rett emphatically endorse the movement for a broader education. Probably Mr. Sells, Mr. Miller and Mr. Carlson, though they have not expressed themselves on this particular point, would take the same attitude.

Dean Kinley throws out a suggestion that practitioners be graded into, say, three classes, accountants, expert accountants and certified public accountants, with corresponding examinations for each class. Mr. Sterrett and Dr. Meade advocate a modification of the same plan, namely, the establishment of two examinations, one preliminary and one final. This idea has already been put into effect in the new circular of the Pennsylvania State Board of Examiners reprinted on another page. Its practical workings will be watched with interest.

The editors of THE JOURNAL hope that one result of the symposium will be to stimulate a discussion of the present C. P. A. requirements. We submit that progressive opinion among accountants and educators favors broader and more searching examinations and longer study in preparation for the profession, and that this opinion ought to lead to action. If any reader of THE JOURNAL dissents from this conclusion or has any additional suggestions to offer, a statement of his views will be welcome.

Pennsylvania C. P. A. Examinations.

The Pennsylvania State Board of Examiners of Public Accountants has published a circular of information for the benefit of men preparing for the C. P. A. examinations in that State. It contains new rules for 1907. This is the most complete and illuminating circular of advice which any state board has thus far issued, and on that account we have deemed it worthy of reproduction in this issue of THE JOURNAL, hoping that the examining boards of other states will scrutinize it carefully and adopt its meritorious features.

The Pennsylvania rules provide for two examinations, a preliminary and a final. In addition to the preliminary examination the Board requires evidence that the applicant has a general education equivalent to that given by a public high school course of recognized standing. Candidates who cannot offer this evidence must pass a preliminary examination in high school subjects,

in bookkeeping and in the history of accountancy. The applicant must then register in the office of a certified public accountant and make preparation for the final examination either by private study, under the guidance of his employer, or in a recognized school of accountancy. Two years from the date of this registration, on presentation of satisfactory credentials from his employer, or from a school of accountancy, the applicant becomes a legitimate candidate for the final examination, which covers commercial law and general accountancy.

Under commercial law the circular describes in considerable detail the subjects of which the applicant must have a mastery. We note with satisfaction that these subjects include much more than a technical knowledge of the law. Under corporations, for instance, the circular states that the student is expected to be familiar with the history of the development of corporations, and have a thorough knowledge of the several kinds of corporations, the purposes for which they may be created, and the fundamental rules of law pertaining to their organization and incoporation, their powers, their management and their dissolution, and the rights and obligations of their stockholders. This means that the student must do more than examine text-books upon the law of corporations. He must be familiar as well with the financing and re-organization of corporations. A student must also have more than a general knowledge of bank accounting. He must know the National Bank Act and the laws in Pennsylvania with regard to State and savings banks and trust companies. All this information is only what the certified public accountant should possess, and the Pennsylvania Board of Examiners deserve the gratitude of the profession for having explicitly stated that henceforth their examinations in commercial law will demand of the student a thorough and profound knowledge of commercial and financial institutions.

We note with pleasure that the Board of Examiners, under the head of general accounting have included much more than bookkeeping. A man who has merely a genius for the solution of puzzles will not be able to pass the Pennsylvania examinations if the examiners set their questions in accordance with the provisions of this circular. Under accounting, for instance, we find such subjects as the following included: Principles of Insurance, Foreign Exchange, Clearing Houses, the Organization and Ad

ministration of Insurance Companies, Factories, and Transportation Companies. In fact, a man cannot pass these examinations in general accounting unless he has made a comprehensive study of business organization and administration.

It is to be hoped that the Pennsylvania examiners will live up to the rules which they have laid down in this circular. It is an official recognition of the fact that the profession of accountancy is based upon the Science of Business, and that bookkeeping is merely the convenient tool of its application.

An admirer of Mr. Whitmore's articles on Cost Accounting takes us to task for publishing an adverse criticism in the December number. He calls this criticism an “outrageous attack on Mr. Whitmore." We feel quite sure that Mr. Whitmore does not consider himself attacked; on the contrary, we have no doubt he is glad to have his views submitted to the test of discussion. As for Mr. Whimore's articles on Cost Accounting, THE JOURNAL is satisfied to let them stand on their merits, and they have plenty to stand on. Every contributor to THE JOURNAL is liable to be criticised. Any accountant who has views not in accord with those expressed in THE JOURNAL, if he can express them intelligently, will be welcome as a contributor. It is the business of THE JOURNAL to bring to light every side of the question wherever differences of opinion are possible.

An effort will be made during the present session of the General Assembly of the State of Illinois to secure the enactment of a law providing that State banking examiners must possess the qualifications of certified public accountants. It is not proposed that the examiners shall be certified public accountants, but that they shall pass examinations in all important respects equivalent to those set by the C. P. A. Board of Examiners. It is also proposed to place bank examiners upon a civil service basis, so that neither their appointment nor discharge may be due to political reasons. Nothing may come of this measure, but it is a bill which deserves the hearty support of the accountancy profession. If the states begin to require expert knowledge on the part of bank examiners there will be reason to hope for improvement in the institution of national bank examiners.

Reviews of Corporation Reports.

Conducted by THOMAS WARNER MITCHELL.

Corporate control is of three kinds, viz.: (1) the control exercised by the stockholder, (2) the control exercised by the board, (3) the control exercised by the officer. The purpose of accounts and reports is to make control intelligent. Do the reports rendered to stockholders contain such information as will enable them to exercise intelligent judgment with respect to the fidelity, efficiency and economy of corporate trustees and agents? This is the viewpoint of criticism and analysis appearing in this department of THE JOURNAL.

The Reports of the Union Pacific Railroad Company.

The reports of the Union Pacific Railroad Company are of especial interest to the general public just now. They belong, in so far as the volume of information is concerned, to the most advanced type of American railroad reports. While it is not the purpose of this article to comment upon the recent increase in the dividend on Union Pacific common stock, the ability of the company to maintain this higher rate of dividend will appear incidentally in the following analysis.

These reports include the combined operations of the Union Pacific Railroad Company proper, the Oregon Short Line and the Oregon Railway and Navigation Company, representing 5403.55 miles of railway, and the water traffic carried on by the last named company. The income statement for each year is presented in an admirable form. Prior to 1906 this consisted of three parts, viz.: first, an income account, showing on one side the gross earnings and income from stocks and bonds owned, rentals, etc., and on the other the operating expenses, taxes and other fixed charges, and exhibiting the net income for the year, available for dividends; second, an appropriation of income account, showing the purposes for which the net income was used, namely, dividends, betterments and additions, etc., and the surplus income for the year; third, the profit and loss (or surplus) account, which showed the unusual profits from the sale of securities, lands, etc., or losses in premiums and discounts paid on bonds, and also the total surplus to the date of the report.

The report for 1906 presents the income statement in a slightly altered form, suggestive of the contemplated increase in the common stock dividend. The first section is entitled "Income from Transportation Operations." One side includes merely the "gross transportation receipts," while the other exhibits not only the operating expenses and fixed charges, but the customary appropriations for dividends as well, namely, 4 per cent. on Union Pacific preferred, 6 per cent. on the common stock, and 4 per cent. on the Oregon Railway stock outstanding, which is very small in amount. The second section is headed "Income other than from Transportation Operations." One side states the income received from rentals, interest on bonds owned, and on loan and open accounts, and, especially to be noted, dividends on corporate stocks owned—the last item amounting to $7,237,916.67 for the year-and in