APPENDIX I 
TABLE V 
RELATIVE INFLUENCE OF Gross EARNINGS 
ON NET EARNINGS 
I 
% 
AND OF ToTAL EXPENSE 
Group* 
Gross Earnings more 
influential, per cent 
*See Table I of Appendix 1 
BEST VALUE OF GENERAL RELATIVE INFLUENCE OF GROSS 
EARNINGS AND OF TOTAL EXPENSE RATIO CHANGES ON 
NET EARNINGS RATIO CHANGES FOR ALL 408 BANKS 
An approximate, general measure of the relative influence of 
gross earnings ratios and of total expense ratios on net earnings 
ratios, for any of the 408 banks picked at random, regardless 
of (group) location, has already been given as 1.54 is to 1.00. 
This result is based upon equations (6) and (7), each being de- 
rived from the 408 banks treated together in one group. This, 
however, it will be recalled, was a first approximation. It was 
later shown that while the law of variation of net earnings with 
total expense varies for the different groups, that of net earnings 
ratios with gross earnings ratios is substantially the same for all 
groups, individually and combined. In order, therefore, to ob- 
tain for any bank in this district, picked at random, a general 
measure of the relative influences of annual changes in gross 
earnings and of total expense upon net earnings, it is necessary, 
first, to obtain the best general expression like (6) for all groups 
combined, and then to use this in connection with (7). 
To obtain this best expression for the 408 banks combined, 
the separate values of K, and E/, shown in Table IV, were 
weighted inversely as the squares of their probable errors, and 
the weighted mean values determined. The computation of the 
best obtainable (general) value of E,’, according to this process, 
is given in Table VI. 
The values of E,” and their probable errors in Table VI are 
the same as those shown in Table IV. Each value of E,” is 
weighted inversely as the square of its own probable error. The