Jan Richard Heier AUBURN UNIVERSITY AT MONTGOMERY

THE DEVELOPMENT OF AMERICAN SHIP ACCOUNTING PRACTICES TO 1900: A COMPARATIVE STUDY OF THREE VESSELS

Abstract: Accounting has always been utilitarian in nature. It adapts to the changes in the business environment by meeting the need for new types of information. The change in waterborne transportation in the U.S. during the 19th century provides an example of such an environmental change that led to a need for accounting adaptation. With the advent of the steamboat, old accounting methods were modified and new ones created to meet the changes in the business environment. In the process, a standardized ship accounting model was developed. The model can be seen in the accounting records of three ships that sailed at the beginning of the 20th century.

INTRODUCTION

In 1903, the prominent English accounting author, Lawrence Dicksee [1976b, p. 3], wrote: “One of the most ancient (and therefore one of the simplest) modes of transacting business is through the agency of the ship.” The early American ship accounting practices were, for the most part, this simple agency model in which the value of the ship and cargo were combined to act as a separate business transaction for each voyage. The development of new accounting procedures to fit the changing nature of ships and the shipping business in the U.S. shows the adaptive nature of the accounting process as the 19th century progressed.

This need for a new shipaccounting model came with the advent of the steamboat in 1807. Robert Fulton’s Clermont showed the world that steam could be used to travel faster on the waterways of the American continent. Faster travel led to changes in the accounting practices of the shipping business. Steamships began to make the aforementioned shipagency accounting practice obsolete, especially for American riverboat traffic. A ship owner could now make numerous trips with his ship in the same period it took the old sailing ships to complete one tour to some distant shore. The accounting relationship between the business transaction and the ship could now be severed. Ship accounting had to adapt to the changes occurring in the industry. The questions involved in this transition are simple. First, did a “standard” model of accounting develop for American shipping during the 19th century? Second, was the model used by the shipping companies accurately presented in this study?

In an attempt to answer the questions posed above, this paper compares the accounting practices of three ships that sailed and traded at the turn of the 20th century. The first ship studied was a Great Lakes steamer named the Adella Shores. The Shores was part of a familyowned partnership that shipped salt between Michigan and Chicago aboard a small fleet of lake vessels. Next, the records of the riverboat or packet named the Betsy Ann were reviewed. This ship was operated out of Natchez, Mississippi, navigated the lower Mississippi River, and was locally owned by a family corporation with multiple business interests. Finally, the records of the Richard A. Bingham, a schooner that plied the lumber trade in the Caribbean, were studied. The schooner was personally owned by the manager of a lumber company in Pensacola, Florida.

The varied modes of ownership of the three ships mirrored that of the shipping industry in 1903. The book, Workers of the Nation [Willets, 1903, pp. 569581], said that there were 3,100 steamers, like the Shores, on the Great Lakes at this time. Of this number, only 600 were operated as part of a fleet business. The remainder of the ships were presumably individually owned and operated. Next, at this point in history, there were only about 189 steamers, like the Betsy Ann, left on the Mississippi River. Willets indicated most of these were locally owned and operated. Finally, the fleet of Americanflagged, oceangoing schooners, like the Bingham, numbered greater than 16,000 in 1903. Willets did not discuss an ownership mode for these vessels.

As a final note of introduction, the three ships all sailed before the U.S. Interstate Commerce Commission (ICC) issued orders in 1910 to begin an effort to regulate the waterborne traffic in the U.S. Regulations issued by the ICC focused on

Heier: American ShipAccounting Practices 29
accounting practices for depreciation and maintenance, as well as balance sheet classifications for waterborne carriers affiliated with railroads [ICC, 1910, 1912]. The fact that these standards did not apply to any of the three ships reviewed for this study allows for a comparison of their records with contemporary shipaccounting practices.
THE SHIPS AND THEIR OWNERS
The Great Lakes Shipper — The Steamer Adella Shores1: Samuel Neff and Sons Shipping Company, the owner of the steamer Adella Shores, was a family partnership comprised of the father, Captain Samuel Neff, and his two sons, Captain Sidney Neff and Charles Neff. The Milwaukeebased shipping company began operations in the late 1880s when Samuel Neff moved from Oshkosh to Milwaukee. His two sons joined him in the business in the early 1890s. Sidney acted as a ship captain while Charles was responsible for the management of the business in Milwaukee. The Neff fleet of 1900 consisted of three woodenhulled steamships — the Adella Shores, the Minnie Kelton, and the Edwin Tice. These three ships acted as the core of their small Great Lakes fleet. In addition, the Neffs purchased two barges, the Marion and the O. J. Hale, for the 1900 shipping season. The auxiliary log of the O. J. Hale noted that she had sailed with the Adella Shores between Chicago, Illinois and Manistee, Michigan. The ships were primarily used to transport salt from central Michigan to the port of Chicago for the National Salt Company, the forerunner of the Morton Salt Company. At the turn of the 20th century, salt was an important commodity that was used in a range of products from food preservatives to industrial solvents. The ships in the Neff fleet all had long and storied histories, but only the records of the Adella Shores and the barge O. J. Hale were used for this study.

According to data from the records of the Runge Collection, the Shores was a woodenhulled steam barge that was built in 1894 for the Shores Lumber Company of Ashland, Wisconsin at a cost of $65,000. The ship was 195 feet long and displaced 734 gross tons. It was built by the Wolverine Boat

1The history of the Adella Shores and the Neff Family comes from the documents of the Wisconsin Marine Historical Society and the Milwaukee County Historical Society. These records include the Neff Family Collection and the Runge Collection which is a set of ship identification records and histories.

Company out of Gibraltar, Michigan. The shipping company of Samuel Neff and Sons purchased the ship for the 1898 shipping season for an undisclosed amount of money. At the time of the purchase, Inland Lloyds indicated that the Shores had a value of $35,000. After Samuel Neff died in 1904, the company’s assets were split between his two sons. Sidney Neff owned the Shores until his death in 1907. The Adella Shores was then acquired, in 1908, by E. M. Carleton of Cleveland, Ohio, and subsequently sank off Grand Island in Lake Superior on May 1, 1909. Fourteen sailors lost their lives in the accident.

