Real estate bubbles always do what bubbles do: they burst. We know that in Southern California. And a group of speculators also found that out back in George Washington’s day.
When Washington was president, the nation’s business was conducted in Philadelphia. But the federal government was searching for a place to build a new city to serve as the capital.
Just before the location was selected, Washington asked a handful of people to purchase key parcels of land along the Potomac. Actor and historian John Curd says Washington "couldn’t really say to the general public he was going to his friends and having them speculate in property and buying it up with insider trading. But that’s exactly what he was doing."
Curd says those speculators were supposed to donate part of the land back to the federal government to sell to pay off war debts. The speculators could keep the leftover parcels.
But building a city from scratch takes time. Few folks wanted to live in a city with neither infrastructure nor commerce. Nobody got rich. One man even ended up in debtor’s prison.
None of it affected Washington; his family already owned a lovely piece of property on the Virginia side of the Potomac River: Mt. Vernon.