it does not require much discrimination to decide which will succeed. As it is in business, so it is with all philanthropical and educational institutions. The college or university which does not appreciate the advantages of using records and reports which will give the maximum amount of accurate information is foredoomed to failure.

This is not the place to enter into any detailed discussion of methods, but a few pointed questions may suggest the wide ground covered by a complete system of accounts and records. If you find yourself unable to answer any of these questions in the affirmative, then to that extent your system of accounts is deficient.

Are your accounts of revenues and expenses so analysed that you can readilly draw up an intelligent and fairly accurate budget for the succeeding year?

This question suggests the thought of analysis of accounts into many and various headings and subheadings. In asking this question or a similar one, I have often been met with the answer that it would take too much work and cost too much; besides, what does it matter, the money has been spent and was not spent foolishly. As an answer to such an argument, the building in which we are convened suggests a valuable thought. Chemistry is the science of synthesis and analysis. The chemist first undertakes analysis so that he may understand synthesis. He first separates to its ultimate elements the compounds presented to him, so that he may know how to manufacture them. Analysis may be compared to your detailed svstem of accounts with their headings and sub-headings, synthesis corresponds to your budget. To carry the illustration farther. Some gold is brought to the chemical laboratory for assay. It looks all right on the face of it, but under the trained hands of the chemist it is analysed and found to be seventy per cent pure gold, thirty per cent dross. How much dross have you in your expense accounts, how much waste. You cannot tell unless your accounts are accurately kept and intelligently analysed. It goes without saying that no money is disbursed by honest administrators for what they considered at the time was foolish expenditure, but a proper distribution of the expense accounts will show at a later date that certain expenditures have not brought the results anticipated and that such items should be cut off or curtailed in the future. In other words they are the dross, the waste.

Do you know promptly each month what your revenues and expenses of each and every classification amount to, and their relation to the appropriations made for same, and also their relation to the corresponding month or period the year prior?

This question suggests a brief digression as to the terms revenue and expense. Please note that I do not use the term receipts and disbursements. Many colleges have no other book of original entry than their cash book, and under this system no intelligent comparison

can be made. Every liability, either for goods purchased or for services received, should be entered in the month it was incurred, and the same argument holds good as to your revenues.

Do you and your business managers receive complete statements of account each month, setting forth fully the revenues and expenses of that month? and does the dean of each faculty receive a copy of that portion of the monthly report dealing with his department? If you do not follow this practice, is it any wonder that at the close of the fiscal year you find yourselves confronted with a deficit instead of a surplus?

Are the accounts with your endowment funds carefully kept, distinct one from another, as also the revenues received from such endowments? Are the uninvested portions of these endowments so recorded as to afford your business manager the information upon which he can invest same, so as to immediately make them interest bearing?

Is an account kept of every investment and a record kept of the rate of interest it is bearing, as a guide to the suitablity or otherwise of a similar class of investment being made in the future? When an investment is one of property, have you detailed accounts to record the cost of operation of such property, and with the further object of being in a position to prepare comparative statements of such expenses of each investment one with another? If you hold the title to improved property, are you providing a reserve to cover depreciation; or, if it be a lease, are you providing a sinking fund? If you own bonds purchased above par, are you writing off a proportionate amount of the premium-each year?

Have you a methodical manner of issuing stores by requisitions, and have you what is known as a "store-room system," so as to avoid waste and possible theft. Furthermore are all supplies purchased by a purchasing agent or the business manager acting as purchasing agent, so as to obtain the best prices and prevent extravagance?

Are you figuring the total cost of operation on a per capita basis? And here I would point out that while this is a valuable calculation for comparing the per capita cost of one year with another, if carried out understandingly, it is more important to make a similar calculation after cutting out of the operation expense all tuition fees. Unlike the ordinary factory or construction company whose sole end is to manufacture or construct at the lowest cost, we may compare the college or university to the manufacture of some specially fine piece of machinery or tool, where the cost of the material or workmanship upon it is not a consideration, or to the construction of a palace or temple where the cost of marble is only a consideration in so far as the amount of money raised for its erection must not be exceeded.

The output of the college or university is the most wonderful piece of machinery known-the brain; and what is more important still, the temple it constructs, the character it builds, is fashioned after the likeness of God. Therefore the cost of tuition per capita cannot be a consideration in the same manner as other operation expenses, except in so far that the total amount expended must be in conformity with your revenues.

