|
Gentlemen, As you may know, George based his analysis of the Business Cycle on
periodic land bubbles and their crashes. In a free market the price mechanism effectively handles the economy –
except for that most basic Factor of production – Land. The behavior of
land prices without control is similar to the collectible market – though
that’s my observation rather than that of others. Land prices bubble out of control until the economy can no longer
sustain them, whereupon anything might send us over the brink – from sunspots
to the stock market. As Samuelson suggests, a
diligent student could prepare a list of Business Cycle reasons that would `run
into dozens'. Actually they would prepare a list of “triggers” that
push an unstable economy over the edge. Homer Hoyt was an interesting individual – an international
economist specializing in land values. There’s an institute that carries
on his work. He gave the Institute no money – simply contributed a mile
of The Economist tells us that many of the world’s economies are
being supported by the “housing boom” – which is really a
land boom, though they miss that. The little history below is from Hoyt’s book of the same name. Harry ----------------------------------------------------------- ONE HUNDRED YEARS OF FLUCTUATING 1830 - Land value of the entire area NOW covered by about 211 square miles $168,800. 1832 - link. Those who had followed the history of the with its tremendous increase in land value - persuaded the federal government to do the same for land along its proposed course. The land was
advertised, offered for sale, and the boom began. Population of 1836 - Soaring land values
reached $10,500,000 and profitable use of the land became impossible. Population was up to 4,000. THEN CAME THE FIRST MAJOR DEPRESSION 1842 - Land values were down to $ 1.400,000. At this price labor and capital could again afford to produce:
business improved. 1848 - 6 years became the railroad center of the west. Plank roads replaced muddy streets; thoroughfares
were lighted; a widespread sewer system was beginning - arid
land values soared. Population was up to 80,000. 1856 - The value of land had reached
$126,000,000. Again labor and capital were unable to afford the cost. THEN CAME THE SECOND MAJOR DEPRESSION 1858 - Many bank and 15 railroad failures occurred.
There was great unemployment as land values dropped steeply. 1860 - Illinois bank failures were 96, but European demand for wheat - sparked by British free trade cheap food’ policy - reversed the trend. Civil War demand for food multiplied shipments of hogs, corn, wheat. Land prices
followed this trio and moved upward. 1871 - boulevards built by the city. About $76
million of new building construction over 7 years fired further land value increases as population reached 187,000. 1873 - was too much for Labor and Capital to pay. THEN CAME THE THIRD MAJOR DEPRESSION 1876 - Land value fell to $250,000,000 and 21 Chicago banks failed. 1884 - The upward curve began once
more as many new manufacturing enterprises and 7 new railroads were
built. The first sky scrapers reared upward, a World’s
Fair was projected, and a wild orgy of land speculation began. Population reached 600,000. 1892 - Land values burst through the one
billion dollar barrier. THEN CAME THE FOURTH MAJOR DEPRESSION 1909 - With great unemployment and many industrial failures the value of level- though population had doubled. But
gradually the upturn became apparent as business and employment improved. 1916 - World War I, followed by the post-war boom. Enormous American and European demand for war material and food was succeeded by equally heavy peace-time needs. The
activity was accompanied by much apartment construction
and once again land values rose to $2 billion by 1921. Also, in this year farm values began a decline driving many farmers to the city, this influx raised land value still higher. 1928 - Land value in records of 1,000% increases from 1915 to 1928. Modern industrial techniques could raise productivity, but not enough to pay such prices. THEN CAME THE FIFTH MAJOR DEPRESSION 1932 - Foreclosure suits involved more than $2
billion of land value. Thirty banks failed, heavy unemployment, poverty and starvation. Conditions remained bad
throughout the thirties, in spite of heavy government interference from the New Deal. Best year was 1937
- still with heavy unemployment. In 1938, the economy again went downhill until saved in 1939 by the European war. Based on "One Hundred Years of Land Values in Homer Hoyt. ******************************* of 818 352-4141 ******************************* |
_______________________________________________ Futurework mailing list [email protected] http://fes.uwaterloo.ca/mailman/listinfo/futurework
