204 
BANKING STANDARDS 
posits and of wages and salaries show that member banks in the 
Boston district are correlated in the same manner with ratios of 
time deposits to total deposits as are those in the entire System. 
But, as Mr. Curtiss points out, “Banks handling a large volume 
of savings deposits also invest heavily in securities.”*” Moreover, 
“Banks carrying the largest proportion of savings deposits gen- 
erally have the highest gross earnings because the low reserve 
requirements on time deposits entail tying up a very small pro- 
portion of non-productive funds.”® This being true for indi- 
vidual banks in the Boston district, it is instructive to determine 
for the country as a whole, by districts, the effect upon gross 
earnings, total expense, and net earnings of varying amounts of 
time deposits to total deposits and of investments to earning 
assets. Gross earnings tend to be large when savings de- 
posits are large. But when savings deposits are large, total 
expense tends to be large also, and net earnings tend to be small. 
Accordingly, what effect upon each of these series have variable 
ratios of deposits and of investments? Mr. Curtiss does not an- 
swer this question for the member banks in the Boston district, 
but an answer for the twelve districts combined, for the years 
1919 to 1925, is found in Table 126. 
The following are the conditions, respecting the relative 
amounts of time deposits and of investments, associated with the 
highest!? and the lowest? ratios in the three series: 
Highest gross earnings: 
Large time deposits and small investments 
Lowest gross earnings: 
Small time deposits and large investments 
Highest operating expenses: 
Large time deposits and small investments 
Lowest operating expenses: 
Small time deposits and large investments 
Highest net earnings: 
Small time deposits and small investments 
Lowest net earnings: 
Large time deposits and large investments 
But the effect of variable time deposits on gross and net earn- 
17 Curtiss, op. cit., 1925, p. I. 
18 0p. cit., 1024, D. 1. 
19 The percentages in all cases are net amounts, account being taken of the signs 
as well as of the percentage amounts of the difference from the district levels.