JOBNAME: No Job Name PAGE: 1 SESS: 11 OUTPUT: Thu Jul 9 18:22:39 2015 SUM: 98F9F0E9 /Xpp84_Wiley/wiley_journal_A/ABAC/abac_v0_i0/abac_12055 Toppan Best-set Premedia Limitedbs_bs_query Journal Code: ABAC Proofreader: Mony Article No: ABAC12055 Delivery date: 09 Jul 2015 Page Extent: 25 ABACUS, Vol. 51, No. 3, 2015 doi: 10.1111/abac.12055 1bs_bs_query 1 JOHN RICHARD EDWARDS bs_bs_query 2bs_bs_query 3bs_bs_query Accounting for Fair Competition between 4bs_bs_query 5bs_bs_query Private and Public Sector Armaments 6bs_bs_query 7bs_bs_query Manufacturers in Victorian Britain 8bs_bs_query 9bs_bs_query Failures in rifle supply during the Crimean War (1853–56) caused the 10bs_bs_query British Government to seek a more reliable method for procuring weapons 11 bs_bs_query for military use. Fact-finding missions to US rifle manufacturers led to the 12bs_bs_query introduction of the ‘American system of manufacturing’ at a purpose-built 13bs_bs_query factory in north London. The extension of gun-making facilities at the 14bs_bs_query Royal Small Arms Factory, Enfield Lock, was accompanied by major 15bs_bs_query accounting innovations driven by society’s desire for ‘cheap and efficient’ 16bs_bs_query government and, within a laissez-faire environment, the need to ensure fair 17bs_bs_query competition between private and public suppliers of military goods. 18bs_bs_query Accounting practices based on ‘strictly commercial principles’ were then 19bs_bs_query disseminated to other government military manufacturing establishments 20bs_bs_query located at the Woolwich Arsenal.The historical knowledge revealed in this 21bs_bs_query paper adds a new dimension to existing accounting historiography, which 22bs_bs_query focuses principally on the business sector as the driving force for account- 23bs_bs_query ing change in Britain. 24bs_bs_query Key words: Accounting change; Cheap and efficient government; Fair 25bs_bs_query competition; Financial reporting; Management accounting; Military 26bs_bs_query accounting. 27bs_bs_query 28bs_bs_query I think the greatest importance should be attached to pricing everything you manufac- 29bs_bs_query ture so that you may know whether you are doing it cheaper than you could get it done 30bs_bs_query for by the trade. 31bs_bs_query Sidney Herbert, Secretary of State for War, interviewed by the Select Committee on 32bs_bs_query Military Organization 33bs_bs_query (BPP 1860 (441), q. 7309) 34bs_bs_query There are good reasons why the army, navy, and ordnance were referred to as the 35bs_bs_query ‘great Departments’ of state in 19th-century Britain (BPP 1841, Session 1 (359), 1 36bs_bs_query p. 5 ). In the year prior to the outbreak of the Crimean War (1853), interest payments 37bs_bs_query 38bs_bs_query 39bs_bs_query John Richard Edwards ([email protected]) is Professor in Accounting at Cardiff Business 40bs_bs_query School, Cardiff University. 41bs_bs_query The author is grateful to Dr John Black for drawing his attention to sources that helped inform this study 42bs_bs_query and to Professor Trevor Boyns and the anonymous referees for comments on earlier drafts. 1 43bs_bs_query Parliamentary papers cited in this paper have been sourced from Chadwyck Healey’s collection of 44bs_bs_query ‘House of Commons Parliamentary Papers’ which are accessed at parlipapers.chadwyck.co.uk 1 © 2015 Accounting Foundation, The University of Sydney JOBNAME: No Job Name PAGE: 2 SESS: 11 OUTPUT: Thu Jul 9 18:22:39 2015 SUM: 5BDC087D /Xpp84_Wiley/wiley_journal_A/ABAC/abac_v0_i0/abac_12055 ABACUS 1bs_bs_query amounted to one-half (£28.1 million) of total government expenditure (£55.3 2bs_bs_query million), with the army, ordnance, and navy spend accounting for 56.3% (£15.3 3bs_bs_query million) of what remained. Three years later military expenditure had trebled to 4bs_bs_query £46.7 million, comprising over one-half of total government disbursements amount- 5bs_bs_query ing to £93.1 million (Mitchell, 1962, p. 397). 6bs_bs_query The prolonged period of peace that began with Wellington’s victory over Napo- 7bs_bs_query leon at Waterloo in 1815 left the military in poor shape when hostilities resumed 39 2 8bs_bs_query years later, this time with Russia as the enemy. The lack of progress in military 9bs_bs_query affairs during that period can be attributed to factors which include demands for 10bs_bs_query military economy when fear of foreign incursion subsided, the reluctance to 11 bs_bs_query strengthen an army whose subservience to Parliamentary democracy remained 12bs_bs_query uncertain, and public resentment at the use of troops to cope with civil disorder as 13bs_bs_query epitomized by the Peterloo Massacre in 1819 (Sweetman, 1984, pp. 15–17). Further, 14bs_bs_query whenever attempts to reform the military were mooted, the ‘Iron Duke’ of Welling- 15bs_bs_query ton was unwavering in his ‘obstinate resistance to progress’ (Sweetman, 1984, p. 15). 