fixed according to the same principles as those which govern the other professions, depending upon the skill and reputation of the practitioner and the nature of the service rendered. If all accountants could be reduced to a common denominator of mediocrity, and their services confined to the checking of books and the statement of profits and losses, in other words if accountancy should cease to be a profession and become a trade, the standardization of accounting fees might be desirable. At present, however, accountancy is becoming a profession within which the only standards applicable are those of high character, fidelity to professional trust, and devotion to the ideals of professional excellence.

Accountants as Corporation Officers.

In the April number of THE JOURNAL appeared an editorial entitled "Collateral Employment of Accountants," which dealt with certain criticisms recently made concerning the propriety of a firm of public accountants certifying to the reports of a corporation in which a member of the firm is acting as auditor. THE JOURNAL took the stand that so long as the accountant's report was made to the officers of the company, the accountant thus not representing the stockholders, there was no inherent impropriety in the relation which had been called in question. The importance of the subject and the general interest which it has aroused, warrant a more specific defence of the practise.

We have in mind several instances where accounting firms have installed systems of accounts for large corporations, which have failed to work because the company's officials and employees were unfamiliar with the details. In one case, after an unsuccesful trial of a new system, the firm responsible for its installation was asked to assume responsibility for its successful operation by designating one of the members to act as comptroller or supervisory accountant. The firm accepted the task, and one of its members was appointed as desired, assuming the official title so that his authority might be unquestioned. The comptroller, thus appointed, accepted no compensation for his services and was not in any way controlled by the corporation in whose service he nominally was. The charges for the service rendered

were paid to his firm in the same manner as charges for other services. Needless to say, the experiment was successful. The staff was trained in the new methods, and the work of the temporary official is now approaching completion.

Nothing is more common in installation work than the appointment of an accountant to supervise the system until it is working smoothly. The designation of such a supervising accountant by an official title, and the investing him with the authority of an officer, in order that he may have full liberty of action in a delicate and difficult situation, should be more common than it is.

Technique in Accounting.

An accountant of some distinction was recently lecturing on partnership realization accounts. A problem was under consideration by the class involving the apportionment of a loss among the partners on the basis of their respective interests. The problem presented no difficulties. It was an elementary exercise in short division. Five minutes' work would have accomplished an easy task. Said the instructor, "Gentlemen, how would you handle this problem? Would you be satisfied with a statement of results merely informing your clients as to the amounts which they were respectively to receive?" The class agreed that this would be all that was required. "By no means," said the instructor. "No accountant would have the effrontery to send in a bill for such puerile service. Your client would reply that he could have done so much for himself without calling you to his assistance. To justify your fee in such a case, you must express your result technically, technically, gentlemen." Forthwith the class, under their instructor's guidance, proceeded to execute a harmonious and perfectly matched arrangement of figures, accomplishing a "technical " expression of a result, which, as the instructor properly remarked, the client could have worked out "on his cuff."

Another accountant was recently requested by a client, a trust and surety company, to investigate a claim for $2,500 made by a brewing company which did a large bottling business on account of an alleged shortage of a bookkeeper, who had been.

bonded by the surety company.

The accountant, after a few hours' investigation, came to the conclusion that because of the lack of any system of control over the collectors, it was not unlikely that one of these men was responsible for the bookkeeper's alleged defalcation. He pointed out to the president of the company that they had taken no proper precautions to prevent theft, and that if the case came to trial the result would be doubtful. As a result of his representations, the accountant gave his check for five hundred dollars to compromise the claim, charging his client a fee of one hundred dollars for his morning's work.

These two instances are typical of the extremes of accountancy. In the first case the goal apparently sought was technique, the expression of the results of simple arithmetic in elaborate schedules and transpositions, shifting balances from one account to another, and thus establishing a basis for a fee. In the second instance the accountant placed his knowledge of the law of evidence, his familiarity with systems of control, and his knowledge of men at the disposal of his client, and rendered him a true professional service. Accounting is not the science of arithmetical circumlocution but the science of business control, and it should be a matter of general congratulation that sublimated bookkeepers cannot much longer masquerade in the garb of professional service.

Book Department.

MONEY AND CURRENCY In Relation to Industry, Prices, and the Rate of Interest. By Joseph French Johnson, Professor of Political Economy in New York University and Dean of the School of Commerce, Accounts, and Finance. Pp. 398. Price $2. 1906: Ginn & Company.

The first impression which the reader of this book will get will be a feeling of pleasure in the clearness of the style and thought and in the absence of abstruse and technical discussion and controversy. This clearness of statement is not obtained at the expense of slurring over real difficulties, but is due rather to the thoroughness of the author who has thought his way through the confused mass of conflicting detail to the unifying principles lying behind.

In the author's own words "the main purpose of this book is to show how the prices of commodities and the profits of business (including the wages of the workingmen) are dependent upon the laws governing the value of money." The scope of the work is broader than that of most books on the subject, for after giving an exposition of the principles of money and credit, the author proceeds to apply them to economic conditions and to show in a convincing and original way how close a relation exists between the money and credit of a country and its prosperity.

Especial care has been given to an analysis of the demand for money and to the effect of the use of credit upon this demand. Credit is a device by which the efficiency of the supply of money is increased and has the same effect upon prices of commodities as money itself. The subject of the deposit currency is thoroughly discussed and its economic effects traced out.

Credit lessens the demand for money to serve as a medium of exchange and as a store of value, but since the credit instruments are promises to pay money, there must always be enough money in existence to maintain confidence that these promises will be honored and redeemed. The principal use of money is, therefore, to serve as a basis for credit. The economic importance of money is increased rather than diminished by the use of credit, since any change in the supply of money is multiplied several times in its effect upon credit.

A chapter of great interest and profit to practical business men is that dealing with the relation of money and credit to prices. The success of the business man is largely determined by the course of prices, and yet there are very few who realize how large a part money and credit plays in fixing prices. Changes in the supply of and the demand for money and credit are responsible for the change of the general price level over periods of several years, bringing either falling prices and business depression or rising prices and prosperity. The profound effect of change in the general price level upon business arises because prices do not change uniformly but irregularly; in the United States prices would be affected in the following order: Stocks, speculative commodities, raw materials, wholesale prices, retail prices, loans, wages, customary prices. Because the costs of production of most articles change more slowly than the price of the finished article, a period of falling prices will mean a curtailment of profits and loss and discouragement to business men, while a period of rising prices will mean an increase of profits and great expansion of industry.

The very abstruse question of the relation between the rate of interest and the supply of and demand for money and credit, the connection between the amount of loanable capital and prices, has been well thought out. "A steady and continuous increase or decrease in the money supply perpetuates a maladjustment of prices and exerts a constant influence upon the rate of interest; a steady increase tends to keep the rate of interest above the normal. Sooner or later the stimulus given to industry by rising prices leads to speculation and panic. When the money supply fails to increase as fast as the demand, the rate of interest tends to decline. The decline of profits and the falling off in demand for capital are wrongly attributed as a rule to overproduction."

The author states in his preface that his theory of fiat money, especially as set forth in the chapter on the greenbacks, will doubtless arouse criticism from students in monetary theory. His conclusion is that the value of the greenbacks during the period of depreciation got their value from their utility as money rather than from the government promise they bore. Confidence in ultimate redemption is only one of the factors determining the value of depreciated credit money. The chief cause for the de