Milling around;

              86 HASKINS & SELLS April
Milling
ACCOUNTANCY practice becomes more
complex as education and experience
provide with a widening interest and en­larged
fund of knowledge relating to ac­counting,
those outside of the profession
who have to deal with business and finance
and legal matters pertaining thereto.
The group outside of the profession is an
ever-increasing group. At present it in­cludes,
at least, public utilitists, industrial­ists,
commercial bankers, investment bank­ers,
economists, statisticians, teachers, gov­ernment
officials, legislators, engineers, ap­praisers,
lawyers, risk-bearers, and the
judiciary.
That these classes of individuals should
have an interest in accounting is but nat­ural,
inasmuch as they have a common
interest in capital and income, which are
the controlling factors in the accountant's
consideration of business affairs. But each
class is influenced by his own concepts, by
the concepts of his group, and by the color­ing
which is given to him by his particular
point of view and his problems.
The business man, having been forced by
modern conditions, tax problems, and the
tendencies of the times to consider financial
data as a basis for judgment, is buffeted
about in the tempestuous sea of conflicting
opinion. He derives certain views from
reading the daily papers, and, perhaps, the
business magazines. His bankers and law­yers
may advise him along other lines. The
appraisal companies give him ideas which
contain an element of conviction, but which
are not accepted by the world at large. His
accountants truss him up, so he sometimes
appears to think, with an assortment of
doctrines which would be dogma if there
were authority to enforce them.
The accountant engaged in public prac­tice
is in much the same position as the
business man, with respect to the prin­ciples
which govern the accounting for
capital and income. There is no supreme
authority to which he can turn for guidance
Around
and support. No two representatives of
other vocations agree with the accountant
or with each other. Even governmental
bodies which attempt to set up rational
standards are drawn into endless argu­ments
because of the possibilities of argu­ment
offered by different points of view.
Something of the eternal problem is seen
in a letter reproduced below. The letter is
from an eminent lawyer; one who has had
no small experience in drafting legislation
governing corporations. Although appear­ing
in spots to be somewhat caustic, the
letter is in no sense intended to be un­friendly.
It is merely a cold-blooded state­ment
of the situation as a lawyer sees it.
"When we talk about the capital stock,
or capital, or stated capital of a corpora­tion
we are talking about two things:
"1. The fund that must be contributed
and maintained as a trading fund to take
the place of individual liability, and
"2. The capital, stated capital, or capi­tal
stock which operates to measure, deter­mine,
or limit the assets available for dis­tribution
by way of dividends or otherwise
than by way of reduction of capital, capital
stock, or stated capital.
"There was a time when statutes gen­erally
required the fund for the protction
of the public to be provided in cash, but
nowadays that fund may be provided in
money or in property, and property may
be taken and considered at its fair value to
the corporation.
"If, so far as the public is concerned, a
corporation may start in business either
with money or property at its fair value to
the corporation, it ought to be agreed by
everyone that the company is required only
to maintain a fund equal to so many dollars
in value of property to the corporation so
that so far as the public is concerned, I can
see no reason why assets should not be
written up to their true or fair value to
the corporation.
"If the Star Manufacturing Company