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been a fraudulent conversion of assets, the evidence is put in possession of a prosecuting attorney and the merchant is prosecuted. The purpose of the Committee is not to make collections but to prosecute the guilty.

At the meeting of 1898 a series of resolutions was passed which provided for the employment of attorneys to investigate and prosecute frauds. Provision was also made for urging the local associations to report all cases of failures, whether fraudulent or not, to the Investigation Committee of the National Association. It was made the duty of this committee to investigate the debtor's commercial record, presenť affairs, character, and capacity, so as to make recommendations to the involved creditors as to a reasonable compromise if the debtor was honest, and the extension of such aid as would enable the debtor to continue in business.

In 1899 after the National Bankruptcy law was passed a plan was submitted by the National Secretary to the local associations for discussion at their meetings. The plan provided for the submission of all offers for the compromise of indebtedness to the Investigation Committee of the State and National Associations, and creditors were pledged to refuse offers of compromise until the investigation by the constituted authorities should take place. The spirit, if not the letter, of this plan was later carried out. A fund was voted to be used in the investigation and prosecution of fraud, and individual creditors were pledged not to accept compromise offers of settlement.

The difficulties involved in carrying on the work of investigation and prosecution by the National Association were seen to be almost insurmountable, and the Board of Directors of the National Association at their meeting in 1903 decided to abandon operation under the investigation and prosecution funds as far as new cases were concerned. The National Association, however, the following year instructed the directors to reorganize the Investigation and Prosecution Bureau as an adjunct to the national work, and recommended “ that a trust fund of $50,000 be raised with which to equip and maintain the bureau.”*

The secretary-treasurer immediately sent out communications to the local associations to obtain opinions on the proposed plan with reference to the collection of the fund. The plan suggested

• Resolution of National Association 1904. Bulletin June, 1905.

did not meet with approval of the local associations, and the Board of Directors, at its next meeting, decided to abandon the project. They recommended that the work be taken up by the local associations in their respective districts, and that the costs of investigation and prosecution be borne by the association or associations interested. This seems to have been the best way of disposing of the matter, as the local associations can organize much more effectively to investigate and prosecute cases in their own district than a committee or bureau of the National Association could handle the cases arising in all parts of the country and where they were naturally but little familiar.

The Committee on Credit Coöperation was organized in 1904. It was not thought advisable to establish a credit exchange bureau, but desired that there be a greater interchange of ledger experience among members of the association. The committee appointed limited itself to advocating a large degree of interchange of information and this committee was retained for 1905. Many local associations have credit exchange bureaus, and the following trades are organized for credit exchange: Jewelers' National Board of Trade, the National Association of Clothiers, the Electric Trade Association of the Pacific Coast, the Merchants' Credit Association of California, the Stationers' Board of Trade of New York, the Hardware Board of Trade of New York, the Crockery Board of Trade of New York, the Lumbermen's Trade Association, the Glass Dealers' Protective Association, the Manufacturers' and Dealers' Protective Association, dealing with plumber materials, and the New York Paint and Allied Trade Association.*

The Committee on Fire Insurance recently installed as a working body of the National Association of Credit Men is limiting itself to devising means of learning of debtors who have not adequate life insurance with a view of urging upon them the necessity of insuring.

* Monthly Bulletin Nat. Assoc. Credit Men, June, 1905, p.83.

The Journal of Accountancy

Published monthly under the auspices of The
American Association of Public Accountants

EDITOR
JOSEPH FRENCH JOHNSON

ASSOCIATE EDITOR
W. H. LOUGH, JR.

SUBSCRIPTION PRICE_$3.00 a year; single numbers, 25 cents; post paid to any address in the United States. Foreign subscriptions, including those in the Dominion of Canada, $3.50 a year; single copies, 30 cents.

ADVERTISING RATES—$30 a page ; all other spaces in proportion; special positions when open, 25 per cent. additional. Rates for classified advertisements appear under that heading.

THE JOURNAL is Published by the Accountancy Publishing Company, at Thirty-two Waverly Place, New York City. Secretary and Treasurer, THOMAS CULLEN ROBERTS.

EDITORIAL.

The Twentieth Annual Meeting. In many respects the Annual Meeting of the American Association of Public Accountants held at St. Paul, October 15-17, was the most interesting and enjoyable meeting ever held by the Association. The local committee on arrangements deserve great credit for the success of the meeting. The program furnished a most judicious combination of pleasure and business.

