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Municipal Research.

By William H. ALLEN, Secretary, Bureau of Municipal Research. Only a pessimist will believe that the day is past for the pioneer. It is true that America has been discovered and that the law of diminishing returns long since began to operate in the gold fields of California, the wheat fields of the Northwest and the oil wells of Pennsylvania. It is also true that there is less opportunity to-day than ever before for adventure of the story book type. But to young men capable of thrilling with excitement when confronted with new problems to solve and new ideas to work out, I wish seriously to recommend a substitute for the North Pole—the unexploited field of municipal accounting and municipal business.

Present accounting methods in American municipalities cannot be called exactly thrilling. In fact, inefficiency and " honest graft " are so easy that they have ceased to be interesting. Municipal bookkeepers, inspectors, accountants, auditors and department heads may not entirely have lost interest in life, but, generally speaking, they have a bored, world-weary expression that raises doubt as to the worthwhileness of their official existence. Some of the lethargy, inertia, and ennui can, it is true, be attributed to civil service protection. But the greater part of the distaste for activity and of the cynicism found in public offices is due to failure of those who keep accounts to comprehend their possibilities.

Specific opportunities are suggested by several cities at the present time.

Boston has for months been undergoing a special investigation by a Finance Commission which has shown that Boston's culture has not prevented inefficiency and dishonesty in city government. Less than a year ago, I heard two statisticians of national reputation congratulating Boston that it had been well administered for over fifty years and had never had a scandal. While the Finance Commission has as yet sent no one to jail, it has discovered favored contractors, padded payrolls and perverted funds that indicate wrong greater, because more persisting, than is generally associated with scandals. The mayor of Louisville and the chief of police of Newark have recently blown out their brains because the public was informed of facts that municipal research might have made matter of universal knowledge long before, or better still, might have made impossible. San Francisco's mayor has been in jail for causes that proper accounting should have removed. New Rochelle, a town of 30,000, advertises a deficit of $305,000 and "$92,000 illegally diverted.” Holyoke, a town of 46,000, (unable to vote money enough for schools and for health) has been paying $3.50 for monkeywrenches, $15 for 450 countersinks, and $12.50 for 88c oil stoves.

The city of New York is spending annually from three to four hundred million dollars in routine administration and in construction. It has several departments, the transactions of which exceed in accounting interest and complexity those of almost any large business enterprise not yet adequately organized. In addition to its accounting problems, the business of municipalities deals with political problems, social questions, education and constructive statesmanship.

It is safe to say that over half the cities in the United States to-day are either ready now for expert leadership in business methods, or could with little effort be interested in the need for reorganization along business lines. Everywhere, cities, large and small, are discovering the need for charters better suited to work that communities want to do for themselves. Everywhere, charters have been misfits because they are made out of other charters or theories of government instead of being fitted to the individual community's particular work and particular needs. Charter making, like budget making, has been unbusinesslike, simply because the men with a social point of view have lacked the accountant's point of view, and because accountants have failed to apply to cities principles they have successfully worked out in business enterprises.

As for reformers, they have been interested in the personalities of government rather than in its acts or in definite community needs.

To divert attention from men to methods, the Bureau of Municipal Research was organized in 1907 with a program which was defined in its charter of 1907 as follows: (1) To promote efficient and economical government; (2) to promote the adoption of scientific methods of accounting and of reporting the details of municipal business, with a view to facilitating the work of public officials; (3) to secure constructive publicity in matters pertaining to municipal problems; (4) to collect; (5) to classify; (6) to analyze; (7) to correlate; (8) to interpret; (9) to publish facts as to the administration of municipal government.*

How different its method from the volcanic eruptions of enthusiasm or scandal, and how serviceable the accountant's training, can be seen from the various steps in the Bureau's method of investigation: Confer with the official responsible for the municipal department or social conditions to be studied; secure promise of coöperation, and instructions that direct subordinates to coöperate with the Bureau's representatives; examine original records of work done and of conditions described; compare function with accomplishment and expenditure as to each responsible officer, each class of employee, each bureau or division; verify reports by usual accounting and research methods and by conferences with department and bureau heads; ascertain how the powers and duties (and other materials of research) are distributed; supervise work in progress; hold frequent conferences with supervisors and directors as to method of investigation and as to significance of facts disclosed; cooperate with municipal officials in devising remedies so far as these can be effected through change of system; make no recommendations as to personnel further than to present facts throwing light on the efficiency or inefficiency of employee or officer; submit in printed form suggestions not easily understood when orally given and not readily conveyed by typewritten statements; prepare formal report (after conference among trustees and after editing by committee on reports) to department heads, city executive officers and general public; support press publicity by illustrations, materials for special articles, suggestions to editors, to city officials, and to reporters; follow up educational work until something definite is done to improve methods and to correct evils disclosed; supply freely verifiable data to agencies organized for propaganda and for legislative, agitative or "punitive work; try to secure from other departments of the same municipality and from other municipalities the recognition and adoption of principles and methods proved by experience to promote efficiency.

