Heat oven to 350°. Grease and flour three 8-inch layer pans. Sift together flour and spices.
In a mixing bowl, combine cooking oil and sugar. Beat in eggs one at a time. Add hot water, then fold in flour mixture.
Stir in potatoes, nuts, and vanilla and combine thoroughly. Pour batter into pans and bake for 25-30 minutes.
In a saucepan, combine all ingredients except vanilla and coconut. Cook over medium heat, stirring constantly for about 20 minutes or until thickened. Remove from heat and add vanilla and coconut; cool. Spread between and on top of layers.