ECONOMIC CLASS, SOCIAL STATUS, AND EARLY SCOTTISH CHARTERED ACCOUNTANTS

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

A third factor to consider in this historical context is the over-supply of chartered accountants in Scotland by the beginning of the First World War [Walker, 1988, pp. 40-51]. New apprentices with aspirations for upward social mobility provided cheap labor but were often surplus to requirements when apprenticeship contracts expired. There was always a large enough pool of newly qualified chartered accountants from which existing partners could select a new or replacement partner with the appropriate background - i.e. what the SAE described in its rules as individuals of "good character." Walker's [1988, p. 44] figures reveal the consequence of oversupply. Between 1855 and 1914, 23% of members admitted to the SAE immigrated overseas. This movement persistently increased from two percent of new members in the first decade to 37% between 1905 and 1914. Twenty-nine percent of this migration was to the US and, given the relatively low social status of American public accountancy at this time compared to the UK, it is reasonable to suggest immigration was due more to the lack of opportunity in Scotland than the lure of prospects in America. According to research for the current study, approximately one in 20 of nearly 3,000 members of the three Scottish bodies resided in the US by 1914.

JACOBS' THESIS

None of these detailed contextual aspects of the professional projects of the three Scottish bodies of chartered accountants appears in Jacobs' [2003] study. He purports to explore the relationship between economic class and professions and alludes to the notion of public accountants maintaining their social status by means of recruitment practices. In this respect, Jacobs follows the common approach of using economic class as an analogy for social status and ignores the historical reality of Scottish chartered accountants recruiting from the lower middle class and working class while maintaining an upper class and upper middle class leadership. He argues that the current recruitment forms of the largest public accountancy firms favor middle class applicants, with particular regard to generic and transferable skills such as leadership. He further states that the profession's habitus remains in this way, based on a middle class environment. Of relevance to this paper is his argument that this social bias is long-standing and has its origins in the social closure practices of the early Scottish chartered accountants. In particular, he cites Walker's [1988] work on the SAE's early members and the search by it for "competent and respectable accountants" and "gentlemen of professional standing" [Jacobs, 2003, p. 573]. He therefore implies that Walker demonstrates the establishment and perpetuation of a viable middle class through an explicit system of inheritance and transfer of position from one generation to the next.

These arguments are unsustainable in terms of Weber's social theory as it applies to professions and inconsistent with the empirical evidence of social historians. Public accountants according to the Weber model of organized communities are not an economic class but, instead, a collective group that weaves through the vertical structure of class. Their social status relates to the groups with which they are best associated at particular points in time - landowners and lawyers in the SAE case and merchants and manufacturers in the IAAG case, both during the mid 19th century. In addition, the empirical evidence of the economic class origins of Edinburgh, Glasgow, and Aberdeen chartered accountants from 1854 to 1914 presented in the following section reveals that, for a variety of reasons, the social closure predicted by the professional project as defined by Larson [1977] was not achieved with respect to general membership. The use of entrants from lower economic class origins as cheap labor in an expanding market for public accountancy services eventually resulted in an over-supply of chartered accountants in the late 19th and early 20th centuries. However, as previously explained, this coincided with a corresponding lack of supply in the US and many Scottish chartered accountants achieved professional success in that country irrespective of their economic class origins. The remainder of this paper is devoted to outlining and analyzing this evidence.