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The ethical movement of the present generation is part of the adjustment of our race to the particular kind of world in which we live. We have been learning that there are laws of Ethics, as well as of Physics and Biology, and that they operate in much the same way. All conduct is the cause of certain effects. Practices are ethical if, in the long run, they make for the well-being of the human species and for normal human relations. If there is friction and social loss, it is a sign of unethical conditions.

Each profession or trade has its own problems of ethics. The conduct of their members must be judged by its consequences, to the group itself and to the community. In the course of time there is likely to develop a certain standard of practice. Traditional customs are questioned and revised, in the light of wider experience. The association comes to have a fairly definite ethics, enforced by an unwritten code of honor. But there is always a fringe of unscrupulous men who are ready to disregard the accepted standard, for the sake of immediate gain. Unethical practices are not only a menace to society. They jeopardize the standing of the group as a whole, and tend to depreciate the value of its service. The enforcement of the standard becomes a matter of self-preservation.

The written code has been found a most effective means of accomplishing this result. It makes the standard definite enough to serve as a basis for moral pressure. It educates sentiment within the profession or trade, particularly among the younger men who have entered or are about to enter. It puts the association in the proper light before the employing public, and enlists the aid of that public in enforcing the standard. In the words of Franklin D. Jones, which have found their way into many code preambles: "The ideals of men best

project themselves into reality when crystallized in written documents.... In every line of human activity, a united written expression of that which is best for the common good becomes a strong force for progress. The mere expression clarifies the general sentiment."

Three things should be kept in mind by the student of ethical codes. The first is that a code of this character is designed to serve an immediate practical purpose. It is not a statement of general morality. It deals with the customs and ideals, the sins and duties, of a particular group of men. Ethical principles are stated in terms of their daily business experience. The code which falls short of this, or attempts to go beyond it, is likely to become a series of platitudes. In the majority of the standards cited, the chief interest lies in the way each group is meeting its own ethical problem. It is usually possible to detect this, even where there has been a close imitation of earlier codes, in arrangement and phrasing. The problem of the manufacturer is different from that of the wholesaler, as this in turn differs from that of the retailer or contractor or professional man. And within each of these general divisions, there will be found a most interesting variety of situations to be met and social relations to be adjusted.

In the second place the code is, with few exceptions, not a law but a creed. As an accepted standard of practice, it may be full of social significance. As a barometer of business life, it is apt to be misleading. How far the general practice conforms to the standard set, can be determined only by a close study of each profession or trade. The code is a means of correcting trade evils and meeting professional temptations, by cooperation, definition and the setting of a goal. The chief value of the written standard is moral and educational. The well-intentioned individual finds support, through knowing that this is the practice on which the group as a whole has agreed. In the words of one association secretary, the code is the "line of march" to which the

members are expected to adhere. Its principles are kept constantly before them by the national officers and by the trade journal. As Professor Willits has said: "An industry becomes unified in its ideas only insofar as there is a common background of principles implanted through some educational process. Among many of the leading trades and industries today, there is an effort on the part of the leaders to give professional standing to their calling. There is a tendency to professionalize the industries. This can be done only through education."

Our third reminder is that the adoption of a code is not necessarily an indication of a higher ethical standard. In many associations which have not taken this step, the code of honor and the sense of social responsibility may be as high or higher. A small organization, with a selected membership, is able to enforce discipline. The Committee on Ethics gradually builds up a series of decisions which serve as a common law for the industry. They may or may not find the formal standard a convenience. In the large association, particularly in wholesale or retail trade (though this is also true in the professions and in manufacturing), moral suasion is the only means which can be applied. And it is in such cases that the written code has been of greatest value. I have in mind one manufacturing industry, where a select group have formed an association. These firms are guided by comparatively high ethical principles. They have felt no need for a code. They look with scorn on the members of the trade outside of their organization, who "would not know what ethics means." But it is just these outsiders whose low standards cast discredit on the trade as a whole. An inclusive organization would bring them in contact with the leaders and make possible a gradual raising of the ethical level, to the advantage of all concerned. This has been repeatedly demonstrated. The selective group, however, when conducted in the right spirit, may have great leavening power.

To prospective teachers of Ethics a word may be in order. Too often ethical principles have been drawn from tradition or out of the air. It is now possible to derive them, by inductive study, from the experience of modern business and professional groups, as registered in their standards of practice. The laboratory method should prove as valuable as in other lines of teaching.

When assigned a particular profession or trade, the student should supplement the published codes by a study of all available literature and by personal interviews. Behind each standard is a background of practical experience. The code must be seen in its setting, as the engineer or the business man sees it. For a knowledge of the modern trade association movement, three books may be consulted: E. H. Naylor, Trade Associations, Ronald Press, 1921; Trade Association Activities, issued by the Department of Commerce, 1923; and Franklin D. Jones, Trade Association Activities and the Law, McGraw-Hill Book Co., 1922. The Annals of the American Academy of Political and Social Science, for May, 1922, supplies a valuable introduction to the professional codes.

An ethical millennium is still a long way off. But the general impression left on the student of these collected standards is one of sincere striving, of positive achievement. One may look forward to the growth of sound ethical adjustment among the American people. We have begun to gather the experience out of which may come in time a science of Social Ethics.



Formerly Am. Assn. of Public Accountants. Adopted 1916; revised Sep. 17, 1923:


(1) A firm or partnership, all the individual members of which are members of the institute (or in part members and in part associates, provided all the members of the firm are either members or associates), may describe itself as "Members of the American Institute of Accountants," but a firm or partnership, all. the individual members of which are not members of the institute. (or in part members and in part associates), or an individual practising under a style denoting a partnership when in fact there be no partner or partners or a corporation or an individual or individuals practising under a style denoting a corporate organization shall not use the designation "Members (or Associates) of the American Institute of Accountants."

(2) The preparation and certification of exhibits, statements, schedules or other forms of accountancy work, containing an essential misstatement of fact or omission therefrom of such a fact as would amount to an essential misstatement or a failure to put prospective investors on notice in respect of an essential or material fact not specifically shown in the balance-sheet itself shall be, ipso facto, cause for expulsion or for such other discipline as the council may impose upon proper presentation of proof that such misstatement was either wilful or the result of such gross negligence as to be inexcusable.

(3) No member or associate shall allow any person to practise in his name as a public accountant who is not a member or associate of the institute or in partnership with him or in his employ on a salary.

(4) No member or associate shall directly or indirectly. allow or agree to allow a commission, brokerage or other participation by the laity in the fees or profits of his professional work; nor shall he accept directly or indirectly from the laity any commission, brokerage of other participation for professional or commercial business turned over to others as an incident of his services to clients.

(5) No member or associate shall engage in any busi

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