THE PROBLEM: ITS SIGNIFICANCE AND METHODS 
OF STUDY 
I. THE PROBLEM 
THE problem with which the following pages deal is one of a 
type with which the writer has been concerned for a number of 
years. In the belief that within the current operations of our com- 
mercial and financial system there are hidden or master facts in- 
dicative of economic order, studies designed to disclose them have 
been planned and carried out. The present one proceeds upon 
the following hypotheses: (1) that norms and trends of similar 
type characterize series of data reflecting bank operation; (2) 
that many of the series are interrelated; (3) that the norms, 
trends and correlations obtaining are quantitatively measurable; 
(4) that a knowledge of them is of economic significance; and 
(5) that they are causally related to the operating processes of 
our competitive system. The problem attacked, therefore, is the 
verification of the truth or error of these hypotheses. 
2. THE PERIODS COVERED AND THE NATURE OF THE DATA 
The periods, banks, and statistical series selected for study are 
as follows: 
1. For each of the twelve Federal Reserve districts, taken as a unit: 
Years: 1919-19235, inclusive 
Banks: the entire membership 
Series: Total earning assets; loans and discounts; investments; 
total deposits; time deposits; demand deposits; gross earnings; 
total expense; salaries and wages; interest on deposits; interest and 
discount on borrowed money; taxes; “other” expenses: and net 
earnings. 
2. For the First (Boston) District: 
Banks: the entire membership, individually