JOHN McDONALD
By Harvey Mann Concordia University
John McDonald was a founding member of the Montreal Association of Accountants, the oldest professional accounting society in North America. He served this Association as a member of Council from its inception and was its president in 1897 and 1898. He was also the father of the founder of McDonald, Currie and Company, a world-wide firm of professional accountants until 1974 when they affiliated with Coopers and Lybrand, thereby formalizing an association that had extended over many years.
McDonald was born in Tain, County of Ross and Cromarty, also known as Ross Shire, Scotland, in 1841 and came to Canada as a youth of fifteen in 1856. It is interesting to note that Tain, which is only a relatively small village (population 1931—1,383) was also the birthplace of Philip S. Ross, another very well known accountant whose name is carried on in the firm of Touche, Ross and Company. McDonald’s first job on arriving in Canada was with his merchant uncle in Picton, Ontario. It is incidental but revealing of the independence of the youth, that his uncle was his only relative in Canada. Three years later, looking for a wider field of action, McDonald came to Montreal where he entered into business with the firm of Louis S. Black and Company, wholesale dry goods merchants.
It wasn’t until 1867 at the age of 26, that McDonald went into the practice of the profession of accounting. Although McDonald may have been familiar with the records of the firms he worked with, it seems quite obvious that his formal training as an accountant could not have been too detailed. This, however, may indicate the relative simplicity of the accountant’s lot about a century ago. However, it is also quite evident that McDonald had a natural talent for the work, that he had learned his lessons well, and probably most important, he had the appropriate character to suit his chosen profession. During the 1880’s and afterwards, he was the auditor of many of the larger companies in Montreal, firms such as Laurentide Pulp Company, Shawinigan Power, Shaw-Cassils, Dominion Cotton, Frother-ingham and Workman, and the Montreal Tramways. It also seems that he worked for the Bank of Montreal although there was no legal requirement for an auditor in the Bank Act until 1913.
Some evidence of McDonald’s work has come to hand as part of the financial statements of Montreal Cotton Company during the 1880’s. These statements for 1884 are hand written as is the audit report which is reproduced below.
Auditor’s Report
Montreal, 2 February, 1884 A. F. Gault, Esq. President
Montreal Cotton Company Montreal
Dear Sir:
I have examined and audited your Company’s books, vouchers and final statement for the year ended 31st De-cember, 1883, and found them correct, complete and in proper order.
I would direct your special attention to the final statement called the “Summary” which shows in a concise and comprehensive manner the specific relations of the differ-ent classes of assets to their liabilities, and of the surplus of the assets to the capital and reserve accounts.
Yours truly John McDonald Auditor
The Summary referred to in the report is a unique presentation of the balance sheet which provides useful information and understanding to the reader. At the same time, it gives us some insight into the expertise that McDonald brought to his work. Since one of the purposes of examining accounting history is to see whether the past can be useful for the future, it is felt worthwhile to reproduce this statement in full.
The Montreal Cotton Company 31st Dec 1883 Summary Expenditure on property, construction and plant 1,236,465.87 Less: Liabilities thereon: J. Bullough, loan 146,000.00 C. Parham, Mtge 6,553.2 152,553.22 Net total on Property Construction plant 1,083,912.65 Cloth manufactured and in process and other realizable assets 178,846.76 Cloth manufactured held against advances 209,640.42 388,497.18 Liabilities, Bills Payable, Open accounts, etc. 244,190.50 do, secured by cloth held as above stated 259,668.23 503,858.73 Total deficiency in active assets to meet active liabilities 115,361.55 Net total surplus of assets over liabilities 968,551.10 Represented by: Capital account paid up 794,200.00 Surplus a/c as shown in contingent & profit and loss a/c etc. 174,351.10 968,551.10 Memo lndi rect I iabi lities Bills receivable under discount 9,532.54 I. W. Howard Secy:Treas Verified John McDonald Auditor
Montreal 2 Feb 1884
This Summary can only evoke admiration for its conciseness and clarity. It is possible that McDonald wrote all the statements himself but of greater interest is the definitiveness of both the report and the Summary. There is no equivocation, only one footnote in the body of the statements referring to bills discounted and there seems to be no reservations as to the correctness of the financial state-ments. Further, the strength of the signature and the title of Auditor leaves no doubt in the reader’s mind that the auditor meant every word he said.
The accountant’s lot may have been simpler in those days but it is clear that this auditor felt his responsibility very deeply. This is made evident by a paper McDonald presented in 1898 at the quarterly meeting of the Chartered Accountant Association of Montreal. The paper called “The Sphere and Duties of Public Accountants” explains in somewhat rotund and formal language how an individual became a public accountant, how to prosper in the profession and the duties that had to be performed. To enter the profession all that was required was experience, usually acquired as a clerk in business, plus the desire or necessity to strike out on one’s own. However, to build up and hold a clientele the accountant needed (and needs to this day) an “honorable character, good judgment, and mental power” plus “courtesy and sauvity.” Insofar as his knowledge was concerned, the accountant had to have “the ability to define incontrovertible facts, and to render, record, and certify them so conclusively that they cannot be successfully assailed.’’ With all the complications and problems facing the profession at this time, even the public accountant of today cannot meet these criteria and at the very least would not be able to be so definitive.
The type of work performed by the accountant in the late 19th century also seems to have had different priorities than what is required today. On the assumption that McDonald listed these duties in order of magnitude, the most important was devising and designing methods of accounting for every variety of business. Furthermore, these methods must be accomplished with the least cost but be able to provide clear and incontrovertible proof of each and every transaction. The second duty was to correct and rectify faulty accounting systems and since the accountant was proficient in “adjusting entries” it followed that he would be able to arbitrate any differences in the old improper accounts. The third duty was the administration of estates both solvent and insolvent. It seems that a large portion of the accountant’s work was involved with this type of engagement as many of the advertisements by public accountants around this time emphasized the fact that they were administrators of estates. The fourth function was what is commonly considered the professional accountant’s job today, that is, examining and reporting upon accounts, including auditing. It is imagined that McDonald was speaking from his own experience in this paper so that the words he uses and the thoughts expressed offer some flavor, description and character of the man.
John McDonald did not revolutionize accounting, nor does his name appear as one of the greats of the profession, but by his de-meanor, actions, and strength of character he made his mark on the community and his profession. On his death, on January 4th, 1904, at the age of sixty-three, his funeral was written up in the daily newspapers and attracted all the well known accountants of the day, as well as many other well known citizens. He clearly saw the future of accounting and by his foresight and example, albeit unintentionally, laid the foundations of the profession of today.
John McDonald stands out as one of the unsung men who started accounting onto the road towards being a respected and respectable profession.
The man and his times can probably best be exemplified by a few lines penned by an unknown poet that McDonald quotes in the afore-mentioned speech:
He either fears his fate too much Or his desserts are small, Who dares not put it to the touch To win or lose it all.
(Vol. 3, No. 2, pp. 8, 3, 1976)
