THE END OF WORLD WAR II - WHAT HAPPENED WHEN THE MEN CAME HOME: THE SOCIETAL IMPLICATIONS FOR THE ACCOUNTING PROFESSION

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1 THE END OF WORLD WAR II - WHAT HAPPENED WHEN THE MEN CAME HOME: THE SOCIETAL IMPLICATIONS FOR THE ACCOUNTING PROFESSION Roxanne T Johnson University of Scranton johnsonr1@scranton.edu Ron Grambo University of Scranton gramborj@scranton.edu ABSTRACT The purpose of this paper is to discuss the societal implications for the accounting profession of the end of World War II. The accounting profession, like the rest of the business world, found itself floundering for personnel in the absence of the millions who served in the military during the war years. In the spirit of Rosie the Riveter the accounting profession often turned to women to fill the void. This would have consequences beyond the immediate needs necessitated by the exigencies of war. Even with the returning veterans, the booming economy of the post war years significantly increased the demand for employees and the pool of returning veterans trained in the practice of accounting was not sufficient to meet the immediate needs of the accounting profession, much less the burgeoning economy. Thus, the accounting profession would be in an excellent position to benefit from the following act. For a number of reasons, in part related to the demands of the marketplace, the U. S. government attempted an extraordinary social experiment by introducing the Servicemen s Readjustment Act of 1944 (commonly known as the Montgomery G.I. Bill). The bill afforded returning veterans the opportunity to pursue higher education with the assistance of Uncle Sam and would give all facets of American society, including the accounting profession, the advantage of additional access to an educated population. It is important to note that the effects of the G. I. Bill extended far beyond the immediate needs of the returning veterans and impacted the education available to all, and consequently the pool of talent available to the marketplace. INTRODUCTION When the men came home from World War II the world had changed dramatically. Not only had their lives been altered in any number of ways forever, but so had the economy and businesses they were coming home to. Women had become important members of the working population in the absence of the roughly 12% of the population which had gone to war. The societal implications of the women who had been absorbed into the accounting profession, for instance, to offset the men who had gone to war, would be significant, and would impact accounting firms beyond the end of the war. When the 16 million men and women came home from the war they faced the prospect of massive unemployment, just like the returning veterans of World War I. They also faced the need to rebuild their lives because they had been obliged to put the needs of the nation before their own.

2 The 1944 Montgomery G. I. Bill (The Serviceman s Readjustment Act of 1944) was passed to help avoid the consequences of returning such a large number of veterans to the population without a plan to integrate them back into society. The success of the G. I. Bill and other efforts would help the returning World War II veterans have a much more successful effect on society than previous returning veteran populations. WOMEN IN THE ACCOUNTING PROFESSION When the full effect of World War II on society became obvious, the implications to the accounting profession would be instrumental in introducing changes that would presage future opportunities for women. The war had caused the profession to need personnel to replace the men who had been drafted into military service. The need was immediate, but was considered to be for an emergency basis only. By May 1943, 954 accounting firms had 3,129 permanent staff members, or 32.8%, drafted by the armed forces. The hiring of women was viewed as a stopgap measure to ease the need for personnel in the wake of the exodus to meet wartime needs. (Wootton and Spruill, 1994, p. 242) Indeed, prior to WWII women had not been encouraged to enter the accounting profession, but rather had been discouraged if not downright denied opportunities in education and public accounting. (Wootton and Spruill, 1994, p. 242) These kinds of attitudes did little to make the accounting profession, at least the public accounting arena, an opportunity for women. Women did find that they could pursue career opportunities in the federal government and in private accounting. (Wootton and Spruill, 1994, p. 245) Although they still faced some discriminating practices mostly limited to salary differentials, the fields here were far more accepting of women in the work place. Nonetheless, the public accounting firms found themselves in the position of needing women to fill their personnel needs. Consequently, by May 1943, women in 954 accounting firms accounted for 8.4% of the public accountants, up from 4%. The number had more than doubled to 821, up from 341. (Wootton and Spruill, 1994, p. 243) Price Waterhouse & Co. was one such firm that found itself in the position of needing qualified male personnel to fill the void formed by the war. The firm turned to college educated women in the spring of (DeMond, 1951, 293) Not surprisingly, by 1943 women even began to receive encouragement from colleges to enter the accounting profession, albeit on a limited basis. The demands for personnel in the firms exceeded the available applicants and prompted the change in the approach taken by the education system. (Wootton and Spruill, 1994, p. 249) The number of CPA s reveal the limitations women faced in achieving the experience requirements necessary to become a CPA, however. Only 26 women CPA s were practicing in the firms, up from 17. (Wootton and Spruill, 1994, p. 243) Part of the problem was the demand for a practice requirement before becoming a CPA and the lack of opportunity to get the necessary experience that stood in the way of women becoming CPA s during the war and even in the post war period. (Wootton and Spruill, 1994, 248) Despite these difficulties, as will be shown, women became more important to accounting firms over a few short years. When the war ended, and the men came home, one would expect that the women in the accounting firms would have been replaced and expected to return home much as happened to most women who had taken Rosey the Riveter type jobs during the war. This did not happen, however, since the accounting profession required a special set of skills. There were not enough men returning from the war who were qualified to be accountants, so most of the women continued in their previous positions. (Wootton and Spruill, 1994, 247)

