ECONOMIC CLASS, SOCIAL STATUS, AND EARLY SCOTTISH CHARTERED ACCOUNTANTS

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

The SAE and IAAG managed their professional projects in different ways, and it is clear that SAE leaders regarded their members as socially superior to IAAG members [Shackleton, 1995]. The SAE saw no need to restrict the number of apprentices contracted to individual members whereas the IAAG did. The IAAG, on the other hand, and in contrast to the SAE, had no indenture entry fee. The SAE attempted persistently to persuade the IAAG to change this policy. In 1890, the IAAG and the SAA opened their memberships to experienced accountants without the required education and training always insisted on by the SAE. As a result, Dundee accountants preferred to join the IAAG rather than the SAE until the merger of these bodies into the Institute of Chartered Accountants of Scotland in 1954. These differences reflect the difficulty of judging issues such as economic class and social status outside the historical and geographical contexts in which they took place. For this reason, the following section briefly examines contextual matters of history in both the US and Scotland that are relevant to this study.

AMERICAN AND SCOTTISH PROFESSIONAL DEVELOPMENTS

The history of the public accountancy profession in the US appears in numerous writings and does not require detailed coverage in this paper. Writers such as Miranti [1990] and Previts and Merino [1998] are the sources for the following comments.

American public accountants were slow to professionalize and organize compared with their British counterparts. Despite considerable economic expansion in the US throughout the 19th century, visiting British accountants provided much of the early public accountancy services needed to protect the interests of UK investors in industries such as iron and steel, mining, brewing, and railways. These temporary assignments led to the identification of long-term opportunities to provide professional services and, in the last decades of the 19th century, professional bodies (e.g. the American Association of Public Accountants) and firms (e.g. Barrow, Wade, Guthrie & Company) appeared with significant British chartered accountancy input. Expansion of this early professional provision, however, created employment opportunities that exceeded the number of available American-born accountants with sufficient skills and led to continuous recruitment over several decades of young chartered accountants from the UK. Scottish men formed an important element in this migration and many were influential in the early history of the American public accountancy profession [Lee, 2002a and b].

These American events coincided with a period in Victorian Scotland when there was a limited supply of recruits with economic class origins consistent with those of the founders of chartered accountancy. Thus, economic and social incentives associated with upward social mobility encouraged many lower middle class and working class families to make considerable sacrifices for sons to achieve economic wealth and social respectability as chartered accountants. Walker [1988, p. 255], for example, reports that approximately six of every ten SAE members between 1855 and 1914 were upwardly mobile and approximately one in every 25 were downwardly mobile. Kedslie [1990, p. 80] reveals a similar trend between 1854 and 1904 in the overall figures for the Edinburgh, Glasgow, and Aberdeen bodies.1 Her data suggest that, whereas at foundation nearly two-thirds of chartered accountants had fathers of independent means or professional background, this proportion fell postfoundation to less than 50%. Conversely, lower middle class and working class recruits increased from approximately one in every ten to two in ten. Entry hurdles such as fees and training periods obviously may have deterred some but did not put off many others. In addition, apprenticeships were relatively inexpensive means for established Scottish chartered accountants to provide client services in an expanding but highly competitive and unstable market in Victorian Scotland. The economic necessity to be profitable appears to have overtaken any concern there may have been regarding diminished social status and habitus at least as long as the professional leadership reproduced satisfactorily.