IN the symposium on the controversy over monetary policy, which I was privileged to read in proof, I was impressed by the great difference in practical approach to vital problems which derives from relatively small differences in emphasis among the writers. With much of what the distinguished participants in the symposium have said I am in agreement. There is also a great deal on which I differ, but I shall not take space here to discuss my disagreements. I firmly believe, however, that an airing of conflicting views in a professional publication is a valuable way to develop an area of agreement among economists, which can then be safely trodden by legislators and administrators. I agree emphatically with Friedman that economists must think things out on their merits without regard to political feasibility. Considerations of expediency not only tend to interfere with processes of thought (of the writer as well as of the reader) but also diminish the degree of reliance that legislators and administrators are likely to place on the experts' recommendations. When economists venture into politics, they are apt to cease being good economists and yet to fall far short of being good politicians. Paul Douglas may be an exception which confirms the rule. I wonder how many of the participants would accept the following propositions to which I subscribe. i. Monetary policy has some effect on economic stability, though the magnitude of this effect and the economic price that must be paid for it are controversial. 2. Limitations on the effectiveness of monetary policy are equally applicable to fiscal policy. In fact, in broader terms, they are two aspects of the monetary approach and must both contend with powerful non-monetary factors. 3. Direct controls do not attack the causes of inflation but only moderate its effects. If promptly imposed and effectively administered, they are useful in holding the line while methods of attacking inflation at its source are being adopted and put into operation. 4. size and urgency of government outlays in a modern war and in preparedness are such as to subject a free market economy to a strain that it may not be able to support without losing its character as a market mechanism. Among the participants in the symposium there are vast differences in approach, in analysis, in emphasis, and in proposed programs of action, but I am most interested in determining what area of agreement could be established. In the light of the four propositions stated above, what would be a feasible program for monetary authorities to pursue? It is clear that in an inflationary period they must not contribute freely to a growth in the money supply. Whatever the extent of its influence, it is a factor that cannot be disregarded, and it is the direct (and principal) field of responsibility of monetary authorities. They can have only an indirect and relatively minor influence on the intensity of use of the existing supply of money and must look to other institutions and groups for most of what can be done to influence it. In regulating the supply of money monetary authorities must operate principally, almost exclusively, through bank reserves. This point, in my judgment, is not sufficiently emphasized in the symposium. rate of interest as such is not effective in controlling money creation over the short run in an inflationary situation. Shortage of reserves at the disposal of banks, on the other hand, results in much more restrictive lending practices. Lerner does not like this, and many other economists think that this argument evades the real issue, which they believe revolves around the interest rate. It is true that money is practically always procurable at some rate (though not necessarily for all applicants). Monetary policy, however, deals not with absolutes but with day-to-day realities. A bank having no 1 S. E. Harris, L. U. Chandler, M. Friedman, A. H. Hansen, A. P. Lerner, and J. Tobin, The Controversy over Monetary Policy, this REVIEW, XXXIII (I95I), PP. I79-200.

Abstract This article focuses on the managerial emphasis in elementary accounting. Accounting is the art of recording, classifying and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof. Individuals interested in the accounts and financial statements of a business enterprise stress the creditors or prospective creditors, investors or prospective investors, credit agencies, governmental agencies, etc. Management is usually relegated to the end of the list. Very few texts stress the fact that the accountant's first duty is to management, and the results of his work play an important role in the decisions of management. Emphasis is placed on the fact that administrative accounting deals with those matters which are the basis of managerial decisions, business policies and administrative actions. It deals with the significant factors from which important constructive accomplishments are brought to a successful conclusion. The students completing such a course will not all become good managers or good administrators overnight or by means of one course. However, with a better administrative background even at a very elementary level perhaps we, the educators, will give the business world a better product.

Abstract A course of the seminar type in accounting theory is needed for graduate students in accounting because (1) sound theory is the basis for good practice, and (2) there is a lack of emphasis on theory in most of our curricula. Students in related fields need a means of achieving an understanding of the basic philosophy of accounting without taking numerous courses stressing techniques. The course should be outlined from the developmental or history of accounting theory point of view. It should cover the following major topics: (1) early history: (2) economics and accounting; (3) fundamental accounting concepts; (4) statements of principles; (5) accounting and the price level; (6) accounting for individual balance sheet items and theft relationship to income determination; (7) financial statement content and structure. Certain topics not otherwise covered could be presented in the form of oral reports if time permits. Materials for reading assignments will be drawn mainly from the volumes of Tim: ACCOUNTING REVIEW and The Journal of Accountancy, plus certain other periodicals, monographs, books, and pamphlets. The course should be conducted as a seminar, employing the discussion method and without extensive written reports. Examinations may need to be given only where the size of the seminar makes student evaluation by other means difficult.