The O. J. Hale was a wooden schooner built in Trenton, Michigan in 1874. It was 138 feet long and displaced 326 tons. When the Neffs purchased the ship for $1,500 in October of 1900, the masts were removed and the hull used as a barge for shipping salt across Lake Michigan. No history was available after the 1900 season.

The River Boat — The Packet Betsy Ann2: The packet (or flatbottomed riverboat) Betsy Ann was built in Dubuque, Iowa in 1899 by the Iowa Iron Works. The ship was the first steelhulled riverboat on the MississippiOhio River system. The ship was 165 feet long with a beam of 33 feet. Its builder and owner was Rufus F. Learned of Natchez, Mississippi. The boat was named after his wife, Elizabeth. Learned, one of the richest men in Mississippi, was the owner of a lumber company and plantation in southern Mississippi. He operated the Betsy Ann through the Natchez & Bayou Sara Packet Company. From 1899 to its sale to Frederick Way in 1921, the Betsy Ann ran mail, passengers, and goods between Natchez and Bayou Sara, Louisiana, about 100 miles south on the Mississippi River. From 1921 to 1931, the riverboat spent most of its time cruising the MississippiOhio River system shipping cotton and ferrying passengers between Cincinnati, Ohio and Pittsburgh, Pennsylvania. The Betsy Ann was famous for its riverboat races in Cincinnati during the 1920s. In 1931, she was sold to John Hay of St. Louis, Missouri, who used it for towing river barges. In 1940, the Betsy Ann was dismantled and her hull used as a barge.

2 The history of the Betsy Ann was discussed by Frederick Way, Jr., and the biography of R. F. Learned was published in Biographical and Historical Memoirs of Mississippi [Anonymous, 1891]. An additional source is Flesher and Soroosh [1987]. The records of the Betsy Ann are part of the Learned Lumber Company Collection, housed in the Special Collections Department of the University of Mississippi Library.

The Ocean Traveler — The Schooner Richard A. Bingham3: The schooner Richard A. Bingham was named for the infant son of the owneroperator, Francis Frasier Bingham (F. F. for short) of Pensacola, Florida. Born in Michigan in 1872, F. F. Bingham moved to Pensacola in 1890 and began working for the Southern States Lumber Company where he eventually became one of its directors. The company harvested the pine forests of western Florida and southern Alabama. The pine lumber was then shipped from Pensacola to the east coast of the U.S. and to Europe. The lumber trade made the city of Pensacola very rich, and the port of Pensacola became second only to New Orleans for shipments from the Gulf Coast. Pensacolabased ships also made trips to Central America where the pine lumber could be bartered for heavier woods such as mahogany. It was into this market that the Bingham entered in 1903.

The log of the Richard A. Bingham indicated that the ship was chartered (fitted out) on October 21, 1902, and formally launched on January 10, 1903. According to the application to the U.S. Customs Service for a vessel license, the Bingham was a woodenhulled, onedeck, threemasted schooner that was about 90 feet in length and 26 feet wide.4 The ship was built by Robert H. Langford, a small shipyard in the Pensacola area. The ledger of the Bingham indicated that the cost of the ship totaled $7,355. This figure included $3,828 for construction, $2,299 for rigging and sails, and $1,227 for equipment.

The Richard A. Bingham was operated by the A. R. Bingham Shipping Company whose “owner” was Amos Reed Bingham, the father of F.F. Bingham. According to customs records, the actual owner and operator was F.F. Bingham, but his lumber company duties may not have allowed him to operate the ship directly. The Bingham s captain was Raymond L. Merritt who, according to the bookkeeping records, shared in the profits of each of the ship’s four voyages. For her short life of 350 days and only four voyages, the Richard A. Bingham had a very interesting history including a reported mutiny. Three of

3 The records of the construction and shipping accounts are in the Bingham Collection housed at the Special Collections Department of the Birmingham Public Library, Birmingham, Alabama. The biography of F. F. Bingham was told by Rucker and Woolsey [1991].

4The Board of Navigation for the District of Pensacola, Florida through the Application or Owners or Master Vessel for Official Numbers a Signal Letters, issued the Richard A. Bingham, I.D. number 111442 on January 23, 1903 (National Archives Document).

the four trips that the Bingham made were to the Central American country of Belize, which was then a small colonial outpost called British Honduras. On the fateful fourth voyage to Belize, the Bingham was detained by customs authorities in Frontera, Mexico. After this problem was rectified, the ship proceeded to Belize, unloaded its cargo of southern pine, and took on mahogany for the return trip. The Richard A. Bingham went down in a gale off the coast of Belize on December 18, 1903. The partial log entry reads as follows: “Sailed Dec. 17 from Belize to Pensacola and that night went on a coral reef outside of Belize Harbor and became a total loss. Crew saved” [Bingham Account Book, 1903, p. 104].

As the historical vignettes show, each of the three ships had a storied past of adventure, romantic voyages, tragedy, and, of course, hard work. The work aspect can be seen in the related accounting records that have survived nearly a century in various archives and libraries. These records show three distinct, but similar methods of accounting for essentially the same activity — the commercial voyage of a ship. The similarities in accounting procedures between each ship show that a “standard” shipaccounting model may have developed over the century preceding the travels of the Adella Shores, the Betsy Ann, and the Richard A. Bingham.

SHIPACCOUNTING PRACTICES

A 19th Century ShipAccounting Model: Comparing the accounting practices of these three ships would be a superfluous undertaking without a baseline accounting model with which to compare the ships’ practices. To detect the baseline model of accounting practices available to these three ships, 16 books published before 1900 were reviewed for their presentation of shipaccounting practices. The books and relevant publication data are listed in Appendix A.
The selection of the books came in three phases. First, a review of Bentley and Leonard’s classic work, A Bibliography of Works on Accounting by American Authors [1970], was conducted. This work noted four specific treatises on ship accounting published in the U.S. before 1900, the authors of which were Ely Stone [1839], Francis Clark [1837], Peter Duff [1846], and James Fleming [1846]. These books were obtained and reviewed. Next, two other treatises on ship accounting, Hemmeter’s [1888] and the Improved Vessel Book [Anonymous, 1881], were reviewed. These books were found in the Great Lakes Historical Society Library. Finally, the remaining selections were general texts on accounting published during the 19th century. Some of that century’s most prominent accounting authors, such as Bennet, Foster, and Marsh, were represented in the study.