3 Women enjoyed good working relations with clients and, although initially hired on an emergency basis, proved themselves valuable and valued employees. (Wootton and Spruill, 1994, 246) Women succeeded to such an extent that by 1950 their numbers had increased from 18,265 in 1940 to 55,660 in In 1950, therefore, 14.8% of the roughly 380,000 accountants were women. (Wootton and Spruill, 1994, 248) Although there had been expectations when the men came home that women would return to the home, many of those that worked in the accounting profession apparently found their work satisfying, and stayed in their jobs, even though the firms returned to prewar hiring and staffing policies when the economy stalled or declined. Also, when the available pool of accountants was large, firms chose to retain men and not women. (Wootton and Spruill, 1994, ) The result nonetheless was a slow increase in the number of women in accounting firms in the last half of the 20 th century, and this despite the impact after the war of the G. I. Bill. G. I. BILL The 1944 Montgomery G. I. Bill (The Serviceman s Readjustment Act of 1944) was signed into law on June 22, 1944 by President Franklin Roosevelt. (Bound and Turner, 2002, p. 789) The real purpose of the act had been in part to help avoid the post-war problems that had plagued the country after World War I. The glut of men coming home could not be immediately absorbed into an economy that had to be transformed from a wartime purpose back to peacetime. The jobs that had been plentiful during the war disappeared immediately after the war ended. Until the peacetime economy had been put back on track, there were not going to be as many opportunities for the returning veterans. People at home were themselves scrambling for employment. Indeed, as Olson (1973, p. 600) stated At its root, The Servicemen s Readjustment Act of 1944, the G. I. Bill s official name, was an anti-depression measure; the persons responsible for it believed that the economy and not the veteran needed readjusting. For American society this statement meant the need to accommodate the return to private life of the millions of veterans who had served in the war. Approximately 16 million men and women served in the various branches of the U. S. military during World War II. The population of the country at the time was roughly 135 million meaning approximately 12 % of the population had gone to war. (Bound and Turner, 2002, p. 787) This had in turn left an appreciable void in the work force that had to be filled. The baby boom generation would not begin to meet the demands of the market place until well until after the middle of the century and there were immediate employment needs that had to be addressed. Although the focus of the G. I. Bill was on the economy, and little attention was paid to the possibility that veterans would take advantage of the education benefits, the authors of the bill, its supporters and detractors alike were in for a big surprise. At its heyday, during the academic year , fully a million veterans flooded American campuses with the highest expectations for a successful educational experience bringing with them a strong work ethic and an unexpected acceptance of authority. (Olson, 1973, p. 602) In so many ways the G. I. Bill was a resounding success. For roughly half a decade after the war veterans were a dominant, unexpected and positive force on American campuses. (Olson, 1973, 596) Indeed, they constituted roughly 70% of the male students on campus for several years after the end of the war. (Bound and Turner, 2002, p. 785) Educators had expected an unruly, disinterested, anti-authority veteran population and they could not have been more wrong. The G.I. Bill was a resounding success from its inception and the veterans that chose to take advantage of it were responsible for the success of the program. The G. I. Bill offered very generous financial incentives to those veterans willing to take advantage of the opportunities available. (Goldin and Margo, 1992, p. 31) In large measure because of the G. I. Bill, following World War II, enrollment in American colleges exploded. Some colleges experienced a doubling of prewar enrollments. (Olson, 1973, p. 608)

