The construction of cost accounting systems in Britain to 1900: The case of the coal, iron and steel industries

Business History

Volumn 39, Issue 3, 1997, Pages 1-29

  Boyns, Trevor ^a   Edwards, John Richard ^a  

^a UNIVERSITY OF WALES   (United Kingdom)

Author keywords

[No Author keywords available]

Indexed keywords

ACCOUNTING SYSTEM; COST ACCOUNTING; DOCUMENTARY SOURCE; HISTORICAL STUDY; INDUSTRIAL HISTORY; NINETEENTH CENTURY;

UK;

EID: 0031473411     PISSN: 00076791     EISSN: 17437938     Source Type: Journal    
DOI: 10.1080/00076799700000097     Document Type: Review

References (138)

1. We are grateful to the Economic and Social Research Council (grant ref. No. R000233749) for financial support for this research and to Mike Jones and participants at the Accounting, Business and Financial History Conference, Cardiff, September 1994, for comments on earlier drafts. We would also like to express our thanks to Geoff Jones and the two anonymous referees for comments which have helped clarify certain points. The usual disclaimer applies.
2. The term 'cost accounting' is used in this paper, except where the context indicates a wider application, to denote the application of costing techniques to industrial processes within the framework of double entry bookkeeping.
3. D. Solomons, 'The Historical Development of Costing', in D. Solomons (ed.), Studies in Costing (London, 1952), p 17.
4. Ibid.
5. The use made of these records is not explicitly addressed in this paper.
6. J.F. Wilson, British Business History, 1720-1994 (Manchester, 1995).
7. R.S. Edwards, The Rationale of Cost Accounting', Accountant Vol.lxxxxvii (1937), pp.389-90; R.S. Edwards, 'Some Notes on the Early Literature and Development of Cost Accounting in Great Britain', Accountant, Vol.lxxxxvii (1937), pp.193-5, 225-31, 253-5, 283-7, 313-16 and 343-4 (this series of articles is reproduced in T. Boyns, M. Anderson and J.R. Edwards (eds.) British Cost Accounting 1890-1952: Contemporary Essays from the Accounting Literature (London and New York, 1996).
8. R.S. Edwards, The Rationale of Cost Accounting', Accountant Vol.lxxxxvii (1937), pp.389-90; R.S. Edwards, 'Some Notes on the Early Literature and Development of Cost Accounting in Great Britain', Accountant, Vol.lxxxxvii (1937), pp.193-5, 225-31, 253-5, 283-7, 313-16 and 343-4 (this series of articles is reproduced in T. Boyns, M. Anderson and J.R. Edwards (eds.) British Cost Accounting 1890-1952: Contemporary Essays from the Accounting Literature (London and New York, 1996).
9. R.S. Edwards, The Rationale of Cost Accounting', Accountant Vol.lxxxxvii (1937), pp.389-90; R.S. Edwards, 'Some Notes on the Early Literature and Development of Cost Accounting in Great Britain', Accountant, Vol.lxxxxvii (1937), pp.193-5, 225-31, 253-5, 283-7, 313-16 and 343-4 (this series of articles is reproduced in T. Boyns, M. Anderson and J.R. Edwards (eds.) British Cost Accounting 1890-1952: Contemporary Essays from the Accounting Literature (London and New York, 1996).
10. Solomons, 'The Historical Development of Costing'.
11. J. Collins, The Perfect Method of Merchants-Accompts Demonstrated (London, 1697); J. Dodson, The Accountant, or, the Method of Book-keeping, Deduced from Clear Principles, and Illustrated by a Variety of Examples (London 1750); W. Thompson, The Accomptant's Oracle: or, Key to Science, Being a Compleat Practical System of Book-keeping (York 1777); R. Hamilton, An Introduction to Merchandize (Edinburgh, 1788); F.W. Cronhelm, Double Entry by Single, a New Method of Book-keeping, Applicable to all Kinds of Business (London, 1818); G. Jackson, A New Check Journal (London, 5th edn., 1836); F.C. Krepp, Statistical Book-keeping: being a Simplification and Abbreviation of the Common System by Double Entry, for the Use of Merchants, Bankers, Tradesmen, Manufacturers (London, 1858); J. Sawyer, A System of Book-keeping, Drawn Up for and Expressly Adapted to the Tanning Trade (London, 2nd edn., 1862).
12. J. Collins, The Perfect Method of Merchants-Accompts Demonstrated (London, 1697); J. Dodson, The Accountant, or, the Method of Book-keeping, Deduced from Clear Principles, and Illustrated by a Variety of Examples (London 1750); W. Thompson, The Accomptant's Oracle: or, Key to Science, Being a Compleat Practical System of Book-keeping (York 1777); R. Hamilton, An Introduction to Merchandize (Edinburgh, 1788); F.W. Cronhelm, Double Entry by Single, a New Method of Book-keeping, Applicable to all Kinds of Business (London, 1818); G. Jackson, A New Check Journal (London, 5th edn., 1836); F.C. Krepp, Statistical Book-keeping: being a Simplification and Abbreviation of the Common System by Double Entry, for the Use of Merchants, Bankers, Tradesmen, Manufacturers (London, 1858); J. Sawyer, A System of Book-keeping, Drawn Up for and Expressly Adapted to the Tanning Trade (London, 2nd edn., 1862).
