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Balancing the Books: Convergence and Diversity of Accounting in Massachusetts, 1875–1895

Published online by Cambridge University Press:  21 August 2020

Caitlin Rosenthal
Caitlin Rosenthal*
Affiliation:
Assistant Professor, University of California, Berkeley – History, 3229 Dwinelle Hall, Berkeley, California 94720. E-mail: [email protected].
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Abstract

The late nineteenth century is often described as an era of innovation in managerial practice, including accounting. However, despite rich case studies of individual firms, we have little quantitative knowledge of average practices. This paper uses errors and omissions in balance statements to estimate the prevalence of double-entry bookkeeping and depreciation at Massachusetts corporations between 1875–1895. In 1875, 62 percent of firms balanced their returns, but by 1895 this number exceeded 96 percent. The proportion considering depreciation increased from 18 to 24 percent over the period. Firms using these techniques survived longer on average.

Type
Article
Information
The Journal of Economic History , Volume 80 , Issue 3 , September 2020 , pp. 782 - 812
Copyright
© The Economic History Association 2020

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Footnotes

I would like to thank participants in the Berkeley Economic History Workshop, the Harvard University Economic History Tea, and the Yale Economic History Workshop. Thanks also to Eric Hilt, Claudia Goldin, Stan Engerman, John Wallis, Naomi Lamoreaux, Marty Olney, Bob Margo, Rick Hornbeck, Tom Nicholas, Dana Rotz, Simo Goshev, Elena Schneider, Carolina Reid, Karen Tani, Lisa Charisma Acey, Elena Conis, Lisa Trever, and Karen Trapenberg Frick for advice during the revision process. Claire Wrigley, Cameron Black, Wen Rui Liau, Nicole Youssef, Joseph Hernandez, and Aria Beizai provided excellent research assistance. Insightful reports from two anonymous reviewers and Editor William Collins dramatically improved the paper.

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