Achieving Completeness in Reporting the Province of Canada’s Revenues and
Expenditures in the Public Accounts
Ron Baker
University of Guelph
Morina D. Rennie
University of Regina
Abstract
In this study we examine the introduction of an accounting technology in the Province of
Canada, namely reporting gross revenues and expenditures in the Public Accounts. While we
find and present evidence of the functionality of this technology in addressing an impending
fiscal crisis in 1858, we also argue that it arose from and contributed to the province’s adoption
of responsible government. We situate this technology within the broader societal arena of
British North America and the political turmoil of Upper and Lower Canada. Drawing on insights
from Foucault’s governmentality we argue that this technology was an essential apparatus in
the art of government that arose from and contributed to the move from colonial sovereign rule
to responsible government. Studying the development of accounting technologies in the
Province of Canada provides an important opportunity to enhance our understanding of the role
of accounting in shaping governable domains and the development of public sector accounting
techniques through the emergence of responsible government in a former colony of the British
Empire.
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Introduction
“Under flaming torches a crowd of fifteen hundred were lashed to vengeful fury by wild
speeches on French domination and the ruin of British interests: but unleashed as well
were the pent-up frustrations of poverty, unemployment, disease and despair”
(Careless, 1967, p. 125).
When governor-general Elgin gave his assent to The Rebellion Losses Bill in 1849 tensions that
had been mounting in the newly formed Province of Canada boiled over. In Montreal, an angry
mob marched to the parliament building and set it ablaze. It was a defining moment in
Canadian history. Not only did it epitomize the conflict between English and French settlers, it
also led to a significant achievement in British North America – responsible government. The
Rebellion Losses Bill provided compensation for losses suffered by the French during the
rebellion of 1837. Strongly opposed by many English, the bill nevertheless received approval by
a majority of elected members of the Assembly. Many English looked to the governor-general, a
representative of the British Sovereign, to invoke the power of the British government to
override the votes of local representatives and thereby, presumably, uphold British interests.
They would be disappointed. Governor-general Elgin provided assent to the bill and responsible
government in British North America had taken hold.
And thus responsible government in Canada was written into existence. And fundamental to the
success of responsible government would be the development of a surveillance mechanism so
that government could not escape the gaze of the populace. Significance advances in the
technology of government financial reporting occurred during the short tenure of the Province
of Canada.
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The Province of Canada had only a 26 year history, much of which has been described as
politically tumultuous during an era of social unrest and change. In its short lifetime, however,
the administrative and financial infrastructure that would later become that of the Dominion of
Canada was established. The political reshaping of British North America was intertwined with
the development of modern structures and technologies of government. The Province made
significant progress in establishing a system of public accounts, the adoption of double entry
bookkeeping, and the creation of the position of auditor and a board of audit. The Province’s
financial system was also adapted to enhance surveillance and centralized control over a
growing bureaucracy through the inclusion of the “entire” receipts and expenditures in the
province in the public accounts. This paper draws on the concept of governmentality (Foucault,
1991) and the panopticon metaphor (Bentham, 1791; Foucault, 1995) to build an interpretative
account of this historic achievement in both the political and administrative landscape of early
British North America. The result is an account of the powerful role of accounting in the
transformation from sovereign to democratic governance – an account of how the state
“governmentalises itself” (McKinlay and Pezet, 2010, p. 494). This study also provides further
evidence and support of the view of accounting as an “instrument of social management and
change” (Burchell et al., 1985, p. 381).
Data was gathered from both primary and secondary sources. Primary source data were
retrieved through archival research conducted at National Archives in Ottawa, Archives of
Ontario in Toronto, and the University of Toronto rare books library. Examples of these data
includes microfilm copies of minutes from board meetings and microfilm copies or original
letter books of hand-written correspondence amongst key political and administrative figures,
the “dusty account books mouldering away” (Napier, 2006, p. 469) that contain contextual as
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well as accounting information. Secondary source data includes prior historical studies, reprints
of correspondences, and microfilm copies of newspapers from the time period of this study,
locating our narrative “within an understanding of the specific context in which the object of our
research emerges and operates” (Carnegie and Napier, 1996, p. 8).
We situate the change in
accounting for receipts and expenditures within the broad, extra-organizational setting,
adopting the view of accounting as a social rather than solely technical activity (see Burchell et
al., 1980).
