Should historians trust late nineteenth-century company financial statements?

Business History

Volumn 38, Issue 2, 1996, Pages 40-54

  Arnold, A J ^a  

^a UNIVERSITY OF ESSEX   (United Kingdom)

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EID: 0040034366     PISSN: 00076791     EISSN: 17437938     Source Type: Journal    
DOI: 10.1080/00076799600000050     Document Type: Article

References (83)

1. S. Marriner, 'Company Financial Statements as Source Material for Business Historians', Business History, Vol. XXII (1980), pp.203-35; R. Lister, 'Company Financial Statements as Source Material for Business Historians: Observations on the Underlying Conceptual Framework', Business History, Vol. XXIII (1981), pp.233-9;
2. S. Marriner, 'Company Financial Statements as Source Material for Business Historians', Business History, Vol. XXII (1980), pp.203-35; R. Lister, 'Company Financial Statements as Source Material for Business Historians: Observations on the Underlying Conceptual Framework', Business History, Vol. XXIII (1981), pp.233-9; J.R. Edwards and K.M. Webb, 'The Influence of Company Law on Corporate Reporting Procedures, 1865-1929: An Exemplification', Business History, Vol. XXIV (1982), pp.259-79; J. Mason, 'Accounting Records and Business History', Business History, Vol. XXIV (1982), pp.293-9; R.H. Parker, 'Misleading Accounts? Pitfalls for Historians', Business History, Vol. XXXIII (1991), pp.1-18.
3. S. Marriner, 'Company Financial Statements as Source Material for Business Historians', Business History, Vol. XXII (1980), pp.203-35; R. Lister, 'Company Financial Statements as Source Material for Business Historians: Observations on the Underlying Conceptual Framework', Business History, Vol. XXIII (1981), pp.233-9; J.R. Edwards and K.M. Webb, 'The Influence of Company Law on Corporate Reporting Procedures, 1865-1929: An Exemplification', Business History, Vol. XXIV (1982), pp.259-79; J. Mason, 'Accounting Records and Business History', Business History, Vol. XXIV (1982), pp.293-9; R.H. Parker, 'Misleading Accounts? Pitfalls for Historians', Business History, Vol. XXXIII (1991), pp.1-18.
4. S. Marriner, 'Company Financial Statements as Source Material for Business Historians', Business History, Vol. XXII (1980), pp.203-35; R. Lister, 'Company Financial Statements as Source Material for Business Historians: Observations on the Underlying Conceptual Framework', Business History, Vol. XXIII (1981), pp.233-9; J.R. Edwards and K.M. Webb, 'The Influence of Company Law on Corporate Reporting Procedures, 1865-1929: An Exemplification', Business History, Vol. XXIV (1982), pp.259-79; J. Mason, 'Accounting Records and Business History', Business History, Vol. XXIV (1982), pp.293-9; R.H. Parker, 'Misleading Accounts? Pitfalls for Historians', Business History, Vol. XXXIII (1991), pp.1-18.
5. S. Marriner, 'Company Financial Statements as Source Material for Business Historians', Business History, Vol. XXII (1980), pp.203-35; R. Lister, 'Company Financial Statements as Source Material for Business Historians: Observations on the Underlying Conceptual Framework', Business History, Vol. XXIII (1981), pp.233-9; J.R. Edwards and K.M. Webb, 'The Influence of Company Law on Corporate Reporting Procedures, 1865-1929: An Exemplification', Business History, Vol. XXIV (1982), pp.259-79; J. Mason, 'Accounting Records and Business History', Business History, Vol. XXIV (1982), pp.293-9; R.H. Parker, 'Misleading Accounts? Pitfalls for Historians', Business History, Vol. XXXIII (1991), pp.1-18.
6. Marriner, in 'Company Statements', p.203, was 'particularly concerned with the dangers inherent in taking entries in such statements at their face value'.
