SERIES CORRELATED WITH GROSS EARNINGS 21%
in the blocks of the table. The bold type figures relate to the year
1925, the individual districts being assigned the numbers given
to them under the Federal Reserve Act; the letters in alphabetical
order refer to Boston! for the years beginning 1919 and ending
1925.
Ratios of gross earnings and of total expense in the same year
in the Boston member banks deviated from the average according
to the same sign in five of the seven years; similar deviations for
all districts occurred in 67 of the 84 district-years. These rela-
tions expressed in percentages are, respectively, 71.4 and 79.8. In
1925, for nine of the twelve districts, deviations in gross earnings
and in total expense were of the same sign, the percentage rela-
tion in this case being 75.0. Ratios of gross earnings and of net
earnings in the Boston district in the same year deviated from
the average according to the same sign in six of the seven years;
deviations of like sign for all districts occurred in 58 out of the
84 district-years. Comparatively, like behavior in the two cases is
indicated by 85.7% and 69.0%. In 1925, eight of the twelve
district-deviations in gross earnings and in net earnings were of
the same sign, the percentage relation in this case being 66.7.
There are other ways in which the relations between gross
earnings and other series of bank data may be measured and
expressed. From year to year, during the years 1919 to 1925, it
is found that in 35 cases the ratios of gross earnings to earning
assets increased, and in 37 they decreased. In the districts with
year-to-year increases and decreases, respectively, what were the
net directions and percentage amounts of change in other series?
Table 133, which answers this question, shows that the ratios in
the different series, with respect to direction of change, are related
to gross earnings in much the same way that they are with re-
spect to position relative to the district averages. That is, for
instance, increasing gross earnings ratios are accompanied by
increasing, and decreasing gross earnings ratios by decreasing
ratios in loans and discounts, in total expense, in net earnings,
and in each of the items of operating expense, except interest on
deposits. On the other hand, the directions of change of ratios
of gross earnings and of demand deposits to earning assets are
1 The reason for using the Boston district and the year 1925 is that data of the
nature indicated are available for individual banks for this district and year. These
are discussed later
