XT1I 
SERIES CORRELATED WITH OPERATING EXPENSES 
I. INTRODUCTION 
THE total expenses of member banks by Federal Reserve dis- 
tricts received attention in Chapters VI, IX, X, and XI. In 
Chapter VI, the norms and trends of the district ratios, without 
reference to other types of data, were traced out in detail. In 
Chapter IX, it was found that both the directions and percentage 
amounts of deviation and of change in ratios of total expense 
were positively correlated with the respective corresponding devi- 
ations and changes in ratios of loans and discounts to earning 
assets. Moreover, the conclusion was reached in Chapter X that 
total expenses, expressed in terms of earning assets and of gross 
earnings, were positively and negatively correlated with deposits 
variously measured, the items correlated being percentage dif- 
ferences from district and country averages and percentage 
changes from year to year. These several correlations are sum- 
marized in Table 130. Again, as shown in Chapter XI, ratios 
of total expense to earning assets are positively correlated with 
ratios of gross earnings to earning assets, the bases of correla- 
tions being the same as those just mentioned. 
In these correlation studies, ratios of total expense are the 
dependent variables. That is, what is observed are the net 
amounts of dispersion, by sign and by direction, in ratios of such 
expense, variously measured, associated with other series of data, 
the latter, in each case, being the independent variable. These 
several analyses show how ratios of total expense are associated 
with variable ratios and changes in other series. They do not, 
however, show the manner in which percentage deviations and 
year-to-year changes in the ratios in each of these series are asso- 
ciated with similar deviations and changes in the ratios of total 
expense. It is considerations of this nature with which this chap- 
ter is concerned. 
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