WILLARD J. GRAHAM
By R. E. Ziegler University of Illinois
The career of Willard J. Graham, an important contributor to both accounting thought and education for 40 years, was unique in that he pioneered a form of continuing education for management level businessmen that today is widely emulated. In 1943, while at the University of Chicago, he instituted one of the first executive devel-opment programs in the nation. This program, in advanced management studies for corporations, became a prototype for those developed later at other schools around the country and the world. At the time of his death in 1966, Professor Graham was recognized both here and abroad as a senior authority in educational programs for businessmen at the executive level, having directed such programs over a longer period continuously than anyone else in the country.
A native of College Corners, Ohio, Willard Graham was born in 1897, a time when the country was in the process of transition from an early and relatively simple state to a distinctly different, more complex and more advanced state of industrial development. The era of the early 1920’s, when he entered the University of Chicago as a graduate student, was marked by aggressive entrepreneurship and rapid industrialization. In a major urban center, like Chicago, where the pace of this transition was accelerated, both the gains and excesses of industrial change brought about by American businessmen in moving American capitalism to a more highly advanced state were exaggerated. It was in this environment that Willard Graham developed his life-long interests of not only participating actively as a business organizer and manager but also of reflecting on and articulating his views on the broader, societal responsibilities of American business.
The executive program instituted at the University of Chicago was designed to develop a broad perspective among the participants. Entrants were required to be carrying major executive responsibilities and to be candidates for senior management positions within their companies. Courses were held at night over a two-year period. In addition to training that would aid in improving industrial effi-ciency, the program stressed planning by the participants for their respective firms for one, five and ten-year time horizons. The resulting exchanges of ideas provided the context for the introduction of a wide spectrum of non-business disciplines. These provided an opportunity for the participants to enlarge their understanding of the “whole enterprise” in its competitive situation, and to develop an appreciation of the political, economic and social forces which influence top management decisions. During the ten years Willard Graham directed this highly successful program at the University of Chicago, approximately 400 executives graduated with either a Master of Business Administration degree or a Certificate of Completion.
In 1952, Willard Graham was persuaded by Thomas H. Carroll, newly arrived at the University of North Carolina as Dean of the School of Business Administration, to leave the University of Chicago and assist in the development of a graduate school of busi-ness, as well as an executive program, at Chapel Hill.
In common with other far-sighted business leaders, as well as educators, Willard Graham was idealistic about his role in the free enterprise system. In a speech given before the annual meeting of directors of the University of North Carolina Business Foundation, Graham eloquently expressed his belief in the importance of the executive development programs such as those he had instituted at the Universities of Chicago and North Carolina. In his talk, Graham stated:
He [the executive] becomes interested in, and con-cerned about, problems far beyond his own position, beyond his own company, even beyond his own industry— problems that concern all business and the whole economy of which business is a part.
He becomes interested in the basic economic principles which must govern all business. He becomes interested in and concerned about the attitudes of workers, and the policies of organized labor, not just in order to out-general them on the next contract, but to understand why they think as they do and act as they do and to determine in what respect management is responsible for the development of these attitudes and what management should do to establish better relationships with labor.
[He continued,] the executive becomes interested in, and concerned about, the relationship of government and busi-ness—what has brought about the present high degree of regulation, to what extent it is necessary and desirable, what the probabilities are for the future and what management should be doing about it.
He becomes interested in, and vitally concerned about our free enterprise system. Through intensive study of the principles of economics and the organization of society, he comes to understand better the basic elements of a free enterprise or capitalistic system as contrasted to other forms of social and economic organization; he understands better and becomes more articulate about the advantages of free enterprise and the dangers which appear to threaten it, from within as well as from without.
And he begins to feel his own personal sense of respon-sibility—and that of management generally—for intelligent action to preserve that system.
This is probably an exaggeration . . . but I like to think that our graduates might make the difference between keeping what we have and losing it.
Thus, to Chapel Hill he would invite such journalists as James Res-ton and Harry Ashmore or such educators as Robert Hutchins to stimulate the clash of ideas. The goal of these encounters was to broaden tolerances, rearrange prejudices and increase the sense of social responsibility among the participating executives.
Willard Graham’s contribution to advanced management education reflected, in part, his unique experience as a businessman as well as an educator. Early in his career, he was an active participant in the formation of a number of corporations, some of which still are thriving. These companies were in fields as diverse as welding, casualty insurance, color dye manufacturing and electric tabulating, a predecessor to the present-day data processing service. In one notable example, the Irwin Publishing Company, he was a member of the Board of Directors and later editor of that firm’s Accounting Series. He also served as a consultant to a number of companies, including the Illinois Bell Telephone Co., the Peoples Gas Company of Chicago and General Motors.