13. J. Collins, The Perfect Method of Merchants-Accompts Demonstrated (London, 1697); J. Dodson, The Accountant, or, the Method of Book-keeping, Deduced from Clear Principles, and Illustrated by a Variety of Examples (London 1750); W. Thompson, The Accomptant's Oracle: or, Key to Science, Being a Compleat Practical System of Book-keeping (York 1777); R. Hamilton, An Introduction to Merchandize (Edinburgh, 1788); F.W. Cronhelm, Double Entry by Single, a New Method of Book-keeping, Applicable to all Kinds of Business (London, 1818); G. Jackson, A New Check Journal (London, 5th edn., 1836); F.C. Krepp, Statistical Book-keeping: being a Simplification and Abbreviation of the Common System by Double Entry, for the Use of Merchants, Bankers, Tradesmen, Manufacturers (London, 1858); J. Sawyer, A System of Book-keeping, Drawn Up for and Expressly Adapted to the Tanning Trade (London, 2nd edn., 1862).
14. J. Collins, The Perfect Method of Merchants-Accompts Demonstrated (London, 1697); J. Dodson, The Accountant, or, the Method of Book-keeping, Deduced from Clear Principles, and Illustrated by a Variety of Examples (London 1750); W. Thompson, The Accomptant's Oracle: or, Key to Science, Being a Compleat Practical System of Book-keeping (York 1777); R. Hamilton, An Introduction to Merchandize (Edinburgh, 1788); F.W. Cronhelm, Double Entry by Single, a New Method of Book-keeping, Applicable to all Kinds of Business (London, 1818); G. Jackson, A New Check Journal (London, 5th edn., 1836); F.C. Krepp, Statistical Book-keeping: being a Simplification and Abbreviation of the Common System by Double Entry, for the Use of Merchants, Bankers, Tradesmen, Manufacturers (London, 1858); J. Sawyer, A System of Book-keeping, Drawn Up for and Expressly Adapted to the Tanning Trade (London, 2nd edn., 1862).
15. J. Collins, The Perfect Method of Merchants-Accompts Demonstrated (London, 1697); J. Dodson, The Accountant, or, the Method of Book-keeping, Deduced from Clear Principles, and Illustrated by a Variety of Examples (London 1750); W. Thompson, The Accomptant's Oracle: or, Key to Science, Being a Compleat Practical System of Book-keeping (York 1777); R. Hamilton, An Introduction to Merchandize (Edinburgh, 1788); F.W. Cronhelm, Double Entry by Single, a New Method of Book-keeping, Applicable to all Kinds of Business (London, 1818); G. Jackson, A New Check Journal (London, 5th edn., 1836); F.C. Krepp, Statistical Book-keeping: being a Simplification and Abbreviation of the Common System by Double Entry, for the Use of Merchants, Bankers, Tradesmen, Manufacturers (London, 1858); J. Sawyer, A System of Book-keeping, Drawn Up for and Expressly Adapted to the Tanning Trade (London, 2nd edn., 1862).
16. J. Collins, The Perfect Method of Merchants-Accompts Demonstrated (London, 1697); J. Dodson, The Accountant, or, the Method of Book-keeping, Deduced from Clear Principles, and Illustrated by a Variety of Examples (London 1750); W. Thompson, The Accomptant's Oracle: or, Key to Science, Being a Compleat Practical System of Book-keeping (York 1777); R. Hamilton, An Introduction to Merchandize (Edinburgh, 1788); F.W. Cronhelm, Double Entry by Single, a New Method of Book-keeping, Applicable to all Kinds of Business (London, 1818); G. Jackson, A New Check Journal (London, 5th edn., 1836); F.C. Krepp, Statistical Book-keeping: being a Simplification and Abbreviation of the Common System by Double Entry, for the Use of Merchants, Bankers, Tradesmen, Manufacturers (London, 1858); J. Sawyer, A System of Book-keeping, Drawn Up for and Expressly Adapted to the Tanning Trade (London, 2nd edn., 1862).
17. J. Collins, The Perfect Method of Merchants-Accompts Demonstrated (London, 1697); J. Dodson, The Accountant, or, the Method of Book-keeping, Deduced from Clear Principles, and Illustrated by a Variety of Examples (London 1750); W. Thompson, The Accomptant's Oracle: or, Key to Science, Being a Compleat Practical System of Book-keeping (York 1777); R. Hamilton, An Introduction to Merchandize (Edinburgh, 1788); F.W. Cronhelm, Double Entry by Single, a New Method of Book-keeping, Applicable to all Kinds of Business (London, 1818); G. Jackson, A New Check Journal (London, 5th edn., 1836); F.C. Krepp, Statistical Book-keeping: being a Simplification and Abbreviation of the Common System by Double Entry, for the Use of Merchants, Bankers, Tradesmen, Manufacturers (London, 1858); J. Sawyer, A System of Book-keeping, Drawn Up for and Expressly Adapted to the Tanning Trade (London, 2nd edn., 1862).