16bs_bs_query The ‘abysmal performance of the [British] army in the Crimea’ (Funnell, 1990, p. 17bs_bs_query 319), however, which was partly attributable to failures in weapon supply (Hogg, 18bs_bs_query 1963, p. 788; Lewis, 1996, p. 51), caused the government to seek alternative provision 19bs_bs_query by expanding its military manufacturing establishments. As we shall see, such action 20bs_bs_query had significant accounting implications driven by the following political priorities: (i) 21bs_bs_query the endeavour to satisfy current demands for ‘cheap and efficient’ government 22bs_bs_query (Perkin, 1969, p. 320; see also p. 379); and (ii) the desire to ensure ‘fair competition’ 23bs_bs_query (BPP 1854 (236), p. 103) between government military manufacturing establish- 24bs_bs_query ments (GMMEs) and armament suppliers in the private sector. 25bs_bs_query 26bs_bs_query RESEARCH QUESTION, SOURCES AND STRUCTURE 27bs_bs_query 28bs_bs_query Hoskin and Macve (e.g., 1988) have made an important contribution to our knowl- 29bs_bs_query edge of accounting history through their studies of the role of the Springfield 30bs_bs_query Armory in the development of accounting as the basis for managerialism in the US. 31bs_bs_query In Britain, by way of contrast, the government sector features little in an historiog- 32bs_bs_query raphy which focuses almost exclusively on accounting change within the private 33bs_bs_query sector. The purpose of this study, therefore, is to discover whether knowledge of the 34bs_bs_query financial affairs of GMMEs can enhance our understanding of the development of 3 35bs_bs_query accounting practices in 19th-century Britain. Such institutions comprised the Royal 4 36bs_bs_query Small Arms Factory (RSAF) at Enfield Lock, the Gunpowder Factory at Waltham 37bs_bs_query Abbey, and the following three constituents of the Woolwich Arsenal: the Royal 38bs_bs_query 2 39bs_bs_query The Crimean War commenced in October 1853 but Britain did not join until March 1854. 3 40bs_bs_query 1887 has been chosen as the end date for this study, partly to keep the length of the paper within 41bs_bs_query manageable proportions. By 1887, however, accounting changes studied in this paper had been suc- 42bs_bs_query cessfully introduced. 4 43bs_bs_query The term ‘small arms’ signifies weapons a soldier could carry into battle. The appellation ‘Royal’ was 44bs_bs_query added in 1855. 2 © 2015 Accounting Foundation, The University of Sydney JOBNAME: No Job Name PAGE: 3 SESS: 11 OUTPUT: Thu Jul 9 18:22:39 2015 SUM: 618CF537 /Xpp84_Wiley/wiley_journal_A/ABAC/abac_v0_i0/abac_12055 ACCOUNTING FOR FAIR COMPETITION 1bs_bs_query Laboratory which concentrated on the manufacture of ammunition; the Royal Car- 2bs_bs_query riage Department where gun carriages and transport wagons were constructed; and 3bs_bs_query the Royal Gun Factory where cannons were the principal output. This study also 4bs_bs_query addresses Funnell’s (2009, p. 561) concern with the lack of attention to military 5bs_bs_query accounting despite the fact that ‘war and the methods of prosecuting war have 6bs_bs_query dominated the history of humankind, and [that] the financial needs of armies and 7bs_bs_query navies until well into the twentieth century dwarfed all other government spending’. 8bs_bs_query To the extent that accounting historians have studied the British military, their 9bs_bs_query principal concern has been to explore the determination of Parliament to achieve 10bs_bs_query effective financial control over army finances and, therefore, the size and power of 11 bs_bs_query the armed forces (e.g., Funnell, 1990, 1997; Funnell and Chwastiak, 2010). Studies of 12bs_bs_query British military accounting practices have been almost entirely confined to the 13bs_bs_query affairs of the British army in the early decades of the 20th century (Wright, 1956; 5 14bs_bs_query Marriner, 1980; Black, 2001; Funnell, 2006). 15bs_bs_query The accounting records of Britain’s GMMEs are virtually non-existent, with no 16bs_bs_query ledgers having survived from the period studied here. The resources available to 17bs_bs_query tackle the research question specified in the preceding paragraph are, nevertheless, 18bs_bs_query extensive. The principal primary resource is the 19th-century content of the ‘House 19bs_bs_query of Commons Parliamentary Papers’ that stretch from the Glorious Revolution of 20bs_bs_query 1688 through to the present day.The website where these papers can be accessed and 21bs_bs_query electronically searched claims that 22bs_bs_query The [19th-century] House of Commons Parliamentary Papers are vital to the historical 23bs_bs_query