Benign sacerdotalist or pious assailant. The rise of the professional accountant in British management

Matthews et al.'s The Priesthood of Industry [Matthews, D., Anderson, M., & Edwards, J.R. (1998). The preisthood of industry. The rise of the professional accountant in British management. Oxford: Oxford University Press] charts the encroachment of professional accountants into the realms of management in Britain. It is suggested in this review essay that the brand of economic determinism employed by the authors o€ers a partial explanation for that fundamental occupational shift. The functionalist and evolutionary foundation of Matthews et al.'s analysis invite a more critical interpretation of the accountants' stratagem. A reading of The Priesthood of Industry also indicates several issues which require the attention of accounting historians. Among these are the shifting character of the professional ideology; responses to entrepeneurialism; the social derivation of professionals; the manner of jurisdictional capture; a fuller understanding of the inter-war climacteric; and the contribution or otherwise of accountants to British economic decline. # 1999 Elsevier Science Ltd. All rights reserved. In 1875, Mr. H.J. Clarke of Trinidad wrote to the Secretary of the Institute of Accountants in London to inquire as to the possibility of his becoming a member of that august body. Mr. Clarke was politely informed that there was no prospect of his achieving that distinction because the Institute only admitted ``professional accountants''. The Secretary explained that: This term comprehends only accountants whose services are at the disposal of the Public in the same way as those of solicitors, and not those whose positions are ocial. Such as accountants to Railway Companies, Banks, Municipalities or Government Departments (Institute of Accountants, Letter Book B, p. 85). This relatively minor episode illustrates the manner in which the emergent accountancy organisations in Britain constructed the `professional' accountant as an independent, fee-earning altruist. Those accountants who were unable to exhibit these de®ning attributes were relegated to `commercial' or `trade' status. Contrast this with the fact that the successor to the Institute of Accountants in London, the Institute of Chartered Accountants in England and Wales (ICAEW), currently boasts that 55% of its active members are engaged in business. Why then, especially after 1918, did large numbers of those trained as public accountants seemingly 0361-3682/99/$ see front matter # 1999 Elsevier Science Ltd. All rights reserved. PI I : S0361-3682(99 )00035-5 Accounting, Organizations and Society 25 (2000) 313±323 www.elsevier.com/locate/aos * Tel.: +44-(0)131-650-8342; fax: +44-(0)131-650-8337. E-mail address: [email protected] (S.P. Walker). depart from the founding ideals of their profession and assume positions in management hierarchies? This, after all, had been construed as an estranged territory associated with the salaried employee and pro®t-seeking. The result of the venturing of professional accountants into the realms of management has been the creation of the `in practice'/`in industry' divide within chartered accountancy. Questions have periodically been raised about whether the profession in Britain is essentially `convergent' or `divergent', given the assortment of occupational roles pursued by its members (Solomons, 1974, p. 88). This compositional feature segments the memberships of the chartered bodies, has engendered intra and inter-organisational discord, and led to a periodic questioning of the institutional structures of the profession. In The Priesthood of Industry Matthews, Anderson and Edwards (1998) document the drift of accountants into management, such that they have become the dominant group of professionals resident in British companies. The book seeks ``to o€er a comprehensive history of the multifaceted role of the professional accountant in British business development from the pre-professionalization era down to the present day'' (p. vi). As part of this remit the authors pursue other objectives. A precursor to documenting the rise of the accountant in management is an excursus into the emergence of the occupation of accountancy, its professionalization, and the changing clientele of public accountants. The treatment of these subjects serves as a useful, if uncritical, synthesis of the literature. The authors then o€er a chronology of accountants in management during three periods: the nineteenth and early twentieth centuries, 1914± 1939, and post-1945. Likely explanations for the phenomena observed by the authors are subsequently pursued. International comparisons emphasise the unique size and character of the accountancy profession in Britain. The Priesthood of Industry (Matthews et al., 1998) represents a collation of material drawn largely from secondary sources, particularly business histories, works of biographical reference, and studies of the changing character of accounting practice. In the latter respect the authors owe a particular debt to Jones (1981, 1995). The analysis of the drift of accountants into British management is, however, based on more than the published literature. Original data is o€ered which not only quanti®es the recruitment of accountants into industry but also provides valuable historical insights into the structure of the audit market, the growth of the accountancy profession, and trends in company formations and merger activity. 1. Economic determinism and the rise of the professional accountant The basic thesis o€ered by Matthews et al. (1998) is a reassertion of the conventional view that accountants are both products and bene®ciaries of the expanding corporate economy under advanced capitalism. The analysis emphasises the primacy of market forces in explaining occupational change. The authors contend that the industrial economy, and the enormous growth in the number of joint stock companies, resulted in the increased demand for the services of accountants. They show that in 1881 the combined membership of the professional organisations in Britain was 1470. Fifty years later that number had increased to 26,006, and by 1995 it was 233,620. Of pivotal signi®cance to the profession was the growth of the corporate audit and its colonisation by accountants. During the inter-war years, when British industry responded to its diminished competitiveness by rationalising and implementing more complex management structures, it was accountants who were increasingly engaged as doctors of business. The rise of the professional accountant in management is also explained by Matthews et al. as a function of the systems of education and training provided by the professional organisations. For long, these o€ered the only available vocational preparation for a career in British management, if not necessarily the best. The exceptional rate of growth of the accountancy profession (in common with the wider service sector), and the creation of new areas of work with maturing industrialism, is examined by Matthews et al. (1998) under a determinist banner: ``we argue that, in the main, the history of the 314 S.P. Walker / Accounting, Organizations and Society 25 (2000) 313±323