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SOME OBSERVATIONS ON THE EXTENT OF
BANK AUDITS IN AMERICA: 1800-1863
by
Paul Frishkoff
University of Oregon
It is easy, in the light of today, to look
back on the America of yesteryear as a simple
bucolic society. And it is true enough
that both technology and commercial
techniques in the period prior to the Civil
War were crude indeed by today's standards.
Yet the (largely agrarian) economy
did function and prosper; accounting
records were (sometimes) kept. And
though we may believe that ethical standards
of daily conduct were perhaps
higher, or people more naive and trusting,
surely there was no shortage of devious
minds at work, eager to reallocate the
wealth of others to themselves. What,
then, of the safeguards of that era?
The study described here investigates
the extent to which something resembling
auditing may have existed or may even
have been required by state law. (Most
banks which existed had some sort of state
or territorial charter before 1863, prior to
the creation of a federal central banking
system.)
There is no paucity of suggestions that
some corroboration of banks' financial
statements may have been desirable. Asset
valuation was incredibly complex, since
most banks (including some totally nonexistent
ones), many private companies, and
some municipal agencies issued their own
notes. Specie also circulated — in some
places. (Further, from 1791-1811 and
again from 1816-1836, the Bank of the
United States, with its own authority to
issue "money," existed.)
Uncollectibles were common and were
rarely voluntarily written off. Branch
banks came and went, often dragging
down the parent during their own demise.
Monetary panics and localized runs on
banks were commonplace. Physical
custody and transportation of specie were
crude. One might suppose that depositors
and governments would have demanded
such reassurances as a primitive attest
function might provide.
SOURCES
Ideally, accounting history ought to be
researched using purely primary sources:
original accounting records, reports and
supporting evidence. Realistically, this is
often extremely costly and awesomely
time-consuming, as there is no single
repository of primary records. The broader
the topic (the less, that is, one wishes to
focus solely on, for instance, a single
bank), the greater the justification for relying
on secondary sources in the form of
the works of other historians, though not
necessarily accounting historians. Fortunately,
there is a richness and diversity
of sources on bank hsitory, such that
reliance on the judgment of only one or
two key authors can be avoided.
One set of documents is a group of
studies, done independently and with apparently
little recognition of each other,
of the banking systems in individual
states. Many of these works appear to have
been doctoral dissertations which were
subsequently published. These works tend
to be scholarly, thorough, and rather
detached or unopinionated.
There is another set of sources: books
written during or shortly after the period
1800-1863. These works are no more abbreviated
than the dissertations; indeed,
42 The Accounting Historians Notebook, Spring, 1989