18. J. Collins, The Perfect Method of Merchants-Accompts Demonstrated (London, 1697); J. Dodson, The Accountant, or, the Method of Book-keeping, Deduced from Clear Principles, and Illustrated by a Variety of Examples (London 1750); W. Thompson, The Accomptant's Oracle: or, Key to Science, Being a Compleat Practical System of Book-keeping (York 1777); R. Hamilton, An Introduction to Merchandize (Edinburgh, 1788); F.W. Cronhelm, Double Entry by Single, a New Method of Book-keeping, Applicable to all Kinds of Business (London, 1818); G. Jackson, A New Check Journal (London, 5th edn., 1836); F.C. Krepp, Statistical Book-keeping: being a Simplification and Abbreviation of the Common System by Double Entry, for the Use of Merchants, Bankers, Tradesmen, Manufacturers (London, 1858); J. Sawyer, A System of Book-keeping, Drawn Up for and Expressly Adapted to the Tanning Trade (London, 2nd edn., 1862).
19. The stock account contains quantity columns to identify any deficiency; transfers and closing stock are each valued at cost.
20. Solomons, 'Historical Development', p.8 quotes with approval A.C. Littleton's Accounting Evolution to 1900 (New York, 1933) categorisation of Cronhelm's illustration as 'deficient'. However, the system would have enabled control to be exerted over the physical movement of goods, which appears to have been the principal concern: 'the manufacturer's goods are controlled throughout their multifarious situations [movements], so that merely the very petty embezzlements can escape discovery', and 'any deficiency in the number of Manufactured Pieces, would be immediately detected' (Cronhelm, Double Entry, p.46).
21. Solomons, 'Historical Development', p.8 quotes with approval A.C. Littleton's Accounting Evolution to 1900 (New York, 1933) categorisation of Cronhelm's illustration as 'deficient'. However, the system would have enabled control to be exerted over the physical movement of goods, which appears to have been the principal concern: 'the manufacturer's goods are controlled throughout their multifarious situations [movements], so that merely the very petty embezzlements can escape discovery', and 'any deficiency in the number of Manufactured Pieces, would be immediately detected' (Cronhelm, Double Entry, p.46).
22. Solomons, 'Historical Development', p.8 quotes with approval A.C. Littleton's Accounting Evolution to 1900 (New York, 1933) categorisation of Cronhelm's illustration as 'deficient'. However, the system would have enabled control to be exerted over the physical movement of goods, which appears to have been the principal concern: 'the manufacturer's goods are controlled throughout their multifarious situations [movements], so that merely the very petty embezzlements can escape discovery', and 'any deficiency in the number of Manufactured Pieces, would be immediately detected' (Cronhelm, Double Entry, p.46).
23. This implies the need to record internal transfers in order to discover the amounts debited to the finished goods account, but this matter is not elaborated upon.
24. M.J. Mepham, 'The Eighteenth-Century Origins of Cost Accounting', Abacus (1988) pp.55-74 has shown, however, that Edwards and Solomons were unaware of the fact that the first edition of Hamilton's text (1777/79) illustrated the practical operation of important costing techniques, including valuing the transfer of goods from one process to another, but that this material was omitted from the second edition (1788).
25. K.N. Bolton, Historical Accounting Literature (London, 1975).
26. Solomons,'Historical Development', p.2.
27. Ibid, p.7.
28. The classification of accounting into financial and costing is of course a twentieth-century development, but we do not see that this poses a problem (see P. Miller and C. Napier, 'Genealogies of Calculation', Accounting, Organisations and Society, Vol.18 (1993), pp.631-47 for a different view). Our sole purpose in using these modem terms is to provide a recognisable and useful classification of the distinctive features of accounting systems which have been the subject of investigation.
29. Solomons,'Historical Development', p.17.
30. Edwards,'Rationale', p.344.
31. Solomons, 'Historical Development', pp.48-9.
32. T. Boyns, J.R. Edwards and M. Nikitin, 'Comptabilité et Révolution Industrielle: Une Comparaison Grande-Bretagne/France', Comptabilité Contrôle Audit, La Revue de L'Association Française de Comptabilité, tome 2 Vol.l (1996), pp.5-20.
33. L. Urwick and E.F.L. Brech, The Making of Scientific Management (London, 1948/49), p.21.
34. M.C. Wells, 'Some Influences on the Development of Cost Accounting', Accounting Historians' Journal, Vol.4 (Fall 1977), pp.47-61.
35. R.R. Locke, 'New Insights from Cost Accounting into British Entrepreneurial Performance Circa 1914', Accounting Historians' Journal, Vol.6 (Spring 1979), pp.17-28.
36. S. Pollard, The Genesis of Modern Management (London, 1965). Note that page references are to the Penguin edition of 1968.
37. See R.K. Fleischman, K. Hoskin and R. Macve, 'The Crux of Alternative Approaches to Accounting History?: The Boulton & Watt Case', Accounting and Business Research, Vol.25 (1995), pp.162-76 for a recent assessment of the accounting significance of these records.
