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Intermediate Accounting: IFRS Edition
Donald E. Kieso
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Intermediate Accounting: IFRS Edition Third Edition

Donald E. Kieso & Jerry J. Weygandt & Terry D. Warfield
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Intermediate Accounting, Volume 1, 12th Canadian

Edition Donald E. Kieso
volume-1-12th-canadian-edition-donald-e-kieso/
DEDICATION TO
Our wives, Donna, Enid, and
Mary, for their love, support,
and encouragement
DIRECTOR Michael McDonald

ACQUISITIONS EDITOR Veronica Visentin
SENIOR MANAGER Emily Marcoux
ASSOCIATE DEVELOPMENT EDITOR Courtney Jordan
EDITORIAL SUPERVISOR Terry Ann Tatro
SENIOR CONTENT MANAGER Dorothy Sinclair
SENIOR PRODUCTION EDITOR Jane Lee Kaddu
MARKET DEVELOPMENT MANAGER Chris DeJohn
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EDITORIAL ASSISTANT Anna Durkin
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ISBN-13: 978-1-119-37300-1
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addition, if the ISBN on the back cover diff ers from the ISBN on this page, the one on the back cover is
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Printed in Singapore
10 9 8 7 6 5 4 3 2 1
Contents
CHAPTER 1 Financial Reporting and Accounting Standards
CHAPTER 2 Conceptual Framework for Financial Reporting
CHAPTER 3 The Accounting Information System
CHAPTER 4 Income Statement and Related Information
CHAPTER 5 Statement of Financial Position and Statement of Cash Flows
CHAPTER 6 Accounting and the Time Value of Money
CHAPTER 7 Cash and Receivables
CHAPTER 8 Valuation of Inventories: A Cost-Basis Approach
CHAPTER 9 Inventories: Additional Valuation Issues
CHAPTER 10 Acquisition and Disposition of Property, Plant, and Equipment
CHAPTER 11 Depreciation, Impairments, and Depletion
CHAPTER 12 Intangible Assets
CHAPTER 13 Current Liabilities, Provisions, and Contingencies
CHAPTER 14 Non-Current Liabilities
CHAPTER 15 Equity
CHAPTER 16 Dilutive Securities and Earnings per Share
CHAPTER 17 Investments
CHAPTER 18 Revenue Recognition
CHAPTER 19 Accounting for Income Taxes
CHAPTER 20 Accounting for Pensions and Postretirement Benefits
CHAPTER 21 Accounting for Leases
CHAPTER 22 Accounting Changes and Error Analysis
CHAPTER 23 Statement of Cash Flows
CHAPTER 24 Presentation and Disclosure in Financial Reporting
Appendix A Specimen Financial Statements: Marks and Spencer Group plc
Appendix B Specimen Financial Statements: adidas AG
Appendix C Specimen Financial Statements: Puma Group
Index
EULA
From the Authors
Globalization is occurring rapidly. As economic and other interactions increase among

countries, capital markets must provide high-quality financial information. A need therefore
exists for high-quality financial reporting standards that meet this objective. Fortunately,
International Financial Reporting Standards (IFRS) has broad international acceptance,
being used in some form by more than 115 countries around the world. One securities regulator
noted that IFRS is best positioned to serve as the single set of high-quality accounting
standards.
Change Is the Only Constant
Most countries want rapid action related to the acceptance of IFRS. A number of countries have
already switched from their own version of accounting standards to IFRS. Students and
instructors need educational materials related to IFRS in order to meet this new challenge. Our
objective in revising Intermediate Accounting, IFRS Edition, was therefore to continue to provide
the tools needed to understand what IFRS is and how it is applied in practice. The emphasis on
fair value, the proper accounting for financial instruments, and the new developments related to
leasing, revenue recognition, and financial statement presentation are examined in light of
current practice. In addition, given the rapid changes taking place, we provide and discuss the
new Conceptual Framework to understand how these issues will likely be resolved in the future.
“If this textbook helps you appreciate the challenges, worth, and limitations of financial
reporting, if it encourages you to evaluate critically and understand financial accounting
concepts and practice, and if it prepares you for advanced study, professional
examinations, and the successful and ethical pursuit of your career in accounting or
business in a global economy, then we will have attained our objectives.”
A Look at Global Accounting
While IFRS has achieved broad acceptance, not all countries have adopted it. For example,
U.S. companies still follow U.S. generally accepted accounting principles (U.S. GAAP) in
preparing their financial statements. In fact, the differences between IFRS and U.S. GAAP may
provide certain companies with a competitive advantage, so understanding these differences
may be important in analyzing company performance. In addition, the IASB and the FASB are
working together to converge their standards as appropriate. Accordingly, we have included a
Global Accounting Insights section at the end of selected chapters, to highlight the important
differences that remain between IFRS and U.S. GAAP, as well as the ongoing joint convergence
efforts to resolve them. As a result, students truly gain a global accounting education by
studying this textbook.
Intermediate Accounting Works
Intermediate Accounting, Sixteenth Edition (based on U.S. GAAP) is the market-leading

textbook in providing the tools needed to understand what U.S. GAAP is and how it is applied in
practice. With this IFRS Third Edition, we strive to continue to provide the material needed to
understand this subject area using IFRS. The book is comprehensive and up-to-date, and
provides the instructor with flexibility in the topics to cover. We also include proven pedagogical
tools, designed to help students learn more effectively and to answer the changing needs of this
course.
We are excited about Intermediate Accounting, IFRS Third Edition. We believe it meets an
important objective of providing useful information to educators and students interested in
learning about IFRS. Suggestions and comments from users of this textbook will be
appreciated. Please feel free to e-mail any one of us at AccountingAuthors@yahoo.com.
Donald E. Kieso
Somonauk, Illinois
Jerry J. Weygandt
Madison, Wisconsin
Terry D. Warfield
Madison, Wisconsin
Author Commitment
DON KIESO Donald E. Kieso, PhD, CPA, received his bachelor's degree from Aurora University
and his doctorate in accounting from the University of Illinois. He has served as chairman of the
Department of Accountancy and is currently the KPMG Emeritus Professor of Accountancy at
Northern Illinois University. He has public accounting experience with Price Waterhouse & Co.
(San Francisco and Chicago) and Arthur Andersen & Co. (Chicago) and research experience
with the Research Division of the American Institute of Certified Public Accountants (New York).
He has done post-doctorate work as a Visiting Scholar at the University of California at Berkeley
and is a recipient of NIU's Teaching Excellence Award and four Golden Apple Teaching Awards.
Professor Kieso is the author of other accounting and business books and is a member of the
American Accounting Association, the American Institute of Certified Public Accountants, and
the Illinois CPA Society. He has served as a member of the Board of Directors of the Illinois
CPA Society, then AACSB's Accounting Accreditation Committees, the State of Illinois
Comptroller's Commission, as Secretary-Treasurer of the Federation of Schools of
Accountancy, and as Secretary-Treasurer of the American Accounting Association. Professor
Kieso is currently serving on the Board of Trustees and Executive Committee of Aurora
University, as a member of the Board of Directors of Kishwaukee Community Hospital, and as
Treasurer and Director of Valley West Community Hospital. From 1989 to 1993, he served as a
charter member of the National Accounting Education Change Commission. He is the recipient
of the Outstanding Accounting Educator Award from the Illinois CPA Society, the FSA's Joseph
A. Silvoso Award of Merit, the NIU Foundation's Humanitarian Award for Service to Higher
Education, a Distinguished Service Award from the Illinois CPA Society, and in 2003 an
honorary doctorate from Aurora University.
JERRY WEYGANDT Jerry J. Weygandt, PhD, CPA, is Arthur Andersen Alumni Emeritus
Professor of Accounting at the University of Wisconsin—Madison. He holds a Ph.D. in
accounting from the University of Illinois. Articles by Professor Weygandt have appeared in The
Accounting Review, Journal of Accounting Research, Accounting Horizons, Journal of
Accountancy, and other academic and professional journals. These articles have examined
such financial reporting issues as accounting for price-level adjustments, pensions, convertible
securities, stock option contracts, and interim reports. Professor Weygandt is author of other
accounting and financial reporting books and is a member of the American Accounting
Association, the American Institute of Certified Public Accountants, and the Wisconsin Society
of Certified Public Accountants. He has served on numerous committees of the American
Accounting Association and as a member of the editorial board of the Accounting Review; he
also has served as President and Secretary-Treasurer of the American Accounting Association.
In addition, he has been actively involved with the American Institute of Certified Public
Accountants and has been a member of the Accounting Standards Executive Committee
(AcSEC) of that organization. He has served on the FASB task force that examined the
reporting issues related to accounting for income taxes and served as a trustee of the Financial
Accounting Foundation. Professor Weygandt has received the Chancellor's Award for
Excellence in Teaching and the Beta Gamma Sigma Dean's Teaching Award. He is on the
board of directors of M & I Bank of Southern Wisconsin. He is the recipient of the Wisconsin
Institute of CPA's Outstanding Educator's Award and the Lifetime Achievement Award. In 2001,
he received the American Accounting Association's Outstanding Educator Award.
TERRY WARFIELD Terry D. Warfield, PhD, is the PwC Professor in Accounting at the
University of Wisconsin—Madison. He received a B.S. and M.B.A. from Indiana University and
a Ph.D. in accounting from the University of Iowa. Professor Warfield's area of expertise is
financial reporting, and prior to his academic career, he worked for five years in the banking
industry. He served as the Academic Accounting Fellow in the Office of the Chief Accountant at
the U.S. Securities and Exchange Commission in Washington, D.C. from 1995–1996. Professor
Warfield's primary research interests concern financial accounting standards and disclosure
policies. He has published scholarly articles in The Accounting Review, Journal of Accounting
and Economics, Research in Accounting Regulation, and Accounting Horizons, and he has
served on the editorial boards of The Accounting Review, Accounting Horizons, and Issues in
Accounting Education. He has served as president of the Financial Accounting and Reporting
Section, the Financial Accounting Standards Committee of the American Accounting
Association (Chair 1995–1996), and on the AAA-FASB Research Conference Committee. He
also served on the Financial Accounting Standards Advisory Council of the Financial
Accounting Standards Board, and he currently serves as a trustee of the Financial Accounting
Foundation. Professor Warfield has received teaching awards at both the University of Iowa and
the University of Wisconsin, and he was named to the Teaching Academy at the University of
Wisconsin in 1995. Professor Warfield has developed and published several case studies based
on his research for use in accounting classes. These cases have been selected for the AICPA
Professor-Practitioner Case Development Program and have been published in Issues in
Accounting Education.
What's New?
This IFRS Third Edition expands our emphasis on student learning and improves upon a
teaching and learning package that instructors and students have rated the highest in customer
satisfaction. Based on extensive reviews, focus groups, and interactions with other intermediate
accounting instructors and students, we have developed a number of new pedagogical features
and content changes, designed both to help students learn more effectively and to answer the
changing needs of the course.
Wiley Engage
Wiley Engage for Intermediate Accounting: IFRS Third Edition is an innovative, dynamic online
environment—designed to help you administer your course in a personalized way. Utilizing
Wiley Engage in your course provides you with the following tools and resources to create and
manage effective activities and assessment strategies:
Complete online version of the textbook for seamless integration of all content. This content
can be fully customized, curated, or rearranged to better support your course, and local
content can be easily added, including your own assessment questions.
Review and Practice questions and solutions provide new practice opportunities and
solutions that are integrated throughout.
Solution Walkthrough Videos provide step-by-step guidance for relevant homework
problems and solutions to review important concepts.
Additional relevant student study tools and learning resources ensure positive learning
outcomes.
Please contact your Wiley representative for details about these and other resources, or visit
our website at www.wiley.com.
Review and Practice and Solutions
New practice opportunities with solutions are integrated throughout the textbook and the Wiley
Engage course. Each textbook chapter now provides students with a Review and Practice
section that includes learning objective summaries, a key term listing, and a practice problem
with solution.
Streamlined Learning Objectives and Design
Each chapter now offers a more focused approach within each chapter and a design that
improves compatibility across all media.
Authoritative Literature References
Now placed near the end of each chapter, the Authoritative Literature References include a full
citation as well as a practice Research Case.
Major Content Revisions
In response to the changing environment, we have significantly revised several chapters.