It is noteworthy that the form of the public accounts of the Province of Canada is what was
ultimately adopted by the Dominion of Canada upon its formation in 1867 (Baker and Rennie, in
press). Ward notes:
The experiences of the Canadian government before Confederation are therefore of
great significance to the understanding of what developed after, and it is perhaps
fortunate that in both Upper and Lower Canada financial affairs reached a more critical
stage than they ever did in the eastern colonies, and thus forced the settlement of
several issues both earlier, often in clearer terms, than in the Maritimes. By far the most
important of these was the assumption by the executive of the initiative in money
matters, which in Canada was recommended by Lord Durham, and made statutory by
the Act of Union of 1840. (Ward, 1951, pp. 16-17)
A defining feature of the Province of Canada’s financial reporting was a lack of established
accounting and reporting procedures. Much experimentation took place as those responsible
for the public accounts searched for improved methods of communicating the province’s
financial situation and controlling the public purse. The achievement of reporting all revenues
and expenditures of the province was one of the most important innovations of that jurisdiction.
5
Governmentality
Foucault distinguishes modern government from previous forms of rule that relied on the
coercive power and (mostly) unquestioned authority of a sovereign. Modern government seeks
to regulate the lives of individuals to achieve desired ends such as wealth building and wellbeing for a population, “…a government of all and each for the purposes of secular security and
prosperity” (Gordon, 1991, p. 14). Governmentality is the “ensemble formed by the
institutions, procedures, analyses and reflections, the calculations and tactics that allow the
exercise of this very specific albeit complex form of power…” (Foucault, 1991, p. 102). These
techniques and procedures are aimed at directing human behaviour (Rose et al., 2006) resulting
in a subtler form of government, a self-government, where behaviours are guided rather than
controlled (McKinlay and Pezet, 2010). Individuals are “enrolled as allies” in the pursuit of
government objectives with “authoritative norms, calculative technologies and forms of
evaluation” serving as “self-steering mechanisms of individuals” (Miller and Rose, 2007, p. 18).
Given the prominent role of calculative technologies in this modern form of government (see,
for example, Rose, 1991), the Foucauldian concept of governmentality has become increasingly
valuable in accounting and accounting history research (see McKinlay and Pezet, 2010;
Fleischman and Radcliffe, 2005; Armstrong, 1994). Accounting, as a technology of governance,
makes a “domain of behaviour visible and amenable to intervention” (Neu and Heincke, 2004, p.
182). It can be used, therefore, as a mechanism to “shape the economic and social conduct of
diverse and institutionally distinct persons” contributing to the process by which “action at a
distance” is exercised (Miller and Rose, 2007, p. 14). As one author argues, “…calculative
6
practice is ubiquitous in the maintenance and reproduction of contemporary social order”
(Vollmer, 2003, p. 373).
Embedded in this technology is the notion of power/knowledge. Foucault’s work in disciplinary
power, as presented in Discipline and Punish (1995), has also informed accounting research.
With knowledge comes visibility and so “activities incorporated into the account can be more
readily subject to the exercising of power (Loft, 1986, p. 140). Accounting, therefore, acts as a
mechanism of surveillance and control (Miller and O’Leary, 1987; Loft, 1986) and by creating
visibility can change “perceptions of the problematic and the possible” (Burchell et al., 1980, p.
16). Within this discourse we can conceive of two areas of power/knowledge. One of these is
the knowledge of and exercising power over a broad population and sub-populations that have
been divided from the overall whole (see Graham, 2010). Power over a population manifests
through a multitude of diverse agents such as bureaucrats. The second arena is specific to an
institutional setting. It is within the organization that Foucault’s work on disciplinary power and
the oft-referred to panopticism has been employed in accounting research to construct an
image of accounting as a mechanism of control over the behaviours of individual workers (See
for example Hoskin and Macve, 1988).
While previous studies have examined the imposition of accounting techniques as a colonization
technology (O’Regan, 2010; Neu, 2000),this study contributes to this Foucauldian stream of
accounting research by providing an account of the introduction of an accounting technology
within the context of government-building – governmentalization.
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The Union
Legislation to create the Province of Canada was passed on February 10 1841--the union of two
provinces of British North America known as Upper Canada and Lower Canada, having been two
separate provinces since their division into two territories in 1791. Proposed by Lord Durham in
a report prepared after an investigation into the causes of rebellion of 1837-1838, a union of
Upper and Lower Canada was recommended as a means of resolving “the strain and conflict of
duality” of two nations – English and French (Careless, 1967, p. 3). It was also seen as a means
of assimilating and “Anglifying” the French settlers (Durham, 1912,, p. 288). The union took
effect January 1, 1842. The Canadian Rebellion has been characterized as turning point in
Canadian constitutional development (Tiffany, 1905). A fundamental chasm in British North
America arose from this conflict of duality between the English and French. Originally a French
colony, Canada fell under British rule with the treaty of Paris in 1763. A traditional
interpretation of Lower Canada inhabitants, of which 82 % were French in 1831 (Bercuson et al,
1992, p. 227) beset by a conquered mentality has since given way to a new interpretations of an
entrepreneurial rural society transformed by modernization and contesting the political, social,
and economic position of the Anglo elite (Bercuson et al., p. 225).