38. Urwick and Brech, Scientific Management, p.15.
39. Pollard, Genesis, pp.289-90.
40. Ibid., p.252.
41. Ibid., pp.256-7.
42. Ibid., p.261.
43. Ibid., p.257.
44. Ibid., p.258.
45. Ibid., p.271.
46. Ibid., p.285.
47. Ibid., p.288.
48. Ibid., p.287.
49. Ibid., p.289.
50. Urwick and Brech, Scientific Management, p.21.
51. The writings of R.S. Edwards and Solomons are footnoted near the start of Pollard's chapter on 'Accounting and Management'.
52. Urwick and Brech, Scientific Management, also referred to the studies of actual records by other historians. Thus, volume II, chapter 3, is basically a resume of E. Roll, An Early Experiment in Industrial Organization: Being a History of Boulton & Watt, 1775-1805 (New York, 1930).
53. J.R. Edwards, 'Industrial Cost Accounting Developments in Britain to 1830: A Review Article', Accounting and Business Research, Vol.19 (Autumn 1989), pp.305-18; R.K. Fleischman and L.D. Parker, 'The Cost Accounting Environment in the British Industrial Revolution Iron Industry', Accounting, Business and Financial History, Vol.2 No.2 (Summer 1992), pp.141-60; J.R. Edwards and E. Newell, 'The Development of Industrial Cost and Management Accounting before 1850: A Survey of the Evidence', Business History, Vol.31 (Spring 1991), pp.35-57.
54. J.R. Edwards, 'Industrial Cost Accounting Developments in Britain to 1830: A Review Article', Accounting and Business Research, Vol.19 (Autumn 1989), pp.305-18; R.K. Fleischman and L.D. Parker, 'The Cost Accounting Environment in the British Industrial Revolution Iron Industry', Accounting, Business and Financial History, Vol.2 No.2 (Summer 1992), pp.141-60; J.R. Edwards and E. Newell, 'The Development of Industrial Cost and Management Accounting before 1850: A Survey of the Evidence', Business History, Vol.31 (Spring 1991), pp.35-57.
55. J.R. Edwards, 'Industrial Cost Accounting Developments in Britain to 1830: A Review Article', Accounting and Business Research, Vol.19 (Autumn 1989), pp.305-18; R.K. Fleischman and L.D. Parker, 'The Cost Accounting Environment in the British Industrial Revolution Iron Industry', Accounting, Business and Financial History, Vol.2 No.2 (Summer 1992), pp.141-60; J.R. Edwards and E. Newell, 'The Development of Industrial Cost and Management Accounting before 1850: A Survey of the Evidence', Business History, Vol.31 (Spring 1991), pp.35-57.
56. N. McKendrick, 'Josiah Wedgwood and Cost Accounting in the Industrial Revolution', Economic History Review, 2nd series, Vol.XXIII (April 1970), pp.45-67; W.E. Stone, 'An Early English Cost Accounting System; Charlton Mills, 1810-1889', Accounting and Business Research, Vol.3, Winter (1973), pp.71-8; G. Marshall, Presbyteries and Profits: Calvinism and the Development of Capitalism in Scotland, 1560-1707 (Oxford, 1980): H. Jones, Accounting, Costing and Cost Estimation: Welsh Industry: J 700-1830 (Cardiff, 1985); R.K. Fleischman and L.D. Parker, 'Managerial Accounting Early in the British Industrial Revolution: The Carron Company, a Case Study', Accounting and Business Research (Summer 1990), pp.211-21; R.K. Fleischman and L.D. Parker, 'British Entrepreneurs and Pre-Industrial Revolution Evidence of Cost Management', Accounting Review, Vol.LXVI (April 1991), pp.361-75.
57. N. McKendrick, 'Josiah Wedgwood and Cost Accounting in the Industrial Revolution', Economic History Review, 2nd series, Vol.XXIII (April 1970), pp.45-67; W.E. Stone, 'An Early English Cost Accounting System; Charlton Mills, 1810-1889', Accounting and Business Research, Vol.3, Winter (1973), pp.71-8; G. Marshall, Presbyteries and Profits: Calvinism and the Development of Capitalism in Scotland, 1560-1707 (Oxford, 1980): H. Jones, Accounting, Costing and Cost Estimation: Welsh Industry: J 700-1830 (Cardiff, 1985); R.K. Fleischman and L.D. Parker, 'Managerial Accounting Early in the British Industrial Revolution: The Carron Company, a Case Study', Accounting and Business Research (Summer 1990), pp.211-21; R.K. Fleischman and L.D. Parker, 'British Entrepreneurs and Pre-Industrial Revolution Evidence of Cost Management', Accounting Review, Vol.LXVI (April 1991), pp.361-75.
