Data computing is a far older practice than most people realize, and it has always been linked to accounting. The Mesopotamians claimed the earliest use of an adding machine—the wire-and-bead abacus—2000 years ago. More recently, in 1890, Herman Hollerith and James Powers invented the punch card, a computing technology that may be familiar to older readers. Punch cards read information that is mechanically stamped into paper, easing the need for handwritten accounts and timesheets and increasing access to data. Articles evaluating accountants use of technology appear from the very beginning of the CPA Journal archives. Although decades-old mechanical technologies may pale in comparison to today’s global digital networks, the CPAs of the past likewise grappled with the still-relevant themes of innovation, evolution, and obsolescence. Every advance in technology has been met by professionals reassessing their skills and adapting to a new environment. Here, we take a look at some of the most compelling technology-driven Journal articles from our archives.
Mechanization of Tax Assessments and Collections
“There is probably no other field of governmental effort that lends itself to mechanization any more than that of taxes and assessments and the ultimate collection of taxes,” wrote Chas. J. Maxcy in the October 1935 Journal (p. 3). In the article, Maxcy presents himself as an advocate of early tax assessment technology—which, at that time, included field cards, assessment rolls, tax rolls, and lot ledgers, all prepared using electrical typing machinery. Maxcy wrote that “The multiplicity of transactions, the necessity of speed, the demand for accuracy and the limitation of time are all factors contributing to the necessity of modernizing this branch of government.” Not only does government benefit from the adoption of technology, but it is obligated to embrace the improved precision it can provide. The article predicted that poor technology could lead to societal breakdown: “When metropolitan communities do not adopt a systematic and orderly method of ascertaining what is the actual valuation of the various properties assessed, opportunities for many irregularities are opened. Property may be under- or overassessed and favoritism may creep in. This results in unrest and dissatisfaction on the part of the taxpayers and in many instances has led to tax strikes with the attendant curtailment of those vital government functions such as education and protection.”
Electrical Operation of Card Files
Manually filing, sorting, and retrieving data were integral skills for CPAs in the 1940s. A desktop machine called a “selector,” sold under the Electrofile brand name, assisted CPAs in carrying out such tasks, and author Raymond L. Collett described how they worked in the October 1940 issue (p. 24). A card was placed on the selector, and, by depressing keys on a keyboard and moving the operating bar, the typist would choose the selected card. The machine could hold up to 1,000 cards, identified with a series of alphanumeric symbols. Collett’s long description of the operating steps to mastering card filing systems makes one grateful for computer keyboards—even if they pose a risk for carpal tunnel syndrome.
The Application and Use of Machines and Electronics in Accounting
In October 1955, author Kermit M. Pennington lamented that machine accounting still required the “limitation” of step-by-step human direction (p. 582). Pennington thought it was high time that CPAs directed the “computers … developed for scientific and mathematical calculations” for their own use. He takes readers on a timeline of computing technology, from the ancient Romans’ use of the abacus, to its adoption in China and Korea, and the development of abacus-like tools in Egypt, Greece, Russia, Armenia, and Turkey. (In an interesting historical note, the author notes that, in January 1955, a Japanese student performed calculations 20 seconds faster than a student with an adding machine!) Pennington brings us through the lesser-known technological advancements of 17th-century France, 1880s America, and 1930s America—leading to 1944, when Harvard University and International Business Machines (IBM) developed the first widely known “thinking machine.” Pennington urged accountants not to take technology for granted, but instead to use it with great care to protect valuable client data: after all, he noted, “the effect of electronic equipment on our economic life is of the same magnitude as the effect of the H-bomb on our military strategy” and “its potentialities must be made to work for the good of all mankind.”
This brief article, penned in February 1956 (p. 103) by the NYSSCPA’s Committee on History, shows how quickly the pace of technology turns what was once considered an innovation into a historical curiosity. The article remembers Colonel Charles Ezra Sprague, a CPA, banker, teacher, author of the first CPA law, and member of the New York State’s first Board of Examiners. The polyglot invented a revolutionary “savings-bank-teller’s machine” to aid him in bookkeeping duties. “In one operation it made the necessary entry in the depositor’s pass-book, recorded it for the bank’s records, and accumulated the day’s total,” writes the committee. Sprague refined and patented the machine and sold it to banks. The machine’s name—automalogothotype—was quite a mouthful. The last one was built in 1917, never to be ordered again. Perhaps rebranding would have helped its longevity?
How CPAs Can Adapt to the Computer
More than two decades before IBM unveiled its personal computer, CPAs were already feeling the “squeeze” of “full computer systems, medium-sized computers, and small-scale ‘desk-size’ computers” being “employed as bookkeeping and data recording devices for banks, manufacturers, retailers, service organizations, and professional firms,” according to John E. Lennox’s December 1965 article (p. 893). Commencing a long contemplation about whether in-office technology is a blessing or a threat, Lennox reminds readers that the computer is a tool created “to speed up man’s thinking abilities,” including business facts and data that an “electronic brain can devour, digest, store, and spout when called upon to do so.” CPAs must master the latest technology, the article concludes, or become devoured by the competition—among which the author counted banks and data processing services that could handle bookkeeping functions, financial statement preparation, and trend forecasting. Lennox described as a case study his own company, which purchased an “add-punch” adding machine (for $9,600!). Using the machine gave the firm employees confidence to upgrade to an NCR Model 3100, a “full accounting machine” with an electric typewriter and paper tape recorder, which helped the firm generate income, purchase an early computer, run feasibility studies, and open two new divisions for accounting and management services. The author’s attitude toward new technology is simple: planning, technical training, and practical experience lead to success.
Editors’ Note:Reproductions of the articles discussed above will be included in the online version of this article.