lots or to take it back since, with ever increasing alarm I saw the impossibility of deriving a profit out of property that I could never see or even visualize.”

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Apparently there is much opportunity for confusion in the sale of remote lots in undeveloped land. How would you go about eliminating such confusion? 2. Some buyers seem confused about the amount of interest charged. What is GALC policy?

PART THREE: SALES METHODS

1. How many prospective buyers actually set foot on the land they buy? 2. What is the relationship between GALC and the Travel Guild of America? Has GALC or any officers or Directors of GALC ever had an interest in Travel Guild?

3. Under what terms are prospective buyers brought to Florida by Gulf American planes for tours of Cape Coral and Golden Gate estates? What will be the method of operation for planes provided to you by your purchase of Modern Air Transport of Trenton, New Jersey?

4. What portion of GALC income is devoted to promotional activity? What portion is devoted to sales promotion by telephone?

5. Are GALC buyers encouraged, as a story by Juanita Greene suggests, to buy land by the acre and sell it by the lot? How many lots, under present regulations, will a 5-acre tract yield?

6. Many GALC sales apparently are begun in other states by salesmen who have not necessarily seen the property. What methods are employed to keep such salesmen objective and informed? What control does GALC have over salesmen?

PART FOUR: ABILITY TO DELIVER ON PROMISES

1. May we have some discussion of this statement by Miss Greene : "Eighteen miles out in the wilderness, a man can buy a site for a filling station, a shopping center, and an apartment house. Yet the land (in the Golden Gate project) is cut up on the County plat books for low density, country type living."

2. May we have your own descriptions of the commitments made to County government to assure availability of funds for future improvement of GALC Holdings?

3. According to the Cape Coral Sun of August-September 1959, GALC had just received engineering reports for water and sewage plants at Cape Coral, The article says further:

"System will be built in stages, and the Company is hopeful to start the first phase late in the fall for completion the first of the New Year."

GALC has apparently received much criticism by those who believe the Company has not fulfilled that promise.

According to the Miami Herald of December 30, 1965, the State Health Department had requested that you build a plant to serve all existing Cape Coral Homes. The article also said:

"Gulf American, under criticism for delaying construction of a central plant, has told the Lee County Commission that it will soon build the first phase of its central sewage treatment plant."

What's the problem here?

PART FIVE: REMUDA RANCH GRANTS

1. Your prospectus of July 21, 1966, says that you have purchased 63,000 acres of land in Collier County, contiguous to Golden Gate Estates, and that the Company "proposes to sell this land as unimproved acreage by metes and bounds description", and that, "The Company will not provide either roads or drainage nor will it develop the land in any other manner." (page 17.) On page 12, the prospectus says: "The Company does not expect to have any material development costs at River Ranch Acres, Remuda Ranch Grants or Golden Gate Acres." A brochure issued by Gulf American Land Corporation (RGM 2149, 1966) states (page 2) that the company is committed to completion of the following facilities at Remuda Ranch Grants by February 1967: The Remuda Ranch Saddle'n'Stirrup Club, The Remuda Ranch Lodge'n'Hunt Club, The Remuda Ranch Rod'n'Reel Club, The Remuda Ranch Charter Boat Marina, The Ranch Bar-B-Q Camp'n'Cookout Park, The Remuda Ranch Trading Post, The Remuda Ranch Trap'n' Skeet Club, and The Remuda Ranch Kennel Club.

Each one of the above listed facilities is described in the brochure, and each one is the subject of paintings described as: "Artist's Conception of Facility". May we have some comment on the apparent contradiction of statements made in the prospectus and statements made in the brochure?

2. The cover of the brochure says that the land offered at Remuda Ranch Grants is "Packed for Pleasure Profits". May we have some discussion of the basis for this claim?

3. The following paragraphs, taken from page three of your brochure, also suggests that there may be substantial profit from purchases of land at Remuda Ranch Grants:

"TODAY'S IN-THE-PATH-OF-PROGRESS

LAND MAY BE THE UNTAPPED WEALTH OF TOMMOROW!"

"Land to be valuable should have a use now or in the foreseeable future. While the company does not represent that this offering has a present habitable use other than recreation, or that it can determine its actual future use, it is of the opinion that its location in an area of growth, together with the recreational facilities which are made a part of this offering, will contribute substantially to further value enhancement. Remuda Ranch Grants are offered as unimproved acreage in small parcels. This may or may not affect its potential for growth, since the growth of the area and its eventual improvements will be primarily dependent upon the efforts of the individual tract owners.