58. N. McKendrick, 'Josiah Wedgwood and Cost Accounting in the Industrial Revolution', Economic History Review, 2nd series, Vol.XXIII (April 1970), pp.45-67; W.E. Stone, 'An Early English Cost Accounting System; Charlton Mills, 1810-1889', Accounting and Business Research, Vol.3, Winter (1973), pp.71-8; G. Marshall, Presbyteries and Profits: Calvinism and the Development of Capitalism in Scotland, 1560-1707 (Oxford, 1980): H. Jones, Accounting, Costing and Cost Estimation: Welsh Industry: J 700-1830 (Cardiff, 1985); R.K. Fleischman and L.D. Parker, 'Managerial Accounting Early in the British Industrial Revolution: The Carron Company, a Case Study', Accounting and Business Research (Summer 1990), pp.211-21; R.K. Fleischman and L.D. Parker, 'British Entrepreneurs and Pre-Industrial Revolution Evidence of Cost Management', Accounting Review, Vol.LXVI (April 1991), pp.361-75.
59. N. McKendrick, 'Josiah Wedgwood and Cost Accounting in the Industrial Revolution', Economic History Review, 2nd series, Vol.XXIII (April 1970), pp.45-67; W.E. Stone, 'An Early English Cost Accounting System; Charlton Mills, 1810-1889', Accounting and Business Research, Vol.3, Winter (1973), pp.71-8; G. Marshall, Presbyteries and Profits: Calvinism and the Development of Capitalism in Scotland, 1560-1707 (Oxford, 1980): H. Jones, Accounting, Costing and Cost Estimation: Welsh Industry: J 700-1830 (Cardiff, 1985); R.K. Fleischman and L.D. Parker, 'Managerial Accounting Early in the British Industrial Revolution: The Carron Company, a Case Study', Accounting and Business Research (Summer 1990), pp.211-21; R.K. Fleischman and L.D. Parker, 'British Entrepreneurs and Pre-Industrial Revolution Evidence of Cost Management', Accounting Review, Vol.LXVI (April 1991), pp.361-75.
60. N. McKendrick, 'Josiah Wedgwood and Cost Accounting in the Industrial Revolution', Economic History Review, 2nd series, Vol.XXIII (April 1970), pp.45-67; W.E. Stone, 'An Early English Cost Accounting System; Charlton Mills, 1810-1889', Accounting and Business Research, Vol.3, Winter (1973), pp.71-8; G. Marshall, Presbyteries and Profits: Calvinism and the Development of Capitalism in Scotland, 1560-1707 (Oxford, 1980): H. Jones, Accounting, Costing and Cost Estimation: Welsh Industry: J 700-1830 (Cardiff, 1985); R.K. Fleischman and L.D. Parker, 'Managerial Accounting Early in the British Industrial Revolution: The Carron Company, a Case Study', Accounting and Business Research (Summer 1990), pp.211-21; R.K. Fleischman and L.D. Parker, 'British Entrepreneurs and Pre-Industrial Revolution Evidence of Cost Management', Accounting Review, Vol.LXVI (April 1991), pp.361-75.
61. N. McKendrick, 'Josiah Wedgwood and Cost Accounting in the Industrial Revolution', Economic History Review, 2nd series, Vol.XXIII (April 1970), pp.45-67; W.E. Stone, 'An Early English Cost Accounting System; Charlton Mills, 1810-1889', Accounting and Business Research, Vol.3, Winter (1973), pp.71-8; G. Marshall, Presbyteries and Profits: Calvinism and the Development of Capitalism in Scotland, 1560-1707 (Oxford, 1980): H. Jones, Accounting, Costing and Cost Estimation: Welsh Industry: J 700-1830 (Cardiff, 1985); R.K. Fleischman and L.D. Parker, 'Managerial Accounting Early in the British Industrial Revolution: The Carron Company, a Case Study', Accounting and Business Research (Summer 1990), pp.211-21; R.K. Fleischman and L.D. Parker, 'British Entrepreneurs and Pre-Industrial Revolution Evidence of Cost Management', Accounting Review, Vol.LXVI (April 1991), pp.361-75.
62. Fleischman and Parker, 'The Cost Accounting Environment in the British Industrial Revolution Iron Industry'; J.R. Edwards and T. Boyns, 'Industrial Organization and Accounting Innovation: Charcoal Ironmaking in England, 1690-1783', Management Accounting Research, Vol.3 (1992), pp.151-69; J.R. Edwards, T. Boyns and M. Anderson, 'British Cost Accounting Development: Continuity and Change', Accounting Historians' Journal, Vol.22 (1995), pp.1-41.
63. Fleischman and Parker, 'The Cost Accounting Environment in the British Industrial Revolution Iron Industry'; J.R. Edwards and T. Boyns, 'Industrial Organization and Accounting Innovation: Charcoal Ironmaking in England, 1690-1783', Management Accounting Research, Vol.3 (1992), pp.151-69; J.R. Edwards, T. Boyns and M. Anderson, 'British Cost Accounting Development: Continuity and Change', Accounting Historians' Journal, Vol.22 (1995), pp.1-41.
64. Fleischman and Parker, 'The Cost Accounting Environment in the British Industrial Revolution Iron Industry'; J.R. Edwards and T. Boyns, 'Industrial Organization and Accounting Innovation: Charcoal Ironmaking in England, 1690-1783', Management Accounting Research, Vol.3 (1992), pp.151-69; J.R. Edwards, T. Boyns and M. Anderson, 'British Cost Accounting Development: Continuity and Change', Accounting Historians' Journal, Vol.22 (1995), pp.1-41.