4 The veterans had faced a great deal of prejudice from several sources who had feared them on many fronts. These fears turned out to be irrational, as the veterans turned out to have the most distinguished record in the history of higher education. (Olson, 1973, p. 604) As it turns out, by far for the better, the G. I. Bill greatly contributed to the supply of college educated workers entering the market place through There seemed to be no permanent effect from the influx of the veterans, but while they were on campus, they were a dominant force in the classroom, socially, and in all other opportunities available on campus. (Olson, 1973, p. 607) In the absence of the veterans, colleges reverted to their former selves. The G. I. Bill was considered primarily an economic program, but it became a social program as well. It afforded a wide variety of veterans access to higher education who may never have had such an opportunity. This democratization of the education process was of concern to many and initiated debate within the profession over the quality of accounting education. (Previts and Merino, 1998, p. 340) The G. I. Bill afforded the opportunity for a wide variety of veterans to go to college, many of whom would never have had the resources without the assistance offered by the Federal Government. There were therefore a fairly large number of men involved in the educational process who would have probably been shut out before the Bill was passed CONCLUSION The sheer numbers of men taking advantage of the G. I. Bill were staggering. Many of these matriculating students majored in accounting. (Wootton and Spruill, 1994, p. 247) A cause and effect relationship between the G. I. Bill and the accounting profession may be difficult to determine, although there is considerable circumstantial evidence to believe that the connection exists and is significant. Carey (1970, 57), for instance, reports that The accounting profession, incidentally, was one of the beneficiaries of this farsighted program to provide higher education for returning servicemen. Further, the men taking advantage of the G. I. Bill were going to schools nationwide including the best schools in the nation. It is impossible to think that recruiters would not be seeking the best students, which these would have been. Further research is suggested to establish relationships between the veterans taking advantage of the G. I. Bill who graduated during the late 1940 s and their career choices. REFERENCES Bound, John and Turner, Sarah (2002). Going to War and Going to College: Did World War II and the G. I. Bill Increase Educational Attainment for Returning Veterans? Journal of Labor Economics, Volume 20, Number 4, Carey, John L. (1970). The Rise of the Accounting Profession; To Responsibility and Authority American Institute of Certified Public Accountants, Inc.: New York, NY. DeMond, Chester W. (1951). Price, Waterhouse & Co. In America; a history of a public accounting firm. The Comet Press Inc.: New York, NY. Goldin, Claudia and Margo, Robert A. (1992). The Great Compression: The Wage Structure in the United States at Mid-Century. Quarterly Journal of Economics, Volume 107, Number 1, Olson, Keith W. (1973). The G.I. Bill and Higher Education: Success and Surprise. American Quarterly, Volume 25, Number 5, Previts, Gary and Merino, Barbara. (1998). A History of Accountancy in the United States. Ohio State University Press: Columbus, Ohio.

5 Wootton, Charles W. and Spruill, Wanda G. (1994). The Role of Women in Major Public Accounting Firms in the United States During World War II Business and Economic History, Volume 23, Number 1,