CONSOLIDATION OF NATIONAL BANKING ASSOCIATIONS 213 
or laxity in the case of the State legislation; in other words, that 
while section 5200 applies only to the national banks, yet that there 
was a similar provision of liberality or laxity in the several States 
and he attributed the failures of the State banks to the extent of 
that State legislation. 
Mr. Mattson. Yes; so I understood him, and I think that is true 
in my section of the country which unfortunately has had more than 
its share of casualties among the banks—the ninth Federal reserve 
district. As a matter of fact, the difficulty there largely has been 
because of the conditions of agriculture. We have often spoken of, 
we have spoken of it several times—frozen assets—and in our section of 
the country we have had (what was a virgin country gradually devel- 
oped in quite recent years) quite an increment in the value of land. 
Recently I had occasion to look up some figures in connection with 
the State of Iowa, which is not in our district but adjoins Minnesota, 
and 1 found that in the 30-year period from 1890 to 1920 the land 
had increased from $25 and $30 an acre to $250 and $300 an acre. 
When one comes to analyze that, it is equivalent to an increase in 
the value of land of 100 per cent every three years without taking 
into consideration any of the profits farming during the period, in 
in other words, an addition of 3334 per cent every year for 30 years, 
and then, in response to the increased price of all good commodities, 
which we know occurred very rapidly during the war period, there 
followed an increased value of the land. Almost in an incredibly 
short time the land went from $100 to $200 an acre on top of that, 
and when the prices of production fell the land had to fall with it, 
and banking had unfortunately been predicated on the theory that 
those land values were somewhat fixed and permanent, and the bank 
had loaned on them, not on first mortgages, because usually the 
country banks negotiate the first mortgage and sell them to Insur- 
ance companies or private investors, os who take chattel mort- 
gages upon the machinery and animals, etc., and it is very largely. the 
sappearance of pal or all of the equity in the land value that cause 
a Te deal of difficulty. 
he CHARMAN. I should think that any study of the causes of 
bank failures would be hopelessly incomplete unless it took account 
of the economic environment. I speak subject to correction, but 
my recollection is that in the third Federal reserve district—the 
district in which Philadelphia is situated—we had only -one failure 
of a member of the Federal reserve system in 10 years. 
Mr. Mattson. The land values have been very fixed there. Our 
country was very sparsely settled and the increase of value was largely 
on account of the increase in population and the settlement of the 
community. 
That is all I care to say, Mr. Chairman. 
The Cuarrmax. The committee is very much obliged to you for 
your statement. The committee will now take a recess until 8 
o'clock p. m. 
(Accordingly, at 6.30 p. m., the committee took a recess until 
8 o'clock.)