Chapter 2 Conceptual Framework for Financial Reporting
Amendments to current IASB Conceptual Framework are expected later in 2017, so a

revised chapter will likely be available early in 2018 (new Evolving Issue discusses the
IASB's exposure draft on its Conceptual Framework).
Chapter 5 Balance Sheet and Statement of Cash Flows
Opening story reflects update on IASB financial statement project.

New discussion of IBM's financial flexibility within the ‘What Do the Numbers Mean?’ box on
the importance of cash flow information for investors.
Chapter 7 Cash and Receivables
Thoroughly updated discussion of recognition and valuation of accounts receivable, per

latest IASB standards, including deleting percentage-of-sales approach.
Chapter 8 Valuation of Inventories: A Cost-Basis Approach
Updated discussion on ownership of goods and costs to include in inventory, per recent
IASB standard on revenue.
Chapter 13 Current Liabilities and Contingencies
New examples and updated discussion of warranties and consideration payable, per latest
IASB standard on revenue.
Chapter 17 Investments
Discussion updated throughout to reflect IFRS 9 ruling for accounting for investments,
including the Fair Value Hedge section in Appendix 17A.
Chapter 18 Revenue Recognition
Right of Return section completely rewritten as Sales Returns and Allowances, with more
explanations and examples, per new IASB standard.
Chapter 21 Accounting for Leases
Entire chapter substantially revised per latest standard.

See the following for a complete list of content revisions by chapter.
Content Changes by Chapter

Chapter 1 Financial Accounting and Accounting Standards
• Updated discussion on convergence efforts between IFRS and U.S. GAAP.

• New “What Do the Numbers Mean?” (WDNM) box on how each country's culture and customs
impact convergence efforts.
Chapter 2 Conceptual Framework for Financial Reporting
• Amendments to current IASB Conceptual Framework are expected later in 2017, so a revised
chapter will likely be available early in 2018 (new Evolving Issue discusses the IASB's exposure
draft on its Conceptual Framework).
• New WDNM box on how the use of unconventional financial terms in statements can mislead
investors.
Chapter 3 The Accounting Information System
• Updated discussion to reflect IFRS on revenue recognition.

• New section on the chart of accounts, as well as increased explanation and graphics of the
recording process.
Chapter 5 Balance Sheet and Statement of Cash Flows
• Revised opening story to reflect the update on IASB financial statement project.
• New discussion of IBM's financial flexibility within WDNM box on the importance of cash flow
information for investors.
Chapter 6 Accounting and the Time Value of Money
• Changed interest rates on many of the in-chapter examples to reflect more realistic data.
• Deleted outdated WDNM boxes
Chapter 7 Cash and Receivables
• Updated WDNM box on where companies park their cash

• Thoroughly updated discussion of recognition and valuation of accounts receivable, per latest IASB
standards, including deleting percentage-of-sales approach.
• Deleted Appendix , Impairments of Receivables.
Chapter 8 Valuation of Inventories: A Cost-Basis Approach
• Updated discussion on ownership of goods and costs to include in inventory, per recent IASB
standard.
• Inventory errors discussion moved to the end of chapter, for improved flow of discussion.
• New WDNM box on operating on lean inventory levels.
Chapter 10 Acquisition and Disposition of Property, Plant, and Equipment
• Updated opening story on importance and capital expenditures (capex) of property, plant, and
equipment to many companies.
Chapter 11 Depreciation, Impairments, and Depletion
• Updated opening story on technical and environmental issues affecting recognition of impaired
assets.
Chapter 12 Intangible Assets
• New WDNM boxes on how companies protect their intangible assets and the many patent battles
between companies.
• Moved up the “Presentation of Intangible Assets” section within chapter for improved flow of topics.
Chapter 13 Current Liabilities and Contingencies
• New examples and updated discussion of warranties and consideration payable, per latest IASB
standard on revenue.
• New WDNM box, on how an increasing liability such as unearned revenues can sometimes provide
a positive signal about a company's sales and profitability.
Chapter 14 Non-Current Liabilities
• Deleted outdated WDNM box on correlations between bond and equity markets.
Chapter 15 Equity
• Moved up discussion of preference shares for improved flow of discussion.

• Updated WDNM box for the recent trends on dividend payouts
Chapter 16 Dilutive Securities and Earnings per Share
• Updated opening story, on increased use of restricted shares versus share options.
• Revised WDNM box on convertible bonds, to include most recent information and trends.
• Updated discussion and added illustration on share-based compensation plans.
Chapter 17 Investments
• Discussion updated throughout to reflect the updated IFRS 9 for accounting for investments,
including the Fair Value Hedge section in Appendix 17A.
• New WDNM boxes on (1) how mutual funds assign a current value to private technology
companies, (2) concerns over accounting rules that delay recognition of losses, and (3) the
expanding global derivatives market.
Chapter 18 Revenue Recognition
• New section on extended example of the basic five-step revenue recognition model, to give
students a better understanding/overview before more advanced issues are discussed.
• Right of Return section completely rewritten as Sales Returns and Allowances, with more
explanations and examples, per new IASB standard.
• End of chapter material includes many new Brief Exercises, Exercises, and Problems, to reflect
new IASB standard and terminology.
Chapter 19 Accounting for Income Taxes
• New section and illustrations on financial statement effects of future taxable amounts and deferred
taxes.
• Completely revised the Financial Statement Presentation section, including new material on note
disclosure.
Chapter 20 Accounting for Pensions and Postretirement Benefits
• Updated the WDNM boxes on defined contribution plans and overall financial health of pension
plans for most recent information.
Chapter 21 Accounting for Leases
• Entire chapter substantially revised per latest standard.