Other books were consulted for the study, but only those books which contained a discussion of ship accounting (either oceangoing or riverboating) were used for the development of the shipaccounting model. Two examples of other books consulted for the study included one by the notable team of Bryant, Stratton, and Packard who wrote Bryant and Stratton’s National Bookkeeping [1860]. Another was A.B. Mersevey’s Bookkeeping, Double Entry [1875]. Both books discussed sending and receiving merchandise on consignment aboard a streamer, but neither discussed the method of accounting for the ship itself. Because of this omission, these books were not used to help discover the baseline, shipaccounting model.

Though the list of books consulted for this study does not purport to be an exhaustive review of all accounting books published in the 19th century, it does represent a fair sampling of the contemporary thought on shipaccounting practices. This assumption is based on three facts. The books consulted represented almost every decade of the 19th century so that a developmental pattern could be noted. Second, the books were written by prominent authors of accounting texts as listed by Bentley. Finally, in many cases, such as Bennet’s The American System of Practical Bookkeeping [1976], the books were found to have had multiple editions published over several decades of the 19th century.

The review of the books provided 14 different principles, methods, and disclosures used by the authors to explain how ship accounting was to be completed. Table 1 shows the distribution by principles, books, and dates. The shipaccounting model provided by the book reviews gives an excellent picture of a “uniform system” of accounts for ships that was widely discussed by the accounting authors of the day and presumably represented actual practice.
The groups of accounting principles derived from the books can be categorized into two sections — capital accounting and financial accounting. Outside of the doubleentry requirements, the principles outlined by the study were all specifically adapted to the shipping industry. They applied equally well to the three geographic areas sailed by the ships — the rivers, the lakes, and the oceans. The model that apparently

TABLE 1 A Review of ShipAccounting Practices Noted in 19th Century Accounting Books

a

o

BOOK 1 2 3 5 6 7 8 9 10 11 12 13 14 15 16 TOTAL %
ACCOUNTING PRINCIPLE
Doubleentry accounting or a system that ties to doubleentry ledger required Y Y Y Y Y Y Y Y Y Y Y Y Y Y 14 88
Purchase of ship as an asset with a ledger account Y Y Y Y Y Y Y Y Y 9 56
Shipments and profits accounted for against the purchase price of the ship Y Y Y Y Y Y Y Y Y Y 10 63
Shipments, both revenues and expenses are accounted, for as individual voyages, not in total Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y 15 94
Specific listing of expenses Y Y Y Y Y 5 32
Captain made debtor of the voyage transactions Y Y Y Y Y 5 32
The profits are closed to the owner’s balance account after specific trip profits are determined Y Y Y 3 19
A ledger account specifically for the ship Y Y Y Y 4 25
Voyage Report Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y 15 94
Cash Book Y Y Y Y Y Y Y 7 44
Fuel Book Y Y Y Y Y Y 6 38
Crew Book Y Y Y Y Y Y Y 7 44
Freight Book Y Y Y Y Y Y Y 7 44
Passage Book Y Y Y Y Y 5 31
TOTAL PER BOOK 5 5 5 6 10 6 5 6 12 10 12 6 8 8
PERCENTAGE 36 36 36 43 29 71 43 36 43 86 71 86 29 43 57 57

Note: The book number corresponds to the bibliographic listing from Appendix A.

Heier: American ShipAccounting Practices

35

developed for ship accounting in the 19th century suited its users well and was adapted to their special needs. The flexibility and adaptability of accounting development are clearly seen in this shipaccounting model. A third category of accounting principles will also be discussed, those comprising management accounting. The accounting procedures of the three ships will be compared and contrasted with this model as a base.

Capital Accounting Principles: The accounting procedures dictated by the “model” discussed above indicated that the physical vessel itself should be accounted for using the traditional agency model. This model takes the cost of the vessel, adds to it any revenues generated, and subtracts from it any expenses to arrive at an ending balance or value. An example of this practice (Exhibit 1) comes from Crittenden in his book, Bookkeeping by Single and Double Entry [1850, pp. 115122]. This example presents a fictitious purchase of the Ship Massachusetts for a voyage to Canton, China from 18491850.

EXHIBIT 15 Ledger A Example for 1849

1849 July 2
July 12 July 16
July 16 To Thomas Harvey (Purchase) ” Cash (Provisions) ” Bills Payable (Insurance) ” Cash (Port duties) 25,000.00 1,160.00
1,926.25 5.60 1849 July 14 By Cash (Passenger fees) 1,800.00

1,800.00 26,291.85

28,091.85 1850 Feb. 28 Balance to

28,091.85 Ledger B 28,091.85
Ledger B Example for 1850

1850 1850
Mar.l To Balance from May 9 By Cash (Freight 5,000.00
Ledger A 26,291.85 May 9 Fees Home) 8,500.00
May 6 ” Adventure to Canton 2,069.68 ” 29 ” Sundries
” Cash (Crew’s Wages) 3,808.67 (Trading fees while 22,500.00
June 29 ” Interest 1,431.84 in Orient)
June 29 ” Profit & Loss 2,397.96
36,000.00 ” Bal to New a/c 36,000.00
1850
July 1 22,500.00
To Bal. Fr. Old a/c
5 The explanation of the account entries was added by the author of this paper.

The system discussed by Crittenden was very similar to those highlighted by other accounting authors of the day. This system may have been introduced some 30 years earlier in Bennet’s classic 1820 text, The American System of Practical Bookkeeping. In a footnote to his Ship Ocean example, Bennet wrote:
The Dr. side shows the cost of the vessel and the charges attending her. The cr. what she produced by the freight or sale. If the ship is not sold, Cr. the account first By Balance for her present value or for the value of any share you have in her, and then To or By Profit and Loss on the account. If the ship is sold the account is to closed To or By Profit and Loss only [Bennet, 1842, p. 69].