In Upper Canada, dissatisfaction arose in the population, an Anglo population that decidedly
found a greater connection with England, but was not impervious to the influence of
republicanism from the United States (Dunning, 2009). Political reformers in the colony sought
an elected council rather than the “bureaucratic aristocracy” that monopolized the banks, the
judiciary and the public domain (Tiffany, 1905, pp. 11-12). Furthermore, there was a growing
dissent over the double standard for immigrants (immigrants from the United States were, for a
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time, refused the right to hold land). There were increasing demands for constitutional and
political reform.
These, amongst other issues such as economic instability, the demographic pressures of the
increasing population, and conflicts of ideals and interests (Ouellet, 1998), fuelled the growing
discontent in both Upper and Lower Canada that led to open rebellion. In Lower Canada a
group of reformers, the Patriotes, rallied support amongst the French population in the summer
of 1837 calling for the election of officers in the militia and justices of the peace (who were
appointed by government at that time) and a declaration of human rights. The Patriotes
objected to the monarchy and British rule in Lower Canada (Greer, 1998). Government militia
mobilized and successfully quelled the peasant forces of the Patriotes. In Upper Canada,
William Lyon MacKenzie attempted to rally forces for a strike in Toronto. Issuing a proclamation
entitled “Independence”, he wrote “Up then, Brave Canadians. Get ready your rifles…” (Tiffany,
1905, p. 21). Like its counterpart in Lower Canada, the “rebellion” in Toronto was quickly
defeated by government forces. These events, however, contributed greatly to a growing
uneasiness with colonial governance. As Lord Durham wrote, “The experiment of keeping
colonies and governing them well ought at least to have a trial” (Tiffany, 1905, p. 15).
Thus, despite the animosity between English and French settlers, dissention in both Upper
Canada and Lower Canada fostered an appetite common to both colonies – self-determination
through responsible government. The key principle of responsible government in the Canadian
context was that the government would be responsible and accountable to the elected
representatives of the people. In his report, Durham eloquently articulated the transition that
was needed for the colony to shed the authority of England and to adopt the disciplinary
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structure to govern themselves—in effect, to “governmentalize themselves” and, in fact, argued
that this transition would be the solution to the discord within these colonies:
It is not by weakening, but strengthening the influence of the people on its Government;
by confining within much narrower bounds than those hitherto allotted to it, and not by
extending the interference of the imperial authorities in the details of colonial affairs,
that I believe harmony is to be restored, where dissension has so long prevailed; and a
regularity and vigour hitherto unknown, introduced into the administration of these
Provinces (Durham, 1963, p. 139).
Durham went on to say:
I admit that the system which I propose would, in fact, place the internal government of
the Colony in the hands of the colonists themselves; and that we should thus leave to
them the execution of the laws, of which we have long entrusted the making solely to
them (Durham, 1963, p. 141).
Although the union was not popular with either group, the promise of control over local affairs
by an elected Assembly addressed French indignation over subordination and English desires for
liberty from oligarchic rule. In the process a new field of intervention and objective of
governmental techniques was created, an identifiable total population. Despite the rift that
continued between two sub-groups within the Province of Canada, a singular governmental
focal point was brought into existence.
The Legislative Assembly created in the new Act would have equal representation from Upper
and Lower Canada, but the Act did not state, in so many words, that the Executive Council
would be responsible to the elected Assembly. Nevertheless, the Governor-General was advised
to “…only oppose the wishes of the Assembly when the honour of the crown or the interest of
the Empire are deeply concerned” (Bryce, 1887, p. 397). In effect, the Executive Council of the
government of the new province had become responsible to the elected Assembly.
Accompanying the changes in the political landscape were changes in the administrative
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mechanisms of local governance. In addition to Lord Durham’s recommendation for unification
his report also emphasized the point that with responsible government came a need for a
transparent and efficient administration, of which accounting was a key part.
The Problem of Incompleteness in Revenue and Expenditure Reporting
A significant challenge faced by administrators of the Province of Canada in its early years was
control over the public purse and the growing number public bureaucrats that managed it1.
Departments and customs officials did not submit their full receipts to the centralized office of
the Receiver General, but rather, first subtracted a sum for salaries and other expenditures,
submitting only the net amount. As a result the public accounts reported only the net receipts
that were received from these various sources and did not report the expenditures that had
been taken from gross receipts. The net change in the financial position of the government on
the whole could be determined under this method. There was, however, no centralized point
where the totality of government financial activity could be provided. Additionally, this practice
impaired the ability of government to “see” the specific financial behaviours undertaken by
government agents in distant locations. This practice not only made a portion of revenues
invisible, but also the expenses that were paid. As a result, the expenses that were paid in this
way escaped the authorization of the legislature—no elected legislative body approved these
payments.
