which has been going on in most of our cities far beyond the amount represented by public improvements, or other additions to the properties (fixed assets) of the city. This deficiency of revenue demonstrates that the accounts of every municipality should be so devised that deficiencies of this nature should be shown automatically and without concealment. This is the argument which has caused me to have these charts prepared and to make this statement to you. Lynn Balance The importance of this matter is well shown in the city auditor's printed statement of the city of Lynn, Mass., of which you now have copies. Turning to the first page of that statement, in the upper left-hand corner in the current assets, you will note the deficiencies of various years set forth. You will please note that the deficiency of revenue 1908 is stated as $78,386.21, while the deficiency of revenue 1909 is given as $8,692.18. There is a difference between these two deficiencies of $70,000.00, which means that $70,000.00 less of borrowed money from long-term bonds was expended for running expenses in the year 1909 than was expended in the year 1908. The only reason why as much or more money was not expended in 1909 arises from the fact that in the latter year these printed balance sheets were presented to the city council monthly, and these prospective deficiencies were clearly evident, whereas in the year 1908, before the new methods of accounting were installed, there was nothing in the monthly statements which could exhibit this important fact to the city. government. Here is a saving of $70,000.00 or more a year to future taxpayers in the city of Lynn, which would undoubtedly have been an additional burden upon them, had it not been for this monthly statement, published as now exhibited to you. It will be noted further that the deficiency of revenue 1910 (if appropriations are fully expended) is expected to be $9,772.21. This deficiency has been caused by bonds issued for revenue purposes shown on the opposite side of the account, amounting to $10,000.00. The deficiency would be exactly $10,000.00, had it not been that minor revenues have come in during the year to date, which diminish the deficiency to the amount stated in the balance sheet. There are many other matters in this Lynn balance sheet which are interesting, and perhaps I should explain to you in the first place, turning to pages 2 and 3 of the statement, that the items set forth upon those pages are accumulated in the total set down in the lower right-hand corner in the last column but one, representing the balance of appropriations not yet expended at the date in question, September 30th. The item $353,586.73 on page 2 is made up of all the complication of accounts on that page, but it is exhibited in the balance sheet on page I as only one of the many items of liability. In addition to this item there are, as you see, a large number of other liabilities which are legal claims against the corresponding assets on the other side, and it is only when all of these liabilities are properly set upon the balance sheet in this way, contrasted with the available current assets, that we may know whether or not there are deficiencies of revenue and how much those deficiencies amount to. I think you will see clearly, if you give careful attention to this division of the balance sheet, the fundamental nature of the methods of accounting which I have described and the reason for the insistence which professional accountants should lay upon such an installation of ledger accounts as will give, without possibility of concealment, the true conditions of the finances of every municipality at least as often as once a month. The Standardizing of Municipal Accounts and Statistics in Massachusetts. By CHARLES F. GETTEMY, BOSTON, Director, Bureau of Statistics, Commonwealth of Massachusetts. It is not my purpose on this occasion to take up your time with a review in detail of the progress of the movement for the standardizing of municipal accounts in the State Laws United States, originating as it did with this organization. Merely by way of introduction, however, to what I have to present with regard to Massachusetts, I may be permitted to recall the fact that Ohio was the first state to take comprehensive action toward securing uniformity in municipal accounts and reports by the provisions of the law passed in 1902 establishing a bureau for the inspection and supervision of the accounts of cities, counties, townships, villages, and school districts. Massachusetts followed in 1906 but with a much milder act, involving no supervision by the State over either local finances or accounting methods and providing only for a return to the Bureau of Statistics by the accounting officers of cities and towns of a statement of their finances upon a uniform schedule to be supplied by the Bureau. Since then the growth of the general movement throughout the country for reform in municipal accounting systems has been noteworthy. Indiana, at the session of her legislature in 1909, adopted an act following closely the Ohio law and in some respects perhaps more complete in its ramifications and requirements; and New York, Iowa, Washington, West Virginia, Wisconsin, Rhode Island, and possibly other states have enacted legislation embodying either modifications of the Ohio law, which represents the extreme type of state supervision over municipal accounts, or the less drastic features of the Massachusetts plan. In Massachusetts we are still very strongly influenced by traditions of local self-government which have grown up through generations of attachment to the town meeting, and anything which savors of ostensible state supervision over local affairs is Massachusetts likely to be viewed with considerable jealousy, perhaps more so than in the newer communities of the region beyond the Alleghenies where the traditions of the oldest commonwealths date back as yet scarcely a hundred years. The Commonwealth acted upon this theory of local responsibility when it undertook to work out a program of accounting reform for its cities and towns. The state does not, therefore, under the present law, exercise any supervision or control over either municipal accounts or financial methods, being thus far content to act as an adviser to local officials and communities. It may be, indeed, that we shall not see proper accounting reform in some communities in Massachusetts without drastic legislation, and it may be that the time will come when the state will see fit to adopt a paternal attitude toward its cities and towns in this matter and require them to submit their accounts to a periodical state audit with a view to protecting their citizens and taxpayers from the inefficiency of their own locally-chosen officials. But the immediate prospect is that we shall continue for the present to move along the lines of least resistance, making progress year by year and step by step, trying to avoid friction between state and municipality, and cultivating mutual relations of assistance and good will. This opinion is substantiated by the attitude of our last legislature, which passed an act upon my recommendation, giving the Bureau of Statistics authority to audit the accounts of municipalities and to install accounting systems upon petition of the local authorities, the cost to be assessed back upon the city or town. Another act provided for a simple but comprehensive method of handling town finances and establishing the office of town accountant with functions similar to the auditor in cities; and this act is also effective only by vote of the town. I have no doubt that numerous towns will, of their own accord in the near future, vote to take advantage of this legislation, and that as soon as its benefits become manifest in a few towns, many others will become convinced of the desirability of following their example; and the Bureau will be kept busy for some time to come in responding to these demands for help, without being sensibly embarrassed in its efforts to reform accounting systems by the absence of such elaborate compulsory legislation on the subject as has been passed in other states. We are, in this matter, in the forefront of a great movement which is gaining headway rapidly and whose concrete results in the form of the statistical information it will furnish, will, ere long, be accepted as absolutely necessary to that efficient administration of public affairs which the people are coming to increasingly demand. If this be a correct appreciation of the momentum already achieved, are we not justified in anticipating for this cause a spontaneous, normal growth without having recourse to forcing processes? The Massachusetts act, therefore, while a recognition of the necessity for municipal accounting reform, was, at the time of its Voluntary passage in 1906, based upon the theory that any needed changes in methods would, in the long run, prove most effective if our public officials could be brought to make them in a measure voluntarily, after they themselves had come to appreciate their importance, rather than to attempt to force such changes prematurely upon municipalities unwilling or unable to comprehend the need of reform in their accounting methods. Hence, instead of meeting the question in the manner which was theoretically most logical, namely, by providing for the general installation of a uniform system of municipal accounting throughout the commonwealth, with incidental returns for statistical purposes to a central bureau upon a schedule based upon the accounting system, the legislature simply made provision for furnishing municipal accounting officers with a schedule which was to be uniform for all cities and towns. No preliminary effort to install uniform classifications or methods in the keeping of accounts, as a prerequisite for the presentation of statistics on a uniform basis, has consequently been attempted by the bureau. But to devise a schedule which would be scientific in its conception and, at the same time, capable of securing classified information upon a uniform basis from the existing heterogeneous and inaccurate "systems" of municipal bookkeeping, which, like Topsy, had "just growed," and the character of which was reflected in poorly-arranged, uninforming, and sometimes inac |