"If land is in an area where property is already being improved, it may well be considered on its way to value enhancement . . . and if it is close to a welltraveled major highway, it offers further promise of its potential.

"We believe that the wheels of progress are made up of wheels within wheels which all revolve around a central hub. It is this unchangeable law of motion which we feel augers well for the future of Remuda Ranch Grants . . . in our opinion an outstanding in-the-path-of-progress investment property."

I would like specific suggestions on actions that can be taken by individual property owners to improve land values, as suggested in the above excerpt. 4. Your brochure discusses drainage to this extent :

"Elevations range from 2 to 15 feet, and while there is some natural drainage towards the Fahkahatchee Strand centering on the property, a substantial portion of the property may be subject to flooding and ponding for considerable time periods. Man-made drainage has been studiously avoided so as not to affect the abundance of ponding areas and rainy-season surface waters so necessary for the perpetuation of this haven of wildlife, rare birds and exotic growth. No corrective drainage is contemplated."

A property report issued by the Florida Installment Land Sales Board on July 12, 1966, says that 80 per cent of the land at Remuda Ranch Grants is covered by surface waters at times during the year.

May we have more information on the extent and duration of inundation? The report also describes the property as "considerably overgrown and densely wooded." What effect will the surface waters and the apparently dense forest have upon (a) use of the area for hunting or fishing; (b) possible resale values, and (c) the statement, made in your brochure that "the pleasurable rewards of gratis club membership dues begin to compensate in fun and frolic dividends for an investment on Remuda Ranch Grants from the very first day."

PART SIX MISCELLANEOUS

1. The Miami Herald of June 9, 1966 (p. 2-B) says that Mr. Milton Mendelsohn has been cited by the Florida Installment Land Sales Corporation for contempt because of his refusal to answer questions. The contempt charge was made in connection with an investigation of the bankruptcy of All-State Development Corporation, developer of Rocket City. Mr. Mendelsohn was described as chief officer of the corporation. The article also said that Mr. Mendelsohn now works as a consultant for Gulf American Land Corporation. May we have a description of Mr. Mendelsohn's activities for Gulf American Land Corporation? Do you believe that the action taken by the Florida Installment Land Sales Board in any way causes an ethical problem in connection with the employment of Mr. Mendelsohn by Gulf American?

2. In the course of our hearings, several critical comments were made about the fact that three of the members of the Florida Installment Land Sales Board are engaged in land sales, and that a fourth member formerly was an attorney

for a land sales company. As a member of that Board, do you see any practical problems arising from what was described at the hearing as industry domination of a regulatory agency?

3. Transcripts of a recent 2-part news report on the CBS Walter Cronkite report are enclosed. I hope you will take this opportunity to make any comments you may wish to make on specific statements made about Gulf American Land Corporation in the report.

4. We would also like to have copies of all current promotional brochures now used in connection with sale of Gulf American Land Corporation developments. We will, of course, be happy to receive any other information or opinion you may wish to give to us, either in regard to the Interstate Land Sales Full Disclosure Bill or to problems discussed at our hearing.

Unless I hear from you to the contrary, I will assume that your response to this letter will be your final contribution to the hearing record. I once again want to express my regret that you did not take advantage of invitations to appear for you to discuss our questions at length in an open public hearing that would have given you full opportunity to answer all questions at length.

Sincerely,

HARRISON A. WILLIAMS, Jr

[Excerpt from CBS Evening News with Walter Cronkite, Aug. 18, 1966) CRONKITE. Senator Williams of New Jersey said today that testimony before his Banking Sub-committee has made a strong case for enactment of a bill which would provide greater protection to purchasers of land in interstate sales. The Committee's concern is prompted in part by the fact that increasing numbers of Americans are buying land for vacations, for retirement or as investment and the methods by which they are persuaded are something of a phenomenon. Tonight the first of two reports beginning with a bus ride and a sales pitch.

SALESMAN. How many of you folks-this is your first time in Florida? Go ahead, raise your hand. Lord of Mercy, we got a lot of them. I'll tell you what I'll do, I'll acquaint you with some of the facts on Florida and you're going to be absolutely amazed at the growth of Florida since the last World War. By the way, folks, over to your left is a drive-in church. Now Sunday morning you can go in there and drive in, turn on the thing there and you can just sit in your car, listen to the preacher.

