240019

Lectures on Fire Insurance Accounting by Insurance Society of New York
Review by: Richard A. Graves
The Accounting Review, Vol. 20, No. 2 (Apr., 1945), p. 251
Published by: American Accounting Association
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Book Reviews 251
(c), while but a single chapter deals with cases within
Section 722 (d). His aim is to determine, as accurately
as it is possible to do so in the absence of any ultimately
authoritative exposition of the statutory language, the
vital factors defining each special case. Having done
that, he next proceeds to analyze the type of factual
data that will have to be presented in order to prove that
a particular taxpayer's case falls within the defined
class. It is in connection with this latter that the author's
discussion is likely to prove most valuable to those who
practise in this field. The data set forth in Appendix A
which is a Bibliography of Sources of Statistical Data,
and in Appendix B which consists of Published Statistics
of Income by Major Industrial Groups, is partially
integrated into the discussion, and is, in any event, a
valuable aid to those called upon to prepare Applications
for Relief under Section 722. There is a concluding
chapter devoted to procedure in Section 722 cases. A
great part of the book is devoted to a series of Appendices
that contain some valuable data that may aid in
the interpretation of the Section.
The present book should prove very useful to all who
are interested in the problem with which Section 722
deals. It is difficult to see how even it can do more than
serve as a starting point for the solution of the numerous
controversies that are practically certain to arise in its
application. That is, however, no demerit to the author's
work. It requires only a cursory reading of Section 722
to realize that it deals with concepts so vague that a
large field of discretion must inevitably be left to those
officials who are called upon to administer it. The recently
issued Treasury Bulletin on General Relief Pro-
visions shows how formidable, is the task of the taxpayer
who petitions for relief under this Section. Time alone
can tell how far it will in fact confer the benefits it was
undoubtedly intended to give.
HENRY ROTTSCIIAEFER
Law School
University of Minnesota
Lectures on Fire Insurance Accounting. Insurance Society
of New York (New York: Wisdom Press, Inc.,
1943. Pp. 128. Paper ed. $1.50. Cloth ed. $2.00.)
This volume does not pretend to present a course in
insurance accounting, but is designed to present to employees,
prospective employees, insurance agents, and
others who may be interested, a description of the forms
and subject matter of the various accounting and statistical
reports that are required in agencies and home
offices in connection with the collection of premiums,
the accumulation and investment of reserves, the settlement
of losses, and the administrative and other expenses
of conducting the business of fire insurance.
Particular attention is paid to the preparation of annual
statements for presentation to government insurance
authorities in accordance with legal requirements.
Among the topics treated in the eleven lectures of
the course are the nature and sources of underwriting
and investment income; disbursements for loss settlement,
taxes and ex-penses; unearned premium and other
reserves; legal requirements as to authorized investments;
taxation and policy reserves.
The final lectures of the course deal with the nature
and uses of office machinery, particularly tabulating
equipment, and with the various types of statistical
data pertinent to the business of insurance.
For the specialized needs which these lectures are
designed to meet, there can be no question of their adequacy
and value.
RicHARD A. GRAVES
University of Minnesota
Mobilizing for Abundance. Robert R. Nathan. (New
York: Whittlesey House, The McGraw-Hill Book
Co. 1944. Pp. xv, 228. $2.00.)
The author of this sprightly written little book has
tried to popularize the Keynes-Hansen views in regard
to the nature of business depressions. Pointing to the
demonstrated productivity of the wartime economy the
author asks, "why can't this continue in times of
peace?" His answer, as an adherent of this school, is
that as national income rises and a satisfactory level of
economic activity is reached people come to save more
and more. If the economy in peacetime is to continue at
this level it is necessary that these savings be offset by
spending elsewhere in the economy. For a dollar saved
that does not result in spending for investment goods,
or which is not offset by someone else spending more
currently than he receives, must mean a reduction in
income to someone else in the economy. What is more
important, Nathan espouses the "mature economy"
thesis in that he does not believe there are sufficient investment
outlets in the economy to offset the 30 billion
dollars of yearly savings that he believes will result if
national gross product is to continue at a 150 billion
dollar level in the period after the immediate postwar
years.
From this much simplified and streamlined analysis,
policy recommendations in profusion follow. Investment
must be encouraged. Business enterprise must be induced
to build new plants and replace old equipment.
Tax policy and interest rates must be designed to promote
such conduct. But 30 billion dollars of investment
offsets simply cannot be found. In the prosperous twenties
only 15 to 20 billion dollars a year of investment
outlets could be found and these activities were of a
precarious nature and failed to last. Therefore, if the
economy persists in saving 30 billion dollars a year the
Government must step in and furnish the necessary offsets
to this saving, for otherwise national income will
fall until savings are so reduced that they are equal to
the volume of offsets. But there is still one other way
out. Savings might be discouraged and spending encouraged.
This can be achieved by utilizing the tax system
for the purpose of redistributing income in favor
of the lower income groups, because obviously they can
be depended upon to spend. Unfortunately, much of
our pre-war tax structure involved regressive taxes.
Thus sales and excise taxes must be abolished and progressive
income taxes must be maintained. Also, insecurity
in the prewar economy led to a good deal of
desperation saving for the purpose of meeting the
"rainy day" and thus help to produce the very condition
the individual feared. Therefore, Social Security in its
many forms must be extended and its benefits raised so
that individuals will be willing to spend without fear
of the future. Furthermore, payroll taxes should be replaced
by general tax sources in financing the S.ocial
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