This same problem had been in existence in the United Kingdom and was identified some two
decades earlier by the Report on the Public Revenue of Great Britain that had been issued in
1831 a portion of which was reproduced in the Second Report of the Public Accounts Committee
of 1854. The British report is quoted as stating :
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We feel this principle to be one of paramount importance for the security of the public
money in the two great branches of receipt and expenditure; we think that no portion
of the public treasure should be arrested under any plea or pretence whatever, on its
way to the Exchequer and that no portion or if should be issued from the Exchequer
without previous Parliamentary sanction. Your Lordships will perceive that a really
efficient and complete control can be introduced into the different departments of the
public service only by the adoption and establishment of the principle we recommend—
a principle, which we believe to be the necessary preliminary to all satisfactory financial
reform; by which means, not only will the whole of the public treasures be made
available for the public service, but the expense for collection will appear as a part of
the public expenditure, and be consequently placed immediately under Legislative and
official control.
We may refer to the satisfactory effects which have been produced by the introduction
of such a regulation into the administration of the public finances of France, in
justification and support of our opinion on this essential point. (Province of Canada.
Committee on Public Accounts, 1855a, p. 1)
The emphasis in this passage is one of legislative control which cannot be at its optimal level
under a system where only net revenues are submitted and reported. Parliament must be able
to view the full set of both revenue and cost generation activities in order for responsible
government to be effective.
It should be noted that one of the members of the committee that wrote the recommendation
to Great Britain later became the Governor General of British North America – Lord Sydenham.
This recommendation it did not come into practice in Great Britain until 1854 and was not made
into law until 12 years after the first implementation of the practice (Great Britain Committee of
Public Accounts, 1866), which seems to illustrate the difficult process of enacting changes in
organizational processes that would be required to make all revenues and expenses subject to
observation by central administrators.
In the Province of Canada, expenditures and revenues were reported in the form of the
“Statement exhibiting the Net Revenue of the Province of Canada…”. The statement for 1842
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reports net revenues of £365,605 and expenditures of £359,538 (Province of Canada. Inspector
General, 1843). The net difference is added to the Consolidated Fund balance, an equivalent to
the modern accumulated surplus/deficit balance found in government financial statements. The
net change in the province’s financial position was thus provided and accounted for. Much of
the actual activity, however, remained invisible, camouflaged in the revenue figures reported
net of expenditures, such as Net Customs and Net Excise.
The transition from sovereign, colonial rule to representative, democratic government
represents, in Foucauldian terms, a shift from sovereign power to disciplinary power. The latter
form of power is much “richer and entails penetrating into the very web of social life through a
vast series of regulations and tools for the administration of entire populations and of the
minutae of people’s lives. The “calculated management of social life is one way of designating
the form of operation of disciplinary power” (Miller and O’Leary, 1987, p. 238).
Disciplinary power is possible through surveillance with accounting as a key technology
identifying and governing populations (Graham, 2010) and as a technique that make individual
behaviour calculable (Miller and O’Leary, 1987). Furthermore, it is a calculative technology that
enables the re-presentation, although imperfectly, “what is happening in unobservable and
distant sites, thereby allowing influential social actors to judge and intervene” (Ramahan et al.,
2010, p. 1097) The construction of the financial reports of the new provincial government, as a
whole, represents a centre of observation with accounting one amongst many functional
discipline-mechanisms. We see this as an example of “…a design of subtle coercion…”, through
which desired ends of government are provoked (Foucault, 1995, p. 209).
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The unification of Upper and Lower Canada came about in response to the rebellions which
arose primarily from the general dissatisfaction with colonial, sovereign rule. The commonality
between two historically and culturally distinct populations was the desire for self-government.
In order for local, representative government to successfully respond to this desire, it must act,
or be seen to act, on behalf of the population it represents. Control over public funds would be
exercised by the population through its elected Assembly. To achieve legitimacy, therefore, the
government must be able to provide an account of public funds and an account of the agents
acting on its behalf. As the 1842 statement of net revenues illustrates, this account could not be
fully provided.
Only a few years after the union, the Province of Canada’s first committee on public accounts
was formed—first in 1843 as a “select committee” to study the reporting of revenues and
expenditures and then, in 1844-45 as a “full-fledged” committee on public accounts (Ward,
1951, p. 26). The public accounts committees over the years of the province brought a
impressive rigour to their work, not only making recommendations on larger issues concerning
the financial management and financial reporting of the province but also going through the
accounts in great detail and calling in witnesses to answer questions about any aspect of the
accounts that concerned them, producing hundreds of pages of evidence in support of their
reports to the legislative assembly.
