332 
BANKING STANDARDS 
ratios increase.®® But increasing gross earnings ratios occasion 
a larger increase in net earnings ratios than do decreasing total 
expense ratios.3* Similarly, decreasing gross earnings ratios bring 
a larger decrease in net earnings ratios than do increasing ratios 
of total expense.?> Moreover, when gross earnings ratios increase 
(a condition favorable to increasing ratios of net earnings) and at 
the same time total expense ratios increase (a condition making 
for decreasing ratios of net earnings), the net change in net 
earnings ratios is a rise, proof conclusive that the dominating 
influence is the change in ratios of gross earnings. Similarly, 
when gross earnings ratios decrease (a condition tending to re- 
duce net earnings ratios) and at the same time ratios of total 
expense decrease (a condition tending to increase ratios of net 
earnings), the net change in net earnings ratios is a fall, thus 
indicating the dominant influence of the change in ratios of gross 
earnings. 
Changes in net earnings ratios between 1924 and 1925 have 
been found to be functions of the size of ratios of gross earnings 
and of total expense in 1924,3% and of the type of change in these 
ratios between 1924 and 1925.3" In general, the forces exert 
opposite influences. This is universally the case when the effects 
of the respective forces are measured concurrently for both series 
—gross earnings and total expense ratios.2® Moreover, it tends to 
be true when they are measured separately.®® Accordingly, the 
net effects on the changes in ratios of net earnings between 1924 
and 1925 need to be determined when the two forces act simul- 
taneously. 
Table 194 shows by direction and amount the net year-to-year 
changes in net earnings ratios for banks with gross earnings ratios 
increasing or decreasing from positions above or below the av- 
erage in 1924, and having ratios of total expense differently 
placed relative to their average in 1924. The net change is 
upward when ratios of gross earnings are increasing, and down- 
33 See the averages of the columns in Table 193. 
3% As indicated by the respective points change: 4.34 and 4.23. 
85 As indicated by the respective points change: —.27 and -.04. 
8 See Table 192. 
7 See Table 193. 
8 See the signs in the corresponding blocks in Tables 192 and 193. 
Mo the signs in the corresponding average lines and columns in Tables 192 
and 193.