Accounting History

Reforms to the British navy’s estimates for 1888—9 radically changed the way that budgetary information was presented to parliament. Motivated by a desire to facilitate efficiency judgments about public expenditure, in the new-style estimates expenditure was classified according to object or purpose rather than on the basis of the traditional subjective categorizations. These reforms were instituted, in the face of strong Treasury opposition, almost as a fait accompli, by Mr Arthur Forwood (later Sir Arthur Forwood, Bt), Parliamentary and Financial Secretary to the Navy, supported by his senior minister, Lord George Hamilton, First Lord of the Admiralty, both of whom possessed unusually advanced ideas about public-sector efficiency and management. The article examines the background to and nature of the reforms and the unusual dynamics of the reform process, as well as attempting to ascertain their wider place in the history of governmental budgeting and accounting.

The experience of one man, Isaac Henderson, provides the lens through which this study examines the operation during the Civil War of the federal expenditure control system of the USA. This system’s requisitioning, disbursing and auditing activities cannot be disentangled from the patronage system and profiteering that inevitably accompany war. Surging activity levels brought on by the war only aggravated the existing weaknesses. Rigidities, redundancies and formalities within the Treasury Department delayed disbursement processing and the subsequent auditing of those disbursements. Clerks who approved disbursements also audited the same disbursements. The focus on appropriation accounting — rather than on information for planning and control purposes — reflected the view that controls existed primarily to assure Congress and the public that money was spent in conformity with laws and regulations. Improper charges were sometimes intentionally placed against appropriations with available balances. Thus the most significant contribution of the federal expenditure control system may well have been to help legitimize wartime spending to Congress and the American people.

From 1861 to 1865, the Louisville and Nashville Railroad suffered cruelly from Civil War actions along its entire length. The railroad’s annual reports from this era left a chronicle of the destructive nature of war and its effect on the economic fortunes of the business. These reports show the resilience of the company for its ability to both plan for and cope with the depredations inflicted by the war. They also provide an excellent look at the procedures developed by the railroad to account for the extraordinary business situations brought on by the physical and economic losses of war. These inventive procedures maintained the institutional integrity of the railroad and eventually would be the foundation for some modern accounting procedures for troubled companies.

The relationship between government and the military is examined through the use of cost-benefit analysis (CBA) statements included in correspondence related to building the Rideau Canal. Discourse analysis is used to identify and evaluate CBA statements. CBA statements are used for rhetorical, technical and reporting purposes. Rhetorical uses of CBA predominate in the period leading up to the construction of the Rideau Canal. CBA as a tool for decision-making of a technical nature is common during the construction of the canal. CBA serves both rhetorical and technical purposes in progress reports. Patterns in the use of CBA in correspondence between government and military are also analysed and reveal a number of communication channels where communication using CBA statements between government and the military is either common or is lacking.

In “Genealogies of Calculation”, Miller and Napier (1993) engaged with the alternative boundaries of calculation beyond traditional accounting histories. This was justified because not all forms of calculation are to be found in accounting. The removal of this accounting limitation encouraged investigation into other calculative technologies in order to widen the accounting history agenda. This challenge is now taken up through the genealogical examination of the mutation of political arithmetic into statistics and then as accounting statistics as employed by the British military and its relationship with the British brewing industry. In particular, the focus is on the work of Colonel William Henry Sykes, a seminal member of the early Victorian Statistical Movement with his statistical accounting analysis of the British and French Armies of 1864 and later employment of this technique in the financial management of the Bass Rifle Volunteers.