ECONOMIC CLASS, SOCIAL STATUS, AND EARLY SCOTTISH CHARTERED ACCOUNTANTS

Accounting Historians Journal, The, Dec 2004 by Lee, Tom

Abstract: A recent study by Jacobs [2003] examines economic class bias in the contemporary recruitment practices of public accountancy firms. The study bases its argument on a historical review that suggests such bias has its origins in early Scottish chartered accountancy. This paper challenges the Jacobs thesis by examining the notion of economic class in relation to the social status of professions, and provides archival evidence of the effects of the recruitment practices of Scottish chartered accountants from mid 19th century until the beginning of the First World War. This evidence demonstrates a dual effect. The first is a considerable change during this period in the economic class origins of the general community of chartered accountants in Scotland and the second is relative stability in the economic class origins of their leadership. Scottish chartered accountancy immigrants to the US provide a clear example of the general community effect. They also reveal how economic class was not a significant factor in the success of their American professional careers. The data also highlight differences in these matters between chartered accountants from each of the three Scottish bodies and suggest generalizations about early Scottish chartered accountancy are inappropriate. Overall, therefore, and contrary to the argument of Jacobs, the early Scottish chartered accountancy bodies did not maintain their social status in terms of the economic class origins of their general memberships. Instead, they coped with the economics of a growing market for their services by increasingly recruiting men from lower middle class and working class backgrounds while maintaining their social respectability as a professional grouping with leaderships almost exclusively of upper class and upper middle class origins.

INTRODUCTION

The purpose of this paper is to examine the issue of "class" and its relationship through time to the organization of a maturing profession. Scottish chartered accountants in the middle of the 19th century are the initial focus of the study and their history to the beginning of the First World War provides evidence of the existence of class in a professional project intended to achieve both control over markets for services and social closure.

Motivation for the study comes from research by Jacobs [2003] on contemporary social closure practices by public accountancy recruiters in the UK. Jacobs uses a general review of the early history of Scottish chartered accountants to build his argument about the longevity of recruitment bias in this professional grouping in order to maintain its social status. In contrast, the present paper examines empirical data describing the economic class origins of the founders of Scottish chartered accountancy and compares these with data relating to subsequent members, including an important subset that developed public accountancy careers in the US. The various analyses reveal a clear change in the economic class origins of Scottish chartered accountants between 1854 and 1914 despite relative stability in the economic class profile of their leaders during the same period. The overall picture provided is of a professional group sufficiently flexible to accommodate growing demand for economic services without diminishing its social status. Further analyses identify the relative success of Scottish immigrants in the American profession and their leadership in its early development and maturation. This reveals a lack of obvious connection between economic class origins and professional success in such a context. Overall, the paper challenges the Jacobs thesis that early Scottish chartered accountants successfully maintained their economic class origins through several generations by means of social closure practices.

The paper contains several sections to present this history of economic class, social status, and professional success. It starts with a brief comparative discussion of class and status from a sociological perspective before considering the relationship of these concepts to professions. The next section uses the structure of the Victorian economic class system as a background to review the early history of the Scottish bodies of chartered accountants as perceived by Jacobs [2003]. A further section contains various empirical analyses of available data concerning the economic class origins of Scottish chartered accountancy founders, post-foundation members, and immigrants to the US. These comparisons also contain data on the leaders of the Scottish bodies and contrast their economic class origins with those of other members over time. There is also an empirical contrast of the success of Scottish chartered accountancy immigrants in America with their economic class origins. Interpretations and conclusions form the final section of the paper.

CLASS AND STATUS

The purpose of this section is to compare and contrast the connected concepts of economic class and social status and argue for the use of the former as an analogy for the latter as occurs in various studies of the sociology of the public accountancy profession. The discussion focuses initially on the work of Weber [1962].