Chapter 22 Accounting Changes and Error Analysis
• New WDNM box on whether changes for accounting estimates are motivated by attempt to provide
more useful information or to make financial results look better.
• Motivations for Change of Accounting Method section now a WDNM box.
Chapter 23 Statement of Cash Flows
• Updated Evolving Issue box, for most recent research on decision-usefulness of direct versus
indirect methods for preparing the statement of cash flows.
• Expanded footnote on reporting of significant non-cash transactions as they can significantly affect
analysts' assessments of capital expenditures and free cash flow.
Chapter 24 Full Disclosure in Financial Reporting
• Updated opening story on most recent IASB actions regarding financial disclosure.
• New Evolving Issue box on pros and cons of short-term interim reporting.
Key Learning Features
This edition continues to provide numerous key learning aids to help you master the textbook
material and prepare you for a successful career.
Chapter Preview
The Chapter Preview summarizes the major issues discussed in the chapter, and provides
students with a visual outline of the key topics.
Underlying Concepts
The Underlying Concepts highlight and explain major conceptual topics throughout chapter.
What Do the Numbers Mean?
The “What Do the Numbers Mean?” boxes further students' understanding of key concepts with
practical, real-world examples.
Evolving issue
The Evolving Issue feature introduces and discusses a current topic in the accounting industry in
which the profession may be encountering controversy or nearing resolution. The feature shows
how the key standardsetting organizations make decisions to adjust to the changing global
business environment.
Review and Practice
NEW Review and Practice section includes Key Terms Review, Learning Objectives Review, and
a Practice Problem with Solution. In addition, multiple-choice questions with solutions, review
exercises with solutions, and a full glossary of all key terms are available online.
Using Your Judgment
The Using Your Judgment section provides students with real-world homework problems covering
topics such as financial reporting and financial statement analysis.
Bridge to the Profession
NEW to this edition, this section now includes Authoritative Literature References and a Research
Case, all designed to refer students to the relevant IASB literature for key concepts in the textbook
and provide assessment of their understanding.
Global Accounting Insights
Global Accounting Insights offer students a detailed discussion and assessment material of U.S.
accounting standards (U.S. GAAP) at the end of each chapter.
Contents
1. Cover
2. Title Page
3. Dedication
4. Copyright page
5. Brief Contents
6. From the Authors
7. Author Commitment
8. What's New?
9. Content Changes by Chapter
10. Key Learning Features
11. Contents
12. Acknowledgments
13. Chapter 1 Financial Reporting and Accounting Standards
1. Global Markets
2. Objective of Financial Reporting
3. Standard-Setting Organizations
4. Financial Reporting Challenges
5. Global Accounting Insights
6. Notes
14. Chapter 2 Conceptual Framework for Financial Reporting
1. Conceptual Framework
2. Fundamental Concepts
3. Assumptions
4. Measurement, Recognition, and Disclosure Concepts
6. Notes
15. Chapter 3 The Accounting Information System
1. Accounting Information System
2. Record and Summarize Basic Transactions
3. Identify and Prepare Adjusting Entries
4. Preparing Financial Statements
5. Financial Statements for a Merchandising Company
6. Appendix 3A Cash‐Basis Accounting versus Accrual‐Basis Accounting
7. Conversion from Cash Basis to Accrual Basis
8. Theoretical Weaknesses of the Cash Basis
9. Appendix 3B Using Reversing Entries
10. Illustration of Reversing Entries—Accruals
11. Illustration of Reversing Entries—Deferrals
12. Summary of Reversing Entries
13. Appendix 3C Using A Worksheet: The Accounting Cycle Revisited
14. Worksheet Columns
15. Preparing Financial Statements from a Worksheet
17. Notes
16. Chapter 4 Income Statement and Related Information
1. Income Statement
2. Content and Format of the Income Statement
3. Reporting Various Income Items
4. Accounting Changes and Errors
5. Related Equity Statements
7. Notes
17. Chapter 5 Statement of Financial Position and Statement of Cash Flows
1. Statement of Financial Position
2. Preparation of the Statement of Financial Position
3. Statement of Cash Flows
4. Additional Information
5. Appendix 5A Ratio Analysis—A Reference
6. Using Ratios to Analyze Performance
7. Notes
18. Chapter 6 Accounting and the Time Value of Money
1. Basic Time Value Concepts
2. Single-Sum Problems
3. Annuities (Future Value)
4. Annuities (Present Value)
5. Other Time Value of Money Issues
6. Notes
19. Chapter 7 Cash and Receivables
1. Cash
2. Receivables
3. Valuation of Accounts Receivable
4. Notes Receivable
5. Other Issues Related to Receivables
6. Appendix 7A Cash Controls
7. Using Bank Accounts
8. The Imprest Petty Cash System
9. Physical Protection of Cash Balances
10. Reconciliation of Bank Balances
12. Notes
20. Chapter 8 Valuation of Inventories: A Cost-Basis Approach
1. Inventory Issues
2. Goods and Costs Included in Inventory
3. Which Cost Flow Assumption to Adopt?
4. Effect of Inventory Errors
5. Appendix 8A LIFO Cost Flow Assumption
6. Last-In, First-Out (LIFO)
7. Inventory Valuation Methods—Summary Analysis
8. Notes
21. Chapter 9 Inventories: Additional Valuation Issues
1. Lower-of-Cost-or-Net Realizable Value (LCNRV)
2. Valuation Bases
3. The Gross Profit Method of Estimating Inventory
4. Retail Inventory Method
5. Presentation and Analysis
7. Notes
22. Chapter 10 Acquisition and Disposition of Property, Plant, and Equipment
1. Property, Plant, and Equipment
2. Interest Costs During Construction
3. Valuation of Property, Plant, and Equipment
4. Costs Subsequent to Acquisition
5. Disposition of Property, Plant, and Equipment
6. Notes
23. Chapter 11 Depreciation, Impairments, and Depletion
1. Depreciation—A Method of Cost Allocation
2. Other Depreciation Issues
3. Impairments
4. Depletion
5. Revaluations
7. Appendix 11A Revaluation of Property, Plant, and Equipment
8. Revaluation of Land
9. Revaluation of Depreciable Assets
11. Notes
24. Chapter 12 Intangible Assets
1. Intangible Asset Issues
2. Types of Intangible Assets
3. Impairment and Presentation of Intangible Assets
4. Research and Development Costs
6. Notes
25. Chapter 13 Current Liabilities, Provisions, and Contingencies
1. Current Liabilities
2. Provisions
3. Contingencies
5. Notes
26. Chapter 14 Non-Current Liabilities
1. Bonds Payable
2. Long-Term Notes Payable
3. Extinguishment of Non-Current Liabilities
6. Notes
27. Chapter 15 Equity
1. Corporate Capital
2. Reacquisition of Shares
3. Dividend Policy
4. Presentation and Analysis of Equity
5. Appendix 15A Dividend Preferences and Book Value per Share
6. Dividend Preferences
7. Book Value per Share
9. Notes
28. Chapter 16 Dilutive Securities and Earnings per Share
1. Dilutive Securities
2. Share Warrants
3. Share Compensation Plans
4. Basic Earnings per Share
5. Diluted Earnings per Share
6. Appendix 16A Accounting for Share-Appreciation Rights
7. SARS—Share-Based Equity Awards
8. SARS—Share-Based Liability Awards
9. Share-Appreciation Rights Example
10. Appendix 16B Comprehensive Earnings per Share Example
11. Diluted Earnings Per Share
13. Notes
29. Chapter 17 Investments
1. Debt Investments
2. Equity Investments
3. Other Reporting Issues
4. Appendix 17A Accounting for Derivative Instruments
5. Defining Derivatives
6. Who Uses Derivatives, and Why?
7. Basic Principles in Accounting for Derivatives
8. Derivatives Used for Hedging
9. Other Reporting Issues
10. Comprehensive Hedge Accounting Example
11. Controversy and Concluding Remarks
12. Appendix 17B Fair Value Disclosures
13. Disclosure of Fair Value Information: Financial Instruments
14. Disclosure of Fair Values: Impaired Assets or Liabilities
15. Conclusion
17. Notes
30. Chapter 18 Revenue Recognition
1. Fundamentals of Revenue Recognition
2. The Five-Step Process Revisited
3. Accounting for Revenue Recognition Issues
4. Presentation and Disclosure
5. Appendix 18A Long-Term Construction Contracts
6. Revenue Recognition Over Time
7. Appendix 18B Revenue Recognition for Franchises
8. Franchise Accounting
9. Recognition of Franchise Rights Revenue over Time
10. Notes
31. Chapter 19 Accounting for Income Taxes
1. Fundamentals of Accounting for Income Taxes
2. Additional Issues
3. Accounting for Net Operating Losses
4. Financial Statement Presentation
5. Appendix 19A Comprehensive Example of Interperiod Tax Allocation
6. First Year—2018
7. Second Year—2019
9. Notes
32. Chapter 20 Accounting for Pensions and Postretirement Benefits
1. Fundamentals of Pension Plan Accounting
2. Using a Pension Worksheet
3. Past Service Cost
4. Remeasurements
5. Reporting Pension Plans in Financial Statements
7. Notes
33. Chapter 21 Accounting for Leases
1. The Leasing Environment
2. Lessee Accounting
3. Lessor Accounting
4. Special Lease Accounting Problems
5. Appendix 21A Sale-Leasebacks
6. Accounting Issues in Sale-Leaseback Transactions
7. Sale-Leaseback Example
8. Appendix 21B Comprehensive Example
9. Lease Terms: Scenario 1
10. Lease Terms: Scenario 2
12. Notes
34. Chapter 22 Accounting Changes and Error Analysis
1. Accounting Changes
2. Changes in Accounting Estimates
3. Accounting Errors
4. Error Analysis
6. Notes
35. Chapter 23 Statement of Cash Flows
1. The Statement of Cash Flows
2. Preparing the Statement of Cash Flows
3. Special Problems in Statement Preparation
4. Use of a Worksheet
6. Notes
36. Chapter 24 Presentation and Disclosure in Financial Reporting
1. Full Disclosure Principle
2. Disclosure Issues
3. Auditor's and Management's Reports
4. Current Reporting Issues
5. Appendix 24A Basic Financial Statement Analysis
6. Perspective on Financial Statement Analysis
7. Ratio Analysis
8. Comparative Analysis
9. Percentage (Common-Size) Analysis
10. Appendix 24B First-Time Adoption of IFRS
11. General Guidelines
12. Implementation Steps
13. Summary
15. Notes
37. Appendix A Specimen Financial Statements: Marks and Spencer Group plc
38. Appendix B Specimen Financial Statements: adidas AG
39. Appendix C Specimen Financial Statements: Puma Group
40. Name Index
41. Subject Index
42. EULA
Acknowledgments
Third Edition Reviewers
Azlina Ahmad, Universiti Kebangsaan Malaysia

