APPENDIX 1 
387 
Case 1. (See footnote, page 336.) On referring to the results 
for Group 3 in this analysis (Table IV), it is seen that this excep- 
tion is probably due to the large constant tendency for net earn- 
ings ratios to decrease. (See discussion under Group 3, above.) 
The natural tendency for gross earnings ratios in banks in this 
group is to decrease, and it was shown that gross earnings ratios 
must increase o.17 of a point in banks in which it alone is assumed 
to determine net earnings ratios before the constant tendency 
for net earnings ratios to decrease is counteracted. Hence, in 
so far as the value —o.o1 results from such banks, its meaning 
is that gross earnings ratios increased less than 0.17 of a point 
on the average in those banks. 
Case 2. (See footnote to page 339.) This exception is prob- 
ably due to a strong constant tendency for net earnings ratios 
to increase for banks with increasing or with decreasing total 
expense ratios, as shown by the constant K;, = + 2.47 + 0.31. 
(See discussion of regression tendencies, Group 4.) 
Case 3. (See footnote to page 339.) This exceptionally large 
difference is probably due to the combined strong tendencies 
(a) for net earnings ratios of banks in Group 4 to increase, re- 
gardless of the direction of change in gross earnings ratios, and 
(6) for net earnings ratios of banks in Group 3 to decrease re- 
gardless of direction of change in total expense ratios. That is, 
it is measurable in terms of the combined constants K, (for 
Group 4) == + 1.02 and K, (for Group 3) =- 1.32. 
Case 4. (See footnote to page 340.) The fact that the net 
change in this case is positive (+ 0.24) is probably due to the 
large constant, K, = + 2.47. Even though total expense is as- 
sumed to be increasing, which has the effect of decreasing net 
earnings, the increases are not large enough to predominate over 
this large constant tendency for net earnings ratios to increase. 
(See further discussion of Group 4, above.) 
Case 5. (See footnote, page 340.) This positive 0.07 is evi- 
dently due to the strong tendency for the net earnings ratios 
of banks in Group 2 to increase, regardless of the direction of 
change in total expense ratios. The constant, K,, for this group 
= 4 2.16. Even though total expense ratios are here assumed 
to be increasing, which has the effect of decreasing net earnings,