Reviewed by Yozo Sakaguchi Case Western Reserve University

When Japan reopened its commerce to the United States of America in 1854, its doors had been closed to foreign countries for more than two hundred years. Needless to say, at that time, there was no bookkeeping or accounting system in Japan that was similar to those used today. But during the Meiji era (1876-1911), Japan’s economy developed, expanded and encompassed almost every type of industry. Under these circumstances, Japanese financial systems that were primarily influenced by British financial accounting followed a European-style commercial code. Thus, until the early 20th century, the British system was the major influence on Japanese accounting.

This was the situation in Japan until after World War II, when a Japanese securities and exchange law was enacted which was strongly influenced by the U.S. Securities Acts. As a result, Japan’s accounting system rapidly changed under the influence of the U.S. financial accounting system and the Securities Acts. Thus, two major external influences affected the basic framework of Japanese financial accounting.

From these two influences, Professor Chiba considers is-sues about social and historical problems in modern Japanese financial accounting, focusing on the influences of British fi-nancial accounting, the need to earn public trust, and the impact of political issues, which Chiba analyzes from a social science approach. He focuses primarily on the important period from the beginning of the 19th century through the 20th century.

The book contains ten sections. Sections 1 and 2 seek to define a basic structure for the British financial accounting ap-proach using a social science methodology. The effects of pas-sage of the modern Companies Act and of related accounts based on British processes is examined in sections 3 and 4; the “Lee Rule” is examined in sections 5 and 6. The accounting system under the British Companies Acts during a period of interventionism is the focus of sections 7, 8, and 9. Finally, the “true and fair” view is considered in the last section. Each of the sections is effectively related with others by the author’s use of social science and economic historical perspectives.

Chiba’s primary objective is to establish a basic structure of financial accounting by means of a social science methodology, relating the expected structure of a company’s accounting to the Companies Act. He examines original documents, but he does not get distracted by legal form. Instead, he considers the social and economic functions of these acts. He uses the social science methodology of both Weber and Habermas to identify the public sphere.

This book identifies several contributions of the British fi-nancial system. First, there is a study of the Compulsory System from 1844 to 1855. Second, the “true” meaning of the 1879 Companies Act and its voluntary rule is considered. Third, the orthodoxy of a classified system of accounts defined by English rules is pointed out. Fourth, in judicial cases, both the doctrine of fiduciary trust and the duties of a corporate director as a “commercial trustee” are noted. Fifth, the social and historical meaning of the concept of a “true and fair view” is considered. Finally, the process of preparing a distinct form for both the “balance sheet” and the “profit and loss” statements is examined.

The author employs the title A History of British Financial Accounting to a characterize this project, a major focus of his scholarly career. The book, which is the summary of his many studies about British financial accounting, took more than twelve years to complete. The use of original sources and references such as accounts, judicial cases, British parliamentary papers, copies of the original acts, and related bibliographies involved nearly five hundred sources. The author found most of them in Guildhall Library in London while studying at the London School of Economics and Political Science in 1985 and 1986.

The book is published in Japanese and is not otherwise available to readers of other languages. References listed in the book alone are worth the effort of any scholars who have an interest in the origins of financial accounting in Britain, as well as “the accounts” during the period from the middle of 19th century through the middle of the 20th century.
As a side note, readers might also have an interest in Pro-fessor Chiba’s next project, which will extend his study about the history of British financial accounting to contemporary times.