During the second period, very material changes are observed. The country grew in population and wealth. The population com menced to drift from rural to urban. Tax rates mounted higher and higher. The activi ties of municipalities were increased in variety and magnitude and, correspondingly, the finan cial transactions assumed proportions and im portance which necessarily called for careful and accurate accounting. It was realized that to the old use of accounts as a means of test ing the honesty of fiscal officers must be added their employment as a means of testing and measuring the efficiency of the work of all of ficers. There developed a general demand for municipal reform. Business men were chosen to fill important posts in municipal governments and, as was to be expected, they sought more comprehensive financial statements which would disclose more clearly the financial condi tion of their respective municipalities. Further more, civic organizations, of which the National Municipal League was one of the pioneers, sprang into existence, and they in conjunction with accountants employed in municipal work consistently and persistently advocated better accounting methods.
However, little was actually accomplished by way of changes within the period, but much was achieved in awakening and quickening thought. While the need was real, the response was not immediate, for, as has been seen, the municipal corporation, unlike a private busi ness concern, could not enter the bankruptcy courts even though it possessed all the elements of insolvency. As in the previous period, mu nicipal accounts were little more than cash book entries and treasury statements. But the foundation upon which to build more substan tial and appropriate systems was laid and the way paved for the rapid development in the period which followed.
It remained for the years intervening since the commencement of the 20th century to wit ness actual changes in accounting proce dure. The demand for better accounting and the necessity of providing a system which would furnish exact knowledge of details and summaries of results in aid of better adminis trative direction and control induced some of the larger cities (Chicago, New York, Boston, Philadelphia and others), and a number of the smaller and other municipal corporations, to employ professional accountants to install im proved accounting systems and to audit their accounts periodically. The accountants aimed, and to a measurable extent succeeded, to make the accounts disclose (a) the current cost of government, (b) the revenue provisions to meet that cost, (c? the property (other than cash) owned and (d) a complete statement of debt obligations. The plans worked out in each municipality were studied by officers and ac countants having to do with the affairs of oth ers. The movement was contagious. At the beginning of the year 1919 there was scarcely a city having a population of more than 30,000, i in which some improvement in accounting pro cedure had not been made.
In a very considerable number of municipali ties, centralized financial control and account ing are facts. Unit cost records, monthly de partmental reports, uniform classification of receipts and expenditures, established fund ac counts and subsidiary records and ledgers are actually being maintained or produced.
However, great as the improvement has been, there are relatively few municipalities in this country which are able to compile a com plete financial statement, including a balance sheet, revenue and expense statement, records of city property and equipment, accurate and scientific sinking-fund records and other data, comparable to those obtained by up-to-date private business. (Consult National Municipal Review, Vol. VI, p. 715).
Some indication of the backwardness of cities is gleaned from the 1913 report of the auditor of the city of Cleveland. He said: 'I have the honor to present for the first time in the city's history, a general and detailed bal ance sheet from our general ledger' Cleve land was at that time, in population, the sixth city of the United States. What was true of Cleveland prior to 1913 is equally true of many sizable American municipalities at this writing.
Uniform Coincident with the actual betterments made in the methods of keeping municipal accounts, there developed the movement for securing reasonable uniformity. The origin or development of the movement may be attributed to no one person, group of persons or association but interest in the whole subject was intensified as well as extended through the discussions and recommendations of numerous associations, national, State and local, of which the following are some of the more important: National Municipal League, League of American Municipalities, American Society of Municipal Improvement, United States Census Bureau, Bureau of Municipal Research, various State bureaus organized ex pressly for the purpose and an army of city clubs, business organizations, citizens' and tax payers' associations, civic organizations and pub lic-spirited individuals.
In this relation it is worthy of mention that the uniform accounting idea was not of Amer ican origin. In 1871, by act of the English Parliament, a °local government board" was created for the express purpose of establishing in counties, municipal corporations and towns, uniform systems of accounts, of complete au dits of accounts and of uniform reports to the government of the financial operations and con dition of local governmental units. The larger German cities, although not compelled by any statute, had for years maintained substantial uniformity of accounting methods which af forded excellent facilities for comparing costs of administration, maintenance, etc.