65. T. Boyns and J.R. Edwards, 'Accounting Systems and Decision Making in the Mid-Victorian Period: The Case of the Consett Iron Company', Business History, Vol.37 No.3 (1993), pp.28-51; T. Boyns and J.R. Edwards, 'Cost and Management Accounting in Early-Victorian Britain: A Chandleresque Analysis?', Management Accounting Research Vol.8 (1997), pp. 19-46.
66. T. Boyns and J.R. Edwards, 'Accounting Systems and Decision Making in the Mid-Victorian Period: The Case of the Consett Iron Company', Business History, Vol.37 No.3 (1993), pp.28-51; T. Boyns and J.R. Edwards, 'Cost and Management Accounting in Early-Victorian Britain: A Chandleresque Analysis?', Management Accounting Research Vol.8 (1997), pp. 19-46.
67. P.L. Payne, British Entrepreneur ship in the Nineteenth Century (London, 1988)
68. Within the last ten years, few significant texts on nineteenth-century economic history have been written, but even articles or texts which deal specifically with the issues of business organisation and the extent to which entrepreneurial success or failure may have been responsible for Britain's relative economic performance during the nineteenth and twentieth centuries have almost totally ignored the issue of accounting - see, for example, S. Pollard, 'Entrepreneurship, 1870-1914' in R. Floud and D.N. McCloskey (eds.), The Economic History of Britain since 1700, volume 2: 1860-1939 (Cambridge, 1994); and B.W.E. Alford, Britain in the World Economy since 1880 (London, 1996).
69. Within the last ten years, few significant texts on nineteenth-century economic history have been written, but even articles or texts which deal specifically with the issues of business organisation and the extent to which entrepreneurial success or failure may have been responsible for Britain's relative economic performance during the nineteenth and twentieth centuries have almost totally ignored the issue of accounting - see, for example, S. Pollard, 'Entrepreneurship, 1870-1914' in R. Floud and D.N. McCloskey (eds.), The Economic History of Britain since 1700, volume 2: 1860-1939 (Cambridge, 1994); and B.W.E. Alford, Britain in the World Economy since 1880 (London, 1996).
70. A. Loft, 'The History of Management Accounting: Relevance Found', in D. Ashton, T. Hopper and R.W. Scapens (eds.), Issues in Management Accounting (London, 2nd edn., 1995), pp.21-44.
71. A. Loft, 'Towards a Critical Understanding of Accounting: The Case of Cost Accounting in the UK, 1914-1925', Accounting, Organizations and Society, Vol.11 (1986), p.142.
72. D. Ashton, T. Hopper and R.W. Scapens, 'The Changing Nature of Issues in Management Accounting', in Ashton et al., Issues, p.2.
73. C. Drury, Management and Cost Accounting (London, 4th edn., 1996), pp.832-3.
74. There are of course many other costing techniques which require study, but those addressed involve significant issues and are sufficient to illustrate the potential of this kind of research.
75. S.P. Gamer, 'Highlights in the Development of Cost Accounting', in W.E. Thomas, Jr. (ed.), Readings in Cost Accounting, Budgeting and Control (Chicago, 1955), p.9.
76. Edwards and Boyns, 'Industrial Organization'; and Edwards, Boyns and Anderson, 'British Cost Accounting Development'.
77. Edwards and Boyns, 'Industrial Organization'; and Edwards, Boyns and Anderson, 'British Cost Accounting Development'.
78. Edwards, 'Rationale', p.389.
79. Ibid., p.390. The issue of integration and overheads, however, loses some of its force if the amount of overheads is low in relation to total costs, and/or if their apportionment does not significantly affect the relative costs of the various items produced. (See below.)
80. H.T. Johnson and R. Kaplan, Relevance Lost (Boston, MA, 1987).
81. These are the kinds of factors which, following Edwards and Johnson and Kaplan, might have been expected to influence valuation procedures, in view of the fact that they raise the profile of a company's external reporting practices.
82. Listings which have been subsequently constructed show ten coal/iron/steel companies amongst the 52 largest British industrial companies, by capital, in 1905 (P.L. Payne, 'The Emergence of the Large Scale Company in Great Britain 1870-1914', Economic History Review, 2nd series, Vol.20 (1967), pp.175-6), 13 among the 100 largest employers in manufacturing and non-manufacturing industries in 1907 (D.J. Jeremy, 'The Hundred Largest Employers in the United Kingdom in Manufacturing and Non-Manufacturing Industries in 1907', Business History, Vol.31 (1991), pp.417-21), 12 amongst the largest 104 employers in 1907 (C. Shaw, 'The Large Manufacturing Employees of 1907', Business History, Vol.25 (1985), pp.52-3), but just two among the 50 largest companies ranked by market value in 1904/5 (P. Wardley, 'The Anatomy of Big Business: Aspects of Corporate Development in the Twentieth Century', Business History, Vol.33 (1991), pp.278-9). These listings included the following companies from our own sample: Bolckow, Vaughan & Co., Dowlais Iron Company (in 1902 becoming part of Guest, Keen and Nettlefolds), Staveley Coal & Iron Co., Steel Company of Scotland, and Wigan Coal & Iron Co.