Abstract In conclusion, the following general principles may be drawn from the study of cases and rulings surveyed in this paper: 1. Costs of acquiring property, including payments of liabilities assumed upon acquisition, constitute capital expenditures. 2. Repairs should be capitalized if they increase the value of an asset, prolong its life, or make it adaptable to a different use. Otherwise, they represent proper deductions from gross income. 3. Expenditures made to protect the taxpayer's business or property are generally held to be deductible provided they do not result in the acquisition of an asset of a capital nature. However, the Commissioner usually contends that such expenditures are nondeductible either because they are not "ordinary" or because they represent payments for goodwill. 4. Lump sum investments in leaseholds may be amortized over the life of the lease. Leasehold improvements, on the other hand, are recoverable over the life of the improvement or the term of the lease, whichever is shorter. 5. In the earlier decisions regarding the deductibility of the cost of demolition as a loss, the intention of the taxpayer at the date of acquisition of the property was the determining factor. However, more recent decisions have shown that capitalization is in order where the demolition is merely one step in an uncompleted transaction which calls for the substitution of a more valuable asset for one of lesser value.

Abstract The purpose of this article is to apply modifications of Newton's method for approximating the root of an equation to the solution of bond problems which require very accurate determination of the interest rate. Repeated applications of Newton's formula will give any desired degree of accuracy. However, it is not practical to apply Newton's formula more than once since the value obtained by the first application will usually give a value of the interest rate for which the corresponding function can not be found in the table. It is desirable to find a formula which will give in a single application greater accuracy than Newton's formula and which has the advantage of using tabular values obtained from the original estimation of the interest rate. has been developed in several papers in mathematical journals but its value in solving bond problems has not received sufficient attention. The use of Newton's method is explained in an article by N. Lecher.

Reviews the book "Basic Cost Accounting," by Samuel Waldo Specthrie.

Abstract This article focuses on the problem of communicating accounting information. The transmission of the information accumulated and condensed in the ledger accounts has always been a problem. Decision must be made as to the basic types of information to be included in the reports, the extent of the detail or condensation of the information, the classification of the information, the form and arrangement of the information in reports, and the terminology to be used. Since the general public is not well grounded in accounting matters, the accountant is faced with the task of making the reports intelligible. This is difficult as the accountant uses so many words in a technical sense which are already in general usage with various shades of meaning. The layman, when he sees a report in which familiar terms are used; will quite naturally believe that he understands the report. A variation of the above approach to making statements more intelligible is to use pictures, charts, and diagrams to supplement or as a substitute for the technical terms. Pictures of the various assets may be placed on the balance sheet; bars representing the total income may be segmentized to show the various expenses and the net profit; the profit retained in the business, paid to stockholders, and paid to the government in the form of income taxes may be illustrated by a pie chart; and trends in income, expenses and profits may be shown by charts.

Abstract This article deals with structural changes and general changes in the price level in relation to financial reporting. It is not possible here to compare in any detail either the techniques which might be involved, or the results which might be obtained from the various bases of adjustment mentioned in the accounting research. The table shows different possible results in the case of a hypothetical corporation whose only asset is a non-depreciable fixed asset. The assumption is made that the asset originally cost one hundred dollars, and that its current market value is two hundred dollars. It is also assumed that the selected index of general prices has risen from one hundred to one hundred fifty between the acquisition date and the current date. The capital stock is considered as having been sold for one hundred dollars on the same day that the asset was purchased. No other transactions have occurred. Specifically, there has usually been a failure to distinguish between a change in the structure of prices and a change in the general price level. A change in the structure of prices involves a change in the prices of certain goods and services relative to the prices of other goods and services, with, therefore, a change in the real economic value of both sets of goods and services. A change in the general price level involves only a proportional change in the prices of all goods and services. If there is a change only in the general price level, this does not in itself imply a change in the value of any good or service, but does imply a change in the value of money and of obligations expressed in terms of a certain amount of money.

Reviews the book "Government and Business," by Vernon A. Mund.

Introduction, 38. — I. The capital-intensity criterion, 38. — II. The nature of the product, 42; real income increases, money income stable, 43; money income increases to the extent of the incremental output, 44; the tautology of the "type III" criterion, 45; the advantages of home market industries, 46. — III. Direct vs. indirect foreign exchange requirements, 48. — IV. Practical value of the rejected criteria, 50. — V. The hazards of international financing, 53. — VI. Conclusion, 60.