How Florida Was Developed 02 — EATING FLORIDA

HENRY MORRISON FLAGLER — Founder of Modern Florida

Henry M. Flagler, one of the world’s wealthiest men at the time of his death, was the business partner of John D. Rockefeller. Who publicly referred to Flagler as “the brains behind the Standard Oil Company.” Flagler had shown an early talent for business, leaving home at the tender age of fifteen to seek his fortune. During the Civil War, he did just that, making it big by supplying salt to the Union Army. Only to bite the bitter bankruptcy bullet when prices plummeted and the market collapsed as the armies returned home in 1865. Flagler, like many good capitalists throughout the North, had counted on the War continuing for at least another year or two and was unprepared for the financial crash that followed victory.

In 1867, John D. Rockefeller, a friend and business associate in the grain business (actually Flagler had hired him earlier as a commissioned grain broker), came to Flagler with an incredible proposition. He wanted to borrow the then princely sum of $100,000 to capitalize his new, successful but highly speculative business venture in petroleum refining and marketing. Thinking Rockefeller was on to a very good idea, Flagler referred him to his half-brother, Daniel Morrison Harkness (the offspring of Henry’s mother and her second husband), who was a major force behind the very prosperous Harkness family’s financial investments.

Dan’s older half-brother, Stephen Harkness (who was also Flagler’s half-cousin and who had made a serious fortune in alcohol distilling/sales through illegal manipulation and collusion with Senator John Sherman, the brother of General William Tecumseh Sherman), agreed to fund the proposal. But only if Flagler, who just so happened to be married to his sister, Mary Harkness — unrelated by blood to Flagler; yeah, it was a complicated family — would become Rockefeller’s partner and in complete control of the Harkness investment. After all, somebody had to protect the family’s financial interests.

In 1868, at age 37, with support from Stephen Harkness and acting as the family’s agent, Flagler joined with John Rockefeller and Samuel Andrews to form the Rockefeller, Andrews and Flagler Oil Refinery. By 1869 the company had grown so quickly it dominated the oil refining market in Cleveland. The prospect of rapid growth, like the horrid smells emanating from the industrial refineries, had thickened the air with incredible promise. On January 10, 1870, the partnership evolved into a joint-stock corporation that took the name, Standard Oil.

By 1872 Standard Oil dominated the American oil refining industry, producing 10,000 barrels per day. Five years later, when Standard Oil was regarded as the world’s largest and richest industrial company, it moved its headquarters from Cleveland to New York City. And the Flaglers moved to their new home on Fifth Avenue. It was the Big Time for Rockefeller and for Henry.

The collaboration between Rockefeller and Flagler became what was likely the greatest money-making venture in the history of capitalism. Many years later, when asked if he had conceived the idea of the now infamous and pilloried Standard Oil Trust, a board of trustees who would operate across international boundaries and grow the company almost without limits until it controlled over 90 percent of the world’s oil refining and marketing capacity, Rockefeller answered, “No, sir. I wish I’d had the brains to think of it. It was Henry M. Flagler.”

Flagler was already a very, very rich man by the mid-1870s. His wealth came the old fashioned way. He acquired it as a direct result of devising and implementing a ruthless strategy of devouring competing refineries or driving them out of business. And thus was the world’s first monopoly created.

In 1876, Flagler, seeking a winter climate healthier than New York City for his ailing wife, Mary, took his family to Florida. The journey from New York to Savannah by rail was uneventful. But the rail line terminated in that South Carolina port. The connecting steamboat trip to St. Augustine took an uncomfortable sixteen hours. The Flaglers found St. Augustine to be small, unattractive, and provincial beyond relief. Henry in particular took an instant dislike to the City, resolving never to return.

Over the next several years Flagler offered to send his chronically ill wife and children south for the winter but she always refused, not wanting to be separated from him, even for a short few months. Despite the specter of her rapidly failing health, Flagler was too enthralled with the prospect of controlling the world’s oil market to take time to re-visit Florida. Or to pay more than passing attention to his wife’s increasingly severe health problems.

In 1882, a year after his wife’s death from pneumonia, for reasons that were never revealed, Flagler returned to St. Augustine and found the City greatly changed. Although it was far from the elegant resorts to which he was accustomed, the City’s January climate was nothing short of wonderful and its accommodations were much more refined than he remembered.

He returned in 1883 with a new wife, Ida Alice Shourds, who had been one of his first wife’s nurses, and decided to build the Ponce de León Hotel, a posh new facility catering to wealthy Easterners who, like himself, were desperate for a fair haven in winter. It would be the first large-scale building in Florida inspired by the so-called “Spanish style” adapted by John Carrere and Thomas Hastings, the young New York architects chosen by Flagler. Actually their design tastefully combined Spanish, Moorish and Italian Renaissance architectural traditions rather than only Spanish.

