JOHN BENNETT CANNING
By William Robert Smith University of Southern California
In 1929, Canning wrote The Economics of Accountancy. The book was destined to have a significant effect on the development of accounting theory. Canning, then Professor of Economics at Stanford University, undertook the task for the purpose of making the work of the professional accountant intelligible to economists. He went far beyond his objective out of frustration with the quality of contemporary writings on accounting and the procedural emphasis of texts. He constructed what he perceived to be the existing state of accounting theory based on his observation of practice. Most important, he did this critically. Assuming an audience of professional economists and accountants, he sought to bridge the conceptual and communications gaps that separated the two disciplines.
Canning’s influence on accounting thought, apparently slight in the early days following publication of his book, has grown with the passage of time. His book has become required reading for generations of graduate students. His writings appear to have heavily influenced the thought of many current writers.
Canning was born in Huron, Michigan, in 1884. He received a Bachelor of Philosophy degree in political economy in 1913 and a Doctor of Philosophy degree in economics in 1929, both from the University of Chicago. Between 1915 and 1917, he was an instructor in political economy at the University of Chicago. After military service in World War I, he went to Stanford University as Assistant Professor of Economics where he remained until 1941. During World War II, he was with the War Food Administration of the U.S. Department of Agriculture. Following his retirement from Stanford in 1946, he served as the U. S. representative on the Quadripartite Council in Berlin examining problems of food and agriculture in the occupied areas.
The Economics of Accountancy was Canning’s Ph.D. dissertation. It was the culmination of a decade of study into the unexplored areas of convergence between accounting and economics. He was ideally suited to the task. He was primarily a statistical economist and was attracted to accounting by the wealth of empirical data it provided. Canning’s accounting credentials were excellent. At Stanford, he built up the curriculum in accounting and headed the division of accountancy within the department of economics. His program marked a sharp divergence from other accounting curricula of his era. It explored the relationships between accounting and economic theory. His programs attracted a distinguished group of graduate students. He was an active member of the American Association of University Instructors in Accounting, predecessor of the American Accounting Association. In addition, although not a CPA, he served as a member of the Board of Examiners of the California State Board of Accountancy from 1921 to 1929.
Canning was not a prolific writer. Also, he was an individual of shifting interests. The Economics of Accountancy was his only book. He wrote on accounting up to 1933. In the early 1930s, he became engrossed in problems of fiscal policy and early in the depression era advocated deficit spending as a primary stimulant to recovery. Subsequently, he became involved in areas of social concern such as social security and unemployment insurance. Also during the 1930s, he was advocating health insurance programs and was a member of the Advisory Board of the California Medical Association. In the late 1930s, his interests shifted to problems of agricultural policy and food distribution. He left Stanford in 1941 and served in the area of food distribution with the Federal Government until his retirement in 1948. He died in 1962.
Canning’s contemporaries provide us with a composite picture of him as a rugged individualist of strong personal and professional integrity who held strong views and was always ready to break new ground regardless of consequences. In today’s environment, he might be described as an avowed liberal and somewhat of a political activist. He supported the New Deal, social programs, teachers’ unions and Harry Bridges. His espousal of causes unpopular with the business community resulted in threats to cut off financial support to Stanford University.
Canning was the first to synthesize the underlying concepts of accounting in terms of economic concepts of valuation and income. He developed a system of rigorous definitions and examined closely the nature and valuation of assets, liabilities and proprietorship and the measurement of income. His numerous criticisms of the state of the art were spiced with proposals for reform. Canning’s work was truly pioneering. He drew heavily on the writings of Irving Fisher, and particularly on Fisher’s Nature of Capital and Income. Speaking before the Symposium on Appreciation at the University of Illinois in late 1929, Fisher referred to his Nature of Capital and Income as the first attempt to bridge the gap between economics and accounting but described Canning’s work as “a much better book for this purpose.”
The Economics of Accountancy is an insightful and penetrating analysis of accounting theory and practice. It is a popular cliche among book reviewers to state that the book under discussion should be part of the library of all graduate students, teachers and practitioners. Canning’s book belongs there to be sure, but not as an historical curiosity, but rather as a current guide providing a basis for solutions to a large number of today’s unresolved prob-lems in accounting measurements and analysis. It is vital, alive, and relevant to the 1970s.
(Vol. 1, No. 3, p. 6, 1974)
