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unicipal Accounting may be termed a by-product of increasing municipal activity. This began with what is commonly known as the industrial revolution. The establishment of the factory system, the abandoning of home production or the "domestic system," the drift of population away from country estates and agricultural employment, the increased need for making provision for the health, comfort, convenience, and for the social order of crowded settlements and fast growing cities have forced on local government activities which have made its officers responsible agents for great business corporations. Within a few decades the small trading towns on the coast and inland lines of transportation in England and continental Europe had grown from mere villages, or a collection of villages, to the proportions of cities; and the proper administration of government came to involve expenditures of millions where before only hundreds or thousands of public revenues were required. In the borough or the town the officer had immediate contact with every detail of public expense and his own experience was sufficient guide to administrative control. Increase in municipal functions forced him to rely on employees and agents, and he soon came to be dependent on them for a knowledge of details; an understanding of the financial transactions of the larger community could be had only through a well devised system of

accounts.

Accounting is a method of collecting, classifying and co-ordinating the financial data pertaining to an enterprise, public or private. As a method of collection, accountancy attempts to make a complete record of financial transactions; as a method of classification it aims to assign accurately each financial fact to an administrative department or category to which it properly belongs; as a means of final co-ordination its object is to finally bring all the data to a single subject of account into form for a complete understanding of related details. Thus by process of original record and restatement, not only does a system of accounts give a complete history of the business as a whole but Vol. II-I

also a chronological, as well as summarized, statement of transactions pertaining to each administrative interest; and, through final summaries, exact knowledge may be brought to the attention of the administrator of every relation that is important in the management of affairs. Judged, therefore, both from its methods and from its results, accountancy has come to be a true science of financial record- -a science which is fundamental to controlling judgment, both with respect to past operation, and as pertaining to provisions to be made for the future, in enterprises that are too large for the personal contact of a single head.

In the development of methods which will properly record financial transactions and reduce these records to reliable statistical statements, accounting has followed all the transformations of business itself. With each advance in complexity, and with each widening of the scope of enterprise the adoption of an improved system of records which will insure authentic results have been imperative. Private concerns have been able to survive under such conditions only that those in control may have a complete mastery over details. When intelligent direction has become impossible the private institution has failed and its business has passed to its competitors. Scientific accounting methods were first worked out in private life as a matter of survival. The public corporation, however, has not been subject to this law. Peace and social order must be preserved at any cost; public health must be protected; public convenience has commanded service of the government as the only institution which could properly represent the public welfare. The government could not die and the corporation, empowered with governing activities, has been allowed to pass on from generation to generation inheriting methods which were inaugurated under conditions that required little or no provision made for authentic record of official conduct.

Analogy with private business may still further illustrate present conditions of municipal accounts. From primitive to modern accounting there have been three steps, namely: A system of partial accounting and two systems of com