[411] There is one further generalization developed in connection with Mr. Wolfe's investigation of the ratio of clearings to "total transactions" which seems to have relevance here, though I am not sure how it should be interpreted. The average ratio, as stated, is about 40%. This varies, however, for different cities. "The rule seems to be that the larger the proportion of bank deposits to individual deposits, the smaller will be the figure representing this ratio. In Cincinnati, for example, it is 31.4% while in Los Angeles it is 59.7%." (Jour. of American Bankers' Ass'n, Jan. 1914, p. 487.) How safely based this generalization is cannot be told from the context, as no further facts are offered. Nor is its bearing on the question at issue, as to whether or not New York clearings bear a higher ratio to New York deposits than country clearings do to country deposits, entirely clear. It would seem to indicate that deposits made by outside bankers in the banks of reserve cities make smaller contributions to clearings than individual deposits do, and this would fit in with the fact that checks on outside banks, deposited for collection by one bank in another, do not get into clearings. What further explanation or significance it has I leave to the reader. It is possible that there are a number of important relevant facts missing regarding New York clearings, and that the conclusions here reached may require later revision.
[412] Loc. cit., p. 304.
[413] But not as a correct estimate of M´V´ for the equation of exchange! We do not know what part of these checks were used in "trade." Cf. our discussion of the estimate of T, infra.
[414] Kemmerer does not do this, but takes total clearings for the country as his index of variation. Loc. cit., 118-120. His figures for "check circulation" are, thus, more variable than Fisher's. In this, Kemmerer's results are much to be preferred.
[415] I have taken the figures for clearings from Professor Fisher's table, loc. cit., p. 448.
[416] Loc. cit., p. 304. Cf. our chapter on "Velocity of Circulation," supra.
[417] Loc. cit., pp. 477-478.
[418] There is, of course, the further point, to be emphasized in the discussion of T, infra, that MV (and hence V), assuming the calculation otherwise correct, is too large, to the extent that it includes tax payments, loans and repayments, dealings between agent and principal, etc. But this criticism does not so clearly apply to MV as it does to M´V´.
[419] Business Cycles, p. 308.
[420] That volume of trade and volume of physical goods are virtually interchangeable in Fisher's thought is strikingly illustrated on p. 195 of the Purchasing Power of Money: "A doubling in the quantities of all commodities sold, or (what is almost the same thing) a doubling of the quantities consumed." Italics are mine.