Reviewed by Diana T. Flamholtz Loyola Marymount University

In Selected Dickinson Lectures in Accounting 1936-1952 Arno Press has reprinted six of the Dickinson lectures given at the Graduate School of Business Administration of Harvard University. The lectures present the views of well-known leaders of the accounting profession at some critical periods of accounting history. In the first lecture, for example, presented during 1936-1937, George O. May spoke on “Improvement in Financial Accounts” and emphasized the need for both accountants and others to understand the nature of accounting information. He argues that all accounts

are necessarily tentative and approximate; in many cases alternative methods of accounting which will produce ma-terially different results may be equally permissible; and therefore the weight to be attached to any accounts can only be determined upon consideration of the bases on which they have been prepared (which may legitimately vary according to the purpose for which they are intended) and of the competence and integrity of those by whom they have been prepared.

For May this understanding is essential in order to deal with the question of improvements in financial reporting. He provides his own history of corporations and corporate reporting and discusses important accounting issues of the day, such as the use of historical cost for fixed assets and depreciation, cost or market for inventories, and corrections relating to prior periods. In dealing with these areas May argues against absolute uniformity in accounting procedure because accounting deals with a business world full of uncertainty and change; although accounting sometimes has been compared to engineering, the engineer deals with the physical world “while in financial accounts the accountant is dealing with things metaphysical.”

In 1939-1940 William A. Paton spoke on “Recent and Prospective Developments in Accounting Theory” and emphasized questions of income measurement. He recognized the significance of the change which came about in the 1930s shifting the focus of accounting away from the balance sheet and commercial creditors to the income statement and investors. In dealing with questions of performance measurement Paton presents his arguments on a variety of issues ranging from the treatment of purchase discounts and use of differential costs to his desire to eliminate the ranking of costs, such as gross profit, seen as “a relic of the early history of accounting for mercantile concerns.” Paton also warns against too frequent reporting of income information because of its tentative nature and the effects such information can have on stock prices. After presenting a skillful discussion of the nature of costs and value, Paton regretfully argues against the use of replacement cost accounting, not on theoretical bases, but because of the legal framework within which accounting must operate.

In 1940-1941 Walter A. Staub spoke on “Auditing Developments During the Present Century.” Staub was well qualified to present his views for he had spent forty years in public accounting, thirty of them as a partner in the New York office of Lybrand, Ross Bros. & Montgomery and, at the time of his talk, was a member of the Committee on Accounting Procedure of the American Institute of Accountants. Staub describes from first-hand experience auditing procedure in the early days of the century as basically an examination of cash records, and goes on to show the changes brought about by a variety of forces ranging from income taxes to the New York Stock Exchange and the Interstate Commerce Commission.

Staub also provides an interesting perspective on the auditing practices of the 1930s, discussing the nature of accounting evidence and what had been learned over the years to bring about change. His views on internal control, internal auditing, and the role of the controller reflect the concerns of the late 1930s growing out of the McKesson & Robbins case. Staub’s discussion of the auditor’s report also is of interest to accounting historians, for he shows the evolution of the language of the report, the impact of McKesson & Robbins, and the need for the public to understand the limitations of the audit.

Henry Rand Hatfield presented a different point of view when he spoke on “Surplus and Dividends” in 1940-1941. From a more aca-demic perspective he dealt with the basic nature of capital and surplus, raising questions in areas that still needed to be settled, such as whether a premium on capital stock represented capital or surplus, and what items should be charged to surplus rather than to the current income account. Hatfield’s discussion of dividends leads him into a witty and acerbic presentation of arguments on the appreciation of assets. He provides a wide variety of views ranging from various court cases to the early views of Paton, Dickinson, McKinsey, and Wildman. Hatfield finally concludes that the strongest argument against showing appreciation rests on its lack of con-servatism. For Hatfield, however, conservatism is not a strong enough argument; he notes that in accounting it is a “weasel word” meaning whatever the user wanted it to mean. He concludes that “appreciation may be recognized, with the obvious understanding that the appreciation must be genuine, objectively verified, and not arbitrarily done in order to make a ‘pretty balance sheet.’ ”

In 1947-1948 George D. Bailey, one of the founders of the firm of Touche, Niven, Bailey, & Smart, presented lectures on “Problems in Reporting Corporation Income,” and “Concepts of Income.” For Bailey the crucial issue is the need for “the sharpest possible determination of the earnings of the corporation for each year’s opera-tion, prepared on the basis of certain generally accepted standards for all business so that progress of each corporation will be measured by the same measuring stick.” In order to further this aim he discusses a variety of reporting issues, ranging from the classification of expenses to the names that should be used for various accounts. Bailey was chairman of the Institute’s Committee on Accounting Procedure from 1944-1947 and he views the Accounting Research Bulletins as a means to reach the goal of income measurement, reduce the variety of practices, and increase comparability. Also of interest is Bailey’s discussion of the all-inclusive income statement relative to the events of the 1920s, 1930s, and 1940s, and his ideas of how accounting could cope with the effects of rising prices on earnings.

Howard Clark Greer, a financial executive, spoke on “Cost Factors in Price-Making” in 1951-1952 in the last lecture included in this compilation. Greer was concerned with the interrelationships among price, cost, and volume, and argues against the simple assumption that price is a function solely of costs plus a profit margin. Greer discusses the variety of factors involved and the differences among various industries. He demonstrates a sharp understanding of the variety of market forces brought to bear on pricing questions.
This selection of Dickinson lectures provides a valuable source for accounting historians, particularly for the period of the late 1930s and early 1940s. An introduction by Stephen A. Zeff adds background on the individuals and the lectures. The book provides interesting insights not only for the specific issues raised but for the manner in which questions are posed and the variety of perspectives presented.