Accounting for Steam and Cotton: Two Eighteenth Century Case Studies

Accounting Historians Journal, The, Jun 1999 by Cross, Joann Noe

Robert B. Williams, Accounting for Steam and Cotton: Two Eighteenth Century Case Studies (New York: Garland Publishing, Inc., 1997, 282 pp., $57)

Reviewed by Joann Noe Cross Univerisity of Wisconsin Oshkosh

The title of this book is, unfortunately, terribly misleading. Although it is true that it touches on accounting for steam and cotton, it does so much more that steam engines and cotton cloth become mere footnotes to the main theme. This book is really about providing a historical and biographical perspective on the development of cost accounting techniques and their contributions toward advancing the British Industrial Revolution.

The book has three major sections. The first and second chapters are an intriguing synopsis of the economic history of manufacturing and the role accounting played in the evolution of business from selling to manufacturing. The first chapter carefully outlines the environment that encouraged the development of the factory system, the core of the Industrial Revolution. The second chapter, entitled "The People," considers the individuals who developed the principles of costing and cost accounting within that factory system. More than that, however, this chapter describes the cultural factors which motivated and molded these individuals. Many of those factors, such as the scientific tone of the Enlightenment and the role of dissenting religious views, become obvious once the author explains their somewhat obscure relationship to factory management and accounting.

The third and fourth chapters consider the specific contributions and embryonic development of cost accounting practices by Samuel Oldknow and James Watt jnr. It is from these chapters that the book gets its title. Samuel Oldknow embodied the character of the Enlightenment. He was a rationalist and a religious dissenter and as a result focused much of his energy on experimentation with industrial processes and products. According to Williams "Oldknow was involved with the cotton industry almost from the time it began its rush to prominence" [p. 77]. After a brief biographical sketch, this chapter examines in detail the types of records maintained over the course of Oldknow's career and highlights the evolution of those records. As a serendipitous side benefit, the reader gains considerable knowledge about the history of the manufacture of cotton cloth.

James Watt jnr is the topic of the fourth chapter. Again beginning with a biographical sketch, Williams contrasts and compares the preparation of Oldknow and Watt jnr for their respective positions. Whereas Oldknow was a dreamer whose inspiration far outstripped his ability to support his dreams, Watt jnr had been raised specifically to manage his father's businesses in a systematic and rational way. The chapter then turns to the organization of the Soho Foundry and the development of the detailed cost records used by James Watt jnr in setting the prices for his steam engines.

I found this book exciting and engaging. It is easy to read and certainly fulfills its intention of describing the foundations of cost accounting in the early Industrial Revolution. Its primary benefit, however, is the elegant way the author draws the reader into the story as a participant in the activities described.