7. Lister, 'Conceptual Framework'.
8. Parker, 'Pitfalls', p.15.
9. Mason, 'Accounting Records', pp.293-4.
10. Marriner, 'Company Statements', p.225.
11. Ibid., pp.205-7. It is difficult, however, to see why the double-entry system itself should be blamed, since it does at least provide a systematic and relatively comprehensive form of recording which can function in conjunction with almost any valuation system or set of conventions. Double-entry is one of three main techniques that have been used for recording the financial aspects of business events and has now superseded the other two, single-entry and charge and discharge accounting. Although it is 'not necessarily the most helpful one for historians' it is far more comprehensive and systematic than single-entry and avoids a focus solely upon the accountability of principal to agent, under charge and discharge accounting, that 'can prove very annoying to the business historian'; Parker, 'Pitfalls', p.6.
12. Ibid., pp.205-7. It is difficult, however, to see why the double-entry system itself should be blamed, since it does at least provide a systematic and relatively comprehensive form of recording which can function in conjunction with almost any valuation system or set of conventions. Double-entry is one of three main techniques that have been used for recording the financial aspects of business events and has now superseded the other two, single-entry and charge and discharge accounting. Although it is 'not necessarily the most helpful one for historians' it is far more comprehensive and systematic than single-entry and avoids a focus solely upon the accountability of principal to agent, under charge and discharge accounting, that 'can prove very annoying to the business historian'; Parker, 'Pitfalls', p.6.
13. Marriner, 'Company Statements', p.216.
14. Ibid., p.221.
15. Ibid., p.219.
16. As compared with, say, seaborne merchant trading in eras in which forms of communication were limited, when a joint-venture approach could be applied to each completed voyage as a separable and concluded economic event. It is also possible to construct cumulative financial statements covering longer periods of time from conventional annual statements as an aid to historical analysis; see R.P. Brief, B. Merino and I. Weiss, 'Cumulative Financial Statements', Accounting Review, Vol. LV (1980), pp.480-90.
17. This is aside from the usual arguments that information is a public good and is not 'costlessly available'; see, for example, P. Taylor and S. Turley, The Regulation of Accounting (Oxford, 1986), pp.6-16.
18. The 1856 Act contained model reporting and auditing provisions but their adoption was voluntary. The Vice-President of the Board of Trade explained that 'having given them a pattern the State leaves them to manage their own affairs and has no desire to force on these little republics any particular constitution'; L.W. Hein, The British Companies Acts and the Practice of Accountancy, 1844-1962 (New York, 1978), p.149. The analogy is revealing, since voting rights in such republics would be in direct proportion to (committed) wealth.
19. P.L. Cottrell, Industrial Finance, 1830-1914: The Finance and Organisation of English Manufacturing Industry (1980), p.41.
20. See R.H. Parker, 'Regulating British Corporate Financial Reporting in the late Nineteenth Century', Accounting, Business and Financial History, Vol. 1 (1990), pp.51-71; Taylor and Turley, The Regulation of Accounting, p.35; and J.R. Edwards, 'Companies, Corporations and Accounting Change, 1835-1933: A Comparative Study', Accounting and Business Research, Vol. 23 (1992), pp.59-73.
21. See R.H. Parker, 'Regulating British Corporate Financial Reporting in the late Nineteenth Century', Accounting, Business and Financial History, Vol. 1 (1990), pp.51-71; Taylor and Turley, The Regulation of Accounting, p.35; and J.R. Edwards, 'Companies, Corporations and Accounting Change, 1835-1933: A Comparative Study', Accounting and Business Research, Vol. 23 (1992), pp.59-73.
22. See R.H. Parker, 'Regulating British Corporate Financial Reporting in the late Nineteenth Century', Accounting, Business and Financial History, Vol. 1 (1990), pp.51-71; Taylor and Turley, The Regulation of Accounting, p.35; and J.R. Edwards, 'Companies, Corporations and Accounting Change, 1835-1933: A Comparative Study', Accounting and Business Research, Vol. 23 (1992), pp.59-73.
23. The Companies Act 1856, for example, recommended that dividends should not be paid out of capital (see model articles) but did not define 'capital' with any precision.
24. J.M. Reid, 'Judicial Views on Accounting in Britain before 1889', Accounting and Business Research, Vol. 17 (1987), pp.247-58.
25. See R.H. Parker, 'The Want of Uniformity in Accounts: A Nineteenth Century Debate', in R.H. Parker (ed.), Papers on Accounting History (New York, 1984), pp.67-88; G.A. Lee, 'The Concept of Profit in British Accounting, 1760-1900', Business History Review, Vol. XLIX (1975), p.19.