As the exhibit shows, the owners of the ship took all the revenues and expenses directly against the value of the ship. The actual cost of the ship itself did not change but was “adjusted” for the value of the expenses or revenues related to the voyage or transaction. In fact, Crittenden actually used the terms “produced value” or “costs value” regarding money paid for or gained from the ship [Crittenden, 1850, p. 67].6 The owners then closed the account to profitorloss after the ship returned home. It must be noted here that the consignments of goods shipped on the Massachusetts were accounted for separately from the ship and yielded a profit of $11,700. Finally, in this case, the ship was not sold at the end of the “Adventure to Canton,” but was instead transferred to a new account so that it could be used to take advantage of another overseas adventure. It is interesting to observe, however, that when the ship was “transferred” to another account, it was done so at a value of $22,500, or $2,500 less than its purchase price. This reduction shows that the ship owners understood that the ship was depreciating, but they did not set up accounts to match this process directly against the revenues produced. Dicksee [1976a, p. 90], about 40 years later, noted in his auditing book:

SINGLE SHIP COMPANIES almost invariably make no provision for depreciation: the auditor need not waste his time upon any effort to convince his clients of the imprudence of this course, but he should not

6 The $1,438 “interest charge” to Ship Massachusetts was credited to an interest and discount account which was closed to profit and loss. This charge was for a loan on the purchase of the ship.

forget to append the necessary qualification to his certificate.

The Single Ship Company that Dicksee talked about is a legal device where a single ship was incorporated into its own company. A freight agent may incorporate several ships separately during a shipping season. This multiple incorporation was done to limit his and his shareholders’ liability against claims from ships that might be lost. The losses from one ship’s voyage would not hurt the profits from another ship’s voyage. To some extent, this process institutionalized the “voyage report” form of ship accounting [Boyce, 1995, pp. 360378].

Though the context of Dicksee’s book defines a legal device called a Single Ship Company, its application can be transferred to small shipping firms rather than larger companies like the Goodrich Transportation Line or the C. Reisse Coal Company that had large modern fleets on the Great Lakes at this time. Although both the Neffs and Binghams owned more than one ship, their accounting methods mirrored those of Dicksee’s Single Ship Company regarding depreciation.
With the Neff records, capital accounting for their ships may have been dictated by Wisconsin state law that taxed ships as personal property based on size and age of the ship. The law read as follows:

Chapter 48 Section 1042a of the Code of Wisconsin for 1898 presented the following rates for determining the value of a wooden ship for property tax purposes based on the age of the ship.

one to five years old $ 9 per net ton
five to ten years old $ 7 per net ton
ten to fifteen years old $ 6 per net ton
fifteen years and upward old $ 4 per net ton
Wooden Barge fifteen years or
upward old $ 3 per net ton
[Sanborn and Berryman, 1898]

Though the shipping companies may not have been concerned directly with depreciation, Wisconsin state law appeared to have allowed for the concept by reducing the value of the ship over time as its hull grew older and began deteriorating.

The type of capital accounting outlined by the model could be identified in two out of three of the vessels used in this study. For the Adella Shores, the manner by which the Neffs accounted for her cost was unfortunately not found in her records; however, the capital accounting for the Shores’ com panion barge, the O. J. Hale, was provided and is shown in Exhibit 2. This exhibit shows that the cost of the O. J. Hale was shown as a current expense rather than capitalized. This practice was probably due to the transient nature of ship ownership at the turn 20th century, and, as ship histories showed, the high probability of accidents. These arguments may have been the reason why none of the books reviewed for this study mentioned the concept of depreciation.
It should be noted here that neither the Neff records nor the Runge Collection identified the reason for the $4,200 in repair charges. The charges could have resulted from either a recent accident involving the ship, or more likely, they represented the additional cost of placing the vessel into service, expenses such as dismantling the masts and refurbishing the hull to create a barge. In either case, modern accounting would have probably shown this adjustment as a capitalization rather than an expense.

EXHIBIT 2
Financial Statement of the Barge O. J. Hale November 1, 1900

1900 NO. 1 STATEMENT NOV. 1ST
BARGE “O. J. HALE” 1900
AMOUNT
HARBOR TOWING 494.10
CREWS WAGES 663.40
PROVISIONS 120.34
TRIMMING 26.95
MISCELLANEOUS ARTICLES 1.60
REPAIRS 4201.52
DAMAGE 7.50
CARGO DAMAGE 83.00
LAY UP EXPENSE 50.78
TONS OF SALT 83.84
TOTAL RECEIPTS 3356.52
TOTAL EXPENSES 5649.19
NET LOSS 2292.67
PURCHASE PRICE [OF O.J. HALE] 1500.00
(1900 NOV. 1 AT COST) 3792.67

As the ship histories indicated, F. F. Bingham kept a ledger on the cost of the construction of the Richard A. Bingham. The cost of the Bingham ($7,355) was used as part of the general recapitulation of the A. R. Bingham Shipping Company. The entries were titled Resources and Liabilities in the ledger. The form of these nearly 50 entries was a standard “balance sheet” with some indication that expenses and revenues were part of the adjustments. The focus on this recapitulation appeared to track changes in the net worth of the company. The Richard A. Bingham acted as the ledger’s primary “debit,” or asset, and the purchases of lumber from Southern States Lumber represented its primary “credit,” or liability. These “balance sheets” were compiled on an intermittent basis, ranging from weekly to every six months, although they loosely corresponded to the arrival of various ships owned by the company.

The Betsy Ann also had a compilation account, which was more a current expense account that was closed periodically. Unlike the Bingham, it did not include the cost of the ship and the relevant net worth. There was not any indication of how the Betsy Ann herself was accounted for in the specific records reviewed for this study.

Financial Accounting Principles: Francis Gedney Clarke [1837] in his book, Shipmaster Guide and Commercial Assistant, pointed out that it was the shipmaster’s or captain’s responsibility to keep account of both the ship and the shipment for the absentee owners. Often they gave him a cash advance with which to conduct business for the owners and pay sailors during the voyage. His responsibility was to make an accounting of those revenues and related expenses. This type of arrangement was noted in the logs and ledgers of the Richard A. Bingham whose captain, Raymond Merritt, was obligated to deal the pine lumber he brought south in favor of the mahogany he was to bring back. Captain Merritt received part of the trip’s profits, besides his salary of $65 per trip.

