Waltham system and early American textile cost accounting 1813-1848

              David M. Porter PEAT, MARWICK, MITCHELL & CO.
THE WALTHAM SYSTEM AND EARLY AMERICAN TEXTILE COST ACCOUNTING
1813-1848
Abstract: This study of the original accounting records of a pioneering American industrial enterprise narrows by one half the time lag between the earliest known English and American applications of industrial cost accounting. The research in-dicates that the precursors of the costing systems now considered essential tools of management were in use virtually from the beginning of large scale industry in America.
The transition from mercantile to industrial accounting remains one of the greatest expansions and refinements of accounting thought since the formulation of double-entry accounting itself in the 15th century. In the words of accounting historian A. C. Little-ton, "this transition signified the expansion of bookkeeping (a record) into accounting (a managerial instrument of precision)."1 Yet information as to the emergence of industrial cost accounting in Europe and particularly in America remains sketchy. Most his-torians have relied on published sources such as management pub-lications and textbooks in establishing the chronology of cost accounting's development. Because of the dearth of cost account-ing materia! published between 1820 and 1885, it is generally held among accounting historians that little of significance in the field of cost accounting occurred between these dates.2 Recently, how-ever, several accounting historians confirmed through research on original accounting records that industrial cost accounting was being developed with surprising sophistication in the textile mills of England and New England much earlier than previously supposed.
In 1972 H. Thomas Johnson published the results of his study of the accounting records of the Boston based Lyman Mills. Johnson challenged the conclusions of Garner and other leading business historians by demonstrating the application of a "sophisticated cost
For assistance in the preparation of this study, I wish to express my debt to the late William Holmes, to Peat, Marwick, Mitchell & Co. and to Robert Lovett of the Manuscripts Division, Baker Library, Harvard Graduate School of Business Ad-ministration.