Finally, do you surround those employees who are entrusted with. the handling of your funds with every safeguard, so that in the hour of temptation the fear of detection may save them from committing a crime? You may say this is a low motive for adhering to the straight and narrow path. I grant it; but are we to be the sole judges and condemn the man for yielding to a temptation, the severity of which we have no conception. After fourteen years continuous practice as a public accountant, and having come in contact with many men whose defalcations I have discovered, I wish to state that honesty and trustworthiness are the rule, and that it is opportunity combined with adverse circumstances, that create the criminal. Not only to you, trustees of colleges and universities, but to all employers of trusted employees, I wish to say that you carry heavy moral responsibility if you do not throw around them the well-known safeguards of proper systems of account and periodical audits. The lack of this appreciation has been not only the cause of much loss of money and bankruptcy of business institutions, but what is infinitely worse, the ruin of homes and fair reputations.

JAMES E. DAVIDSON .

Trustee of Hillsdale College

I have been very much interested in this discussion, and think it is time there was an awakening on the questions brought out by these papers this afternoon. I hoped we should hear from some of the larger colleges on this subject. I am connected with one of the smallest colleges represented in this gathering; but the remarks that have been made come home to me, because I note the soundness of the business requirements so ably set forth in the last paper read. I think what is true of the college I represent is equally true of any college I am acquainted with. I find them regularly having deficits, and eating into their endowed funds; and they go right along doing it year after year. Some of them make an effort to make good the loss; but I think there is a most regretable carelessness on this subject. I have been very much afraid that the college with which I am connected has been cutting into the fund with which it has no right to do anything with but to make use of the income. I hope those papers will be printed and circulated, believing their usefulness will be largely

lost if they are only heard here. I think we need them, and I wish every trustee of the college with which I am connected could have a copy. I believe nothing will do more to open the fountain of public benevolence than to have the donors assured that what they give as a permanent endowment fund will be sacredly kept for all time. There is not much to encourage one to give funds to a college if he finds that the trustees are to spend the principal sum that he has set aside to be kept permanently. If we can awaken the conscience of the trustees of colleges to the importance of this, this meeting will have been worth a great deal more than it will cost.

MR. A. C. TRUE

Director in the Office of the Experiment Stations of the United States Department of Agriculture

It has been my fortune, in behalf of the United States, to examine the accounts kept of one of the federal funds granted to the colleges and universities of the various states. In this way I have seen the books of those institutions in all the states and territories; and while it is my business to examine an account which is only small in amount and limited in its application, I have, nevertheless, in connection with this examination, had numerous opportunities to become acquainted with the general methods of accounting in those colleges. I arise this afternoon simply to say that I am sure that good will come out of such a conference as this, from the getting together of representatives and trustees and accounting officers of these institutions with a view of comparison of methods of accounting out of which may come the establishment of certain principles and methods which will bring the accounts of such institutions generally into more harmonious order and establish a somewhat general system of accounting for colleges and universities. I have been impressed in my examinations of the accounts of those institutions with the great diversity in their methods of accounting. I understand, of course, the environment of these institutions is very different. The funds which they handle are naturally under very different conditions, so that I would not expect any very great uniformity of detail in their methods of accounting. But there are certain principles in accounting which it seems to me are general in their application, and which run through these institutions as a class. I am sure that such a discussion as we have had here this afternoon will lead to a better and more thorough system of accounting for colleges and universities.

FOURTH SESSION

SELECTION OF TRUSTEES

HON. PAUL JONES

Former Trustee of Ohio State University

Formerly some of the universities were divided into three classes; the magistrate, the scholars, and the disciples.

To-day in the United States we have three bodies constituting our universities and colleges: the trustees, the president and the faculty, and the students. The trustees are charged, in part, with the intellectual, moral, physical, and sometimes religious, development of a select body of youth. The rollicking and often tempestuous young men of to-day will, a generation hence, be the men who will be filling the pulpits, the teachers in our public schools, the professors in our universities and colleges. They will be the men who will be editing our great newspapers and magazines and writing our books. They will be the men who are healing the sick and afflicted, as physicians; they will be the men who will, as engineers, construct and operate our great thoroughfares and highways of travel; the architects who will erect our buildings; our lawyers and judges, who will administer justice in our courts; the educated, intelligent, and scientific farmers who will till the millions of acres of our land; in fact, the college students of today will, when they come to full manhood and enter upon the duties of life, be an epitome of what this nation then shall be. To the end that these young men and young women may be educated, trustees are charged with the duties of selecting presidents and faculties, of determining what studies, at least in part, shall be pursued. The trustees of colleges must determine what departments must be had at their institutions, and the trustees of the universities must determine what colleges shall be added to their university. They must look after the endowments, the budgets, and the appropriations. They must erect the halls, libraries, laboratories, gymnasiums and other buildings, and acquire land upon which they shall be constructed. Surely the duties of the trustee are multitudinous and responsible. The question comes to us as to what manner of man he should be. He should be a man of probity and character; and if a young man he should be one who promises to attain some distinction in his business, profession, or calling, in order to be an example to the students in the institution which he serves. Above all things he should have a constructive mind. He should be a man who is capable of originating