The Power in the Land — Chapter: The Hoyt Heist

Executive Summary

“The Hoyt Heist” is Chapter 8 of Fred Harrison’s foundational 1983 book The Power in the Land. In it, Harrison directly challenges Homer Hoyt’s 1960 claim that the 18-year real estate cycle had been “eliminated.” Harrison presents three types of evidence: (1) interviews with Chicago appraisers about post-war land value trends, (2) Hoyt’s own personal land speculation biography showing classic cycle timing, and (3) data on REITs (Real Estate Investment Trusts) as the new vehicle for cycle-amplifying speculation. The chapter also contains an eye-opening account of how Hoyt himself personally profited from buying at cycle lows and selling at peaks — contradicting his academic conclusion that cycles no longer existed.

Key Arguments

• Hoyt’s self-contradiction: Hoyt concluded in 1933 his own cycle study, then predicted in 1933 that cycles were becoming “of interest only to historians,” reaffirmed in 1968 that “the fluctuations… have ceased” — but his own land deals told the opposite story. [pp.109-110]
• Hoyt’s personal deals (the “heist”):
  • 1951: Bought 620 acres in Fairfax County VA at $200-350/acre(trough).Sold1972for$7,000/acre — 2,500% increase. 20 years = close to 18-year cycle. [p.111]
  • Treasure Beach (Hutchinson Island FL): Bought early 1960s at $200/frontfoot,soldSeptember1972for$3m (3x). Buyer McFadden defaulted March 1975 — “a classic example of what happens to the unwary at the peak of a land boom.” [p.112]
  • Florida oranges (1943): Bought near WWII peak; price collapsed after war ended. Lesson: “buy early in the cycle and sell before the downturn.” [p.111]
• Hoyt’s own guide to speculation (1967): “Market Value Versus Speculative Value” — his private guide showing exactly how to exploit the cycle he publicly said didn’t exist. [p.113]
• REITs as cycle amplifiers: REIT assets: $1bn(1969)\to$2bn → $4.7bn\to$8.1bn+ → $20bn+by1974.Bankslent$11bn to REITs between 1972-74. When cycle turned, REITs collapsed, taking banks with them. [pp.114-115]
• The Kentucky Mortgage Company lost ~$2m on McFadden-type deals; had to resell defaulted properties at “half of original asking prices.” [p.114]
• The mechanism: “The belief that money can be made from nothing — as, for shrewd operators in the land market, it can — generates a swift flow of short-term funds into speculation… unless they re-sell to other speculators before the crisis they are left with overvalued assets.” [p.112]
• Double public payment for infrastructure: Public pays via taxes for infrastructure (sewers, roads), then pays again via higher land prices that capitalize those benefits. Hoyt explicitly advised clients to buy before utility extensions reached their land. [p.114]

Predictions Made

• This 1983 chapter does not make forward predictions explicitly
• Harrison’s broader book (The Power in the Land) predicted the 1974 crisis was land-cycle driven (not oil shock) — this chapter provides the evidence that the cycle was alive in the post-WWII period

Notable Quotes

“Homer Hoyt… believes that the 18-year cyclical trends in the USA — at any rate — no longer operate. Yet in our analysis of the British economic depression of the mid-’70s a major role was assigned to the causal influence of land speculation, and stress was placed on the predictive value of the 18-year pattern.” [p.109]

“McFadden had not learnt these basic lessons well enough. He bought land from Hoyt at its full future value, and at a time when interest rates were reaching their peak. One of the institutions which suffered along with McFadden was the Kentucky Mortgage Company, which lost a total of about $2m.” [p.114]

“[Hoyt] sold out in 1972 for $7,000anacre—anaverageincreaseperacreofnearly2,500$2m.” [p.111]

“After sewer and water lines have been extended to an area, there will of course be a sharp advance in land prices. In order to make a substantial profit on his investment, the buyer must anticipate the possibility or probability of the extension of the utilities before others do.” [p.114, citing Hoyt’s private guide]

Cross-References

• Fred Harrison — this is his foundational 1983 work
• Homer Hoyt — the key figure whose public claims Harrison refutes using Hoyt’s own private deals
• Hoyt Chicago Land Cycle — the empirical foundation being defended/extended
• 18.6-Year Real Estate Cycle — the pattern this chapter proves still operated post-WWII
• Economic Rent — the infrastructure double-payment mechanism
• Property Tax as Cycle Stabilizer — implicit; public infrastructure creates rent that should be recaptured

Source Notes

• Full book: The Power in the Land (1983), Shepheard-Walwyn, London
• This excerpt covers pages 109-119 of the original book (Chapter 8)
• The book’s earlier chapters contain Harrison’s original 18-year land value table (1818–1983) which Foldvary later uses
• Excerpt hosted by cooperative-individualism.org as a free PDF
• Context: Harrison was responding to UK economists dismissing land cycle theory after the 1974-75 recession