Wilfredo Baltazar, De La Salle University
Dennis Chan, Bunda Mulia University
Peng-Chia Chiu, The Chinese University of Hong Kong
Teresa Chu, University of Macau
Kaleed Jaarat, Middle East University
Edmund Keung, National University of Singapore
Kevin Li Chi Keung, The Open University of Hong Kong
Sudheer Kimar, Hurix.com
Paul Kimmel, University of Wisconsin—Milwaukee
Kurniawati, Bunda Mulia University
Raji Lakshmi, Pauls Engineering College, India
Jessica Lee, Hong Kong University of Science and Technology
Vincent Leung, Macao Polytechnic Institute
Tom Linsmeier, University of Wisconsin—Madison
Hsin-Tsai Liu, National Taiwan University
Daphne Main, Loyola University—New Orleans
Kingsley Olibe, Kansas State University
Can Ozturk, Cankaya University
Hannah Pantaran, Silliman University, Philippines
Fernando Penalva, IESE Business School
Nuchjaree Pichetkun, Rajamangala University of Technology, Thanyaburi
Nuraini Sari, Binus University
Dr. Charlie Sohn, University of Macau
Nai Hui Su (Suzanne), National Chung Hsing University
Sukarnen Suwanto, Indonesia
Professor Ting-Wong, National Chengchi University
Rita Yip, Lingnan University
Amy Zang, The Hong Kong University of Science and Technology
Stephen Zeff, Rice University
Ancillary Authors, Contributors, Proofers, and Accuracy Checkers
Ellen Bartley, St. Joseph's College
LuAnn Bean, Florida Institute of Technology
John C. Borke, University of Wisconsin—Platteville
Melodi Bunting, Edgewood College
Jack Cathey, University of North Carolina—Charlotte
Andrew Debbink, FASB
Jim Emig, Villanova University
Larry Falcetto, Emporia State University
Coby Harmon, University of California, Santa Barbara
Kimberly Hurt, Central Community College—Hastings
Mark Kohlbeck, Florida Atlantic University
Steven Lifl and, High Point University
Jill Misuraca, University of Tampa
Barbara Muller, Arizona State University
Yvonne Phang, Borough of Manhattan Community College
Laura Prosser, Black Hills State University
Lynn Stallworth, Appalachian State University
Alice Sineath, Benedictine University
Dick D. Wasson, Southwestern College
Lori Grady Zaher, Bucks County Community College
Practicing Accountants and Business Executives
From the fields of corporate and public accounting, we owe thanks to the following practitioners
for their technical advice and for consenting to interviews.
Tracy Golden, Deloitte LLP
John Gribble, PricewaterhouseCoopers (retired)
Darien Griffin, S.C. Johnson & Son
Michael Lehman, Sun Microsystems, Inc. (retired)
Michele Lippert, Evoke.com
Sue McGrath, Vision Capital Management
David Miniken, Sweeney Conrad
Robert Sack, University of Virginia
Clare Schulte, Deloitte LLP
Willie Sutton, Mutual Community Savings Bank, Durham, NC
Mary Tokar, IASB
Lynn Turner, former SEC Chief Accountant
Finally, we appreciate the exemplary support and professional commitment given us by the
development, marketing, production, and editorial staffs of John Wiley & Sons, including the
following: Michael McDonald, Emily Marcoux, Terry Ann Tatro, Margaret Thompson, Chris
DeJohn, Karolina Zarychta, Courtney Jordan, Anna Durkin, Jane Lee Kaddu, Jenny Welter, and
Maureen Eide. Thanks, too, to Jackie Henry and the staff at Aptara®, Inc. for their work on the
textbook.
Suggestions and comments from users of this book will be appreciated. Please feel free to e-mail
any one of us at AccountingAuthors@yahoo.com.
Donald E. Kieso
Somonauk, Illinois
Jerry J. Weygandt
Madison, Wisconsin
Terry D. Warfield
Madison, Wisconsin
CHAPTER 1
Financial Reporting and Accounting Standards
LEARNING OBJECTIVES
After studying this chapter, you should be able to:

1 Describe the global financial markets and their relation to financial reporting.
2 Explain the objective of financial reporting.
3 Identify the major policy-setting bodies and their role in the standard-setting
process.
4 Discuss the challenges facing financial reporting.
PREVIEW OF CHAPTER 1
As the following opening story indicates, countries are moving quickly to adopt
International Financial Reporting Standards (IFRS). It is estimated that over 300
of the 500 largest global companies are using IFRS. However, the accounting
profession faces many challenges in establishing these standards, such as
developing a sound conceptual framework, use of fair value measurements,
proper consolidation of financial results, off-balance-sheet financing, and proper
accounting for leases and pensions. This chapter discusses the international
financial reporting environment and the many factors affecting it, as follows.
This chapter also includes numerous conceptual discussions that are
integral to the topics presented here.
Revolution in International Financial Reporting

The age of free trade and the interdependence of national economies is now with us.
Many of the largest companies in the world often do more of their business in foreign
lands than in their home country. Companies now access not only their home capital
markets for financing but others as well. As this globalization takes place, companies
are recognizing the need to have one set of financial reporting standards. For
globalization to be efficient, what is reported for a transaction in Beijing should be
reported the same way in Paris, New York, or London.
A revolution is therefore occurring in financial reporting. In the past, many countries
used their own set of standards or followed standards set by larger countries, such as
those in Europe or in the United States. However, that situation is changing rapidly. A
single set of rules, called International Financial Reporting Standards (IFRS), is now
being used by over 149 jurisdictions (similar to countries). Here is what some are
saying about IFRS.
• “The global financial crisis that began in 2007 and continues today provides a very
clear illustration of the globally connected nature of financial markets and the
pressing need for a single set of high quality global accounting standards. That is
why the G20 … has supported the work of the IASB and called for a rapid move
towards global accounting.” [Michael Prada, chairman of the IFRS Foundation.]
• “Large multi-national companies stand to realize great benefits from a move to a
single set of standards. Companies will have more streamlined IT, easier training,
and there will be better communication with outside parties. In fact, the move to
IFRS is not so much about the accounting but about the economics of a shrinking
world.” [Sir David Tweedie, former chairman of the IASB.]
• “The added costs from having to use this complex hodgepodge (different country
reporting standards) of financial information can run in the tens of millions of
dollars annually. In the international arena, they can act as a barrier to forming and
allocating capital efficiently. Thus, there are growing demands for the development
of a single set of high quality international accounting standards.” [Robert Herz,
former chairman of the FASB.]
• “The current and growing breadth of IFRS adoption across the world suggests that
IFRS has become the most practical approach to achieving the objective of having
a single set of high-quality, generally accepted standards for financial reporting.
Those who share this belief are influenced by the fact that the IASB's structure and
due-process procedures are open, accessible, responsive, and marked by
extensive consultation.” [KPMG Defining Issues.]
• “Developments such as the shocks of the Asian financial crisis, the Enron and
WorldCom scandals, and Europe's creation of a unified financial market helped
build consensus for global accounting standards. Every relevant international
organization has expressed its support for our work to develop a global language
for financial reporting.” [Hans Hoogervorst, chairman of the IASB, June 2013.]
What these statements suggest is that the international standard-setting process is
rapidly changing. And with these changes, it is hoped that a more effective system of
reporting will develop, which will benefit all.
Review and Practice
Go to the REVIEW AND PRACTICE section at the end of the chapter for a
targeted summary review and practice problem with solution. Multiple-choice
questions with annotated solutions as well as additional exercises and practice
problem with solutions are also available online.
Global Markets
LEARNING OBJECTIVE 1
Describe the global financial markets and their relation to financial reporting.
World markets are becoming increasingly intertwined. International consumers drive