The Public Accounts Committee of 1851 (at the time referred to the “Select Committee to which
were referred the Public Accounts of the year 1850, with power to report from time to time”),
recommended that the public accounts begin to report gross revenue rather than net revenue:
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Your Committee, in conclusion, would recommend, that, inasmuch as the Receipts and
Expenditure of the Public Revenue do not exhibit at one view the Gross Amounts (as
shewn by the Statements Nos. 1 and 2, appended to this Report,) a Statement should in
future be added to the Public Accounts annually laid before the Legislature—shewing
the Gross and Net Receipts and Expenditure in each branch of the Public Revenue.
(Province of Canada. Committee on Public Accounts, 1851, p. 1)
The Statement of Revenue and Expenditure for the year ended January 31, 1854, for the first
time reported Gross Revenues rather than Net Revenues as had been done in all years previous
to this. The impact of this change – that is, the additional information captured by this new
format – is evident in the amount of the total revenue reported. In the previous year’s
statement, where revenue from Customs and the other departments was reported as “net”,
total revenues from the same departmental sources totalled £880,531. Using the new gross
revenue format, revenues “rose” to £1,320,659, an increase of almost 50%! (By contrast, the
following year revenues rose again but by only 15%). (Province of Canada. Inspector General,
1854, 1855, 1856)
Moving from Reporting Gross Revenue and Expenditures to More Complete Gross Revenue
and expenditures
However, the term “Gross Revenue” that was reported in fiscal 1854 and subsequently was not
quite accurate because the receipts figure still included items that were shown at their net
amounts (Langton, 1866). Thus the public accounts still did not provide a comprehensive
reporting of revenue and the issue was raised again by the 1854 Public Accounts Committee.
That year the Public Accounts Committee was chaired by a critical player in the Public Accounts
Committee’s drive for reform of the financial management -- William Lyon Mackenzie (Balls,
1940, p. 150). Mackenzie led the charge as the Public Accounts Committee exposed many
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weaknesses in the province’s record keeping and ineffectiveness in the audit process, including
the issue of complete reporting of revenues and expenditures (Balls, 1940, p. 150-151).
The evidence supporting this committee’s First Report includes questioning of Deputy Inspector
General Cary. Question 50 was: “Would it add to your labours much were the whole Public
Revenue, instead of net balances, to come into the public chest; and if it would, do you consider
extravagant expenditure as efficiently checked under the present method?” The answer was:
It would add very considerably to the labours of this office, as well as to those of the
Executive Council, and Receiver General; Departments, all connected with the issue and
payment of warrants, if the expenses of the collection of the Public Revenue were paid
by warrants, instead of being deducted therefrom, while in progress of collection,
without, in my humble opinion, being attended with any compensating advantages.
Expenses of collection being the first charge upon the Revenue, it is only the net
Revenue after such deduction, that is applicable to general services, so that whether
these expenses of collection were deducted in the first instance or paid out of the gross
Revenue after reaching the Treasury, the result would be precisely the same…. There is
no extravagant expenditure, that I am aware of, and the check is fully as efficient as it
could be under any other system. (Province of Canada. Committee on Public Accounts,
1855b, pp. 14-15)
It is clear that Mr. Cary did not grasp the importance of this question. His last statement is
particularly telling. He could not be aware of any extravagant expenditure because he had no
means of monitoring this. He put forth a cost-benefit argument in favour of the status quo. Yet
he had no idea of the benefits (effective surveillance and control of actors operating remotely)
because the system did not generate data with which to make an assessment of this. In the
absence of information about the missing information about revenues and costs, he assumed
that all was well.
In its Second Report of 1854, the Public Accounts Committee argued for submittal of gross
revenues to the treasury and drew attention to a resolution of the British House of Commons
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concerning the importance of submitting whole amount of revenues to be submitted to the
Exchequer and reporting this in the public accounts. The British resolution begins:
“Resolved—That this House cannot be the effectual guardian of the revenues of the
State, unless the whole amount of the taxes, and of the various other sources of income
received for the public accounts, be either paid in, or accounted for, to the Exchequer.
That no department of revenue ought to be allowed to stop any portion of its gross
receipts in their progress to the Exchequer, without the previous authority of
Parliament. That no department of expenditure should be permitted to appropriate to
the public service any other sums than those sanctioned by previous votes of
Parliament, and that all receipts from sales of stores, or other sources, should be paid
into the Exchequer. That whereas the expenditure of many departments escapes
Parliamentary control, either wholly or in part, in consequence of paying their expenses
out of fees or other resources , and of accounting to the Exchequer only for the balances
of such receipts; and in other cases of applying to Parliament for grants to make up the
deficiency of such fees or other resources; it is necessary, as a check upon abuse, and a
security for the proper appropriation of the public monies, that such receipts should be
paid into the Exchequer, and not be disposed of without the preliminary sanction of
Parliament. (Province of Canada. Committee on Public Accounts, 1855c, p. 17)
The argument made in this resolution demonstrates the importance of complete revenues and
expenses for the modern government.