Fleming [1846, p. 117] made it clear that the ship’s personnel (especially the captains and bookkeepers) were surrogates for the owners and had the responsibility to account for and protect all of the goods consigned to the ship. Stone [1839, p. 24], in his book on steamboat accounting, made stewardship of the customer’s assets a foremost concern. He wrote as follows:

In receipting for goods sent on board, great care should be given and exercised in examining their condition, the number of packages, and their shipping marks etc; for any error in this respect by receipting more than actually received or by acknowledging the packages in good order when in fact they are not so, so lays the boat and owner’s liable to be sued for damages or deficiencies which do not in fact exist, but for which there may be no remedy.

With the Betsy Ann and the Adella Shores, the owners of the ships acted as freight agents and received fares as such. In the case of all three ships, the type of business engaged in by the shipping company helped to dictate the type of accounting procedure used.

The review of books summarized in Table 1 suggests that the shipaccounting process could range from a sophisticated ledger and journal system to a more basic, singleentry accounting system. All the books agreed that the central focus of the financial accounting system dealt with the individual trips or voyages of the ship. The primary document was the Voyage Report or Trip Report. There may also have been related documents that supported the Voyage Report and accounted for specific areas of the business, such as the crew’s wages, cash disbursements, commodities shipped, and fuel usage. Finally, a recapitulation that noted the profits or losses of the trip was prepared for the ship’s owners. Dicksee [1876a, p. 90], explained the importance of this document as follows:

The Auditor of Single Ship Companies must bear in mind that, as regards to fraud, there is no such thing as ‘safety in numbers’ here, for the accounts are usually all in one person’s hands — let him, therefore, not omit to examine the Voyage Account Book in detail.

The best example of this type of accounting comes from the flagship of the Neff fleet, the Adella Shores (Exhibit 3). The Shores’ Trip Report was a wealth of information for the owners of the ship. It included a listing of revenues and expenses of the trip, a manifest of the cargo shipped, and a report of the fuel consumed by each ship. Unfortunately, this statement does not include the destination and purpose of the trip. According to the records of the O. J. Hale, that information was part of the ship’s Captain’s Log. The Improved Vessel Book [Anonymous, 1881] contained a Voyage Report very similar to the one presented for the Adella Shores.

EXHIBIT 3 Financial Statement of the Adella Shores June 1, 1900

No. 2 Statement of the Steamer Adella Shores June 1, 1900
Trip 9 Trip 10 Trip 1 Total
Totals
Repairs 3.11 22.86 25.97
Miscellaneous Articles .61 1.07 2.99 4.67
Fuel 104.25 69.54 511.54 685.33
Loading Salt 72.18 85.85 73.00 231.03
Unloading Salt 140.35 150.23 121.65 412.23
Stove Coal 3.00 3.50 6.50
Provisions 24.07 40.90 106.72 171.69
Cooperage 24.06 25.75 9.90 59.71
Shortage 7.60 15.00 22.60
Laundry .88 1.41 2.29
Crew Wages 122.21 122.21 537.83 782.25
Loading Lumber 385.09 385.09
Unloading Lumber 294.67 294.67
Commission 10.00 10.00
Harbor Towing 6.00 6.00
499.21 513.66 2087.16 3100.03
Freight Receipts 721.80 513.66 4092.44 5586.89
Net Gain\trip 222.59 258.99 2005.28 2486.86
Draft of Water 12.813.3 13.613.8 12.513.5
Draft lumber 13.013.5
Draft rock salt 13.314.2
Tons of Coal 30 20 1571/2 2071/2
Barrels of Salt 8020 8285 8110
Lumber ft 921.133
Tons Rock Salt 1304

As noted above, the vast majority of all of the books required a Voyage Report or Trip Report. However, the method and appearance of this accounting varied from book to book. For example, Fleming’s Steamboat Bookkeeper’s Assistant [1846] required an actual ship’s ledger. The Richard A. Bingham used a lengthy, doubleentry ledger (Exhibit 4) similar to Fleming’s requirements. In addition, the ledger of the Bingham acted as the Voyage Report and the Ship’s Log to inform the owner of important events. The accounting system of the Bingham included a separate ledger for the outbound trip from Pensacola and inbound return trip to Pensacola. A cash ledger to keep a record of the captain’s spending on the trip was also included in an accounting format.

The Bingham ledger highlights an accuracy shortfall in turnofthecentury accounting. The credit column of this ex hibit should have added up to $1,010.03, not $993.38. Correct addition would have made the profits of the voyage $490.64 instead of the $502.69 actually reported. Such accuracy problems may have been the reason for Dicksee’s admonition for the auditor to check the Voyage Reports for small shipping companies more closely.

EXHIBIT 4
American Schr. Richard A. Bingham Trip # 1 Pensacola to Belize with Pine & Return with Mahogany

1903 DR 1903 CR.
Jan 19 To: Loading 3 00 Ma 2 Mcorten 2 25
31 “Mchugh 87 83 r 5 overcharge
11 31 “Water 2 00 Cr. Lumber 2 40
Feb 2 “Bill Health 2 44 Fe 2 Lumber 977 38
” 5 “Medicine Chest 4 40 b 5 Freight 8 00
Jan 31 loading 95 20 Ma 6 shingles
” 28 “McHugh 5 45 r 6
Feb 3 “clearance 1 50 ”
4 “serum25, wood75 1 20
med. 20 8
” 24 “fumigation 15 62
“light harbor dues 5 50
11 “measuring deck 28 75
11 26 “inward pilotage 45
11 “labor discharging 12
11 7 Riggers 1000 13 50
11 fresh stores 1 25
11 To: Captain
11 wages bill 22 50
11 Mate 18
11 Cook 15
11 cub 15
11 Mike 22 50
11 Liberstein 65
11 Merrit 62 83
11 R.L. Merrit Profit 439 86
11 F. F. Bingham
993 38 993 38

The Trip Report of the Betsy Ann (Exhibit 5) was more detailed than the other ships and was completed on a series of preprinted forms by the packet’s clerk, Charles Gordon. The system used by the packet company was very similar to the system that was outlined in George Soulé’s New Science and Practice of Accounts [1976]. His book required separate preprinted sheets for the accounting of goods shipped, passengers, expenses, cash, crew expenses, and fuel. Though the Natchez & Bayou Sara Packet Company combined several of these sheets into one, the system was essentially the same. Even with its sophistication, the basic plan of the accounting system still goes back to that outlined by Ely Stone in the late 1830s in his classic book, The Steamboat Clerk [1839].