Japanese cars, wear Italian shoes and Scottish woolens, drink Brazilian coffee and
Indian tea, eat Swiss chocolate bars, sit on Danish furniture, watch U.S. movies, and
use Arabian oil. The tremendous variety and volume of both exported and imported
goods indicates the extensive involvement in international trade—for many
companies, the world is their market.
To provide some indication of the extent of globalization of economic activity,
Illustration 1.1 provides a listing of the top 20 global companies in terms of sales.
ILLUSTRATION 1.1 Top 20 Global Companies in Terms of Sales
Rank Company Country Revenues ($
millions)
1 Walmart U.S. 482,130
2 State Grid China 329,601
3 China National Petroleum China 299,271
4 Sinopec Group China 294,344
5 Royal Dutch Shell Netherlands 272,156
6 ExxonMobil U.S. 246,204
7 Volkswagen Germany 236,600
8 Toyota Motor Japan 236,592
9 Apple U.S. 233,715
10 BP Britain 225,982
11 Berkshire Hathaway U.S. 210,821
12 McKesson U.S. 192,487
13 Samsung Electronics South 177,440
Korea
14 Glencore Switzerland 170,497
15 Industrial & Commercial Bank of China 167,227
China
16 Daimler Germany 165,800
17 United Health Group U.S. 157,107
18 CVS Health U.S. 153,290
19 EXOR Group Italy 152,591
20 General Motors U.S. 152,356
Source: Source: http://beta.fortune.com/global500..
In addition, due to technological advances and less onerous regulatory requirements,
investors are able to engage in financial transactions across national borders and to
make investment, capital allocation, and financing decisions involving many foreign
companies. Also, many investors, in attempts to diversify their portfolio risk, have
invested more heavily in international markets. As a result, an increasing number of
investors are holding securities of foreign companies. For example, over a recent
seven-year period, estimated investments in foreign equity securities by U.S. investors
increased over 20-fold, from $200 billion to $4,200 billion.
An indication of the significance of these international investment opportunities can be
found when examining the number of foreign registrations on various securities
exchanges. As shown in Illustration 1.2, a significant number of foreign companies are
found on national exchanges.
ILLUSTRATION 1.2 International Exchange Statistics
Exchange Market Total Domestic Foreign Foreign
(Location) Capitalization ($ Listings Listings Listings %
millions)
NYSE (U.S.) 19,009,042 2,322 1,834 488 21.0
Nasdaq (U.S.) 7,549,892 2,871 2,489 382 13.3
Japan Exchange 4,967,989 3,525 3,517 8 0.2
Group
London Stock 3,612,520 2,622 2,131 491 18.7
Exchange Group
Euronext 3,425,104 1,057 938 119 11.3
Deutsche Börse 1,682,370 599 538 61 10.2
(Germany)
SIX Swiss 1,458,721 266 230 36 13.5
Exchange
Korea Exchange 1,344,266 2,008 1,992 16 0.8
Nasdaq Nordic 1,282,556 848 813 35 4.1
Exchanges
Australian 1,276,494 2,068 1,947 121 5.9
Securities
Exchange
Johannesburg 1,036,306 377 306 71 18.8
Stock Exchange
Taiwan Stock 843,133 901 826 75 8.3
Exchange Corp.
BM&F Bovespa 752,694 352 341 11 3.1
(Brazil)
BME Spanish 701,756 3,553 3,526 27 0.8
Exchanges
Singapore 668,022 767 484 283 36.9
Exchange
Source: Focus: The Monthly Newsletter of Regulated Exchanges (September 2016).
As indicated, capital markets are increasingly integrated and companies have greater
flexibility in deciding where to raise capital. In the absence of market integration, there
can be company-specific factors that make it cheaper to raise capital and list/trade
securities in one location versus another. With the integration of capital markets, the
automatic linkage between the location of the company and location of the capital
market is loosening. As a result, companies have expanded choices of where to raise
capital, either equity or debt. The move toward adoption of global accounting
standards has and will continue to facilitate this trend.
Financial Statements and Financial Reporting
Accounting is the universal language of business. One noted economist and politician
indicated that the single-most important innovation shaping capital markets was the
development of sound accounting principles. The essential characteristics of
accounting are (1) the identification, measurement, and communication of financial
information about (2) economic entities to (3) interested parties. Financial
accounting is the process that culminates in the preparation of financial reports on
the enterprise for use by both internal and external parties. Users of these financial
reports include investors, creditors, managers, unions, and government agencies. In
contrast, managerial accounting is the process of identifying, measuring, analyzing,
and communicating financial information needed by management to plan, control, and
evaluate a company's operations.
Financial statements are the principal means through which a company communicates
its financial information to those outside it. These statements provide a company's
history quantified in money terms. The financial statements most frequently provided
are (1) the statement of financial position, (2) the income statement (or statement of
comprehensive income), (3) the statement of cash flows, and (4) the statement of
changes in equity. Note disclosures are an integral part of each financial statement.
Some financial information is better provided, or can be provided only, by means of
financial reporting other than formal financial statements. Examples include the
president's letter or supplementary schedules in the company annual report,
prospectuses, reports filed with government agencies, news releases, management's
forecasts, and social or environmental impact statements. Companies may need to
provide such information because of authoritative pronouncements, regulatory rule, or
custom. Or, they may supply it because management wishes to disclose it voluntarily.
In this textbook, we focus on the development of two types of financial information: (1)
the basic financial statements and (2) related disclosures.
Accounting and Capital Allocation
Resources are limited. As a result, people try to conserve them and ensure that they
are used effectively. Efficient use of resources often determines whether a business
thrives. This fact places a substantial burden on the accounting profession.
Accountants must measure performance accurately and fairly on a timely basis, so
that the right managers and companies are able to attract investment capital. For
example, relevant financial information that faithfully represents financial results allows
investors and creditors to compare the income and assets employed by such
companies as Nokia (FIN), McDonald's (USA), Air China Ltd. (CHN), and Toyota
Motor (JPN). Because these users can assess the relative return and risks associated
with investment opportunities, they channel resources more effectively. Illustration 1.3
shows how this process of capital allocation works.
ILLUSTRATION 1.3 Capital Allocation Process
An effective process of capital allocation is critical to a healthy economy. It promotes

productivity, encourages innovation, and provides an efficient and liquid market for
buying and selling securities and obtaining and granting credit. Unreliable and
irrelevant information leads to poor capital allocation, which adversely affects the
securities markets.
High-Quality Standards
To facilitate efficient capital allocation, investors need relevant information and a

faithful representation of that information to enable them to make comparisons across
borders. For example, assume that you were interested in investing in the
telecommunications industry. Four of the largest telecommunications companies in the
world are Nippon Telegraph and Telephone (JPN), Deutsche Telekom (DEU),
Telefonica (ESP and PRT), and AT&T (USA). How do you decide which, if any, of
these telecommunications companies you should invest in? How do you compare, for
example, a Japanese company like Nippon Telegraph and Telephone with a German
company like Deutsche Telekom?
A single, widely accepted set of high-quality accounting standards is a necessity to
ensure adequate comparability. Investors are able to make better investment
decisions if they receive financial information from Nippon Telegraph and Telephone
that is comparable with Deutsche Telekom. Globalization demands a single set of
high-quality international accounting standards. But how is this to be achieved? Here
are some elements:
1. Single set of high-quality accounting standards established by a single standard-
setting body.
2. Consistency in application and interpretation.
3. Common disclosures.
4. Common high-quality auditing standards and practices.
5. Common approach to regulatory review and enforcement.
6. Education and training of market participants.
7. Common delivery systems (e.g., eXtensible Business Reporting Language—XBRL).
8. Common approach to company governance and legal frameworks around the
world.1
Fortunately, as indicated in the opening story, significant changes in the financial
reporting environment are taking place, which hopefully will lead to a single, widely
accepted set of high-quality accounting standards. The major standard-setters of the
Another random document with
no related content on Scribd:
like effect on all who have the time and patience to read what I have
here written.
Speech of Hon. John A. Logan,
On Self-Government in Louisiana, January 13 and 14, 1875.