Canadian legislators responded promptly with the May 19, 1855 act “to secure the more
efficient Auditing of the Public Accounts” which required that:
IX. All Public Moneys, from whatever source of revenue derived, except the Post Office
Department, and all Moneys forming part of Special Funds administered by the
Provincial Government, shall be paid to the credit of the Receiver General of the
Province, through such Banks or Parties as the Governor in Council shall from time to
time direct and appoint; and Certificates of such deposit, in duplicate, shall be taken by
the party making the same, and transmitted, one to the Receiver General, the other to
the Department to which the payment relates” (Statutes of the Province of Canada,
1855, Article IX).
The Public Accounts Committee of 1856 monitored compliance with this provision. As part of its
March 18, 1856 questioning of Deputy Inspector General William Dickinson, the committee
asked: “Are the Gross Revenues deposited to the credit of the Receiver General by the various
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Sub-Accountants, or are they allowed to withhold certain Salaries or Commissions therefrom,
and do such gross Revenues appear in the Public Accounts?” to which Dickinson responded:
“Heretofore the general practice has been for the Sub-Accountants to retain their emoluments
of Office out of their collections, but arrangements are in progress in the Customs Department,
and in the collection of the revenue from Public Works, to secure the payment of the gross
Revenue to the credit of the Receiver General, the Crown Lands Department has also been
communicated with a view to the same object by the Board of Audit, the Post Office has not
been interfered with” (The 9th Section of Audit Act except the Post Office.) (Province of Canada.
Committee on Public Accounts, 1856a, p. 15).
The Fourth Report of the Public Accounts Committee of 1856 made a strong statement
endorsing compliance with the 1855 legislation:
“Your Committee are also strongly of opinion that the Cash Book of the Receiver
General should represent the whole gross receipts of the province, and the gross
payments of whatever kind or nature. Every penny of receipts, no matter by whom
received, should be transferred to the Receiver General, for entry in the cash Account of
the Province, and no one should have the power to distribute any part of the said gross
receipts except through the Receiver General, for entry in the cash Account of the
Province, and no one should have the power to distribute any part of the said gross
receipts except through the Receiver General. This is far from being the case at present,
for Mr. Langton, in his letter to the Commissioner of Crown Lands…says, that
Department cost £60,000, of which £50,000 is deducted from gross Revenue before it is
paid to the Receiver General. Your committee believe an important principle is involved
in the change now suggested, and that it will be in vain to attempt any effectual
improvement in the system of keeping the Public Accounts without adopting it. Mr.
Langton, Auditor, and Mr. Anderson, Deputy Receiver General, both agree with your
Committee in this opinion. (Province of Canada. Committee on Public Accounts, 1856b,
p. 7)
The committee here emphasizes the need to reveal—to make transparent — the operations of
the government and also emphasize the importance of capturing the expenditures side.
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While the initial instructions for the Public Accounts Committee were to determine the true
state of the provinces financial affairs, the theme that runs through the evidence of their work,
and in the reports from England regarding gross revenues and expenditures is surveillance and
control. The “really efficient and complete control” over the different public service
departments appearing in the 1831 British report to the “check on abuse” sought through the
British resolution suggest the use of accounting and the calculative centre of public accounts as
a disciplinary-mechanism rather than a solely technical undertaking to provide an account of the
state of affairs. The panopticon metaphor is invoked with accounting’s role becoming one of
inspection following “…the more constantly the persons to be inspected are under the eyes of
the persons who should inspect them, the more perfectly will the purpose of the establishment
have been attained (Bentham, 1791, p. 3). From the perspective of governance, this accounting
technology is not simply the re-creation or “mirroring” of individual department accounts.
Rather, it makes a domain of behaviour “visible and amenable to intervention” from a distance
(See, Neu and Hiencke, 2004, p. 182). This would introduce a new presence into the
geographically dispersed local offices of government - a democratically controlled disciplinary
mechanism allowing the “observer to observe” (See Foucault, 1995, p. 207).