26. See R.H. Parker, 'The Want of Uniformity in Accounts: A Nineteenth Century Debate', in R.H. Parker (ed.), Papers on Accounting History (New York, 1984), pp.67-88; G.A. Lee, 'The Concept of Profit in British Accounting, 1760-1900', Business History Review, Vol. XLIX (1975), p.19.
27. Marriner, 'Company Statements', p.216.
28. W.P. Kennedy, Industrial Structure, Capital Markets and the Origins of British Economic Decline (Cambridge, 1987), p.126; see also L. Hannah, The Rise of the Corporate Economy (2nd edn. 1983), pp. 130-31; and L. Hannah, 'Takeover Bids in Britain before 1950: An Exercise in Business "Pre-history"', Business History, Vol. XVI (1974), pp.72, 77.
29. W.P. Kennedy, Industrial Structure, Capital Markets and the Origins of British Economic Decline (Cambridge, 1987), p.126; see also L. Hannah, The Rise of the Corporate Economy (2nd edn. 1983), pp. 130-31; and L. Hannah, 'Takeover Bids in Britain before 1950: An Exercise in Business "Pre-history"', Business History, Vol. XVI (1974), pp.72, 77.
30. W.P. Kennedy, Industrial Structure, Capital Markets and the Origins of British Economic Decline (Cambridge, 1987), p.126; see also L. Hannah, The Rise of the Corporate Economy (2nd edn. 1983), pp. 130-31; and L. Hannah, 'Takeover Bids in Britain before 1950: An Exercise in Business "Pre-history"', Business History, Vol. XVI (1974), pp.72, 77.
31. 'Extract from Memorandum furnished by the Institute to the Company Law Amendment Committee', Correspondence File 28443/1925/p2, Archives of the Institute of Chartered Accountants in England and Wales, Guildhall Library Manuscripts Department.
32. University College London, Gower Street, Royal Mail Steam Packet Company Archives: Boxes 26-31, annual reports and statements of account.
33. Statist, 3 May 1913, p.374; and Fairplay (1914), pp.897-8.
34. Statist, 3 May 1913, p.374; and Fairplay (1914), pp.897-8.
35. This leaves aside sectors such as the railways and utilities, in which companies were subject to far more specific regulation. The number of companies in the set was determined by the availability of good quality archives. The companies concerned were: Brewing: Bentley's Yorkshire Breweries Ltd, Bristol Brewery Georges & Co. Ltd, Chesters Brewery Co. Ltd., Tennant Brothers Ltd, Threlfall's Brewery Co. Ltd. Commercial and Industrial; Birmingham Small Arms Co. Ltd., Bradbury Greatorex & Co. Ltd, Brunner Mond & Co. Ltd, Bryant & May Ltd, John Crossley & Sons Ltd, Lawes Chemical Manure Co. Ltd, Lister & Co. Ltd, Walkers Parker & Co. Ltd. Iron Coal and Steel: Sir W.G. Armstrong Whitworth & Co. Ltd, Bolckow Vaughan & Co. Ltd, Consett Iron Co. Ltd, Dorman Long & Co. Ltd, R.W. Hawthorne Leslie & Co. Ltd, Staveley Coal & Iron Co. Ltd, Vickers Ltd. Shipping: Cunard Steamship Co. Ltd, General Steam Navigation Co. Ltd, India General Navigation & Railway Co. Ltd, Peninsular & Oriental Steam Navigation Co. Ltd, Royal Mail Steam Packet Co. Ltd.
36. Calculations based on a count of items of information, i.e. excluding repeated items, arithmetic balances and totals. West Yorkshire Archive Service, papers held on John Crossley & Sons Ltd; University of Liverpool Archives, Cunard papers D42/A/1/7.
37. Although Edwards in 'Companies, Corporations', p.70, described it as 'commonplace' for large nineteenth-century, non-regulated, companies. In evidence by the Society of Incorporated Accountants and Auditors to a Company Law Amendments Committee in 1925, however, the attenuation of balance-sheet information was described as an 'increasing tendency'.
