INTERPRETATION 
367 
date is determined for rates above, below or equivalent to the 
average rate, it is found, in general, as shown in Table 207, that 
it is the rates which are high at a given time which decrease, and 
it is those which are low which increase from call to call. This 
is the same type of relation which is found to obtain in ratios 
of gross earnings to earning assets, and in other banking series 
with which this study deals. 
If, in the fluctuation of interest rates as measured by rates 
on customers’ paper rediscounted with the Federal Reserve banks, 
there is a tendency of regression to type, then such pattern is 
reflected in the gross earning ratios of banks in so far as the 
two are common. Discount rates, moreover, are related to in- 
terest rates of all types. There are no reasons for believing that 
those of one type can be seriously out of line with those of others 
in the same market. That this assumption is valid, so far as 
the activities of banks are concerned, is confirmed by the tol- 
lowing facts. 
1. The direction of change from year to year, for 34 cities, in 
the annual average money rates customarily charged customers is 
the same on the six major types of loans given in Table 208. 
TABLE 208 
ANNUAL MoNEY RATES CUSTOMARILY CHARGED CUSTOMERS ON 
Six Major TYPES OF LoANS. AVERAGED FOR ALL CITIES* 
VEAR 
1919... 
1920. . 
1921... 
1922... 
1923..... 
1024........ 
102. ... . 
NUMBER 
OF 
CITIES 
_USTOMERS’ CoM- 
MERCIAL LOANS 
4-0 
"fonths 
iy 
{NTER- 
Bank 
LOANS 
3 
23 
~8 
ro 
8s 
fr 
5.80 
Loans 
SECURED 
8Y LIBERT 
BonDs 
"3 
“4 
- 
3.02 
LOANS SECURED BY 
IR STOCK 
AND BoNDs 
Time 
Demana 
7 
1 
13 
40 
19 
20 
ox 
_- 19 
i i 
32 
-. 7X 
we FL 
*Winfield W. Riefler, “Differentials in Rates Charged Customers,” Federal Reserve Bulletin, December, 
1927, p. 804. 
2. “Differentials in rates . . . . charged customers . . . . are 
not characteristically differentials that can be ascribed to risk, to 
maturity of the loan, or to the type of collateral by which it is 
secured.” 21 
21 Winfield W. Riefler, “Differentials in Rates Charged Customers,” Federal Re- 
serve Bulletin, December, 192%, p. 804.