From Gross Revenue and Expenditure to Entire Receipts and Payments
A significant enhancement to the public accounts of the Province of Canada from an
accountability standpoint occurred for the 1857 public accounts which included all receipts and
payments made by the province whether through the consolidated fund or other accounts. The
Board of Audit’s submittal letter for the 1857 public accounts explained:
19
The Gross Revenue, from all sources, is now paid in to the Receiver General, and the
expenses of collection are defrayed by Warrants, the few minor exceptions which continue
to exist having been assimilated to the rest of the system at the end of the year. (Province of
Canada. Board of Audit, 1858, p. 2)
Several years later, the Province of Canada’s Auditor, John Langton, provided a summary of
Canada’s approach to reporting receipts and payments in a letter to British authorities:
Prior to 1857 no statement was published shewing the entire Receipts & Expenditure of the
Province. The financial statement given was the Receipts & Expenditures of the
Consolidated fund, & even in that the net Revenue only was in some cases shewn; but
besides the Consolidated Fund, there were many transactions in special accounts, which
were sometimes, but not always, separately published. It would be impossible therefore
without great labor to shew the entire Revenue & Expenditure prior to 1857 upon the same
principle as it is given since that date. (Langton, 1866, p. 1)
Reporting gross receipts and expenditures as a requirement was becoming further entrenched
in the accounting practices of the province. An amendment to the law regarding Duties and
Excise levies did allow for net accounting and returns to the Receiver General requiring the
Municipal Officer to submit all monies less four percent “for his trouble in collecting” duties
(Statutes of the Province of Canada, 1858, p. 227). The Act associated with paying for the
government expenses of public services, however, was very specific about reporting:
Accounts in detail of all moneys received and paid under this act…and of all expenses
attending the collection and payment of sums of money collected, received or paid
under the authority of this Act, shall be laid before both Houses of the Legislature of this
Province at each Session thereof (Province of Canada, 1858, p. 264).
This increasingly disciplined approach to public account proved useful for financial management
of the government during this period on at least one occasion. The Province experienced a
severe depression at about this time (Creighton, 1957). In a detailed letter to Inspector General
Cayley on June 27, 1858, the Auditor, John Langton, was able to use information derived from
the public accounts to estimate the severity of expected future deficits and to suggest measures
20
(including both spending cuts and the initiation of the very unpopular “direct taxation”) to
ensure that the finances of the province did not spiral into a disastrous state.
Deducting this from the sum previously given (£1,063,700) we arrive at a probably
future deficiency for many years to come, upon the basis of our last year’s expenditure
and our average income for five years of £587,500. This has all the appearance of a
permanent deficiency upon our present basis, which no one can hope to meet by
borrowing or by temporary expedients. There must be a permanent reduction of
expenditure or a permanent increase of revenue, or a mixture of both, to meet the
emergency and it is by no measure easy to see where either can come from to the
extent required. (Langton, 1858, p. 3)
Without a complete reckoning of revenues and expenses, this analysis would not likely have
been possible, or at least not as effective. The skill with which the 1858-9 depression was dealt
with was later commented on: “The years 1858 and 1859 witnessed a most severe financial
crisis, but again skilful administration restored confidence, and despite the temporary setback of
the early sixties, the finances were in a flourishing condition when the province became part of
the larger Union” (McArthur, 1914, p. 182).
In the public accounts of 1858 a further advance was made in comprehensive reporting of
receipts. What had in the previous few years been entitled “A statement exhibiting the Gross
Revenue …” was now called “Statement of the entire Receipts and Payments of the Province
from all sources, during the year 1858, together with the Cash Balances on the 1st of January and
31st of December” (Province of Canada. Inspector General, 1859, Statement 3).
The Board of Audit explained further in its submittal letter to the public accounts:
In submitting to you the Public Accounts, as finally audited and prepared for publication,
we desire to explain the principles which have guided us in the changes of form, which
we have introduced this year. The principal alterations are in Statement 3, which gives
the entire receipts and payments of the year in abstract; and in Statement 12, which
contains the details of the expenditure. In former years, these statements embraced
only such payments and such revenues as belonged to the Consolidated Fund, and there
21
was nearly an equal amount scattered through the separate statements of Special
Funds, or which did not appear in detail at all, and could only be imperfectly gathered in
the aggregate, from a comparison of the several items in the statement of Affairs of the
year under consideration with those of the previous year. Great inconvenience had
been experienced from this system, to obviate which we submitted to your predecessor
in Office a proposition to include the entire transactions of the Province in one
statement; an important change, the principle of which received his assent, and the
practical arrangements to give it effect have since been approved of by yourself. It is
believed that Statement 3, as now prepared, will include every payment made during
the year, and the gross revenue received, with the single exception of the Upper Canada
Law Fee Fund, in which case the existing law was found to present obstacles, which for
the future we hope will be obviated, either by an Order in Council, or if that should be
found insufficient, by Legislation during the present Session. (Province of Canada. Board
of Audit, 1859, p. 11)
Statement No 3 continued to include the entire receipts and payments of the province from all
sources right through to the termination of the province and continued on in the public
accounts of the Dominion of Canada after confederation.
Discussion
The numerous “histories” of the pre-confederation recount a dissatisfied, culturally diverse
population embittered to the point of rebellion in both Upper and Lower Canada. A variety of
complex issues have been promoted for the unrest, but a common theme found in this study
was the escalading resistance to “foreign”, sovereign rule. While a local government existed, all
meaningful decisions were carried out under British authority through an appointed
representative of the monarchy. The notion of colonial rule, it seemed, would not work.