BURNS. The travelers on this bus are being urged to invest in Florida. The questions that arise in their minds are those that occur to any investor: Is this a sound investment? Is it safe? Those with long memories may be cautious. The Florida land sales boom of the 1920's ended abruptly with thousands of people losing millions of dollars in a sudden collapse of the real estate market. This is the site of a defunct development outside Miami. It started as a dream and ended as a dump. But there are some differences about the Florida land boom of the 60's. The most obvious difference is the degree of organization probably the most aggressive and successful merchandising campaign in America. The critics call it high pressure but almost any visitor to Florida has a chance to judge for himself.

SALESMAN. Excuse me, folks, are you enjoying your Florida vacation?
VOICES. Very much.

SALESMAN. Well, the reason I ask, Brenda and I work for the publicity department for our city of Cape Coral and Golden Gate Bridge on the west coast of Florida and we would like to extend an invitation to you on behalf of our city to be their guest on an all-expense paid day out tomorrow morning at no charge. BURNS. Gulf American Land Corporation is by far the largest land developer and promoter in the world. To understand the Florida land boom it is necessary first to understand the vigor with which the land is sold. Gulf American has become the fourth largest corporation in Florida with sales last year of over one hundred eleven million dollars, mostly on the investment plan. Banks of computers are needed to bill its more than ninety thousand customers monthly. But a boom thrives on expansion and the search for new customers can begin almost anywhere. A free boat tour of Miami's elegant homes with a pointed reference to what can be done with undeveloped land.

GUIDE. And if there were any property available it would cost you in the neigh borhood of $55,000 per one hundred waterfront foot depending upon the distance of the property. But it is a beautiful example to look at it and remember that this was all man made.

BURNS. Gulf American has created this exhibit of jungle animals. It is free to visitors who are then approached by sales representatives. Some take free plane trips to inspect Gulf American property.

Do you think you'll buy some land now?

WOMAN. You mean today? Oh, I don't know. Got to see it, can't buy what you don't see, right?

BURNS. The real sales effort begins with a bus tour of the property. In this case, Cape Coral, Gulf American's first development and its showplace. And then lunch or dinner and some words about real estate as an investment.

SPEAKER. Land is a very limited commodity. And thus, it is the basis for wealth. Always will be and we say simply this to you, if you want to be better off in the future you will only be so because of what you do today to make it so. Gentleman take your homes. Mr. Hill, twelve for Mr. Hill. Mr. Stern, number four for Mr. Stern. Mr. Jones . .

BURNS. The salesmen whip up excitement by putting fifteen-minute holds on what they say are choice locations. After the bidding the prospects settle down to their meal. At each table a salesman.

SALESMAN. One fellow was towing behind this home on his boat and he caught a tarpon that weighed well over a hundred pounds. So if you enjoy fishingWOMAN. I don't, he does.

SALESMAN. Well, if you're not a fisherman now we'll make a fisherman out of

you.

WOMAN. I bet.

SALESMAN. If you've never hooked into a fish that-I guess you can gather I'm a fisherman. But if you've never hooked into a-100, 200, 300 pound fishWOMAN. Picture you bringing in a 300 pound fish.

SALESMAN. Sure, sure! Might take you an hour or two hours to bite that one single fish

WOMAN. Might take two hours to bring it in.

SALESMAN. That's what I'm talking about.

WOMAN. Does that have to be done today?

The only

SALESMAN. Not necessarily. This is depending upon yourself. reason that many people do it today is to protect themselves for that particular location.

BURNS. At this particular luncheon, 47% of the prospects in the room bought land. Quite obviously the sales pitch is successful. But what are they buying and will the land live up to their expectations? On this point there has been some disagreement. Land promoters and many businessmen in general insist that aggressive selling creates value, that a swamp can become a paradise if people believe enough.

In our next report we'll examine the question of real value. What is being sold? Is it really a paradise in the sun?

PETER BURNS, CBS News, Miami, Fla.

[Excerpt from CBS Evening News with Walter Cronkite, Aug. 22, 1966] CRONKITE. The profits in Florida land, Part 2 of a special report, in a moment.

