244 
BANKING STANDARDS 
assets, the higher or lower, respectively, the ratios of interest on 
deposits. Neither positive nor negative correlation obtains, how- 
ever, between the net percentage deviations of ratios of interest 
and discounts on borrowed money and percentage deviations of 
salaries and wages. 
Positive correlation, found to obtain between the district devia- 
tions of ratios of salaries and wages and of interest on deposits, 
should not, it is believed, be interpreted as of a causal order. The 
reasons for this belief are as follows: At a given time, the larger 
the proportion of time deposits to gross deposits, the smaller the 
ratios of wage and salary expense to earning assets, and the 
larger the ratios of interest on deposits to earning assets. The 
positive correlation, found in Table 144, is due to the fact that 
during the years 1919 to 1925 there was an upward trend in both 
series. 
The inverse correlation between ratios of salaries and wages 
and of ratios of interest on borrowed money is due to the fact 
that, for the period 1919-1925, the direction of change in the 
ratios of the first series was generally upward and in those of 
the second series generally downward. When yearly deviations 
in the respective series are paired, the correlation, therefore, tends 
to be of the negative type. It would be perfect only if a plus 
deviation in one series were always accompanied by a negative 
deviation in the other, and vice versa. 
(2) Interest on Deposits 
The average amounts of interest paid on deposits, relative to 
earning assets, by all member banks in each of the Federal Re- 
serve districts by years weré analyzed with respect to norms and 
trends in Chapter VI. In later chapters, the types and degrees of 
correlation obtaining between each of a number of banking series 
and interest payments in this form were given in various tabular 
summaries. There is no necessity of repeating what has been said 
relative to such correlations in each of which interest payments 
on deposits, in the form of ratios to earning assets, were treated 
as the dependent variable. Neither is it advisable, because of 
£ See Frederic H. Curtiss, “Operating Costs and Profits in 1925,” Federal Reserve 
Bank of Boston, from which this relationship may be determined for banks in the 
Boston district.