Instead, in order to quell uprisings and political upheaval, responsible government was ushered
into British North America.
This shift in governance, in the ideology of how a population, could be governed is synchronous
with Foucault’s account of the shift from sovereign, rule-based governance of the body to a
22
subtler, disciplinary form of power of the art of government. Governmentality, the tactics and
apparatuses introduced into the social fabric of a population to achieved desired ends, would
(and did) eventually replace authoritative rule. In order for this to unfold in British North
America under the new political scheme of responsible government, the population would need
to control their affairs, their destinies, their government.
The introduction of a new accounting technology, gross receipts and expenditure reporting, was
more than a simple effort to provide a full account, for accounting’s sake. The report of the
revenue and expenditure activity of government, expressed in the change in the balance of the
Consolidated Fund, could be arrived at through either net or gross reporting. That gross
reporting would provide additional information regarding the government departments’
operations can be proposed. An increase in gross revenues, for example, would be an indicator
of increased activity and may signal the need for additional staff, for example.
The rationale for demanding gross reporting, however, identified further benefits. Specifically,
efficiency, control, the use of public funds only under proper authority and the prevention of
abuse were cited a motivating factors behind the change to this new form of accounting.
Specifics with respect to departmental financial activities would inform decision-makers in their
efforts to achieve efficiency. This new reporting would also introduce a heightened surveillance
of activities occurring on behalf of the people, but outside the physical presence, the “watch” of
the centralized location of the people’s government. Submitting and reporting only Net
revenues, allowed the expenses which were netted against revenues to escape the scrutiny and
authorization of the legislature. Allowing expenditures to occur, only when authorized by
legislative authority is a key aspect of responsible government. We can hesitantly employ the
panoptic metaphor to characterize the new accounting as means of controlling the behaviours
23
of agents acting at a distance. We use the word “hesitantly” because while we see linkages, in
all likely practical interpretations given the social, political, and geographical context of the
backwoods of British North America in the 19th century, it is difficult to envision a continuous,
penetrating form of observation being employed through this one change in financial reporting.
We argue here that the symbolic role of this new form of accounting may have been more
powerful than the initial practical effects on distant behaviours. The motivation behind gross
reporting was control of the public purse by the population through their elected
representatives. It is a mechanism for centralizing information regarding all of the financial
transactions undertaken on behalf of the government. It facilitated the process of having public
funds approved by parliament prior to being spent. It introduced a subtle form of surveillance
that signalled to agents across the territory that the people, as a population, were in control of
the financial affairs of the new province. The introduction of gross reporting shifted financial
reporting from a technical means of providing an account for the government to a mechanism
of control and a symbol of responsible government and an empowered population.
Conclusion
This study provides an account of the introduction of an accounting technology, the reporting of
gross revenues and expenditures of government operations. As a technical matter, it would
seem beneficial for elected representatives to understand the full picture of government
finances and reporting full revenues and expenditures would increase this understanding.
Adopting a Foucauldian approach, we argue that this new reporting method served a much
broader and more fundamental purpose. It is interpreted as a tactic, a discipline-mechanism
24
that would introduce a panoptic effect into the “social” of a geographically disperse government
operation. In addition to this, we argue that the need to ensure payments were approved by an
elected executive and that abuse was curtailed may have had an important symbolic significance
to a population embittered by sovereign-based, government from a distance. This accounting
technology symbolized the population’s power over its government, which in turn would
legitimize the government’s exercise of power over the population.
By no means do we suggest that the introduction of gross receipts and expenditures resulted in
a continuous, perceived or real, surveillance of every single individual action carried out by
agents of government. It has been argued that doubt can be cast on the extent to which the
panopticon concept can be applied to domains permeated with information technologies (Brivot
and Gendron, 2011). The time between the first call for full disclosure of departmental
accounting in 1843 and its implementation 1854 speaks to the difficulties encountered. Data
retrieved in the archives, particularly correspondence, showed repeated requests from the
Receiver General’s Offices and, later, the Board of Audit, for financial information from the
various departmental offices. Sometimes the response was timely, sometimes not, and
sometimes an account could not be given at all, casting doubt of the applicability of accounting
when employing panopticism in a domain completely absent of information technology and
limited infrastructure.
What this technology did introduce, however, was a powerful symbolic message to agents of
government and the broader population. The people would control their own affairs and
control their own government. Financial reporting of all receipts and expenditures facilitated
this control and, by extension, supported the shift from colonial, sovereign-based rule to
responsible government.
25
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1
Public service staff nearly doubled in size from 1842 to 1852 growing from 437 to 880. By Confederation
this number had reached 2,660 (Careless, 1967, p. 219).
30