EXHIBIT 5 Statement of the Receipts and Expenditures
STEAMER BETSY ANN For TRIP 467 and Week Ending July 20th, 1902

RECEIPTS
From 35 Cabin Passengers Down 63 25
” 85 Cabin Passengers Down 124 50 187 75
” 145 Cabin Passengers Down 81 00
” 50 Cabin Passengers Down 29 25 110 25
From Freight, Down 291 01
” Freight, Up 44 05 335 06
” Rent Bar
11 Sale Coal 15 00
648 06
Expenditures
Stores
Fuel 333 13
Officers 213 75
Mates Crew 127 20
Cabin Crew 26 85
Engineer’s Crew 48 85
Deck 64 05
295 40
Expense
Mate
Engineer 27 35
Office 5 90
Pantry 6 90
General Expense 40 70
Agency 73 89
Rebates and Bills Returned 34 08
Extra Labor 2 20
Last Friday 15 94
Chas Gorden, clerk 1316 19

Stone’s book was a compilation of procedures used by steamboats on the Ohio River. These accounting procedures evolved from the first Fulton steamboats that sailed the MississippiOhio River system in the early 1800s. For example, records from the second steamboat on the river, the Vesuvius

(18141822)7, showed both trip and freight accounting in the only records left from the Natchez Steamship Company. According to Flesher and Soroosh [1987], the Betsy Ann represented an exception to this system of individual trip reports because her trips were so short (two to four days) that the accounting was performed weekly for all of the trips completed that week rather than on the traditional tripbytrip basis. The Trip Reports of the Betsy Ann were then integrated into the general accounting system of the owners.

The Voyage Reports were often summaries of other documents compiled by the ship’s bookkeeper. For example, the Betsy Ann had a full range of supporting documents, including a crew’s list and payroll, expense list, and cash receipts/cash disbursements book, all of which were then tied to the accounting system of the Learned Lumber Company. On the other hand, both the Adella Shores and the R. A. Bingham were limited in their supporting documents and seemed to put most information into one report. For the Bingham there was a captain’s cash report but no general summary of all the voyages for a given year was recognized in the account books. The company’s balance sheets that were discussed previously may have acted as a form of recapitulations of voyages with the purpose of finding the current net worth of the company rather than current income.

The Adella Shores did not have the sophisticated accounting system of the Betsy Ann, but as Exhibit 4 above indicated, it was very comprehensive. The supporting documentation available in the library collection showed that the Neffs did have a cash disbursements journal as part of their ships’ logs. The Adella Shores log has been lost but the one for her sister ship, the O. J. Hale (Exhibit 6), revealed that the captain was responsible for the payment of all expenses on the voyage, ranging from groceries to crew wages.

7The records of the Vesuvius are housed at the Mississippi Department of Archives and History and include a small leatherbound book which acted as a freight register. These records are among the oldest steamboat records in the U.S.

EXHIBIT 6 Partial Log of the O. J. Hale

Trip 12 Barge O. J. Hale. Loaded at Terkley & Douglass
From: So Chicago To: Sept. 12 Left So. Chicago with Adella Shores
” ” 13 Arrival Manistee
” ” 14 Left Manistee
11 ” 15 arrives Ludington at Shelters
1111 17 left Ludington [with] Str Adella Shores
” ” 18 arrive Chicago
H. J. Wilson, Master Seaman W. Marks, Cook
Sept. 11 to Sept. 18 Sept. 11 to Sept. 18
included 8 days at $ 70 per month Included 8 days at $45 per month
— $18.64 — $12.00
J. Johnson, Seaman G. Claussen, Seaman
Sept. 11 to Sept. 18 Sept. 11 to Sept. 18
included 8 days at $45 per month Included 8 days at 45 per month
— $12.00 — $12.00
Wages of Master and Crew $54.64
Sept. 11 To William Runsfle Provisions $ 2.83
11 “11 To Petersons Bro. Groceries $ 1.46
11 “15 To A Prairies Groceries $ 1.30
(at Ludington) $ 5.59
Whole Amount — $60.23
Sept. 19 John Johnson, Seaman 1 day $1.50 per 1.50
Sept. 19 G. Claussen, Seaman 1 day $1.50 per 1.50
Whole Amount — $63.23
Sept. 18 Payout from Capt. S. O. Neff By Cash $60.00

Finally, the Neffs did compile reports of total income for all their ships and related general office expenses for each month (as shown in Exhibit 7) and for the entire year as well. Though Charles Neff may have used two columns to “balance out” his accounts at the end of the year, this exhibit, along with the previous Neff Voyage Report, shows that he used a very simple accounting system that can be properly classified as single entry.

EXHIBIT 7
General Statement of Samuel Neff and Sons Shipping Company — October 1, 1900

1900 General Statement Oct. 1st 1900
Receipts Loss Gain
Str Adella Shores Str. Minnie Kelton Str. Edwin S. Tice Str. Marion Gain 43.31 2383.31 850.80 1028.44 547.38
2426.62 2426.62
Gain for September General Expenses Net Gain 2383.31 276.35 2106.96
2383.31 2383.31

Management Accounting Principles : A modern textbook defined accounting as “the process of identifying, measuring, classifying and accumulating, summarizing, and communicating information about economic entities that is purely quantitative and is useful to decision makers” [King et al., 1997, p. 688]. The shipaccounting procedures discussed above did identify, measure, and, in a limited way, communicate economic information about the shipping business. However, evidence that shows that the owners used this information to control operations and make informed business decisions is sketchy at best.
The shipaccounting model discussed in this paper did have several devices for control and analysis. First, the captain’s control over all financial and nonfinancial activities during a voyage helped to give a sense of accountability to the absentee owners. Next, the Voyage Report or Trip Report could either be used as the accounting of one business transaction, as foreseen by Bennet [1976] and Crittenden [1850], or be used as a micromanagement tool for the control of the company’s overall financial operating activities. For example, the records show that the owners of the ships tracked the profits of the individual trips as well as the combination of all trips. Finally, the nonfinancial measures listed in the records could be used for controlling and monitoring operations.