The Senate having under consideration the resolution submitted
by Mr. Schurz on the 8th of January, directing the Committee of the
Judiciary to inquire what legislation is necessary to secure to the
people of the State of Louisiana their rights of Self-government
under the Constitution Mr. Logan said:
Mr. President: I believe it is considered the duty of a good sailor
to stand by his ship in the midst of a great storm. We have been told
in this Chamber that a great storm of indignation is sweeping over
this land, which will rend asunder and sink the old republican craft.
We have listened to denunciations of the President, of the
republicans in this Chamber, of the republican party as an
organization, their acts heretofore and their purposes in reference to
acts hereafter, of such a character as has seldom been listened to in
this or in any other legislative hall. Every fact on the side of the
republican party has been perverted, every falsehood on the part of
the opposition has been exaggerated, arguments have been made
here calculated to inflame and arouse a certain class of the people of
this country against the authorities of the Government, based not
upon truth but upon manufactured statements which were utterly
false. The republican party has been characterized as despotic, as
tyrannical, as oppressive. The course of the Administration and the
party toward the southern people has been denounced as of the most
tyrannical character by men who have received clemency at the
hands of this same party.
Now, sir, what is the cause of all this vain declamation? What is
the cause of all this studied denunciation? What is the reason for all
these accusations made against a party or an administration? I may
be mistaken, but, if I am not, this is the commencement of the
campaign of 1876. It has been thought necessary on the part of the
opposition Senators here to commence, if I may use a homely phrase,
a raid upon the republican party and upon this Administration, and
to base that upon false statements in reference to the conduct of
affairs in the State of Louisiana.
I propose in this debate, and I hope I shall not be too tedious,
though I may be somewhat so, to discuss the question that should be
presented to the American people. I propose to discuss that question
fairly, candidly, and truthfully. I propose to discuss it from a just,
honest, and legal standpoint. Sir, what is that question? There was a
resolution offered in this Chamber calling on the President to furnish
certain information. A second resolution was introduced, (whether
for the purpose of hanging on it an elaborate speech or not I am not
aware,) asking the Committee on the Judiciary to report at once
some legislation in reference to Louisiana. Without any facts
presented officially arguments have been made, the country has been
aroused, and some people have announced themselves in a manner
calculated to produce a very sore feeling against the course and
conduct of the party in power. I say this is done without the facts;
without any basis whatever; without any knowledge officially
communicated to them in reference to the conduct of any of the
parties in the State of Louisiana. In discussing this question we ought
to have a standpoint; we ought to have a beginning; some point from
which we may all reason and see whether or not any great outrage
has been perpetrated against the rights of the American people or
any portion of them.
I then propose to start at this point, that there is a government in
the State of Louisiana. Whether that government is a government of
right or not is not the question. Is there a government in that State
against which treason, insurrection, or rebellion, may be committed?
Is there such a government in the State of Louisiana as should
require the maintenance of peace and order among the citizens of
that State? Is there such a government in the State of Louisiana as
requires the exercise of Executive authority for the purpose of
preserving peace and order within its borders? I ask any Senator on
this floor to-day if he can stand up here as a lawyer, as a Senator, as
an honest man, and deny the fact that a government does exist?
Whether he calls it a government de jure or a government de facto, it
is immaterial. It is such an organization as involves the liberties and
the protection of the rights of the people of that State. It will not do
for Senators to talk about the election of 1872. The election of 1872
has no more to do with this “military usurpation” that you speak of
to-day than an election of a hundred years ago. It is not a question as
to whether this man or that was elected. The question is, is there
such a government there as can be overturned, and has there been an
attempt to overturn it? If so, then what is required to preserve its
status or preserve the peace and order of the people?
But the other day when I asked the question of a Senator on the
other side, who was discussing this question, whether or not he
indorsed the Penn rebellion, he answered me in a playful manner
that excited the mirth of people who did not understand the
question, by saying that I had decided that there was no election, and
that therefore there was no government to overturn. Now I ask
Senators, I ask men of common understanding if that is the way to
treat a question of this kind; when asked whether insurrection
against a government recognized is not an insurrection and whether
he endorses it, he says there is no government to overturn. If there is
no government to overturn, why do you make this noise and
confusion about a Legislature there? If there is no State government,
there is no State Legislature. But I will not answer in that manner. I
will not avoid the issue; I will not evade the question. I answer there
is a Legislature, as there is a State government, recognized by the
President, recognized by the Legislature, recognized by the courts,
recognized by one branch of Congress, and recognized by the
majority of the citizens by their recognition of the laws of the State;
and it will not do to undertake to avoid questions in this manner.
Let us see, then, starting from that standpoint, what the position of
Louisiana is now, and what it has been. On the 14th day of
September last a man by the name of Penn, as to whom we have
official information this morning, with some seven or ten thousand
white-leaguers made war against that government, overturned it,
dispersed it, drove the governor from the executive chamber, and he
had to take refuge under the jurisdiction of the Government of the
United States, on the soil occupied by the United States custom-
house, where the exclusive jurisdiction of the United States
Government extends, for the purpose of protecting his own life.
This then was a revolution; this then was a rebellion; this then was
treason against the State, for which these men should have been
arrested, tried, and punished. Let gentlemen dodge the question as
they may; it may be well for some men there who engaged in this
treasonable act against the government that they had Mr. Kellogg for
governor. It might not have been so well for them, perhaps, had there
been some other man in his place. I tell the Senator from Maryland if
any crowd of armed men should undertake to disperse the
government of the State of Illinois, drive its governor from the
executive chamber, enter into his private drawers, take his private
letters, and publish them, and act as those men did, some of them
would pay the penalty either in the penitentiary or by dancing at the
end of a rope.
But when this rebellion was going on against that State, these
gentlemen say it was a State affair; the Government of the United
States has nothing to do with it! That is the old-fashioned secession
doctrine again. The government of the United States has nothing to
do with it! This national government is made up of States, and each
State is a part of the Government, each is a part of its life, of its body.
It takes them all to make up the whole; and treason against any part
of it is treason against the whole of it, and it became the duty of the
President to put it down, as he did do; and, in putting down that
treason against the Kellogg government, the whole country almost
responded favorably to his action.
But our friend from Maryland, not in his seat now, [Mr.
Hamilton] said that that was part of the cause of the elections going
as they did. In other words, my friend from Maryland undertook in a
roundabout way to endorse the Penn rebellion, and claim that people
of the country did the same thing against the government of the State
of Louisiana, and on this floor since this discussion has been going
on, not one Senator on that side of the chamber has lisped one word
against the rebellion against the government of the State of
Louisiana, and all who have spoken of it have passed it by in silence
so as to indicate clearly that they endorse it, and I believe they do.
Then, going further, the President issued his proclamation
requiring those insurgents to lay down their arms and to resume
their peaceful pursuits. This morning we have heard read at the
clerk’s desk that these men have not yet complied fully with that
proclamation. Their rebellious organization continued up to the time
of the election and at the election. When the election took place, we
are told by some of these Senators that the election was a peaceable,
and a fair election, that a majority of democrats were elected. That is
the question we propose to discuss as well as we are able to do it.
They tell us that there was no intimidation resorted to by any one in
the State of Louisiana. I dislike very much to follow out these
statements that are not true and attempt to controvert them because
it does seem to me that we ought to act fairly and candidly in this
Chamber and discuss questions without trying to pervert the issue or
the facts in connection with it.
Now, I state it as a fact, and I appeal to the Senator from Louisiana
to say whether or not I state truly, that on the night before the
election in Louisiana notices were posted all over that country on the
doors of the colored republicans and the white republicans, too, of a
character giving them to understand that if they voted their lives
would be in danger; and here is one of the notices posted all over that
country:
2×6
This “2 × 6” was to show the length and width of the grave they
would have. Not only that, but the negroes that they could impose
upon and get to vote the democratic ticket received, after they had
voted, a card of safety; and here is that card issued to the colored
people whom they had induced to vote the democratic ticket, so that
they might present it if any white-leaguers should undertake to
plunder or murder them:
New Orleans, Nov. 28, 1874.
This is to certify that Charles Durassa, a barber by occupation, is a

Member of the 1st Ward Colored Democratic Club, and that at the late
election he voted for and worked in the interests of the Democratic
Candidates.
WILLIAM ALEXANDER,
President 1st Ward Col’d Democratic Club.
NICK HOPE, Secretary.
Rooms Democratic Parish Committee.
New Orleans, Nov. 28, 1874.
The undersigned, Special Committee, appointed on behalf of the Parish

Committee, approve of the above Certificate.
ED. FLOOD, Chairman.

PAUL WATERMAN.
H. J. RIVET.
Attest:
J. H. HARDY, Ass’t Sec. Parish Committee.
These were the certificates given to negroes who voted the

democratic ticket, that they might present them to save their lives
when attacked by the men commonly known as Ku-Klux or white-
leaguers in that country; and we are told that there is no intimidation
in the State of Louisiana!
Our friend from Georgia [Mr. Gordon] has been very profuse in
his declamation as to the civility and good order and good bearing of
the people of Louisiana and the other Southern States. But, sir, this
intimidation continued up to the election. After the election, it was
necessary for the governor of that State to proceed in some manner
best calculated to preserve the peace and order of the country.
Now, Mr. President, I want to ask candid, honest, fair-minded

