In the June, 1947, issue of the "Journal of Accountancy," appeared an article entitled "TVA's first audit by General Accounting Office (GAO) points way to businesslike evaluation." The article starts out with an editorial comment stating failure of TVA . . . to provide "yard-sticks" to measure private corporate operation; or, to be capable of being evaluated as going businesses, springs from lack of facts. General Accounting Office has made a commercial-type audit of Tennessee Valley Authority (TVA), plus recommendations, which show how TVA may be made comparable to commercial operation. . . failure to charge property taxes, depreciation, interest, and other expenses makes business men feel that government corporations, like TVA, cannot be considered commercial enterprises. The business man's objection grows out of the belief that government should not set up privileged competition with him, using his own money, and giving this competition the added advantages of freedom from taxes, interest, and other charges.

The recent discussion among accountants concerning reinstatement of fully amortized emergency facilities was in some respects, too late. It is tempting to use hindsight and observe that perhaps a more useful and timely framework within which to handle the question of reinstatement might have emerged if the profession had started to think about and to discuss the problem earlier. The quasi reorganization device has been applied during periods of business depression. In the depression situation the recorded amounts were written down in an attempt to restore current reality to tile accounting process. There is considerable justification for arguing that some of the most pressing problems currently facing accountants, namely, depreciation on a replacement cost basis, the use of inventory reserves, and the practice of expensing a portion of current capital outlay, have as their common origin a feeling that currently the accounting process is producing inadequate and, perhaps, misleading financial statements. There is not the slightest intention to argue that now is the time for quasi-reorganizations, in reverse or otherwise, but it does appear that now is the proper time to investigate, discuss, and settle upon the limits of accounting reorganizations. The relevant conditions precedent may not be far distant.

The article presents information on the pricing of exports under the foreign assistance act of 1948. The ultimate objective underlying the plans for the re-establishment of economic stability in Europe, South America, and China will be lost if the U.S., in the course of making these great efforts, fails to maintain the essentials of a sound economy for itself. Strained and stressed as the economy already is from the transitions from wartime status to peacetime operation, two major factors now enter the picture, each one of which by itself can have a profound and decisive effect upon the course of economy. People are concerned here with that aspect of the problem of maintaining a sound economy which is affected by pricing policies, and in particular with the effect of certain cost concepts on pricing policies. Lest it be thought that this aspect is anything but a segment of the problem of maintaining a sound economy, it must be said that the answer lies in other directions for many phases of the problem. For example, where the productive capacity not only is insufficient to handle these new burdens but was proved to be insufficient to handle the needs of the last war.

I. The problem, 748. — II. One country acts as a monopolist and sets a price which the other accepts, 749. — III. The same, continued, 752. — IV. One country acts as a discriminating monopolist, making an all-or-none offer which the other accepts, 756. — V. The case of pure competition, 759. — VI. Comparison of the three cases, 761.