386 
BANKING STANDARDS 
These detailed studies of the constant regression tendencies in 
each group, as given by the constants K, and K,, all show the 
predominating influence of gross earnings over total expense in 
determining net earnings, and are consistent with the evidence 
revealed in the constants E,” and E./. It seems worth while 
briefly to generalize about these constant regression tendencies 
by referring again to Table IV, and by noting the signs and 
amounts of the constants K; and K, in the different groups. 
In Groups 2 and 4, gross earnings ratios are below their 1924 
average (see Table I). If they tend to increase the following 
year—to regress toward their average of 6.0% —net earnings 
must increase in banks in which total expense does not change. 
The large positive values of K, for these groups represent the 
increases in net earnings and furnish strong indication of regres- 
sion of gross earnings to type. In Groups 1 and 3, gross earnings 
are high in 1924. If they tend to decrease the following year, 
net earnings must decrease in banks in which total expense did 
not change. The negative values of K, for these groups repre- 
sent the decreases in net earnings, and furnish evidence of regres- 
sion in gross earnings. 
In Groups 1 and 4, total expense ratios are above their 1924 
average of 4.2%. If they tend to decrease the following year, 
the result must be an increase in net earnings ratios for banks 
in which gross earnings ratios did not change. The increase in 
net earnings ratios is shown in the positive values of K, for these 
groups. In Groups 2 and 3, total expense ratios are below their 
1924 average. If they tend to increase the following year, the 
result must be a decrease in net earnings ratios for banks in which 
gross earnings ratios did not change. This decrease in net earn- 
ings ratios is shown in the negative values of K, for these groups. 
APPARENT EXCEPTIONS AND CONTRADICTIONS IN TABULAR ANALY- 
SES EXPLAINABLE IN TERMS OF CONSTANT REGRESSION 
TENDENCIES IN NET EARNINGS 
In the light of the discussion of constant regression tendencies 
in net earnings, it is possible to explain and interpret the meanings 
of certain values obtained in the analyses in Chapter XVII, which 
appeared to be exceptions or contradictions to the ruling tenden- 
cies there discussed.