ANNOUNCEMENT

Spanish explorer Ponce de Leon discovered Florida in 1513, but he found no gold. In the 1920's real-estate salesmen discovered Florida, and they did find gold-from selling land, sand and swamps. Now there's another boom in land there, but what kind of land? Peter Burns reports.

BURNS. One look at the spectacular groth of Miami Beach and its skyrocketing real estate values is enough to explain the enormous interest in Florida land of buyers from all over the world. But is all of Florida a potential Miami Beach? Hundreds of thousands of people think so. Many are persuaded to think so by high-pressure salesmanship. The giant in the Florida land boom is Gulf American Land Corporation.

SPEAKER. And as the land becomes more desirable more people move in. Right? True?

WOMAN. That's right.

SPEAKER. What happens to the price of the remaining land?

WOMAN. It goes up.

SPEAKER. You've won the sixty-four-dollar jackpot.

WOMAN. OK. I'll take it.

BURNS. What sort of land is Gulf American selling? Basically, two types of land, that on which development is promised and that which is sold as raw land. This is Cape Coral, Gulf American's showplace. Millions have been spent on recreational facilities, waterways, churches, and a school. It is a pleasant picture, and many of those who live here are delighted.

SPEAKER. Well, we came down last October, and we moved down from Buffalo, New York, and we fell in love with the place. The minute we got off the plane everything was so clean and nice.

BURNS. But those who are buying land now are not buying land like this. Their land is 12 to 20 miles from town, and they usually don't get to see it. It is undeveloped, but they are promised development in the future. Many do not ever intend to build. They are buying the land as an investment.

All investment involves risk. We talked with an independent real estate dealer, Pete Petrie. He has handled some resale of Cape Coral land.

Mr. Petrie, have the people who have decided to sell their land made money as they expected?

PETRIE. Yes. 95 percent of the people that have purchased in a developed section have realized a profit. Now, 75 percent of the area is undeveloped, and they have consistently shown a loss when it comes to selling. I'll give you an example. We have a piece of property here, and the paper price on this canal happens to be $6,600. The man sold it for $2,000.

BURNS. Petrie discusses the economics of the land being sold by Gulf American. PETRIE. They will buy an acre of land-say perhaps $300. They in turn will make about two and a half home sites out of this one acre of land, and each home site could possibly sell for $6,000 each.

BURNS. Recently Gulf American opened up two enormous new properties called Bermuda Ranch Grants and River Ranch Acres. This land is different, in that no Cape Coral-type development is promised. The chief appeal to buyers is speculative, the hope that future demand will bring higher prices. At River Ranch Acres the land is now used for camping, hunting, and other recreational purposes. The manager is John McDonald. If a man buys a piece of property, how can he get to that property, not right now necessarily, but in a couple of years? Are there going to be roads?

MCDONALD. There are proposed roads.

BURNS. Who's going to build them?

MCDONALD. I feel that it will have to be the county, Pete. We've promised nothing along this line.

BURNS. But the Polk County Commissioners insist that if Gulf American doesn't improve the land no one will. Obviosuly this has some bearing on the future value of the property. Some buyers have been disappointed or disillusioned by Florida land sales, perhaps because they expected too much. We talked to Robert Hoffman of the National Better Business Bureau.

HOFFMAN. There have been quite a number of people who've been disappointed for one reason or another.

BURNS. Do the complaints fall in any particular category?

HOFFMAN. There have been-I'd say the bulk of them stem from people who did not look at the property and did not understand the true nature of the land. There've also been complainants who apparently succumbed to high-pressure selling and signed a contract without adequate research and thought to the matter.

BURNS. There are many techniques for selling land, including luncheons like this, with a salesman at every table. The buyer has some protection by law. Installment sales of land are regulated by the Florida Installment Land Sales Board. Three of its five members are land developers, including the board chairman of Gulf American. The state requires a property report, but not all the buyers take time to read it. In the case of Berber Ranch Acres the report describes some land as being within three miles of the Avon Park practice bombing range. It also mentions that all mineral rights, such as oil and the right of entry are retained by the sellers. For example, they could drill on the land without compensation to the buyer. The report concedes that because of this right of entry most banks will not lend mortgage money with which to build a house on such land, one point to consider in judging future value.

The question is: Are these required reports protection enough, and do the buyers, in the face of aggressive salesmanship, have either the time or the skill