VI 
NORMS AND TRENDS IN OPERATING EXPENSES 
I. INTRODUCTION 
THE operating expenses of member banks in the Federal Re- 
serve system, reported by years ending June 30, are classified 
as follows: 
1. Operating expenses (total); 
2. Salaries and wages; 
3. Interest on deposits; 
4. Interest and discounts on borrowed money; 
5. Taxes; and 
6. “All other” expenses. 
It is an analysis of the total and of each expense item with which 
this chapter is concerned. Attention is given first to the total; 
the amounts in the respective districts for the years 1919 to 1925 
being expressed in terms, first, of earning assets, and second, of 
gross earnings. 
2. TOTAL EXPENSE 
It will be recalled that in the earlier chapters the different 
amounts and ratios used applied to all member banks, combined, 
in each Federal Reserve district. That is, the banks in each dis- 
trict were considered as a single institution, the loans, invest- 
ments, deposit items, gross earnings, being totaled into a single 
figure and expressed as a percentage of a suitable base. The 
operating expenses are similarly treated and in this section of the 
study are expressed as percentages of earning assets.! 
[1) The Relation of Total Expense to Earning Assets 
If the seven-year period 1919-1925 for all member banks in 
the twelve districts is considered as a unit, the average ratio of 
1 For method of calculation in an analogous case, see note 6, page 41. 
Y