38. Marriner, 'Company Statements', p.221.
39. See, for example, P. Bircher, 'Company Law Reform and the Board of Trade, 1929-43', Accounting and Business Research, Vol. 18 (1988), pp.107-19.
40. J.R. Edwards, 'Companies, Corporations', p.68. See also idem, The Process of Accounting Innovation: The Publication of Consolidated Accounts in Britain in 1910', Accounting Historians Journal, Vol. 18 (1991), pp. 113-32.
41. J.R. Edwards, 'Companies, Corporations', p.68. See also idem, The Process of Accounting Innovation: The Publication of Consolidated Accounts in Britain in 1910', Accounting Historians Journal, Vol. 18 (1991), pp. 113-32.
42. See also Bircher, 'Company Law Reform'; and idem, 'The Adoption of Consolidated Accounting in Great Britain', Accounting and Business Research, Vol. 19 (1988), pp.3-13.
43. See also Bircher, 'Company Law Reform'; and idem, 'The Adoption of Consolidated Accounting in Great Britain', Accounting and Business Research, Vol. 19 (1988), pp.3-13.
44. L. Hannah, 'Mergers in British Manufacturing Industry, 1880-1918', Oxford Economic Papers, Vol. 26 (1974) p. 15.
45. L. Hannah, Corporate Economy; P.L. Payne, 'The Emergence of the Large-Scale Company in Great Britain, 1870-1914', Economic History Review, Vol. 20 (1967), pp.519-42. Intercompany investment was affected by legal as well as economic factors; the 1907 Companies Act, for example, established private companies which provided a particularly convenient mechanism for covert transfers of profit between related companies.
46. L. Hannah, Corporate Economy; P.L. Payne, 'The Emergence of the Large-Scale Company in Great Britain, 1870-1914', Economic History Review, Vol. 20 (1967), pp.519-42. Intercompany investment was affected by legal as well as economic factors; the 1907 Companies Act, for example, established private companies which provided a particularly convenient mechanism for covert transfers of profit between related companies.
47. Birmingham Small Arms 15.9 per cent, Bryant and May 27.1 per cent, John Crossley & Sons 17.5 per cent. Four companies had investments of less than two per cent of their net assets. University of Warwick, Modern Records Centre, MSS/19A/2; Hackney Archives, D/B/BRY/1/2; West Yorkshire Archive Service, papers held on John Crossley & Sons Ltd.
48. Marriner, 'Company Statements', p.219.
49. And subsequently in the case of banking, insurance and shipping companies.
50. J.R. Edward's History of Financial Accounting, for example, says very little about their incidence before 1920 (1989), p.138.
51. Marriner, 'Company Statements', p.220. R.H. Parker, 'Pitfalls', p. 12, confirms this impression by stating that 'the use of secret reserves in the nineteenth and twentieth centuries has been described by Marriner as the "largest single factor"' and so on.
52. Marriner, 'Company Statements', p.220. R.H. Parker, 'Pitfalls', p. 12, confirms this impression by stating that 'the use of secret reserves in the nineteenth and twentieth centuries has been described by Marriner as the "largest single factor"' and so on.
53. G.A. Lee, 'The Concept of Profit', p.33.
54. R.H. Parker, Macmillan Dictionary of Accounting (2nd edn. 1984), p.253. See also E.E. Spicer, Reserves, Annuities and Sinking Funds (1909), p. 10; J.C. Stamp and C.H. Nelson, Business Statistics and Financial Statements (1924), pp.249-51 and, for an extended analysis of the possible mechanisms, E.E. Spicer and E.C. Peglar, Practical Auditing (8th edn. 1947), pp.303-11.
55. R.H. Parker, Macmillan Dictionary of Accounting (2nd edn. 1984), p.253. See also E.E. Spicer, Reserves, Annuities and Sinking Funds (1909), p. 10; J.C. Stamp and C.H. Nelson, Business Statistics and Financial Statements (1924), pp.249-51 and, for an extended analysis of the possible mechanisms, E.E. Spicer and E.C. Peglar, Practical Auditing (8th edn. 1947), pp.303-11.
