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sesses little value, for they are prepared in secret, and they bear no certification in which the people place confidence.

Hence we say that the members of the accounting profession are vitally interested in the causes of this panic, and they have no right to be modest in their assertion of the public's need for their services. Publicity is the safe and conservative remedy for most corporate abuses. The certified public accountant is the authorized agent of publicity. Let popular discussion of this subject proceed until the people shall demand that the affairs of every public service corporation, of every bank, and of every insurance company shall be regularly examined by certified public accountants who are independent of the directors, if not also of the stockholders. Then the time will come when investors will demand equal publicity and the same trustworthy certification on the part of railroads and other corporations seeking to market their securities.

With regard to the future, no man can speak with confidence, yet there is good reason for believing that the depression incident to the money panic of 1907 will be short lived. Fortunately the present is an era of increasing gold supply and of rising prices. Since 1897 the average prices of commodities have risen over forty per cent. It is impossible that such an advance should go on unchecked. A temporary reaction was inevitable, for the high level of prices could not be maintained without a readjustment of wages, profits, and the costs of production. Apparently, the ensuing twelve months must be devoted to these processes of readjustment, but this prospect is not a matter for regret; indeed, for the accountant the coming year ought to be a busy and a profitable one, and when the task is finished, we have a right to expect that the trade and industries of the United States will again leap forward into a period of unexampled prosperity.

The Art of Budget-Making. For years the City of New York has given the world an object-lesson of how not to make a budget. We are going through the process to-day much as usual. All the departments have in the past sent in their estimates in lump sums, asking much more than they had any idea of obtaining, in anticipation of the “horizontal cut" they have come to expect. The taxpayer or the city official who really wanted to find out from the estimates how many people were to be paid in any one department, and at what rate, or what was set aside for supplies, could obtain no answer

to his question. The Board of Estimate and Apportionment gave a perfunctory hearing, and the heads of departments made their special pleas. Then it cut here and there, sometimes with reason, sometimes without, until it had reduced the total of the budget to the sum upon which it could agree as safe.

That a budget of approximately one hundred and fifty million dollars can be adopted in such a loose and haphazard fashion must appear to any foreign observer wholly incredible. His astonishment would surely be the greater on hearing that the department estimates, covering thousands of printed pages, are held almost as secretly as if they were private documents of the Department of State, and that the public is not allowed to participate in the hearings given to the departmental heads. He would at once explain that this method of making a budget is not only wholly unscientific, but is a direct incentive to waste and extravagence. It shows, moreover, that the real purpose of the budget—" to give the direct representatives of the people control over the administrative officers "-has been lost sight of.

Some of the principles of budget-making have just been set forth in THE JOURNAL OF ACCOUNTANCY by Dr. Frederick A. Cleveland, the technical director of the Bureau of Municipal Research, to which the eight adequately segregated estimates handed in this year are due. Extracts from this article we print elsewhere, for it deserves the widest circulation, particularly at this moment when the Charter Revision Commission is looking for suggestions as to ways and means of bettering our city government. Dr. Cleveland is strongly of the opinion that the development of the efficiency, economy, and fidelity demanded of officials is in the long run much more a matter of method than of men. If the acts of every official are recorded so plainly that even an inexpert citizen can understand them, responsibility is quickly fastened on the proper official. That so many acts of our officials never come to light is the reason why there are so many that will not bear inspection.

Correct information is, therefore, as Dr. Cleveland shows, the true basis for the control of an executive official. So far as the present "negative control" of the budget by the Board of Estimate is concerned, Dr. Cleveland shows that it may protect the tax-rate, but it neither rewards competence nor discourages inefficiency, and cannot so long as the Board is without the information upon which it can properly base an opinion or formulate a judgment. At the same time, though the present budget methods are quite archaic, it is extremely encouraging to know that there are easily obtainable new ways of allotting the city's expenditures, which, together with the publicity of an adequate City Record, and the enormous powers of inquest that already belong to the Commissioners of Accounts, will, when adopted, automatically provide a better and more scientific government than this city has hitherto dreamed of. This every one will concede, even though one cannot agree with Dr. Cleveland that sound methods of conducting the city's business are of greater importance than efficient and honest departmental heads.--The New York Evening Post, October 18, 1907.

The American Association of Public Accountants.


ANNUAL MEETING, OCTOBER 15, 16, AND 17, 1907, St. PAUL, Minn. For the information of those who were unable to attend the Annual Meeting held recently at St. Paul, and pending the issuance of a new Year Book and the printing of the full proceedings in THE JOURNAL OF ACCOUNTANCY, the officers of the American Association have issued the following summary of the more important features of the proceedings:

Monday, October 14. MORNING SESSION:

There was a special meeting of the Executive Committee for the purpose of disposing of the routine business. AFTERNOON SESSION :

A special meeting of the Board of Trustees was held for the purpose of considering the reports of officers and committees to be submitted to the general meeting and for the purpose of passing on applications for membership.

The public accountants of Louisiana were admitted to membership subject to the provisions (1) that they should form an unincorporated body, with the word “Certified” omitted from the title, composed of members of the incorporated society called “The Certified Public Accountants of Louisiana,” and (2) that such members of the Louisiana Society are eligible in accordance with the requirements of the Constitution of The American Association of Public Accountants. The membership of the Louisiana Society in the American Association is to date from the time the Society qualifies under these provisions.

Tuesday, October 15. MORNING SESSION :

The regular general meeting of the Association convened in the reception room of The Commercial Club, of St. Paul, at 10 o'clock. The President of the Association introduced Mr. Temple, President of the Minnesota Society of Public Accountants, who, on behalf of his Society, the host of the occasion, made an address of welcome and introduced a representative of his Excellency, the Governor of the State of Minnesota, his Honor, the Mayor of the City of St. Paul, and the President of The Commercial Club, all of whom made addresses of welcome.