83. Listings which have been subsequently constructed show ten coal/iron/steel companies amongst the 52 largest British industrial companies, by capital, in 1905 (P.L. Payne, 'The Emergence of the Large Scale Company in Great Britain 1870-1914', Economic History Review, 2nd series, Vol.20 (1967), pp.175-6), 13 among the 100 largest employers in manufacturing and non-manufacturing industries in 1907 (D.J. Jeremy, 'The Hundred Largest Employers in the United Kingdom in Manufacturing and Non-Manufacturing Industries in 1907', Business History, Vol.31 (1991), pp.417-21), 12 amongst the largest 104 employers in 1907 (C. Shaw, 'The Large Manufacturing Employees of 1907', Business History, Vol.25 (1985), pp.52-3), but just two among the 50 largest companies ranked by market value in 1904/5 (P. Wardley, 'The Anatomy of Big Business: Aspects of Corporate Development in the Twentieth Century', Business History, Vol.33 (1991), pp.278-9). These listings included the following companies from our own sample: Bolckow, Vaughan & Co., Dowlais Iron Company (in 1902 becoming part of Guest, Keen and Nettlefolds), Staveley Coal & Iron Co., Steel Company of Scotland, and Wigan Coal & Iron Co.
84. Listings which have been subsequently constructed show ten coal/iron/steel companies amongst the 52 largest British industrial companies, by capital, in 1905 (P.L. Payne, 'The Emergence of the Large Scale Company in Great Britain 1870-1914', Economic History Review, 2nd series, Vol.20 (1967), pp.175-6), 13 among the 100 largest employers in manufacturing and non-manufacturing industries in 1907 (D.J. Jeremy, 'The Hundred Largest Employers in the United Kingdom in Manufacturing and Non-Manufacturing Industries in 1907', Business History, Vol.31 (1991), pp.417-21), 12 amongst the largest 104 employers in 1907 (C. Shaw, 'The Large Manufacturing Employees of 1907', Business History, Vol.25 (1985), pp.52-3), but just two among the 50 largest companies ranked by market value in 1904/5 (P. Wardley, 'The Anatomy of Big Business: Aspects of Corporate Development in the Twentieth Century', Business History, Vol.33 (1991), pp.278-9). These listings included the following companies from our own sample: Bolckow, Vaughan & Co., Dowlais Iron Company (in 1902 becoming part of Guest, Keen and Nettlefolds), Staveley Coal & Iron Co., Steel Company of Scotland, and Wigan Coal & Iron Co.
85. Listings which have been subsequently constructed show ten coal/iron/steel companies amongst the 52 largest British industrial companies, by capital, in 1905 (P.L. Payne, 'The Emergence of the Large Scale Company in Great Britain 1870-1914', Economic History Review, 2nd series, Vol.20 (1967), pp.175-6), 13 among the 100 largest employers in manufacturing and non-manufacturing industries in 1907 (D.J. Jeremy, 'The Hundred Largest Employers in the United Kingdom in Manufacturing and Non-Manufacturing Industries in 1907', Business History, Vol.31 (1991), pp.417-21), 12 amongst the largest 104 employers in 1907 (C. Shaw, 'The Large Manufacturing Employees of 1907', Business History, Vol.25 (1985), pp.52-3), but just two among the 50 largest companies ranked by market value in 1904/5 (P. Wardley, 'The Anatomy of Big Business: Aspects of Corporate Development in the Twentieth Century', Business History, Vol.33 (1991), pp.278-9). These listings included the following companies from our own sample: Bolckow, Vaughan & Co., Dowlais Iron Company (in 1902 becoming part of Guest, Keen and Nettlefolds), Staveley Coal & Iron Co., Steel Company of Scotland, and Wigan Coal & Iron Co.
86. See Boyns, Anderson and Edwards, British Cost Accounting.
87. T. Plumpton, 'Manufacturing Costs', Accountant, Vol.18 (1892), p.270.
88. T. Plumpton, 'Cost Accounts', Accountant, Vol.20 (1894), p.990.
89. Double entry bookkeeping of course originated in Italy and classically consists of a memorial, journal and ledger employed in trade and commerce, hence the caption 'the Italian System'.
90. Boyns and Edwards, 'Cost and Management Accounting'.
91. Edwards, Boyns and Anderson, 'British Cost Accounting Development', p.25.
92. British Steel Corporation, North Western Regional Records Centre (hereafter BSC, NWRRC), location no. 6720.
93. T. Boyns, 'Cost Accounting in the South Wales Coal Industry c. 1870-1913', Accounting, Business & Financial History, Vol.3 (1993), pp.327-52.
94. F. Hayne Carter, Practical Book-Keeping Adapted to Commercial and Judicial Accounting, 2nd edn. (Edinburgh & Glasgow, 1874).
95. Ibid., p.66.
96. Ibid.
97. Ibid., p.70.
98. Ibid., p.69. We can therefore conclude that the cost records were separate from the financial records; an arrangement which facilitated the placing of the records in those locations where they could be consulted by interested personnel. Such records might be entirely separate from one another, though possibly the subject of periodic reconciliation, or linked together through the use of control accounts.