Within a month after breaking ground on the hotel, Flagler and several business partners bought the Jacksonville, St. Augustine, and Halifax River Railway, a short-line road with connections to the rail hub in Savannah. At that same time he started construction on another hotel in St. Augustine, the Alcazar, whose design was inspired by the Moorish influenced castellated towers and red tile roofs of the Alcazar Palace in Seville.

Determined to make money on his hotel investments by insuring a steady occupancy, Flagler decided to take the reins in his hands and hustle customers directly to his resorts. He bought two other short-lines and extended track south to Daytona Beach, renaming the line the Florida East Coast Railway. He was well on his way to becoming one of the most important entrepreneurs in Florida history.

Disappointed with the weather in St. Augustine, especially after the City suffered several hard freezes in the late 1880s and early 1890s, Flagler decided to move his operations to a location with a more reliable winter climate. Sometime in 1889 he sailed his yacht south along the Florida coast and came across a long, slender barrier island that was reported to have exceptionally mild winters. The Gulf Stream curved closer to the shore at that point than at any other location in the country. Bordered on one side by the Atlantic and on the other by Lake Worth, a navigable inlet of great beauty, the island was continually cooled by sea breezes and was further distinguished by a remarkable stand of coconut palms. Small wonder Henry fell in love with it.

In 1892, relying on his experience at The Standard Oil Company, that he who controls the production, sale, and transportation of a product in demand controls the market, Flagler sought and received an official charter to extend the rail line from Daytona to Miami. The irresistible financial plum in this deal was a generous gift from the State of 8,000 acres of land per each mile of track laid. In all, the land granted to Flagler from the State added up to 2.04 million acres. Seriously. Talk about a world-class steal. Ah, that’s the State of Florida for you, always generous with the already wealthy. He then began developing a huge new resort on the sheltered side of his favorite barrier island, between Lake Worth and the Atlantic, a resort designed for the richest of the rich that came to be known as Palm Beach.

As track was being laid to reach his new city, Flagler broke ground on one of the largest and most luxurious hotels in the world, the six-story Royal Poinciana. The hotel opened in Palm Beach in 1894 with 1,150 rooms, electricity, elevators, private bathrooms, a potential occupancy of 2,000, and seven miles of corridor. Suites cost $100 per day, a truly incredible sum in those pre-inflation days. In the summer of 1895, Flagler began work on another hotel on the Atlantic shore of the island. That hotel, which later became known as the Breakers, is the only one of his hotels that remains a working establishment today. These two ventures cost Flagler well over $4 million (which today would be worth more than $106 million).

At the same time, Henry was building an estate for a third wife who was considerably younger than he. Whitehall, an enormous Classical Revival mansion in the heart of Palm Beach, was literally filled with tons of the most expensive Italian marble. Not to risk ostentatiousness, the mansion was decorated everywhere with gilded ornamentation, to the staggering tune of $2.5 million, which would be worth slightly more than $66 million today. Determined not to be outdone by his future neighbors, Flagler then filled Whitehall with over a million dollars of the finest furniture the world had to offer. To put this enormous pile of money in historical perspective, in those times a skilled worker earned about $1.50 a day or even slightly less and upper management executives were making about $6,500 a year. Think about that and a $3.5 million house for a moment. In a wonderfully incisive book, Theory of the Leisure Class, the great and now largely forgotten sociologist-economist-satirist Thorstein Veblen coined a phrase about people like Flagler that said it all: Conspicuous Consumption.

All that investment, plus Flagler’s railroads, added up to a mountain of serious money. But you have to understand that Flagler was rich beyond our imagination. He was so wealthy that near the end of his life he was drawing over two million dollars income a year from his Standard Oil holdings alone, in the days before inflation and income tax. Remember, that $2 million did not include a single penny from his enormously profitable Florida holdings or from his other stocks and bonds.

Incidentally, Henry’s Florida earnings are very difficult to estimate today because he incorporated over a dozen independent firms: railroads, hotels, land development, car ferries, electrical utilities, water companies, etc. Those separate, stand-alone enterprises were put in place for one purpose only: to insolate Flagler’s enormous Standard Oil holdings from potentially damaging lawsuits. Having once gone bankrupt as a young man, Henry had become a very crafty businessman. In every way imaginable.

When Flagler extended the Florida East Coast Railway to Miami he received 100,000 acres of land with prime agricultural potential from the State. He also was given, at no cost to him, land in Miami from local landowners anxious to profit from a railhead in their then squalid little community (population of 1,680 in 1900). Flagler really possessed the golden touch, making money everywhere he turned, from the State, from eager investors in his ideas, from the consuming public, and even from fellow property owners.