The December issue of THE JOURNAL will contain a full report of the proceedings of the meeting, of the papers and discussions, and of the responses to toasts at the banquet. The papers and discussions were all of such high order that accountants everywhere will be glad of the opportunity to read them. The most notable paper was that by Mr. Joseph E. Sterrett on “ Professional Ethics,” which was published in the October JOURNAL. The discussion of this subject was participated in by Col. Franklin Allen of New York, Mr. Seymour Walton of Chicago, Mr. R. H. Montgomery of Philadelphia, and Mr. John A. Cooper of Chicago. Mr. Vollum of Philadelphia held the close attention of the delegates with a paper in which he argued for the restriction of the

privilege of membership of the Association to certified public accountants.

The Association was fortunate in having secured the attendance of representatives of several leading universities. Their presence suggested the importance of an educational discussion. This was led by Dean Johnson, of the New York University School of Commerce, and was participated in by Professors Gray of the University of Minnesota, Gilman of the University of Wisconsin, and Robinson of the University of Illinois. Each speaker had something fresh and interesting to say on the education of the public accountant.

The routine business of the meeting was transacted with dispatch, and no unnecessary friction. Mr. Sells was re-elected to the office of President, and Mr. Roberts to the office of Secretary, Mr. Kennedy having declined to serve again as treasurer, the office was filled by the election of Mr. Westermann of St. Louis.

Denver made a strong bid for the Twenty-first Annual Meeting, but the feeling was general among the delegates that next year's meeting should be held in the East, and Atlantic City was agreed upon.

New York's Panic. New York City has had one of the craziest, most spectacular panics ever recorded in the annals of finance. Within three days the banks of the city lost over $12,000,000 in cash, much of which found its way into the boxes of safety deposit vaults. During the greater part of the week ending October 26 long lines of frightened depositors besieged the doors of two trust companies, paying no heed to assurances, official and unofficial, that their money was safe. One large trust company suspended payment, and several small banks in Brooklyn and Harlem closed their doors. The situation became so critical toward the end of the week that the clearing house banks of the city provided for the issuance of clearing house loan certificates.

Accountants are vitally interested in both the causes and effects of this panic. It was characterized by the sudden collapse of the credit system in New York City, and at one time the mercantile and banking credit of the entire country seemed in danger. As Mr. George E. Roberts pointed out in his address before the delegates at St. Paul, the solidity of credit depends very much

upon the kind of work done by accountants. If their work is inadequate or faulty, miscalculations on the part of business men result, and sooner or later panic is inevitable. There is certainly no evidence that the practicing accountants of this country are in any way responsible for the October panic, yet we are confident that the panic might have been averted, or that the conditions making for panic would never have existed, if the various business interests of the United States had made during the last five years proper and adequate use of the accounting profession

This panic was due largely to ignorance and to the unreasoning fear which is always born of ignorance. For several years the great corporate interests of this country have been the victims of indiscriminate assault and criticism. Demagogues of high and low degree have publicly charged that the people were being robbed by managers of banks, insurance companies, railroads and industrial combinations. Investigations of certain companies brought to light facts which seemed to justify the wholesale denunciation of business methods. Prominent men predicted disaster if the investigation mania were not checked. Others declared that the great prosperity of the country could not possibly last, and pointed to the high rates of interest as evidence that capital had taken alarm and was withdrawing from the support of enterprise. All these events and sinister prognostications had their effect on the popular mind, so that when a clique of speculators failed in a rash attempt to corner the market for a copper security, hysteria seized upon bank depositors and panic was the result.

It must be clear to any unprejudiced person that the blind and unreasoning forces of such a panic could not have been brought into existence if the people could have had positive knowledge about business conditions. The majority of corporations in this country are honestly managed. The great bulk of the $10,000,000,000 deposited in our banks is more than offset by investments of permanent value, and these investments are closely watched by experienced and conscientious bankers. Speculative transactions in this country, large as they seem when viewed in isolation, are insignificant in comparison with the total of genuine and legitimate business operation. Unfortunately, these are truths which cannot be demonstrated. We have, to be sure, the reports and balance sheets of banks, railroads, and insurance companies, but with the common people the evidence of these documents pos

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