Reviewed by R. A. Bryer University of Warwick
This is a book of extracts from the annual reports of the United States Steel Corporation from its formation to 1968, which are claimed by the editor to represent “… milestones in the history of financial reporting in the United States” [Introduction, unpaginated]. While historians will find the extracts “of interest” — any access to the early reports of major companies is better than none — many may be frustrated by the selections and the editor’s failure to explain their rationale.
Although we are given 32 pages of the 1902 report, eight other years are given only between 8 and 14 pages each, and the modal year is allotted just 5 pages. The book includes extracts from only 39 years of the “first seven decades.” Thus, this is clearly not intended as a simply sourcebook for accounting historians.
However, without a clear reason for selecting some parts of the reports and rejecting others, any selections are arbitrary. The book is not a test or exploration of any explanations of U.S.
Steel’s reports. Its presupposition is that ” … a study of U.S. Steel’s annual reports is, in effect, a study of the best of financial reporting in the United States” [ibid]. This may explain the selections and the headline comments introducing each extract which focus exclusively on what the editor believes were “innovations” in accounting and presentational policies. The book appears to invite us to just sit back and watch the leaders at work.
The 1902 report is “commended for the very informative data it presented to the stockholders” [ibid]. For the remaining years we are given a brief selected chronology of major innovations: comparative figures, conservatism, production related depreciation, pension fund appropriations, basestock and lifo accounting, asset and liability reclassifications, extraordinary appropriations of income, the inclusion of public relations materials, replacement cost depreciation, straightline and accelerated depreciation, etc.
Few explanations are offered. The clearest is the reclassification in 1910 of accumulated depreciation as a contra asset for tax reasons. For some innovations (for example, its introduction of replacement cost depreciation in 1947) the only explanation offered is U.S. Steel’s “trailblazing.” For the majority of innovations we are simply reminded of the obvious effect — sometimes U.S. Steel used its accounting policies to lower its reported income, sometimes it used them to raise it — but the reasons, and their effects (real and imagined), are not discussed.
Accounting historians seek to explain accounting as the product of, and as a force within, the changing historical contexts in which it is practiced. The most important historical contexts of accounting are economic and political. Thus, to explain innovations in the annual reports of U.S. Steel requires that we attempt to understand to what extent they resulted from the economic and political contexts in which it operated. In this sense, not only is Milestones not a comprehensive sourcebook, it is also not an accounting history of U.S. Steel. Thus, in my opinion, while we have here a book which will be of some interest to accounting historians, its weaknesses will make this rather limited.