men, after reading the report of General Sheridan showing the
murder, not for gain, not for plunder, but for political opinions in the
last few years of thirty-five hundred persons in the State of
Louisiana, all of them republicans, not one of them a democrat—I
want to ask if they can stand here before this country and defend the
democratic party of Louisiana? I put this question to them for they
have been here for days crying against the wrongs upon the
democracy of Louisiana. I want any one of them to tell me if he is
prepared to defend the democracy of Louisiana. What is your
democracy of Louisiana? You are excited, your extreme wrath is
aroused at General Sheridan because he called your White Leagues
down there “banditti.” I ask you if the murder of thirty-five hundred
men in a short time for political purposes by a band of men banded
together for the purpose of murder does not make them banditti,
what it does make them? Does it make them democrats? It certainly
does not make them republicans. Does it make them honest men? It
certainly does not. Does it make them law-abiding men? It certainly
does not. Does it make them peaceable citizens? It certainly does not.
But what does it make them? A band of men banded together and
perpetrating murder in their own State? Webster says a bandit is “a
lawless or desperate fellow; a robber; a brigand,” and “banditti” are
men banded together for plunder and murder; and what are your
White Leagues banded together for if the result proves that they are
banded together for murder for political purposes?
O, what a crime it was in Sheridan to say that these men were
banditti! He is a wretch. From the papers he ought to be hanged to a
lamp-post; from the Senators he is not fit to breathe the free air of
heaven or of this free Republic; but your murderers of thirty-five
hundred people for political offenses are fit to breathe the air of this
country and are defended on this floor to-day, and they are defended
here by the democratic party, and you cannot avoid or escape the
proposition. You have denounced republicans for trying to keep the
peace in Louisiana; you have denounced the Administration for
trying to suppress bloodshed in Louisiana; you have denounced all
for the same purpose; but not one word has fallen from the lips of a
solitary democratic Senator denouncing these wholesale murders in
Louisiana. You have said, “I am sorry these things are done,” but you
have defended the White Leagues; you have defended Penn; you
have defended rebellion; and you stand here to-day the apologists of
murder, of rebellion, and of treason in that State.
I want to ask the judgment of an honest country, I want to ask the
judgment of the moral sentiments of the law-abiding people of this
grand and glorious Republic to tell me whether men shall murder by
the score, whether men shall trample the law under foot, whether
men shall force judges to resign, whether men shall force prosecuting
attorneys to resign, whether men shall take five officers of a State out
and hang or shoot them if they attempt to exercise the functions of
their office, whether men shall terrify the voters and office-holders of
a State, whether men shall undertake in violation of law to organize a
Legislature for revolutionary purposes, for the purpose of putting a
governor in possession and taking possession of the State and then
ask the democracy to stand by them—I appeal to the honest
judgment of the people of this land and ask them to respond whether
this was not an excusable case when this man used the Army to
protect the life of that State and to preserve the peace of that people?
Sir, the man who will not use all the means in his power to preserve
the nationality, the integrity of this Government, the integrity of a
State or the peace and happiness of a people, is not fit to govern, he
is not fit to hold position in this or any other civilized age.
Does liberty mean wholesale slaughter? Does republican
government mean tyranny and oppression of its citizens? Does an
intelligent and enlightened age of civilization mean murder and
pillage, bloodshed at the hands of Ku-Klux or White Leagues or
anybody else, and if any one attempts to put it down, attempts to
reorganize and produce order where chaos and confusion have
reigned, they are to be denounced as tyrants, as oppressors, and as
acting against republican institutions? I say then the happy days of
this Republic are gone. When we fail to see that republicanism
means nothing, that liberty means nothing but the unrestrained
license of the mobs to do as they please, then republican government
is a failure. Liberty of the citizen means the right to exercise such
rights as are prescribed within the limits of the law so that he does
not in the exercise of these rights infringe the rights of other citizens.
But the definition is not well made by our friends on the opposite
side of this Chamber. Their idea of liberty is license; it is not liberty,
but it is license. License to do what? License to violate law, to
trample constitutions under foot, to take life, to take property, to use
the bludgeon and the gun or anything else for the purpose of giving
themselves power. What statesman ever heard of that as a definition
of liberty? What man in a civilized age has ever heard of liberty being
the unrestrained license of the people to do as they please without
any restraint of law or of authority? No man, no not one until we
found the democratic party, would advocate this proposition and
indorse and encourage this kind of license in a free country.
Mr. President, I have perhaps said more on this question of
Louisiana than might have been well for me to say on account of my
strength, but what I have said about it I have said because I honestly
believed it. What I have said in reference to it comes from an honest
conviction in my mind and in my heart of what has been done to
suppress violence and wrong. But I have a few remarks in conclusion
to submit now to my friends on the other side, in answer to what they
have said not by way of argument but by way of accusation. You say
to us—I had it repeated to me this morning in private conversation
—“Withdraw your troops from Louisiana and you will have peace.”
Ah, I heard it said on this floor once “Withdraw your troops from
Louisiana and your State government will not last a minute.” I heard
that said from the opposite side of the Chamber, and now you say
“Withdraw your troops from Louisiana and you will have peace.”
Mr. President, I dislike to refer to things that are past and gone; I
dislike to have my mind called back to things of the past; but I well
remember the voice in this Chamber once that rang out and was
heard throughout this land, “Withdraw your troops from Fort
Sumter if you want peace.” I heard that said. Now it is “Withdraw
your troops from Louisiana if you want peace.” Yes, I say, withdraw
your troops from Louisiana if you want a revolution, and that is what
is meant. But, sir, we are told, and doubtless it is believed by the
Senators who tell us so, who denounce the republican party, that it is
tyrannical, oppressive, and outrageous. They have argued themselves
into the idea that they are patriots, pure and undefiled. They have
argued themselves into the idea that the democratic party never did
any wrong. They have been out of power so long that they have
convinced themselves that if they only had control of this country for
a short time, what a glorious country they would make it. They had
control for nearly forty long years, and while they were the agents of
this country—I appeal to history to bear me out—they made the
Government a bankrupt, with rebellion and treason in the land, and
were then sympathizing with it wherever it existed. That is the
condition in which they left the country when they had it in their
possession and within their control. But they say the republican
party is a tyrant; that it is oppressive. As I have said, I wish to make a
few suggestions to my friends in answer to this accusation—
oppressive to whom? They say to the South, that the republican party
has tyrannized over the South. Let me ask you how has it tyrannized
over the South? Without speaking of our troubles and trials through
which we passed, I will say this: at the end of a rebellion that
scourged this land, that drenched it with blood, that devastated a
portion of it, left us in debt and almost bankrupt, what did the
republican party do? Instead of leaving these our friends and citizens
to-day in a territorial condition where we might exercise jurisdiction
over them for the next coming twenty years, where we might have
deprived them of the rights of members on this floor, what did we
do? We reorganized them into States, admitted them back into the
Union, and through the clemency of the republican party we
admitted representatives on this floor who had thundered against
the gates of liberty for four bloody years. Is that the tyranny and
oppression of which you complain at the hands of the republican
party? Is that a part of our oppression against you southern people?
Let us go a little further. When the armed democracy, for that is
what they were, laid down their arms in the Southern States, after
disputing the right of freedom and liberty in this land for four years,
how did the republican party show itself in its acts of tyranny and
oppression toward you? You appealed to them for clemency. Did you
get it? Not a man was punished for his treason. Not a man ever
knocked at the doors of a republican Congress for a pardon who did
not get it. Not a man ever petitioned the generosity of the republican
party to be excused for his crimes who was not excused. Was that
oppression upon the part of the republicans in this land? Is that a
part of the oppression of which you accuse us?
Let us look a little further. We find to-day twenty-seven
democratic Representatives in the other branch of Congress who
took arms in their hands and tried to destroy this Government
holding commissions there by the clemency of the republican party.
We find in this Chamber by the clemency of the republican party
three Senators who held such commissions. Is that tyranny; is that
oppression; is that the outrage of this republican party on you
southern people? Sir, when Jeff Davis, the head of the great
rebellion, who roams the land free as air, North, South, East, and
West, makes democratic speeches wherever invited, and the vice-
president of the southern rebellion holds his seat in the other House
of Congress, are we to be told that we are tyrants, and oppressing the
southern people? These things may sound a little harsh, but it is time
to tell the truth in this country. The time has come to talk facts. The
time has come when cowards should hide, and honest men should
come to the front and tell you plain, honest truths. You of the South
talk to us about oppressing you. You drenched your land in blood,
caused weeping throughout this vast domain, covered the land in
weeds of mourning both North and South, widowed thousands and
orphaned many, made the pension-roll as long as an army-list, made
the debt that grinds the poor of this land—for all these things you
have been pardoned, and yet you talk to us about oppression. So
much for the oppression of the republican party of your patriotic
souls and selves. Next comes the President of the United States. He is
a tyrant, too. He is an oppressor still, in conjunction with the
republican party. Oppressor of what? Who has he oppressed of your
Southern people, and when, and where? When your Ku-Klux,
banded together for murder and plunder in the Southern States,
were convicted by their own confession, your own representatives
pleaded to the President and said, “Give them pardon, and it will
reconcile many of the southern people.” The President pardoned
them; pardoned them of their murder, of their plunder, of their
piracy on land; and for this I suppose he is a tyrant.
More than that, sir, this tyrant in the White House has done more
for you southern people than you ought to have asked him to do. He
has had confidence in you until you betrayed that confidence. He has
not only pardoned the offences of the South, pardoned the criminals
of the democratic party, but he has placed in high official position in
this Union some of the leading men who fought in the rebellion. He
has put in his Cabinet one of your men; he has made governors of
Territories of some of your leading men who fought in the rebellion;
he has sent on foreign missions abroad some of your men who
warred against this country; he has placed others in the
Departments; and has tried to reconcile you in every way on earth,
by appealing to your people, by recognizing them and forgiving them
for their offenses, and for these acts of generosity, for these acts of
kindness, he is arraigned to-day as a Cæsar, as a tyrant, as an
oppressor.
Such kindness in return as the President has received from these
people will mark itself in the history of generosity. O, but say they,
Grant wants to oppress the White Leagues in Louisiana; therefore he
is an oppressor. Yes, Mr. President, Grant does desire that these men
should quit their everyday chivalric sports of gunning upon negroes
and republicans. He asks kindly that you stop it. He says to you,
“That is all I want you to do;” and you say that you are desirous that
they shall quit it. You have but to say it and they will quit it. It is
because you have never said it that they have not quit it. It is in the
power of the democratic party to-day but to speak in tones of
majesty, of honor, and justice in favor of human life, and your Ku-
Klux and murderers will stop. But you do not do it; and that is the
reason they do not stop. In States where it has been done they have
stopped. But it will not do to oppress those people; it will not do to
make them submit and subject them to the law; it will not do to stop
these gentlemen in their daily sports and in their lively recreations.
They are White Leagues; they are banded together as gentlemen;
they are of southern blood; they are of old southern stock; they are
the chivalry of days gone by; they are knights of the bloody shield;
and the shield must not be taken from them. Sirs, their shield will be
taken from them; this country will be aroused to its danger; this
country will be aroused to do justice to its citizens; and when it does,
the perpetrators of crime may fear and tremble. Tyranny and
oppression! A people who without one word of opposition allows
men who have been the enemies of a government to come into these
legislative Halls and make laws for that government to be told that
they are oppressors is a monstrosity in declamation and assertion.
Who ever heard of such a thing before? Who ever believed that such
men could make such charges? Yet we are tyrants!
Mr. President, the reading of the title of that bill from the House
only reminds me of more acts of tyranny and oppression of the
republican party, and there is a continuation of the same great
offenses constantly going on in this Chamber. But some may say “It
is strange to see Logan defending the President of the United States.”
It is not strange to me. I can disagree with the President when I think
he is wrong; and I do not blame him for disagreeing with me; but
when these attacks are made, coming from where they do, I am ready
to stand from the rising sun in the morning to the setting sun in the
evening to defend every act of his in connection with this matter
before us.
I may have disagreed with President Grant in many things; but I
was calling attention to the men who have been accusing him here,
on this floor, on the stump, and in the other House; the kind of men
who do it, the manner of its doing, the sharpness of the shafts that
are sent at him, the poisonous barbs that they bear with them, and
from these men who, at his hands, have received more clemency than
any men ever received at the hands of any President or any man who
governed a country. Why, sir, I will appeal to the soldiers of the rebel
army to testify in behalf of what I say in defense of President Grant—
the honorable men who fought against the country, if there was
honor in doing it. What will be their testimony? It will be that he
captured your armed democracy of the South, he treated them
kindly, turned them loose, with their horses, with their wagons, with
their provisions; treated them as men, and not as pirates. Grant built
no prison-pens for the southern soldiers; Grant provided no
starvation for southern men; Grant provided no “dead-lines” upon
which to shoot southern soldiers if they crossed them; Grant
provided no outrageous punishment against these people that now
call him a tyrant. Generous to a fault in all his actions toward the
men who were fighting his country and destroying the constitution,
that man to-day is denounced as a very Cæsar!
Sherman has not been denounced, but the only reason is that he
was not one of the actors in this transaction; but I want now to say to
my friends on the other side, especially to my friend from Delaware,
who repeated his bitter denunciation against Sheridan yesterday—
and I say this in all kindness, because I am speaking what future
history will bear me out in—when Sheridan and Grant and Sherman,
and others like them, are forgotten in this country, you will have no
country. When the democratic party is rotten for centuries in its
grave, the life, the course, the conduct of these men will live as bright
as the noonday sun in the heart of every patriot of a republic like the
American Union. Sirs, you may talk about tyranny, you may talk
about oppression, you may denounce these men; their glory may
fade into the darkness of night; but that darkness will be a brilliant
light compared with the darkness of the democratic party. Their
pathway is illuminated by glory; yours by dark deeds against the
Government. That is a difference which the country will bear witness
to in future history when speaking of this country and the actors on
its stage.
Now, Mr. President, I have a word to say about our duty. A great
many people are asking, what shall we do? Plain and simple in my
judgment is the proposition. I say to republicans, do not be scared.
No man is ever hurt by doing an honest act and performing a
patriotic duty. If we are to have a war of words outside or inside, let
us have them in truth and soberness, but in earnest. What then is our
duty? I did not believe that in 1872 there were official data upon
which we could decide who was elected governor of Louisiana. But
this is not the point of my argument. It is that the President has
recognized Kellogg as governor of that State, and he has acted for
two years. The Legislature of the State has recognized him; the
supreme court of the State has recognized him; one branch of
Congress has recognized him. The duty is plain, and that is for this,
the other branch of Congress, to do it, and that settles the question.
Then, when it does it, your duty is plain and simple, and as the
President has told you, he will perform his without fear, favor, or
affection. Recognize the government that revolution has been against
and intended to overthrow, and leave the President to his duty, and
he will do it. That is what to do.
Sir, we have been told that this old craft is rapidly going to pieces;
that the angry waves of dissension in the land are lashing against her
sides. We are told that she is sinking, sinking, sinking to the bottom
of the political ocean. Is that true? Is it true that this gallant old
party, that this gallant old ship that has sailed through troubled seas
before is going to be stranded now upon the rock of fury that has
been set up by a clamor in this Chamber and a few newspapers in the
country? Is it true that the party that saved this country in all its
great crises, in all its great trials, is sinking to-day on account of its
fear and trembling before an inferior enemy? I hope not. I
remember, sir, once I was told that the old republican ship was gone;
but when I steadied myself on the shores bounding the political
ocean of strife and commotion, I looked afar off and there I could see
a vessel bounding the boisterous billows with white sails unfurled,
marked on her sides “Freighted with the hopes of mankind,” while
the great Mariner above, as her helmsman, steered her, navigated
her to a haven of rest, of peace, and of safety. You have but to look
again upon that broad ocean of political commotion to-day, and the
time will soon come when the same old craft, provided with the same
cargo, will be seen, flying the same flag, passing through these
tempestuous waves, anchoring herself at the shores of honesty and
justice, and there she will lie undisturbed by strife and tumult, again
in peace and safety. [Manifestations of applause in the galleries.]
Speech of Hon. James G. Blaine, of Maine,
On the False Issue raised by the Democratic Party, Delivered in the