The roll-call showed that all State societies, with the exception of Georgia and Michigan, were represented by delegates. A proxy from the Michigan Association of Certified Public Accountants was received after the Committee on Credentials had reported. In addition to the delegates there were a number of Fellows-at-Large and Associates-at-Large present. The regular meeting of the Board of Trustees was held, concluding the

consideration of matters brought before the special meeting of the Board the day before. AFTERNOON SESSION:

This meeting was devoted principally to the consideration of the reports of the Board of Trustees, Officers, and Committees. All of those presented to the general meeting will be published in detail in the next issue of the Year Book.

The report of the Committee on By-Laws was given immediate consideration. Numerous important changes were adopted. Among other things an amendment was passed to strike out the provision for semiannual meetings. There was also passed an amendment providing for an Arbitration Board for the purpose of considering differences between the State societies, members, etc.; and another providing for a standing Committee on Rules.

There was an appropriation of $3,600 made for the general use of the Association during the ensuing year.

The Minnesota Society entertained the members of the Association at luncheon, and at a reception in the evening at the St. Paul Commercial Club.

Wednesday, October 16. MORNING SESSION :

Mr. J. E. Sterrett (Penn.) presented a paper on “ Professional Ethics" (printed in full in THE JOURNAL OF ACCOUNTANCY for October). A discussion on the subject followed, participated in by Messrs. John Alexander Cooper (111.), Franklin Allen (N. Y.), Robert H. Montgomery (Penn), and Francis Gottsberger (N. Y.). Messrs. Sterrett and Cooper entered further into the discussion in regard to some points that had been brought out.

Following this there was an address on “The Certified Public Accountant Movement,” by Mr. Charles N. Vollum (Penn.).

A discussion on “Education and its Relation to Public Accountancy" was opened by Professor Joseph French Johnson, Dean of the New York University School of Commerce, Accounts, and Finance, and participated in by Professor John H. Gray, of the University of Minnesota; Mr. Seymour Walton (Ill); Professor S. W. Gilman, University of Wisconsin; and Professor W. H. Robinson, University of Illinois. There were also present Professor Robinson, University of Minnesota; Professor Heine, University of Iowa; and Professor Pierson, University of Pennsylvania. AFTERNOON SESSION :

There was an address by Mr. Thomas P. Ryan (N. Y.), on the subject of “The Accountant in the World of Affairs."

The reports of presidents of various State societies were presented, and, by resolution of the Association, the President was authorized in his discretion to print all or part of these reports in the proceedings.

A resolution was adopted authorizing a new special Committee on Federal Recognition.

There were present as guests of the Association:
The Dominion Association of Chartered Accountants represented

by its President, Mr. A. F. C. Ross, of Montreal.
The Association of Accountants in Montreal, also represented by

Mr. Ross.
The Institute of Chartered Accountants of Manitoba, represented

by Mr. W. Sidney Ronald, President, and Mr. W. A. Henderson,

Secretary. Mr. Ross responded to the welcome extended the Societies which he represented, and Mr. Henderson acknowledged the welcome extended to his Society.

Invitations were extended by Mr. Fowlie, President, on behalf of The Colorado Society of Public Accountants, to meet as the guests of that Society at Denver, Colorado, and by Mr. Vollum, on behalf of the Pennsylvania Institute of Certified Public Accountants, to meet as the guests of that Society at Atlantic City, New Jersey. The invitation of the Pennsylvania Institute to meet at Atlantic City was accepted.

The following officers and trustees were elected for the ensuing year: Elijah W. Sells (N. Y.), President; T. Cullen Roberts (N. J.), Secretary; H. T. Westermann (Mo.), Treasurer; Auditors: H. A. Keller (Ohio), Alexander E. Fowlie (Col.); Trustees to serve for three years: J. E. Sterrett (Penn.), J. P. Joplin (I11.), J. S. M. Goodloe (Ohio).

The following Honorary Members were unanimously elected: Professor Joseph French Johnson, New York University School of Commerce, Accounts, and Finance; Dr. Edward Sherwood Meade, Wharton School of Finance, University of Pennsylvania ; Professor David Kinley, Dean of the Graduate School, University of Illinois.

The Annual Banquet of the Association was held in the evening at the Hotel Aberdeen. Colonel Franklin Allen (N. Y.) presided as Toastmaster. The toasts were as follows: "The President of the United States," Hon. E. A. Jaggard; “The American Association of Public Accountants,” Herbert M. Temple; “The Public Accountant,” Adam A. Ross, Jr.; “The Public Accountant and the Banker,” George E. Roberts; “ Education of the Public Accountant,” Professor Ward W. Pierson, Professor John H. Gray; “The Public Accountant and the Lawyer in Commercial Enterprises,” Albert N. Eastman; “The Public Accountant from a National Standpoint,” Hon. Frank M. Nye, M. C.; “C. P. A. Legislation,” S. S. Gregory; “Accountants of Western Canada,” S. Sidney Ronald; "Our Guests," Theo. F. Smith; "The West,” Alex. E. Fowlie; “The Ladies,” Professor Joseph French Johnson.

Thursday, October 17. MORNING SESSION:

Trolley cars conveyed the members of the Association and guests to Minneapolis, where a meeting was held in the Mayor's reception room in the City Hall, a welcome being extended by a representative of his Honor, the Mayor. Acknowledgment was made, on behalf of the Association, by Mr. Thomas L. Berry (Md.).

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