Of the three ships, the Richard A. Bingham had the best example of a managerial accounting application. This sophistication can be seen in Exhibit 8, where the bookkeeper of A. R.

Bingham Shipping Company determined that it was important to show the cost and income per day of the voyage.

EXHIBIT 8
Summary Out and Back

Trip #1 71 days Trip #2 67 days Trip #3 69 days
Gross Earnings per day 24.55 17.29 31.68
Net Profit per day F. F. Bingham’s share 10.77 4.22 9.10
Gross Expenses per day Including RLM’s shore profit 13.78 13.07 22.58

Mr. Bingham’s need for this type of information is difficult to surmise. One assumption is that he was viewing each voyage as a modern opportunity cost. Was he secondguessing himself about where he could have sent the ship for better profits? Could Bingham have made better profits elsewhere? The answers to these questions are unknowable. In any case, the practice of pegging costs or revenues to a base was widespread at this time. For example, the ICC required railroads to track passenger miles and loaded ton miles [ICC, 1907]. The concept of revenues or costs per passenger mile is still a mainstay for breakeven analysis for modern airlines.

The Adella Shores, in Exhibit 3 above, shows some evidence of the usage of nonfinancial, managerial accounting measures. The exhibit indicates record keeping for the fuel usage of the ship and the draft of water that the ship would draw in certain situations. The second set of information was important because each harbor was dredged at a different depth. The harbor pilot who guided the ship to the dock area needed to know the draft of the ship when it was empty and fully loaded to eliminate the threat of grounding. The Betsy Ann showed no such managerial accounting methodology in its financial statements. However, all of the ships provided sufficient information to determine such information as a unitcost per mile.

SUMMARY AND CONCLUSIONS

As this paper shows, American ship owners developed and used a “standard model” of ship accounting during the 19th century. This system developed before the ICC began standardizing ship accounting in 1910. The shipaccounting model could be seen in the accounting textbooks and manuals published during the 19th century. It was a system that was very utilitarian in nature and developed according to the needs of an everchanging shipping industry. Though the ship accounting was widely standardized in procedures and nature, it was not necessarily standardized in presentation and style, with each of the three ships presenting its own version of a Ship or Voyage Report. Finally, as Table 2 below shows in summation, there was substantial usage of the 19th century shipaccounting model by the three ships reviewed for this study. The Richard A. Bingham most closely matched the procedures in the model. The other two ships, the Adella Shores and the Betsy Ann, showed substantial compliance with the model as well.

TABLE 2

A Review of Accounting Practices Noted in 19th Century Accounting Books

ADELLA SHORES R. A. BINGHAM BETSY ANN
ACCOUNTING PRINCIPLE SAMUEL NEFF F.F. BINGHAM R.F. LEARNED
Doubleentry accounting NO YES YES
Purchase of ship as an YES YES UNKNOWN
asset with a ledger account (No purchase
account found
with records)
Shipments and profits YES (O. J. Hale) YES NO
accounted for against the
purchase price of the ship
Shipments, both revenues YES YES YES
and expenses, are
accounted for as individual
voyages not in total
Specific listing of expenses YES YES YES
Captain made debtor of NOT YES NOT
the voyage transactions APPLICABLE APPLICABLE
Captain was owner The ship was
of ship in this case owned by a
corporation.
The profits are closed to UNKNOWN YES UNKNOWN
balance not the ship (No balance sheets (No balance
account found in records) sheets found
in records)
Ship’s Ledger NO YES YES
Voyage Report YES YES YES
Cash Book YES (O.J. Hale) YES YES
Fuel Book YES NOT UNKNOWN
APPLICABLE Purchase of fuel
No steam engine mentioned but
aboard ship. no amounts
given.
Crew Book YES YES YES
Crew listed with
Cash Book

Heier: American ShipAccounting Practices
TABLE 2 (Continued)
A Review of Accounting Practices Noted
in 19th Century Accounting Books

ACCOUNTING PRINCIPLE ADELLA SHORES SAMUEL NEFF R. A. BINGHAM F.F. BINGHAM BETSY ANN R.F. LEARNED

Freight Book YES YES YES
Passage Book NOT APPLICABLE (Did not take passengers) NOT APPLICABLE (Did not take passengers) YES
Rating of comparison between ship practices and 19th century shipaccounting model — bases on applicable items Nine out of twelve
75% Twelve out of twelve 100% Nine out of twelve
75%

The actual presentation of accounting records by the ships may have been different from that presented in the textbooks. However, the accounting model used by them was the same basic model introduced by Bennet [1976] and Gibson [1827] 75 years earlier. The same model was repeated and improved upon throughout the 19th century by authors such as Stone [1839], Duff [1846], and Soulé [1976]. Though some records of the three ships were incomplete, making a clear picture of the total accounting methodology by each ship impossible, the available records show that there was a “standard” shipaccounting system that met the information needs for the owners of the Adella Shores, Betsy Ann, and Richard A. Bingham at the turn of the 20th century.

