00 
BANKING STANDARDS 
TABLE 122 ° 
RATIOS OF ToTAL EXPENSE TO GROSS EARNINGS, ALL MEMBER BANKS 
IN FEDERAL RESERVE DistrICT 1, CLASSIFIED BY RATIOS 
oF TiME To Gross (ToraL) Deposits, 1923-1925* 
RATIOS: Time 
Deposits to 
Gross (Total) 
Deposits 
Total. .. 
No time Deposit. 
as and less...... 
316-50... c00en. 
1gS ye 
Ver 75...000n. 
Number 
of 
Ranks 
1023 
RATIOS: Total 
Expense to 
I»oss Earninc 
5 7 
1924 
Number 
“a 
RATIOS: Total 
- “<pense to 
-3ss Earnin< 
c 
3.0 
1925 
RATIOS: Total 
Expense to 
Gross Earnings 
Number 
of 
Banks 
H 
70.8 
4 . QO 
IC4 | 66.0 
97 73.0 
I x16 74.0 
47 24.0 
*Taken from the 1923, 1924, and 1925 reports on ‘Operating Costs and Profits, based on the Exper- 
iences of all Member Banks in Federal Reserve District I,” prepared by Frederic H. Curtiss, Chair- 
man and Federal Reserve Agent, Federal Reserve Bank of Boston. 
classified according to percentage amounts of time to gross 
(total) deposits. Concerning a chart illustrating the ratios for 
1925, Mr. Frederic H. Curtiss, Chairman and Federal Reserve 
Agent of the Federal Reserve Bank of Boston, writes as follows: 
“Tt [the chart] indicates that banks having less than 14 of their 
gross deposits in the form of time deposits are the cheapest to 
operate, and therefore [sic] the most profitable. As soon as the 
ratio of time deposits to gross deposits rises appreciably above 
25% the operating costs rise above 70% of gross earnings— 
70%! being the typical operating ratio for all banks in Federal 
Reserve District 1.”12 Similar explanations are given for the 
charts applying to the years 1923 and 1924. 
That is, for 1923, 1924, and 1925, for member banks in the 
Boston district, Mr. Curtiss found that amounts of time deposits, 
as ratios of gross (total) deposits, were positively correlated with 
amounts of total expense as ratios of gross earnings. We find 
a like correlation between these ratios for member banks in the 
entire Federal Reserve system for the years 1919-192 5—*“bank,” 
in our analysis, being the combined member banks in each dis- 
trict.!3 Mr. Curtiss found inverse or negative correlation between 
11 The arithmetic means computed by us for 1923, 1924, and 1925, are respec- 
tively 42.00, 72.80, and 91.10. For the seven years, 1919-1925, the average per- 
centage is 69.60. 
12 Curtiss, 0p. cit., Report for 1925, p. 3. 
18 Gee Table 121.