Senate of the United States, Monday, April 14, 1879.
The Senate having under consideration the bill (H. R. No. 1,)
making appropriations for the support of the Army for the fiscal year
ending June 30, 1880, and for other purposes—
Mr. Blaine said:
Mr. President: The existing section of the Revised Statutes
numbered 2002 reads thus:
No military or naval officer, or other person engaged in the civil,
military, or naval service of the United States, shall order, bring,
keep or have under his authority or control, any troops or armed
men at the place where any general or special election is held in any
State, unless it be necessary to repel the armed enemies of the United
States, or to keep the peace at the polls.
The object of the proposed section, which has just been read at the
Clerk’s desk, is to get rid of the eight closing words, namely, “or to
keep the peace at the polls,” and therefore the mode of legislation
proposed in the Army bill now before the Senate is an unusual mode;
it is an extraordinary mode. If you want to take off a single sentence
at the end of a section in the Revised Statutes the ordinary way is to
strike off those words, but the mode chosen in this bill is to repeat
and re-enact the whole section leaving those few words out. While I
do not wish to be needlessly suspicious on a small point I am quite
persuaded that this did not happen by accident but that it came by
design. If I may so speak it came of cunning, the intent being to
create the impression that whereas the republicans in the
administration of the General Government had been using troops
right and left, hither and thither, in every direction, as soon as the
democrats got power they enacted this section. I can imagine
democratic candidates for Congress all over the country reading this
section to gaping and listening audiences as one of the first
offsprings of democratic reform, whereas every word of it, every
syllable of it, from its first to its last, is the enactment of a republican
Congress.
I repeat that this unusual form presents a dishonest issue, whether
so intended or not. It presents the issue that as soon as the
democrats got possession of the Federal Government they proceeded
to enact the clause which is thus expressed. The law was passed by a
republican Congress in 1865. There were forty-six Senators sitting in
this Chamber at that time, of whom only ten or at most eleven were
democrats. The House of Representatives was overwhelmingly
republican. We were in the midst of a war. The republican
administration had a million or possibly twelve hundred thousand
bayonets at its command. Thus circumstanced and thus surrounded,
with the amplest possible power to interfere with elections had they
so designed, with soldiers in every hamlet and county of the United
States, the republican party themselves placed that provision on the
statute book, and Abraham Lincoln, their President, signed it.
I beg you to observe, Mr. President, that this is the first instance in
the legislation of the United States in which any restrictive clause
whatever was put upon the statute book in regard to the use of troops
at the polls. The republican party did it with the Senate and the
House in their control. Abraham Lincoln signed it when he was
Commander-in-Chief of an army larger than ever Napoleon
Bonaparte had at his command. So much by way of correcting an
ingenious and studied attempt at misrepresentation.
The alleged object is to strike out the few words that authorize the
use of troops to keep peace at the polls. This country has been
alarmed, I rather think indeed amused, at the great effort made to
create a widespread impression that the republican party relies for
its popular strength upon the use of the bayonet. This democratic
Congress has attempted to give a bad name to this country
throughout the civilized world, and to give it on a false issue. They
have raised an issue that has no foundation in fact—that is false in
whole and detail, false in the charge, false in all the specifications.
That impression sought to be created, as I say, not only throughout
the North American continent but in Europe to-day, is that elections
are attempted in this country to be controlled by the bayonet.
I denounce it here as a false issue. I am not at liberty to say that
any gentleman making this issue knows it to be false; I hope he does
not; but I am going to prove to him that it is false, and that there is
not a solitary inch of solid earth on which to rest the foot of any man
who makes that issue. I have in my hand an official transcript of the
location and the number of all the troops of the United States east of
Omaha. By “east of Omaha,” I mean all the United States east of the
Mississippi river and that belt of States that border the Mississippi
river on the west, including forty-one million at least out of the forty-
five million of people that this country is supposed to contain to-day.
In that magnificent area, I will not pretend to state its extent, but
with forty-one million people, how many troops of the United States
are there to-day? Would any Senator on the opposite side like to
guess, or would he like to state how many men with muskets in their
hands there are in the vast area I have named? There are two
thousand seven hundred and ninety-seven! And not one more.
From the headwaters of the Mississippi River to the lakes, and
down the great chain of lakes, and down the Saint Lawrence and
down the valley of the Saint John and down the St. Croix striking the
Atlantic Ocean and following it down to Key West, around the Gulf,
up to the mouth of the Mississippi again, a frontier of eight thousand
miles either bordering on the ocean or upon foreign territory is
guarded by these troops. Within this domain forty-five fortifications
are manned and eleven arsenals protected. There are sixty troops to
every million of people. In the South I have the entire number in
each State, and will give it.
And the entire South has eleven hundred and fifty-five soldiers to
intimidate, overrun, oppress and destroy the liberties of fifteen
million people! In the Southern States there are twelve hundred and
three counties. If you distribute the soldiers there is not quite one for
each county; and when I give the counties I give them from the
census of 1870. If you distribute them territorially there is one for
every seven hundred square miles of territory, so that if you make a
territorial distribution, I would remind the honorable Senator from
Delaware, if I saw him in his seat, that the quota for his State would
be three—“one ragged sergeant and two abreast,” as the old song has
it. [Laughter.] That is the force ready to destroy the liberties of
Delaware!
Mr. President, it was said, as the old maxim has it, that the
soothsayers of Rome could not look each other in the face without
smiling. There are not two democratic Senators on this floor who can
go into the cloak-room and look each other in the face without
smiling at this talk, or, more appropriately, I should say without
blushing—the whole thing is such a prodigious and absolute farce,
such a miserably manufactured false issue, such a pretense without
the slightest foundation in the world, and talked about most and
denounced the loudest in States that have not and have not had a
single Federal soldier. In New England we have three hundred and
eighty soldiers. Throughout the South it does not run quite seventy
to the million people. In New England we have absolutely one
hundred and twenty soldiers to the million. New England is far more
overrun to-day by the Federal soldier, immensely more, than the
whole South is. I never heard anybody complain about it in New
England, or express any great fear of his liberties being endangered
by the presence of a handful of troops.
As I have said, the tendency of this talk is to give us a bad name in
Europe. Republican institutions are looked upon there with jealousy.
Every misrepresentation, every slander is taken up and exaggerated
and talked about to our discredit, and the democratic party of the
country to-day stand indicted, and I here indict them, for public
slander of their country, creating the impression in the civilized
world that we are governed by a ruthless military despotism. I
wonder how amazing it would be to any man in Europe, familiar as
Europeans are with great armies, if he were told that over a territory
larger than France and Spain and Portugal and Great Britain and
Holland and Belgium and the German Empire all combined, there
were but eleven hundred and fifty-five soldiers! That is all this
democratic howl, this mad cry, this false issue, this absurd talk is
based on—the presence of eleven hundred and fifty-five soldiers on
eight hundred and fifty thousand square miles of territory, not
double the number of the democratic police in the city of Baltimore,
not a third of the police in the city of New York, not double the
democratic police in the city of New Orleans. I repeat, the number

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