing of the Keys, the first time a city during the Depression literally gave up its government to a state.

This was big news around the nation. The New York Times, the Houston Chronicle, Los Angeles papers, all covered the plight of Key West and its abandonment of its government to the state.

But the governor didn't want to take on the job of running the town or bringing it back from the economic ashes. He had other towns, other economies to worry about around the state.

So Sholtz turned to the federal government and FERA, saying, in effect, "I can't do it. You do it." Give it to your FERA people, he said.

The people of Key West, watching this, must have been nearly panicked by the lack of government follow up in Tallahassee. The governor had also rejected their plight. Or so it seemed.

Sholtz met with Julius F. Stone Jr., Florida's FERA administrator and asked him to take charge in the city and Monroe County, and on July 5, Stone agreed, as long as he had extraordinary powers to decide what must be done. It was a deal. A deal that didn't make everyone in Key West happy, by the way. Stone was both beloved and hated, especially by the Ernest Hemingway, who felt Key West should remain the unsophisticated, disheveled, third-world playground he'd come to love.

Nevertheless, the Sunday, July 22, New York Times ran a story with a photograph of Key West Mayor William H. Malone, wearing a white suit and boater's hat, handing a ceremonial wooden key to B.M. Duncan, Stone's assistant. Key West now belonged to Stone.

The Harvard chemistry major had nothing less than the re-creation of Key West in mind.

Stone called for an island-wide cleanup and face lift within six months. The laborers? Key West citizens who would work for free under a military style of leadership. When the work was done, those workers who kept to their pledges to sweep, rake, paint, and other work would be honorably discharged. Those who did not follow up on their tasks properly would be "dishonorably discharged" under his plan.

The plan: To create a "New Bermuda" at the end of the Keys, The New York Herald wrote, quoting Stone. FERA money would go to supplies, tools, and a hospitality house to greet visitors to the island and find them places to stay for the night.

To redefine Key West into a clean and orderly place where tourists could relax under the warm, winter sun, Stone and the citizen volunteers had to be prepared to work.

Cisterns and privies hadn't been cleaned for a long time; the streets were dirty and junk piled in alleys, Time Magazine reported in August.

Under Stone's plan, Duncan was to take over the city's health and sanitary departments; use trucks from Miami to haul away debris and trash from the streets and alleyways; and condemn property to be demolished or restored.

The plan included cleaning up beaches and building new ones; put hotels and restaurants in good order; and fix up houses so vacationers would be willing to stay in them.

Stone also wanted to bring in an expert on parks and playgrounds; photographers to record Key West's transition from a poor, dirty little town to a vacationer's paradise.

Would Stone's plan work? Could Key West use elbow grease and paint to create a tourist destination to put Key West on the financial map? Stone had his detractors, too, including Ernest Hemingway, who came to view Key West as his town.

We'll tell you how it all came out in the next issue of Key West History #36 Highway Opens