99. Ibid., pp.66-76.
100. Prime cost was a term used widely in the nineteenth century, and which is still used today, to describe the original or direct cost of an article, that is, the material costs, productive labour costs and departmental or direct expenses associated with production. It differs from the total cost of production in that it does not include indirect expenses associated with sales, distribution and administration. J. Mann, Jr., 'Cost Records of Factory Accounting' in Vol.II of Encyclopaedia of Accounting, reprinted in R. Brief (ed.), Selections from Encyclopaedia of Accounting, 1903 (New York, 1978), p.134.
101. Ibid., p.69.
102. J.R. Edwards and C. Baber, 'Dowlais Iron Company: Accounting Policies and Procedures for Profit Measurement and Reporting Purposes', Accounting and Business Research, Vol.9 (1979), pp.139-51.
103. BSC, NWRRC, location no. 6720.
104. BSC, NWRRC, location no. 1256.
105. Edwards, Boyns and Anderson, 'British Cost Accounting Development', p.14.
106. The detailed calculations were set out in the working papers under the heading, 'Statement of Capital, Interest and Depreciation Accounts' [Derbyshire Record Office, Accession No. D3808, Balance Sheet Book, 1841-63].
107. Edwards, Boyns and Anderson, 'British Cost Accounting Development', pp.14-22.
108. We are grateful to one of the anonymous referees for pointing out to us the significance of this difference.
109. Even in the eighteenth century, however, steps were taken at the Duke of Norfolk's Works to apportion shared costs such as the premium paid on a lease and 'land tax and window money' between departments, albeit in what appears to have been an entirely arbitrary manner, Edwards and Boyns, 'Industrial Organization', p. 163.
110. Edwards, Boyns and Anderson, 'British Cost Accounting Development', pp.22-4.
111. BSC, NWRRC, location no. 1256.
112. Boyns and Edwards, 'Accounting Systems', n.38, p.50.
113. British Steel Corporation, North Eastern Regional Records Centre (hereafter BSC, NERRC), location No. 04698.
114. Glamorgan Record Office (hereafter GRO), D/D G C 4/2.
115. GRO, D/D G Section E, Box 3, Annual Report, 1869, pp.26-7.
116. Boyns,'Cost Accounting'.
117. It is worth noting here that the ubiquitous emphasis on cost per ton in the cost accounts contrasts sharply with the need in financial accounts for the provision of aggregate figures for the determination of overall profitability and dividend payments.
118. See R.H. Parker, Management Accounting: An Historical Perspective (London, 1969), pp.28-31.
119. BSC, NERRC, location no. 04698.
120. Edwards, Boyns and Anderson, 'British Cost Accounting Development', p.25.
121. Much earlier examples of the calculation of yields at Staveley may be found both in the ledgers and loose documentation, of the quantity of input 'spent' to produce a ton of pig iron (charcoal and ironstone) and a ton of bar iron (charcoal and pig iron). For example, in 1701 at Carburton Forge and for each of the years 1700-20 at the Staveley Forge, Edwards and Boyns, 'Industrial Organization', pp. 166-7.
122. BSC, NERRC, location no. 04879.
123. Boyns and Edwards, 'Cost and Management Accounting'.
124. Ibid.
125. GRO, D/D G Section E, Box 3, Annual Report, 1869, pp.26-7.
126. Edwards and Boyns, 'Industrial Organization', pp.161-2, 165-7; Edwards, Boyns and Anderson, 'British Cost Accounting Development', pp.10, 13-14, 16-17, 31.
127. Edwards and Boyns, 'Industrial Organization', pp.161-2, 165-7; Edwards, Boyns and Anderson, 'British Cost Accounting Development', pp.10, 13-14, 16-17, 31.
128. Edwards, Boyns and Anderson, 'British Cost Accounting Development', pp.8-12.
129. Ideally, decisions to 'make-or-buy' should be based on market prices. Though the determination of an appropriate 'market price' for goods traded internally may be difficult, once chosen, it could serve both this purpose and the determination of departmental profitability.
130. Boyns and Edwards,'Accounting Systems'.
131. The price of coke, rather than that of coal, was used since only small amounts of coal were sold externally by the company, in contrast to coke sales which accounted for 40-50 per cent of production.
132. BSC, NWRRC, location no. 6720, letter to the directors dated 23 June 1890.
133. BSC, NWRRC, location no. 6720, Director's minutes, 16 April 1891.
134. BSC, NWRRC, location no. 6720.
135. BSC, NWRRC, location no. 6720, Director's minutes, 28 March 1893.
136. BSC, NERRC, location no. 04781, Report, p.5.
137. Boyns and Edwards, 'Cost and Management Accounting'.
138. With the output for any period unknown prior to the commencement of that period, the use of an estimated cost per ton figure in the cost accounts, when multiplied by the actual output, could generate a total cost which exceeded or fell short of the actual cost of the overhead item during the period. In the former case there would be over-recovery, whilst in the latter under-recovery, of the overhead.