After reaching Miami and building the Royal Palm Hotel, Flagler looked south and saw Cuba. Many thought his extension of the Florida East Coast Railway to Key West was but the first part of a grand strategy to bring Havana within his entrepreneurial grasp. Alas, it was not to be. On March 15, 1913, Flagler fell down a flight of marble stairs at Whitehall and suffered a broken hip and other serious complications. His only son, Harry Harkness Flagler, who hadn’t seen his father for nearly 20 years and had never met his step mother, eventually agreed to travel from New York to be at his bedside. But his father, drugged to the max, never recognized his estranged son and died on May 20. He is buried alongside his daughter, Jennie Louise, and first wife, Mary Harkness, in a mausoleum in the St. Augustine Presbyterian Church, a church he built and donated to its members. With his railroad, hotels, and land holdings extending from St. Augustine to Key West, Flagler ushered the State into the modern triumvirate age of tourists, land development, and agriculture. An age Florida has yet to exit.

Henry Morrison Flagler created modern Florida in many ways. When he first became involved in the late 1870s, not one city in the State had a population exceeding 10,000. What Flagler did was to set the stage. He established the critical infrastructure and the international focus that changed the State for all time. He proved once and for all time that a man with money, vision, and a single-minded drive to succeed could make a fortune by wisely investing in Florida real estate.

Of course, Henry Flagler was a far more complex historical character than how much money he made or how much Florida real estate he developed, directly or indirectly. Like most of us mere mortals, his personal life was riddled with quite a number of very human foibles. Money, despite what we impecunious folk like to think, doesn’t protect you from the slings and arrows of life. So, let’s turn the coin over to glance briefly at the other side and examine Flagler’s feet of clay.

As mentioned above, Henry M. was much too busy building Standard Oil into the world’s largest corporation to take his invalid first wife out of New York during the severe winters. It is not an exaggeration to say he willfully ignored her physician’s warning that a change of climate was vital to her well-being. The problem was he was having way too much fun building the world’s greatest industrial empire to tend to his ailing wife. Almost certainly one result of Flagler’s inattention was Mary Harkness Flagler’s early demise from a chronic bronchitis that graduated to full fledged pneumonia. And, during the time his wife was most ill, Henry was not bent over his desk in Manhattan working late at the office but was spending evenings and weekends dallying about New York with Helen Long Foote, the lovely wife of C. W. Foote of Syracuse.

Not long after Mary’s death, Henry was named a correspondent in the nasty Foote divorce proceedings. Documents produced in Court demonstrated that Flagler had presented the beautiful Helen with munificent gifts, not the least of which were a fashionable townhouse on East Fifty-Seventh Street in Manhattan and Standard Oil Company stock valued at over $400,000. Not a shabby price to pay for the favors of an attractive and willing woman, married or not. It could be he was crying over spilt milk, but poor C. W. angrily stated in a formal deposition that his wife served as Flagler’s mistress for over a year. Perhaps the recurrent black-dog depression that hounded Flagler mercilessly in his declining years, leaving him weeping and emotionally incapacitated for weeks on end, was related to his unconscionable treatment of his first wife. After all, Mary Harkness was a woman who loved him so deeply and unselfishly that she refused to save her own life by moving to a location with a warmer winter climate.

When Henry’s second wife (who had been his first wife’s nurse and who had had an ongoing affair with Henry while Mary was alive) became mentally ill, but not too far gone to realize he was running around with other women, he was in a quandary. The State of New York, then his legal residence, did not recognize insanity as grounds for divorce. No problem. Henry switched his legal residence to Florida and arranged for several key members of the legislature, inspired by campaign contributions totaling $150,000 (worth about $3 million today), to sponsor a bill making insanity grounds for divorce in the Sunshine State. Several months after the legislation passed, Henry was divorced and re-married. The public outcry over that all too obvious political favoritism was so great the statute was repealed several years later. But Henry had accomplished his purpose well before that time.

Henry’s only son, Henry Harkness Flagler, the youngest child of his first marriage, proved singularly uninterested in running his father’s businesses in Florida. After two years laboring at Henry’s grindstone in Palm Beach, Harry permanently abandoned the Sunshine State for New York City. There he married Anna Louise Lamont, heiress of wealthy financier Charles Lamont, and became a devotee and great benefactor of the arts. Harry had basically been estranged from his father for nearly 20 years when Henry died. It was only after his father’s death that Harry blossomed into his own man, becoming one of the most influential leaders of the New York musical world and the principal financial supporter of the Symphony Society and the Philharmonic-Symphony Society.

Uncomfortable as the idea might make us, it could be said that it was Henry Flagler’s cold, distant, manipulative, greedy, and narcissistic nature that enabled him to become the “Father” of modern Florida. Certainly, a well-balanced, sensitive, caring, altruistic individual would have had little motivation to drive him toward the same land development and moneymaking goals that drove Henry. Perhaps the State of Florida is lucky to have had a Henry Flagler to drag it kicking and screaming into the Modern Age. Maybe Karl Marx was right when he coined the idea of the Historical Imperative. Without doubt, few other men could have done half as much in twice the time as Flagler. Having said all that, I have always wondered what Florida would look like today if Henry had never returned to St. Augustine after his first wife’s death.