SERIES CORRELATED WITH NET EARNINGS 257 
It is apparent at once, from an inspection of this table, that 
ratios of total expense to earning assets are not independent of 
—that is, remain the same with—variable ratios of loans and 
discounts as measured. Indeed, the types of relations between 
ratios of loans and discounts and of total expense are the same 
as those between ratios of loans and discounts and of gross earn- 
ings. Accordingly, with both gross earnings and total expense 
positively correlated with loans and discounts, and with total ex- 
pense indifferently correlated with deposits, the relation between 
gross earnings and total expense is in doubt when approached 
in this indirect manner. But if high gross earnings go with high 
total expense and low gross earnings with low total expense, as 
is the case when the ratios themselves are directly correlated 
with respect to the district and yearly variations and percentage 
changes from year to year, the manner in which net earnings 
are related to both of them, and to the series correlated with 
gross earnings and with total expense, is not self-evident. Further 
study is necessary to establish these relations. 
TABLE 151 
NATURE OF CORRELATION IN PERCENTAGE DEVIATIONS AND YEAR-TO- 
YEAR CHANGES IN DIFFERENT SERIES PAIRED 
SERIES CORRELATED 
Independent Variables 
Dependent Variables 
Gross Earnings to Earning 
Assets. .................. 
Total Expense to Earning 
Assets 
Total Expense to Earning 
Assets... ............... 
Gross Earnings to Earning 
Accets 
NATURE oF CORRELATION 
Differ- 
ences 
from 
District 
Averages 
Changes 
‘rom 
Vear 
to 
Year 
Differ- 
ences 
from 
Country's 
Yearly 
Averages 
Positive . Positive 
Pocitive + Positive 
Positive 
Positive 
But first, attention should be directed to the type of relations 
between variable gross earnings and variable total expense. The 
nature of the correlation is shown in Table 151. If, as shown in 
this table, high or low ratios of gross earnings, respectively, ac- 
company high or low ratios of total expense, how are ratios of net 
earnings affected by these sympathetic changes? Conflicting evi- 
dence bearing on this question is found in Table 152, in which is 
summarized the nature of the relations between variable gross