amount loaned. This is entirely natural, for these loans were made only in cases of extreme emergency when employees were in temporary need. This relation of two curves to each other, with the peaks of one curve following at some definite distance behind the peaks of another curve, is generally referred to as "lag." Students of economics are continually finding curves which are seen to have a very great dependence upon each other when "lag" is taken into account. If "lag" is not considered, a great difference in the shape of the curves might be taken to show that there was absolutely no relation between the facts from which the curves were plotted.
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Fig. 137. Loans Each Month Made to Employees of a Large Industrial Corporation and Amounts Paid Back Each Month. Number of Accounts Opened and also Number of Accounts Closed Are Shown on a Cumulative Basis
Note how the curve for repayment lags behind the peaks and valleys of the curve for
loans. The extent of the lag gives a good idea of the length of time loans are outstanding.
This illustration is for the same loan department shown in Fig. 136
Great care must ordinarily be taken in determining to just how great an extent the element of "lag" enters in. The best way of determining this is to plot the two curves on separate sheets of transparent bond paper, tracing paper, or tracing cloth, plotting each curve to a separate scale, if necessary, so that the peaks and valleys in the
