How Property Bubbles Help Us

The Economist:

The second thing that a bubble can do is to make a more profound impression on the public mind than a more conservative period of economic development can manage. The 1920s land boom implanted the idea of Florida as a glamorous holiday destination that has lasted to this day. Fisher, who displayed an unending genius for promotion, can take much of the credit.
Corbis Warren Harding and his caddie

He used a visit by Warren Harding, the then president-elect, to win early coverage for Miami Beach and he arranged high-profile tennis, golf and polo tournaments to garner more publicity. He imaginatively combined the two: this picture shows Harding employing one of Fisher's pet elephants as a caddie at the Flamingo hotel golf course. Fisher also put up a huge sign in Manhattan during the winter of 1921 boasting "It's always June in Miami Beach." The pricking of the bubble never erased the fun-drenched image of Florida that was created during the boom.

The impression left by the railway mania was of a different kind. Although the bubble clearly failed to deliver good returns to its investors, it did add greatly to the depth and awareness of financial markets. According to Mr Odlyzko, the number of families holding shares doubled during the period. He reckons that the introduction of general limited liability in Britain in 1856 was hastened by the experience of limited liability for authorised railway schemes during the boom.