This article focuses on the relation of taxation to the history of the balance sheet. The census which was introduced by the Emperor Augustus at the time of the birth of Christ was of great importance, for it was intended to obtain a firm financial basis for expenses; consequently, it laid the foundation of a budget and the proportional distribution of taxes among those who were liable to pay. The first entries were made upon wooden boards coated with wax, which were put together in the shape of a book, originally being called "caudex" and after the introductions of parchment, "charta." The taxpayer had then to declare upon oath that he had made no false entries. Citizens shared political authority according to the amount of property declared and the Roman, therefore, kept not only exact accounts of their daily receipts and expenditures, but also exact statements of their property. The relation between balance sheet and taxation can best be explained by. an examination of the business books and tax returns of the great Florentin banking house of the Medici.

Reviews the book "Material Control and Storeskeeping In Machine Shops and Foundries," by Willis Hissler.

Reviews the book "American Investment Trusts," by John Francis Fowler.

Reviews the book "The Principles of Money, Banking, and Foreign Exchange and their applications to Australia," by R.C. Mills and F.C. Benham.

Reviews the book "Putnam's Economic Atlas," edited by George Philip and T. Swinborne Sheldrake.

Reviews the book "Manufacturing Costs and Accounts," by A. Hamilton Church.

On September 10, 1929, the special committee of the American Institute of Accountants on definition of earned surplus submitted its report to the Council of the Institute. This report was subsequently sent to all members and associates of the Institute and given somewhat general publicity. Earned surplus is the balance of net profits, income and gains of a corporation from the date of incorporation after deducting losses and after deducting distributions to stockholders and transfers to capital stock accounts when made out of such surplus. Surplus in its broadest sense is the amount of the stockholders' equity in a corporation in excess of that represented by capital-stock accounts. Capital surplus comprises paid-in surplus, donated surplus and revaluation surplus-that is, surplus other than earned surplus. Profits arising from the sale or other disposition of fixed assets or from the resale of the corporation's own capital stock are properly included in earned surplus. Earned surplus is not properly consolidated with capital-stock accounts on the balance-sheet without specific corporate action authorizing such procedure.

QNLY a few statistical series measuring the volume of business are available for a long enough period to make possible satisfactory comparisons of a considerable number of past cycles with the present. Monthly (or at least quarterly) figures are necessary, and most of the prewar statistics relating to business volumes are on an annual basis. For the measurement of physical volumes, a satisfactory series for pigiron output has been developed by Professor Warren M. Persons, going back as far as I877 in quarterly form, and to I884 in monthly form.' For the measurement of dollar volumes there is the series for bank clearings in seven selected cities outside New York City compiled by Doctor Edwin Frickey, and published in this REvIEw for May and August I930. These figures go back, on a monthly basis, to i875. For the postwar period, bank debits of certain selected cities (again excluding New York, and also certain other cities especially affected by speculative transactions) are used to measure the dollar volume of business. Fluctuations in bank debits paralleled very closely those in the clearing figures for the post-war years, and the differences between the two series are probably less than the inaccuracies unavoidable in comparisons of such series over a long interval of time. This discussion will give chief attention to the clearings or debits figures. Such statistics are, of course, only one way of measuring fluctuations in business activity; but they have the advantage of covering a great variety of payments and are expressed in dollars, in which we are accustomed to reckon business transactions. On the following page, there is presented a chart of the adjusted figures for clearings or debits during periods of business decline and recovery.2 The low points of the indexes have been plotted on the middle line of the chart; when more than one low point appears, the last low point falls on the middle line. The period of d cline (except for I875-79) is from the last significant high point of the preceding period of activity to the low point; the period of recovery, from the low point to normal (in most instances). In i888, and again in I89I, when the fluctuations were mostly or entirely above normal, six months of recovery are shown. In I895, normal wa not reached, though closely approached, on the recovery. The pre-war figures are corrected for trend (as well as seasonal movements). Consideration is now being given to the determination of a trend line (or normal) for the past few years. Until such a normal has been satisfactorily ascertained, it is necessary to show I929-30 without correction for trend. The years I92-22 are likewise shown without such correction. The application of trends would tend to increase the amount of declines, and decrease the amount of advances; but over the short periods for which the figures are shown, such periods embracing wide fluctuations, the correction for trend would form a small proportion of the actual movement. For the I922 recovery, the final point is approximately at normal. The curve for debits in I929-30 is placed on the chart to facilitate comparison with the two declines which appear to resemble its movement most closely those of I920-2I and I883-84. The high point is placed on a level with that shown for I883, and twenty months (the duration of the I920-2I decline) from the middle line. This placing of the curve is not to be regarded as an expression of opinion as to the precise extent of possible further decline, or the exact length of time until the curve turns up. The twenty-month interval is the longest shown on the chart except that of the late seventies, which is not regarded as comparable because of the peculiar movement of the clearing figures in these years, attributable at least in part to the

Many credit men and bankers tend to place a high value upon the condition of the current ratio as found in balance sheets in extending credit to borrowing clients. In many instances the ratio of current assets to current liabilities is taken for granted without adequate reasons being given for the underlying causes that brought about the change from a former position. In a particular balance sheet, the ratio may show the same figure of, three to one at the close of each of two fiscal periods, or it may show a change to a decidedly higher ratio of four to one, or again to a lower ratio of two to one. The credit man should analyze his balance sheet far enough to ascertain whether or not the improvement in the working capital was caused by the investment of inside money or outside money. Bonds involved mortgage liability and increased overhead costs. Capital stock naturally has no foreclosure possibility, but demands its rent. The changes in the ratio, caused by increases or decreases in the working capital are fundamental. They are apt to be permanent, therefore, should be analyzed carefully, in order to ascertain if the financial structure has been altered seriously by the change, as for example the flotation of bonds to fund the current debts.