REFERENCES

Anonymous (1881), Improved Vessel Book (Cleveland: Brooks and Co.).
Anonymous (1891), Biographical and Historical Memoirs of Mississippi (Chicago, The Goodspeed Publishing Company): 1108.
Bennet, James (1976), The American System Of Practical Bookkeeping (New York: Collins Brothers, 1842), reprinted (New York: Arno Press).
Bentley, Harry C. and Leonard, Ruth (1970), Bibliography of Works on Accounting by American Authors (Boston: Harry C. Bentley, 1934), reprinted (Augustus M. Kelley Publisher: New York).
Bryant, H. B., Stratton, H. D., and Packard, S. S. (1860), Bryant and Stratton’s National Bookkeeping (New York: Ivison, Blakeman, Taylor & Company).
Boyce, Gordon (1995), “Accounting of Managerial Decision Making in British Shipping 1870 1918,” Accounting Business and Financial History Vol. 5, No. 3: 360 378.
Clarke, F. G., (1837), American Shipmaster’s Guide and Commercial Assistant Being an Enlargement of the Seaman’s Manual (Boston: Allen & Co.).
Clarke, F.G. (1841), A Synthetic and Inductive System of Bookkeeping by Double Entry (Boston: B.B. Mussey).
Crittenden, S. W. (1850), Bookkeeping by Single and Double Entry (Philadelphia: E. C. & J. Biddle & Co.).
Colt J. C. (1838), The Science of Double Entry Bookkeeping (Cincinnati: Burgess & Co.).
Dicksee, L. R. (1976a), Auditing: A Practical Manual for Auditors (London: Gee & Co., 1892), reprinted (New York: Arno Press).
Dicksee, L. R. (1976b), Advanced Accounting (London: Gee & Co., 1903), reprinted (New York: Arno Press).
Duff, Peter (1846), The Western Steamboat Accountant (Pittsburgh: Anderson & Co.).
Fleming, J. (1846), The Steamboat Bookkeepers Assistant (Pittsburgh: McDonald & Elliot).
Flesher, Dale and Soroosh, Jalal (1987), “Riverboat Profitability: The Betsy Ann,” The Journal of Mississippi History, Vol. XLIX, No. 1: 23 34.
Foster, B. F. (1836), A Concise Treatise on Commercial Bookkeeping (Boston: Perkins & Co.).
Gibson, J. ( 1827), A New and Improved System of Bookkeeping (Philadelphia: published by author).
Hemmeter’s Improved Steamboat Book; Time and Wage Tables Comprising Shipping Articles Cash Account, Disbursement Journal, Towing Journal (1888), (no publisher or copyright noted).
Interstate Commerce Commission (1907), Classification of Locomotive Miles, Car Miles, and Train Miles (Washington: Government Printing Office).
Interstate Commerce Commission (1910), Classification of Operating Expenses of Carriers by Water (Washington: Government Printing Office).
Interstate Commerce Commission (1912), Form of Balance Sheet Statement for Carriers by Water (Washington: Government Printing Office).
Jones, Thomas (1841), Principle and Practice of Bookkeeping (New York: Wiley & Putman).
King, Thomas E., Lembke, Valdean C., and Smith, John H. (1997), Financial Accounting: A DecisionMaking Approach (New York: John Wiley & Sons).
Krepp, F. C. (1856), Statistical Bookkeeping (London: Longman & Co.).
Marsh C. C. (1831), The Science of Double Entry Bookkeeping (Baltimore: McDowell & Co.).
Mersevey, Atwood Bond (1875), Mersevey’s Bookkeeping, Double Entry (Boston: Thomas, Brown & Co.).
Rucker, Brian R. and Woolsey, Nathan F. (eds.) (1991), Log of the PeepoDay: Summer Cruises in the West Florida Waters, 1912 1915 (Baghdad, FL: Patagonia Press).
Sanborn, Arthur and Berryman, John R. (1898), Wisconsin Statutes of 1898 Volume I (Chicago: Callaghan & Co.).
Soulé, George (1976), Soulé’s New Science and Practice of Accounts, 7th ed. (New Orleans: G. Soulé), reprinted (New York: Arno Press).
Stone, Ely (1839), The Steamboat Clerk ( Cincinnati: Lucas & Company ).
Willets, Gilson (1903), Workers of the Nation: An Encyclopedia of the Occupations of the American People (New York: P. F. Collier and Son).

APPENDIX A

A Review of ShipAccounting Practices Noted in 19th Century Accounting Books:

The Bibliography of Books Used in the Study

# DATE AUTHOR
1 1827 Gibson, J.
2 1831 Marsh C. C.
3 1836 Foster, B. F.
4 1837 Clarke, F. G.
5 1838 Colt J. C.
6 1839 Stone, Ely
7 1841 Clarke F.G.
8 1841 Jones, T.
9 1842b Bennet, J.
10 1846 Duff, Peter
11 1846 Fleming, J.
12 1850 Crittenden S.
13 1856 Krepp, F. C.
14 1881
15 1888d Hemmeter
16 1903c Soule, George
NOTES: a CB = A complete

TITLES
A New and Improved System of Bookkeeping
The Science of Double Entry Bookkeeping
A Concise Treatise on Commercial Bookkeeping
Shipmaster Guide and Commercial Assistant
The Science of Double Entry Bookkeeping
The Steamboat Clerk
Bookkeeping by Double Entry
Principle and Practice of Bookkeeping
The American System of Practical Bookkeeping
The Western Steamboat Accountant
The Steamboat Bookkeepers Assistant
Bookkeeping by Single and Double Entry
Statistical Bookkeeping
Improved Vessel Book
Hemmeter’s Steamboat Book
New Science and Practice of Accounts

PLACE PUBLISHER PAGEfs^ can
Philadelphia author 79 Shi
Baltimore McDowell 6970
Boston Perkins 153
Boston Allen & Co. CBa 0
p
Cincinnati Burgess 41, 70, 99102
Cincinnati Lucas CB 5′
era
Boston Mussey 144150 V
New York Wiley & Putman 29,31,40,51,52,62
New York Collins Brothers 69 ;tic
Pittsburgh Anderson CB ft
Pittsburgh McDonald & Elliot 99116
Philadelphia Biddle 147167
London Longman 160166
Cleveland Brooks CB
CB

This book was originally published in 1817. c Soule’s book was originally published in the 1880s.
Hemmeter’s book did not have a copyright or the specific name of the author. Entries in the book at the Great Lakes Historical Society had dates of 1888 so that date was taken for its listing above.

Accounting, Auditing & Accountability Journal
Volume 11 Number 5 1998 Editors: James Guthrie and Lee Parker

Contents

The introduction of accrual reporting policy in the Australian public sector: an agendasetting explanation Christine Ryan
An insight into accountability and politics in universities: a case study David Coy, Michael James Pratt
Assessing the impact of “liberalisation” on auditor behaviour: accounting research in politically charged contexts Constantinos Caramanis
International accounting regulation by the United Nations: a power
perspective
Sheikh Rahman

A longitudinal study of corporate social reporting in Singapore: the case of banking, food and beverages, and hotel industries Eric Tsang
Literature and Insights Index to Volume 11
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