Old wine...The new Harvard bottle

              Gary John Previts, President THE ACADEMY OF ACCOUNTING HISTORIANS
OLD WINE AND ... THE NEW HARVARD BOTTLE
Professor Robert Anthony of Harvard re-exposes for considera-tion the issue of "Accounting for the Cost of Equity," in a recent article in the Harvard Business Review (November-December, 1973).
What is somewhat disconcerting to the historian who reads this well written piece is the lack of adequate reference to the interesting and important precedent episodes involved in the controversy over interest as a cost that date back fifty years and more.
Accounting historians, familiar with the evolution of income determination theory are aware of the host of early writers who be-came embroiled in this issue. Indeed the early arguments over treat-ment of interest cost (both paid and imputed) spurred publication of countless articles and commentaries along with a relatively sound but since unheralded work Interest as a Cost (C. H. Scovell, Ronald Press, 1924, 254 pp.)
Advocates of interest costing included some of the most respected academicians and practitioners of the period—William Morse Cole, J. Lee Nicholson, John R. Wildman, DR Scott, D. C. Eggleston, Thomas H. Sanders and G. Charter Harrison.
In opposition was a formidable and, perhaps, politically more prominent group, and in the sense of the outcome, the success of their position may have been in large part because of such political strength. As early as 1911, Arthur Lowes Dickinson criticized ad-vocates of interest inclusion. Dickinson's allies included R. H. Montgomery, Jos. F. Sterrett, and George O. May.
In the 1921 yearbook of the N.A.(C).A., then a newly formed group, a point by point summary of the interest debate was pub-lished. Later a special bulletin of this group (No. 61, New series, June 15, 1923) dealt with the issue and cited one of the earliest empirical investigations in modern accounting—a questionnaire circulated among members seeking to determine opinion concern-ing the interest matter.
It is evident that the interest topic has had a complex evolution. This explains the unsettling feeling which one experiences when