Editorial

This special issue of Accounting History Review is dedicated to the memory of Malcolm Anderson. It commences with a memorial to Malcolm which celebrates his academic career and is followed by a series of research articles written by some of Malcolm’s friends and colleagues.¹ Indeed, all the authors contributing to this special issue had a close connection with Malcolm through joint research, the production of AHR or its predecessor, Accounting, Business & Financial History, or arising from the annual conference that he helped to organise in Cardiff.

In the first main article, Stephen Walker builds on prior research conducted in collaboration with Malcolm to explore the ethical and moral boundaries of the British accountancy profession at a time when accounting societies were formed to help organise and raise the status of their members. The particular focus of attention is the ethical behaviour of David Chadwick, a major contributor to the organisation of the accounting profession in England. Chadwick was also a Member of Parliament and in 1880 he was accused and found guilty of bribery by a Royal Commission into corrupt practices during elections. Walker examines possible explanations for apparent disinterest in the Commission’s findings on the part of the accounting bodies to which Chadwick belonged. An important conclusion is that, in late Victorian Britain, bribery, though a criminal act, remained outside the moral boundaries of the accounting profession.

In 2009, following growing concern over the increasing inequality of wealth and income in British society and the decline in upward social mobility, a panel was set up, chaired by Alan Milburn MP, to study access to the professions. Derek Matthews’ study of social mobility within the accounting profession focuses on the membership of the Institute of Chartered Accountants in England and Wales. Key aspects of Milburn’s findings are reviewed based on responses to a postal questionnaire sent to a sample of the membership qualifying in the 1930s and in each of the following seven decades. Matthews shows that, historically, the ICAEW has always had a significant proportion of members from the lower middle and working classes. Recent decades have nevertheless witnessed an increase in the proportion of entrants from the upper middle class and a decline in those from the lower classes. This was not due, as often posited, to educational changes such as the decline of the grammar schools or the rise of the graduate profession. Instead, it is attributed to the increased dominance of the largest accounting firms, which have always tended to take on trainees from higher social backgrounds.

Yannick Lemarchand’s paper builds on previous work by Boyns, Edwards, and Nikitin (e.g. 1997) and by himself (Lemarchand 2016) to better explain the following paradox: whereas firms implemented industrial accounting later in France than in Britain, a specialised literature appeared much earlier in the former country. In so doing, Lemarchand studies the cultural and institutional element which played a decisive role: the progressive affirmation of an intellectual movement – industrialisme – characterised, from the last quarter of the eighteenth century, by a new attitude of intellectual élites vis-à-vis scientific and technical knowledge, their applications and their dissemination. Lemarchand’s review of French nineteenth-century accounting literature detects a second paradox: the publication of more books on agricultural accounting than on industrial accounting. Here, again, the intellectual and institutional context proves a decisive historical explanation.

Trevor Boyns and Fabrizio Cerbioni also venture to mainland Europe to examine the accounting system of a firm born in Tuscany, in 1818, to harness the region’s natural resources – its steam springs and associated lagoons – to manufacture boric acid. The system of double-entry bookkeeping employed at Larderello between 1836 and 1858 is explained in terms of the nature of the business, its organisational structure and its market environment. The potential origins of the accounting system developed at Larderello are explored and compared with developments elsewhere in Europe during the first half of the nineteenth century.

Companies Acts passed in 1844 and 1855 facilitated the formation, in Britain, of the limited liability company that is today the dominant type of business organisation. The Kingston Cotton Mill Company was one of the first to be registered under the 1844 Act and, as it grew in size, witnessed a growing divorce of management from ownership. This led to concerns, both at the level of the state and individual companies, of how to tackle issues which are today captured under the umbrella term ‘corporate governance’. Roy Chandler’s case study is designed to improve our understanding of corporate governance in Britain during the second half of the nineteenth century – a period which saw an explosion in the number of limited companies and when key features of modern financial reporting practices were established (Yamey 1960; Bryer 1993) – by studying arrangements for audit and accountability put in place by the directors of the textile company based in Kingston-upon-Hull.

John Richard Edwards also focuses on aspects of corporate accountability in late-nineteenth century Britain. His paper comprises an in-depth study of the archives of a major industrial enterprise – the Staveley Coal and Iron Co. Ltd – to improve our understanding of how an early limited liability company, whose shares were listed on the stock exchange, tackled the challenging question of how best to account for the erosion of fixed assets. The study is contextualised through a review of the contemporary relevant literature penned by accountants, businessmen and engineers, who agreed on the need to allocate depreciation in ‘the fairest possible manner … in order to state as accurately as possible the net profit earned in each year’ (Dicksee 1903, 226). At Staveley, the depreciation question generated widespread discussion and disagreement both among and between the company’s directors, auditors and its consulting engineer. It is discovered that early attempts to account for the deterioration of fixed assets in a systematic manner soon gave way to a more flexible treatment – i.e. the subordination of the amount of the charge to corporate profitability – that the existing literature suggests remained common practice for much of the first half of the twentieth century.

Notes

1. In accordance with journal policy, the initial submissions were sent to two anonymous referees. After revisions and editing, the final manuscripts accepted by the editors appear in this issue.