Every one of these steps requires elements that schools of accounting are also seeking to develop in their students. The

Trustees : Prof. E. R. A. Seligman, Chairman; Frank Tucker, Vice-Chairman; R. Fulton Cutting, Treasurer; Richard Watson Gilder, George McAneny, Albert Shaw, Carroll D. Wright. Administrative Council: Henry Bruere, Director; F. A. Cleveland, Technical Director, W. R. Patterson, R. E. Miles, P. C. Wilson, and the Secretary.

foremost accounting houses put at the head of their large engagements men who must assume toward their clients the attitude assumed by the Bureau's experts in dealing with both city officials and the public. The difference in the two fields is rather one of the social, larger purposes of municipal research whose client is not an individual, a class or an industry, but a community of individuals, industries and classes seeking to work out a form of self-government in the interest of all the governed. The accounting in private business undertakes to organize records and accounts that will tell business heads where the machinery of business breaks down, where it needs strengthening or replacement. The municipal accountant should try to work out, devise and install records that will tell just where the community treatment of cummunity needs, common acts and common properties is not such as to give equal benefits for those who constitute the community

The accountant is tempted to overestimate the importance of accounts and to underestimate the importance of service records. An accounting system may be perfect, but unless those who read its story know what the money bought, both graft and incompetence may thrive. This fact suggests another temptation of the accountant, to underestimate the value of periodical reports to the public set up in such a way as to emphasize discrepancies and needs. For example, one of the Bureau's studies was "How Manhattan is Governed." The borough office was disorganized, unequipped with any modern business methods. Unnecessary men were carried on the payrolls; it was not even known whether men were on duty; trust funds were diverted; the law was evaded that restricts open market contracts to sums of less than $1,000. So much an accountant could have discovered; but the city could not have been protected against any of these evils by the mere introduction of a perfect system of accounts unaccompanied by a system of records of goods bought and of days spent at work. For example, it was not enough to charge in a proper way $900 for an invoice of hose; it was necessary to know that only $160 worth of hose was purchased. When the result side of expenditure was checked up, it was found that the Borough President had been authorizing open market purchases from a dummy supply company, that made profits from thirty to one thousand per cent. Itself without a business, its only capital a favorable acquaintance

with the borough president's office, this particular supply company could make $80 on a $60 rug, by merely transferring to its own bill head an invoice from a department store. Accounting, alone, could never have learned that Manhattan was paying $3.85 for each coat-hook hung in its comfort stations. The combination of accounting records and service records, which is known in the accounting world as cost accounting, led to the removal of the Borough President by Governor Hughes for gross incompetency.

Never before had a high official used his power to enforce a proposition which, universally applied, would open a ready market for the 1,000 efficient accountants called for in my title: While the majority may elect an officer, they are not entitled to insist, nor can it be assumed that they desire to insist, upon improper administration, or upon the retention in office of one who fails to do his duty.

In other words, a premium has been placed upon official conduct that when recorded and openly published will bear testimony to efficient as well as to honest administration,

Within a short time, the methods of the Bureau of Municipal Research, prosecuted constantly and on a large enough scale to carry conviction, have led to fundamental changes in New York City :

1. The city is committed to a classified functional budget, showing clearly for what purposes each department is seeking funds and restricting to the purposes advertised in advance of appropriation, the use of funds after appropriation. There is to be no more robbing of Peter to pay Paul; no more watering of estimates for popular purposes and shrinking of estimates for unpopular purposes before the budget is voted, and the transferring from popular to unpopular after public attention is diverted.

2. Comptroller Metz has adopted a system of uniform accounting for all municipal departments. This system has been formally and critically studied by three accounting firms after submission by a conference committee of representatives of the Bureau and of the department of finance.

3. Reorganization from top to bottom of the business methods of the comptroller's office is under way. After the segregated budget and uniform functional accounting system were adopted,

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