Knowledge that Transforms

Reviews the book "Principles of Business Law," 2nd ed., by Essel R. Dillavou and Charles G. Howard.

Reviews the book "Capital Expansion, Employment, and Economic Stability," by Harold G. Moulton, George W. Edwards, James D. Magee and Cleona Lewis.

Reviews the book "An Introduction to Monetary Theory," by Lester V. Chandler.

Reviews the book "Credit Manual of Commercial Laws, 1940."

The question whether premiums paid upon the redemption of an entire issue of preferred stock should be charged to earned surplus or capital surplus, has been the subject of difference of opinion among accountants for a long time. Even at present, many members of the accountancy profession seem to take opposite points of view in the matter. This study is based on the reasoning developed from the economic concept of profit and loss in business and from the single entry method of calculating profits. The conclusion, that the premium paid upon the redemption of an entire issue of preferred stock is properly chargeable to earned surplus to the extent that the total premium paid exceeds the amount of premium paid into the issuing corporation on the same issue of preferred stock at the time it was issued. The question under consideration does not deal with the treatment of discount on preferred stock when an entire issue is redeemed at a discount. Accordingly, no comment is made on that phase of the subject.

Reviews the book "Executive Compensation Practices of Retail Companies: 1928-1937," by John C. Baker.

Accounting by departments of the Federal Government is not often referred to as a model of modern efficiency, and is commonly regarded as dating from the Hamiltonian era. The organization under the Commissioner of Accounts and Deposits of the United States Treasury Department which performs the accounting functions with respect to funds appropriated by the United States Congress for Emergency Relief, however, has demonstrated that it is possible to maintain an accounting system in the Government which is comparable to systems of the largest and most progressive industrial corporations. Expenditures made under the Emergency Relief Appropriation Acts amounted to $11,924,829,853 as of January 31, 1940 and the tremendous job required for detailed accounting and reporting in connection with these disbursements was accomplished with speed, accuracy and efficiency having infinite lessons and applications for the whole Federal accounting system. The Federal Government in adopting this system of accounting for Emergency Relief expenditures has demonstrated that it is possible for it to maintain a system of accounting as efficient as private industry.

The outstanding Federal administrative trend is, of course, the enormous increment of new responsibilities, which has accrued to national administrative agencies. The familiar fact that the budget of Federal expenditures is twice as large as ten years ago and over six times as large as twenty-five years ago is but an indication of this growth. The mere recital of a quantitative measure, however, does not by any means tell the entire story. The problem of maintaining and improving accountability in the Federal government is one that requires continuous vigilance and a strong concentration on the importance of balance in the administration as well as in the entire national life. The democratic system if properly implemented should assure this balance because of its guarantees of freedom of expression, of responsiveness and compromise in the legislative process, and of continuity and coordination in the executive process. It is for this reason that the author regards recent administrative trends in the Federal government as of major importance because they are, in his opinion, a great step forward in operating free institutions.