56. R.H. Parker, Macmillan Dictionary of Accounting (2nd edn. 1984), p.253. See also E.E. Spicer, Reserves, Annuities and Sinking Funds (1909), p. 10; J.C. Stamp and C.H. Nelson, Business Statistics and Financial Statements (1924), pp.249-51 and, for an extended analysis of the possible mechanisms, E.E. Spicer and E.C. Peglar, Practical Auditing (8th edn. 1947), pp.303-11.
57. R.H. Parker, Macmillan Dictionary of Accounting (2nd edn. 1984), p.253. See also E.E. Spicer, Reserves, Annuities and Sinking Funds (1909), p. 10; J.C. Stamp and C.H. Nelson, Business Statistics and Financial Statements (1924), pp.249-51 and, for an extended analysis of the possible mechanisms, E.E. Spicer and E.C. Peglar, Practical Auditing (8th edn. 1947), pp.303-11.
58. S. Pollard, 'Capital Accounting in the Industrial Revolution', Yorkshire Bulletin of Economic and Social Research (1963), p.90.
59. R.P. Brief, 'The Origin and Evolution of Nineteenth-Century Asset Accounting', Business History Review, Vol. 10 (1966), p.8. See also idem. The Late Nineteenth-Century Debate over Depreciation, Capital and Income (New York, 1976). Many railway companies and public utilities reported under the double-account system, which did not encompass the making of annual allocations of the cost of fixed assets to profit and loss.
60. R.P. Brief, 'The Origin and Evolution of Nineteenth-Century Asset Accounting', Business History Review, Vol. 10 (1966), p.8. See also idem. The Late Nineteenth-Century Debate over Depreciation, Capital and Income (New York, 1976). Many railway companies and public utilities reported under the double-account system, which did not encompass the making of annual allocations of the cost of fixed assets to profit and loss.
61. R.P. Brief, 'Accounting Error as a Factor in Business History', Accounting, Business and Financial History, Vol. 1 (1990), p. 11.
62. J.R. Edwards and T. Boyns, 'Accounting Practice and Business Finance: Some Case Studies from the Iron and Coal Industry 1865-1914', Journal of Business Finance and Accounting, Vol. 21 (1994), p.1176. See also T. Baldwin, 'Management Aspiration and Audit Opinion: Fixed Asset Accounting at the Staveley Coal and Iron Company 1863-1883', Accounting and Business Research Vol. 25 (1994), pp.3-12; J.R. Edwards, 'British Capital Accounting Practices and Business Finance 1852-1919: An Exemplification', Accounting and Business Research (1980), pp.242-3; J.R. Edwards and C. Baber, 'Dowlais Iron Company: Accounting Policies and Procedures for Profit Measurement and Reporting Purposes', Accounting and Business Research (1979), p.148; J. Wale, 'The Reliability of Reported Profits and Asset Values, 1890-1914: Case Studies from the British Coal Industry', Accounting and Business Research, Vol. 20 (1990), pp.253-67; and, in the shipping industry, C.J. Napier, 'Fixed Asset Accounting in the Shipping Industry: P & O, 1840-1914', Accounting, Business and Financial History, Vol. 1 (1990), pp.37-47.
63. J.R. Edwards and T. Boyns, 'Accounting Practice and Business Finance: Some Case Studies from the Iron and Coal Industry 1865-1914', Journal of Business Finance and Accounting, Vol. 21 (1994), p.1176. See also T. Baldwin, 'Management Aspiration and Audit Opinion: Fixed Asset Accounting at the Staveley Coal and Iron Company 1863-1883', Accounting and Business Research Vol. 25 (1994), pp.3-12; J.R. Edwards, 'British Capital Accounting Practices and Business Finance 1852-1919: An Exemplification', Accounting and Business Research (1980), pp.242-3; J.R. Edwards and C. Baber, 'Dowlais Iron Company: Accounting Policies and Procedures for Profit Measurement and Reporting Purposes', Accounting and Business Research (1979), p.148; J. Wale, 'The Reliability of Reported Profits and Asset Values, 1890-1914: Case Studies from the British Coal Industry', Accounting and Business Research, Vol. 20 (1990), pp.253-67; and, in the shipping industry, C.J. Napier, 'Fixed Asset Accounting in the Shipping Industry: P & O, 1840-1914', Accounting, Business and Financial History, Vol. 1 (1990), pp.37-47.
