A brief history of double entry book-keeping #8
Posted by Christie Malry on March 18, 2010 at 12:25 am
This episode, an uncomfortable one for our profession, looked at how accountants have been involved in genocide.
In 1938, the Secretary of Institute of Accountants and Actuaries in Glasgow (predecessor body to ICAS) wrote to the Secretary of the ICAEW. A party of Britain's top accountants was about to travel to Berlin for the 5th International Congress and some of his members were nervous. They went to the Foreign Office for advice. However, the Secretary of ICAEW was very keen to go to the Congress. Why?
Stephen Walker (Cardiff University) explains. Britain's big accounting firms were opening offices in Europe. There was lots of capital going into Germany following WW1, esp into Berlin. Firms wanted to follow the money, especially given the political uncertainty.
At the time, the German accounting profession had already been taken over by the Nazis. The Jews had been banished from the profession. But the British accountants were not concerned with the fate of the Jews, but were worried that their firms might be expelled from Germany or taken over. In the end, the attendees were looked after embarrassingly well. They were wined, dined, and even entertained by a band from a labour camp.
Lots of the top Nazis were interested in the Congress. Their view was that an organised and competent accountancy profession would be the vehicle for the implementation of national socialist policies. The British representatives enjoyed the hospitality. Even the president of the Society of Accountants in Edinburgh was won over, and the contingent left Germany much relieved.
However, within a few weeks all the British firms were expelled. Within a year, Britain and Germany were at war.
Warwick Funnell (University of Kent) has researched the involvement of accountants in the implementation of the Holocaust. Historically, accounting has tended to avoid the criticism levelled at other profesions, which were perhaps more obvious. However accounting was important by supporting the civil bureaucracy, such as the train system. And accountants also assisted in costings, which helped lead to the ultimate commoditisation of people. The Germans calculated a profit per concentration camp member, based on an average lifespan of nine months and the residual value of their hair, fat and ashes on death.
Accounting was also being used to square their consciences. Himmler wanted to create a sense of moral behaviour for people who were responsible and he used accounting to 'sanctify' what they were doing. Property was recorded with painstaking accuracy. In his words, "Anyone who takes a single mark will be a dead man."
Accountants have been implicated in other tragedies too. Philip O'Regan (Limerick University) has looked at the British reliefs provided after the Irish potato famine. There was a view that if relief was to be given then it should be earned. There was a prevailing view of the 'deserving' poor. The Irish population was viewed as a population that could be improved. Accordingly, nearly a million people were set on schemes that were futile, such as 'roads to nowhere'. To make it all work, lots of accountants needed. In time, this led to the development of a fairly significant accounting infrastructure.
Another rural tragedy - the Highland clearances - provides a further example. When estates went bankrupt, they fell into the hands of professional accountants. A particularly notorious one was James Brown, of mid 19th century Edinburgh. He had a strong reputation for taking estates over and evicting any sitting tenants from it, leaving them to die. His decision making wasn't entirely rational/economic. He and others tended to jump to conclusions over the tenants' morals and personal habits.
In conclusion, Jenkins asked whether dullness can be a mask Funnell disagrees. Accounting is not a neutral activity. The very act of accounting means you have to decide what to measure and how to present it.
Leave a Reply