351 
supply the funds necessary for the conduct of business and indus- 
try. Closely linked as they are with the fortunes of business, it 
may be assumed in general that whatever fluctuations occur in 
business as a whole will tend to be reflected in banking resources. 
If this is true, then, provided general business is substantially 
the same district by district during the years 1919 to 1925, the 
first link in the chain of phenomena which accounts for the 
similarity of behavior of banking series in the several districts 
is secured. 
“Bank debits . . . . constitute an extremely representative 
measure of the complex of activities included under the term 
general business. Production of consumption goods, wholesale and 
retail trade, construction of buildings and engineering projects, 
and agriculture—these and all other forms of economic activity 
have a share in making up the total of check transactions.”? If 
this is true, and if the general trend and year-to-year fluctuations 
of bank debits by districts closely agree with each other and with 
those for all districts combined, then the conclusion follows that 
business conditions tend to be the same and to change together 
in the various parts of the country, as indicated by the geo- 
graphical limits of the districts themselves. This chain of reason- 
ing may be set out as follows: 
Total bank debits tend to fluctuate with general business conditions; 
Bank debits by districts tend to fluctuate with total bank debits; 
District bank debits tend to fluctuate with district business condi- 
Hons. 
INTERPRETATION 
This set of relations is illustrated in Chart 51, on which are 
plotted, to a ratio scale, for each district, the debits for the cities 
located therein and also the total debits for all of the 141 cities 
combined. 
But from the above reasoning and from the graphic illustration 
in Chart 51, the conclusion follows that district business con- 
ditions tend to fluctuate together. This comes about because 
District bank debits tend to fluctuate with district business condi- 
tions; 
District bank debits tend to fluctuate together; 
District business conditions tend to fluctuate together. 
2 Weekly Letter No. 2, Vol. VII, January 14, 1928, page 11, Harvard Economic 
Society, Cambridge, Massachusetts. 
3 This condition follows by analogy only.