64. J.R. Edwards and T. Boyns, 'Accounting Practice and Business Finance: Some Case Studies from the Iron and Coal Industry 1865-1914', Journal of Business Finance and Accounting, Vol. 21 (1994), p.1176. See also T. Baldwin, 'Management Aspiration and Audit Opinion: Fixed Asset Accounting at the Staveley Coal and Iron Company 1863-1883', Accounting and Business Research Vol. 25 (1994), pp.3-12; J.R. Edwards, 'British Capital Accounting Practices and Business Finance 1852-1919: An Exemplification', Accounting and Business Research (1980), pp.242-3; J.R. Edwards and C. Baber, 'Dowlais Iron Company: Accounting Policies and Procedures for Profit Measurement and Reporting Purposes', Accounting and Business Research (1979), p.148; J. Wale, 'The Reliability of Reported Profits and Asset Values, 1890-1914: Case Studies from the British Coal Industry', Accounting and Business Research, Vol. 20 (1990), pp.253-67; and, in the shipping industry, C.J. Napier, 'Fixed Asset Accounting in the Shipping Industry: P & O, 1840-1914', Accounting, Business and Financial History, Vol. 1 (1990), pp.37-47.
65. J.R. Edwards and T. Boyns, 'Accounting Practice and Business Finance: Some Case Studies from the Iron and Coal Industry 1865-1914', Journal of Business Finance and Accounting, Vol. 21 (1994), p.1176. See also T. Baldwin, 'Management Aspiration and Audit Opinion: Fixed Asset Accounting at the Staveley Coal and Iron Company 1863-1883', Accounting and Business Research Vol. 25 (1994), pp.3-12; J.R. Edwards, 'British Capital Accounting Practices and Business Finance 1852-1919: An Exemplification', Accounting and Business Research (1980), pp.242-3; J.R. Edwards and C. Baber, 'Dowlais Iron Company: Accounting Policies and Procedures for Profit Measurement and Reporting Purposes', Accounting and Business Research (1979), p.148; J. Wale, 'The Reliability of Reported Profits and Asset Values, 1890-1914: Case Studies from the British Coal Industry', Accounting and Business Research, Vol. 20 (1990), pp.253-67; and, in the shipping industry, C.J. Napier, 'Fixed Asset Accounting in the Shipping Industry: P & O, 1840-1914', Accounting, Business and Financial History, Vol. 1 (1990), pp.37-47.
66. J.R. Edwards and T. Boyns, 'Accounting Practice and Business Finance: Some Case Studies from the Iron and Coal Industry 1865-1914', Journal of Business Finance and Accounting, Vol. 21 (1994), p.1176. See also T. Baldwin, 'Management Aspiration and Audit Opinion: Fixed Asset Accounting at the Staveley Coal and Iron Company 1863-1883', Accounting and Business Research Vol. 25 (1994), pp.3-12; J.R. Edwards, 'British Capital Accounting Practices and Business Finance 1852-1919: An Exemplification', Accounting and Business Research (1980), pp.242-3; J.R. Edwards and C. Baber, 'Dowlais Iron Company: Accounting Policies and Procedures for Profit Measurement and Reporting Purposes', Accounting and Business Research (1979), p.148; J. Wale, 'The Reliability of Reported Profits and Asset Values, 1890-1914: Case Studies from the British Coal Industry', Accounting and Business Research, Vol. 20 (1990), pp.253-67; and, in the shipping industry, C.J. Napier, 'Fixed Asset Accounting in the Shipping Industry: P & O, 1840-1914', Accounting, Business and Financial History, Vol. 1 (1990), pp.37-47.
67. J.R. Edwards and T. Boyns, 'Accounting Practice and Business Finance: Some Case Studies from the Iron and Coal Industry 1865-1914', Journal of Business Finance and Accounting, Vol. 21 (1994), p.1176. See also T. Baldwin, 'Management Aspiration and Audit Opinion: Fixed Asset Accounting at the Staveley Coal and Iron Company 1863-1883', Accounting and Business Research Vol. 25 (1994), pp.3-12; J.R. Edwards, 'British Capital Accounting Practices and Business Finance 1852-1919: An Exemplification', Accounting and Business Research (1980), pp.242-3; J.R. Edwards and C. Baber, 'Dowlais Iron Company: Accounting Policies and Procedures for Profit Measurement and Reporting Purposes', Accounting and Business Research (1979), p.148; J. Wale, 'The Reliability of Reported Profits and Asset Values, 1890-1914: Case Studies from the British Coal Industry', Accounting and Business Research, Vol. 20 (1990), pp.253-67; and, in the shipping industry, C.J. Napier, 'Fixed Asset Accounting in the Shipping Industry: P & O, 1840-1914', Accounting, Business and Financial History, Vol. 1 (1990), pp.37-47.
