SOME months ago it became apparent that important basic industries were lagging behind in the process of economic recovery which seemed to be under way in the United States. Throughout the entire depression trade has been slackest and unemployment greatest in industries producing durable goods. This has occurred in spite of the efforts of our governments, federal and local, to carry through ambitious programs of public works; and it becomes very striking when the low level of production in these industries and others largely dependent upon them is compared with the levels recently obtaining in industries that produce goods of a relatively perishable character. The employment indexes of the Bureau of Labor Statistics show that a group of large industries producing such commodities as beverages, butter, meat and meat products, wirework, explosives, chemicals, soap, and rubber goods (other than tires and shoes) were in November employing numbers of laborers that ranged from 2.7 to 36.6 per cent in excess of the number employed in the basic year (I926) used in constructing the index. In exceptional cases, where for special reasons there exists a very strong upward trend, much higher increases are recorded, ranging from 69.3 to I89.I per cent. But, when one turns to industries producing durable goods such ,as cast-iron pipe, steam fittings and heating apparatus, structural metal, agricultural implements, railroad cars, locomotives, lumber, brick, tile, cement, and stone, the number of people employed last November ranged from 20.2 to 50.0 per cent of the number employed in the base year I926. Equally startling is the record of industrial production shown by the Federal Reserve Board's index which, unlike the employment data just used, is adjusted for seasonal variation. Production of consumption goods such as textiles, shoes and leather, rubber tires, food products, paper and printing, tobacco, and petroleum products ranged last October or November1 from 89 to I52 per cent of the production in the base years (I923-25). At the same time production of iron ore, lumber, automobiles, cement, iron and steel, lead, and zinc, ranged from 23 to 72 per cent of average production in the years chosen as a base. It is too clear for all doubt or cavil that, in considering what should be done with the Securities Act, we must take into account the fact that industries producing either durable consumers' goods the marketing of which requires the use of consumers' credit, or capital goods the sale of which depends upon the ability of industries to finance their capital requirements, will be seriously affected by any measure that restricts the flow of capital into industrial enterprise. The unfavorable showing of this important group of industries is one of the discouraging factors in an economic situation which upon the whole shows decided improvement. No single cause accounts for it. Provisions in some of the codes, by which restrictions are placed upon the introduction of new machinery or effort is made to restrict excessive production, cannot but react unfavorably upon certain basic industries. Debasement of our currency, beside impairing general confidence, makes it difficult to look very far ahead, and so injures the construction industry and others dependent upon it. Finally the Securities Act of I933 interferes seriously with the flow of capital into industries that require financing upon any substantial scale. The Act is not the only reason for the extremely small volume of financing in I933, but it reacts unfavorably upon the very industries that now lag behind the general economic recovery. The need of federal regulation of security issues is patent, and the general procedure prescribed by the Act seems appropriate and effective. The difficulty is that some of its provisions impose liabilities that issuing houses and security dealers would be foolish to assume. In investing one's own funds it is impossible to avoid mistakes, and the same is true with the business of buying securities for sale to others. The facts presented in any prospectus or oral communication are frequently of a sort that does not admit of exact determination but must depend upon someone's judgment which, with the best of intentions, may turn out to be bad. To sustain the burden of proof that he did not know, and in the exercise of reasonable care could 1 In some cases November figures are not yet available.

Abstract Independent research in business is demanded increasingly with the ever-changing conditions of production, marketing, finance, and consumption. Ability to examine, to organize, to draw logical conclusions from, and to report upon available data is needed. This requires the services of a trained research worker. Training for this work is best provided in college or university postgraduate years. It is assumed that the basis for graduate work in accounting shall be determined largely by accepted standards for graduate work generally. A restatement of such standards, with some comments, may therefore be justified. It is believed that thesis standards are more or less generally established under independent scholarship. It also include an appropriately limited subject, a definitely stated purpose or problem, adequate collection of data by various means, reasoning-organization, analysis and conclusions. Moreover, written expression of the work done, which is the basis of the conclusions too finds a mention in the standardization.

England's rivals, 304. — Each century had its spokesman: Malynes, 305; Mun, 306; Gee and Postlethwayt, 308. — The Wealth of Nations an attack on all three, 311. — To Smith foreign trade is internal trade internationalized, 312. — Defining mercantilism as protectionism obscures the issue, 314. — Three clues to Smith's significance: his realism, his balance, his creating as he builds, 315. — The place of America in Smith's thought, 315.

Abstract There is an increasing tendency for the U.S. statutory law to rest dividend declarations upon the existence of an excess of assets after excluding appraisal increases. This is accompanied by a tendency to drop the traditional common law test of the existence of undivided profits. The growing preference therefore seems to be for an indirect control over dividends by rules which say in effect, maintain capital and all excess assets may be disbursed as dividends. This type of rule creates the problem of defining the capital which is to be maintained. On the other hand, a direct approach to dividend control would favor a rule which would say in effect, no dividend disbursement may be made beyond the amount of the accumulated, undivided profits. The problem then would become one of defining profits for dividend purposes. Presumably either method could be made to work satisfactorily provided only that respective definitions were comprehensive and their interpretations clear enough to furnish trustworthy controls in all instances. But recent changes in corporation statutes have not shown much tendency to produce an adequate definition of the capital fund to be maintained before dividends may be declared.

Abstract The British were the first to face the problem of finding a way to control unsocial individualism without resorting to absolute prohibitions. Early in the nineteenth century the government was under pressure to relax the prohibition of company promotion which dated from 1720 and to make the incorporation of joint stock companies somewhat easier. But the thought of simple repeal of the Bubble Act brought visions of another disastrous era of unrestrained stockjobbing and wild speculation. The problem was to find a way to yield to the pressure for free incorporation without opening the way for former excesses. The answer was found in breaking the privacy of accounting information. This was the British approach in the early nineteenth century to a control over private business affairs through semi-public accounts. Attempts at control in the United States came later and seem in comparison rather unorganized. The U.S. have had nothing quite as effective as the British registration of proposed incorporations.

Abstract The fault of having two bases for dividend is that they may be considered identical when that is not the case. With two bases in existence the way is opened for creating an excess of assets by revaluation and for paying dividends out of prior profits while allowing revaluation surplus to take the place of the profits withdrawn. Recent experiences have suggested the need for some measure of enlarged control in the public interest over corporation finance and operation. For the most part these control measures have been aimed at the issue of securities, that is, aimed at controlling promotion. But promotion is secondary to the expectation of profits and expectations of future profits rests very largely upon the current and recent past experience in producing profits. It is clear therefore that a sound legal and accounting determination of real profits has much more significance than has the theoretical preservation of a margin for the protection of creditors of a limited liability corporation.

Abstract Beginning students usually find their introduction to nominal accounts and accruals the hardest spot in their first semester. A large part of the confusion may often be due to the undigested condition of illogical material presented earlier, nominal accounts and accruals themselves should not be hard to grasp. But even though they do present difficulty to the student they should be strongly stressed very early because in them is the essence of the accrual basis of accounting which accountants are so anxious to see replace the cash basis. In fact so completely do nominal accounts and accrued items embrace the heart of modern accounting that they might well be made the foundation of the introductory work itself. This would mean a start based upon the Income Statement rather than the Balance Sheet. Instruction in elementary accounting is still very much under the influence of age-old traditional methods of teaching bookkeeping. Bookkeeping instruction traditionally aims at teaching a balanced recording methodology, it appeals to imitative faculties rather than reasoning processes, it over-simplifies a naturally complex subject by artificial rules of thumb, it introduces personal debts very early, presumably merely because external transactions and personal accounts bulked large in early bookkeeping.