Professor Graham played an active role in the American Accounting Association, and it was in that organization that his influence as an accounting theoretician probably found its great expression. His work as Chairman of the prestigious Committee on Accounting Concepts and Standards began in 1950. It was under his chairmanship that the first of the Committee’s eight Supplementary Statements, issued as appendages to the 1948 “Statement on Accounting Concepts and Principles Underlying Corporate Financial Reporting,” were issued. These supplements recommended, among other things, that appropriations of retained earnings not enter into the determination of periodic income and that the effect of general price level changes on the financial statements of a firm be measured and reported as supplementary information. Willard Graham was chairman of this committee until his election as a vice-president of the Association in 1952, and he took an active interest in its deliberations thereafter.
In 1955, when Willard Graham was elected President of the AAA, this Committee on Accounting Concepts and Standards was charged with the task of completely revising the Association’s pre-vious 1948 Statement. Although the resulting revised statement, issued in 1957, often is regarded as another, albeit the final, revision in the series of pronouncements that began in 1936, it differed from its predecessors significantly in that it advocated the measurement and reporting of gains and losses resulting from price changes. Specifically, the 1957 Statement, reflecting the views of those influential in its creation, recommended that both inventories and cost of goods sold be measured in terms of current costs and that such other supplemental data as necessary be reported to disclose the impact of both specific and general price-level changes on the financial statements of the firm.
Although Willard Graham’s personal views of accounting theory had their basis in a “matching” notion of income determination that often is associated with the stewardship function of accounting, he was primarily an advocate of the view that accounting should pro-vide information useful to decision-makers in the predictive context within which their decision must be made. With respect to income determination, he felt that it was incumbent upon management and the accounting profession to provide a measure of past business income which would give the most useful basis for estimating future earning power. To accomplish this, he advocated that income be determined within a replacement-cost framework. He also was an outspoken critic of the accounting literature for what he felt was an almost total absence of criteria available for use in selecting from among the variety of specific procedures often regarded as alternatives in any given situation.
At the conclusion of his term as President of the AAA, Willard Graham was appointed a member of the Committee on Accounting Procedures of the AICPA. He served a three year term on that body, a period which encompassed the issuance of Accounting Research Bulletins 48 through 51 dealing with contingencies, earnings per share, business combinations and consolidations. He later served the AICPA as a member of a Project Advisory Committee to the successor Accounting Principles Board.
Graham’s other activities and memberships were extensive. He was active in the Controller’s Institute of America, the National Association of Cost Accountants and the American Institute of Management. He was a member of Alpha Kappa Psi, serving on the Board of Directors of that organization’s Foundation, and was a member of two honorary fraternities, Beta Gamma Sigma and Sigma Iota Epsilon. He was a member of the Board of Nominations for the Accounting Hall of Fame at Ohio State University. Wherever he lived, he also was active in local professional and civic affairs.
Graham received his A.B. degree at Tarkio College in Missouri in 1921. He subsequently entered the University of Chicago, where he received his A.M. (1924) and Ph.D. (1934) degrees. From 1921 to 1923, he was a professor of business administration at Tarkio College and from 1924-29 at Monmouth College in Illinois. While at Monmouth, he also served as an Instructor of Accounting at the University of Chicago from 1927 to 1930, when he was appointed assistant professor and left his teaching duties at Monmouth. He remained on the faculty of the University of Chicago until 1952. A frequent contributor to various accounting journals and other publications, he wrote several books, including Auditing, Public Utility Valuation, Economics of Business, Accounting in Law Practice (with W. G. Katz) and Financial Management (with J. O. McKinsey). He also edited over 50 books on accounting and controllership.
Early in 1966, at an unscheduled addition to the graduation cere-monies of an executive program class at Chapel Hill, he was honored by the establishment of a distinguished professorship carrying his name. The endowment was contributed by many of the approximately 500 executives who graduated from that program since its founding by Graham in 1953. Of the many tributes given in his honor upon his death later that year was one by Richard D. Irwin, Chairman of the Board of Directors of Richard D. Irwin, Inc. His announcement expressed the sentiments of many:
. . . we acknowledge his contribution to the improvement of education through his efforts as a Consulting Editor for us during these many years. As such, he was able to project his own talents as a teacher and author by way of inspiration to other authors in a manner which not only benefited their efforts, but gained for him their admiration, respect and friendship. Through their works his influence will, therefore, be felt far into the future.
(Vol. 3, No. 4, pp. 12, 8, 1976)