68. Edwards, History of Financial Accounting, p. 137.
69. Accountant (1695), pp.75-6.
70. The other companies were later identified as being Guest Keen Nettlefold, Amalgamated Wagon, W. & T. Avery, Kynochs, Docker Bros, and Bellis & Morcom; Accountant (1906), p.271.
71. L.R. Dicksee, Depreciation, Reserves and Reserve Funds (1903), pp.49-50.
72. G. Lisle (ed.), Encyclopaedia of Accounting (1904), pp.487-8.
73. Napier, 'Fixed Asset Accounting', pp.21-48. The secret reserve grew very rapidly in 1892-1912 and was not shown on the face of the Balance Sheet, instead being included, in a manner that subsequently became more common, within the caption 'Sundry balances and accounts not closed'.
74. J.R. Edwards, Company Legislation and Changing Patterns of Disclosure in British Company Accounts, 1900-1940 (1981), pp.38-40; and J.R. Edwards and K.M. Webb, 'The Influence of Company Law on Corporate Reporting Procedures, 1865-1929: An Exemplification', Business History, Vol. XXIV (1982), p.271.
75. J.R. Edwards, Company Legislation and Changing Patterns of Disclosure in British Company Accounts, 1900-1940 (1981), pp.38-40; and J.R. Edwards and K.M. Webb, 'The Influence of Company Law on Corporate Reporting Procedures, 1865-1929: An Exemplification', Business History, Vol. XXIV (1982), p.271.
76. R.K. Ashton, 'The Royal Mail Case: A Legal Analysis', Abacus, Vol. 22 (1986), pp.3-19; A.J. Arnold, 'Secret Reserves or Special Credits? A Reappraisal of the Reserve and Provision Accounting Policies of the Royal Mail Steam Packet Company', Accounting and Business Research, Vol. 21 (1991), pp.203-14. The basic argument put forward was that the accounts of the company during the 1920s were deceptive, but largely through the treatment of special incomes or credits, rather than through the use of secret reserves.
77. R.K. Ashton, 'The Royal Mail Case: A Legal Analysis', Abacus, Vol. 22 (1986), pp.3-19; A.J. Arnold, 'Secret Reserves or Special Credits? A Reappraisal of the Reserve and Provision Accounting Policies of the Royal Mail Steam Packet Company', Accounting and Business Research, Vol. 21 (1991), pp.203-14. The basic argument put forward was that the accounts of the company during the 1920s were deceptive, but largely through the treatment of special incomes or credits, rather than through the use of secret reserves.
78. L.R. Dicksee, 'Published Balance Sheets and Accountants', Accountant, 20 Nov. 1920, p.563
79. A simple one in the case of Crossley's and a highly intricate one in the case of P & O; see Napier, 'Fixed Asset Accounting'. University of Warwick, Modern Records Centre, MSS/19A/2; West Yorkshire Archive Service, papers held on John Crossley & Sons Ltd; Tyne and Wear Archives, 130/273-83; National Maritime Museum, P & O/4/9-27.
80. Lister, 'Company Financial Statements', p.233.
81. R.P. Brief, 'Nineteenth Century Accounting Error', Journal of Accounting Research (1965), p. 14. See also note 41 above.
82. Marriner, 'Financial Statements', p.225.
83. With the possible exception of Marriner's allegation ('Financial Statements', p.219) that excessive depreciation, as opposed to the misclassification of shareholders funds as liabilities, functioned as the primary means of creating hidden reserves. There is ample evidence that such accounting conservatisms as excess depreciation and the deliberate undervaluation of assets were widespread, particularly in years of high profitability, but very little that reversals took place on any systematic basis.