 1881 - 1948 (66 years)
-
| Name |
ERNST Alwin Charles |
| Birth |
21 Jul 1881 |
Cleveland, Cuyahoga, Ohio, USA  [1, 2] |
| Gender |
Male |
| Census |
1930 Census [3] |
- Home: 1904 Windermere St, East Cleveland Ward 3, Cuyahoga, Ohio, Age=38, Birthplace= Ohio, Spouse= Charlotta F., Father Birthplace= Germany, Mother birthplace= Germany, Married, Home owned- yes, Able to read=yes, Able to write-yes,
Info:
Alwin, C.Ernst, 38
Charlotta F., 38
Ruth C Ernst, 13,
Frances N. Ernst, 15
Harriet A. Ernst, 12 yrs, 7 mos
Allayne C. Ernst, 11 mos
Lillian G. Barresch, 15, servant
Agnes Ewing, 32, servant
George H. Mohr, 32, servant
Carrie Dregalla, 41, Servant
|
| Census |
1900 |
Cuyahoga Heights, Cuyahoga, Ohio, USA [4] |
| Single |
| Census |
1930 |
Cleveland Heights, Cuyahoga, Ohio, USA |
| 1930 Census |
- Ernst, Alwin, Head of Hosehold, owns home, home value, $150,000, marri3ed, age 46, age at 1st marriage 21, education yes, owns radio yes, place of birth= Ohio, Father's birthplace= Germany, Mother's birthplace= Germany, citizen=yes, occupation= Public Accountant, managing partner, veteran=no.
Wife: Charlotta
Children:
Frances, Daughter, F, 15, S
Harriett, Daughter, F, 12, S
Allayne, Daughter, F, 11, S
Servants:
Agnes Ewing, W, F, 42, S, Scotland, Children's Nurse
Agnes Hazen, W, F, 47, M, Scotland, Cook, M
Hanna Crawford, W, F, 27, S, Scotland, Upstairs Girl
Helen Milne, W, F, 28, S, Scotland, Waitress
|
| Residence |
1939 |
Cleveland Heights, Cuyahoga, Ohio, USA |
| 2540 Fairmount Bv. |
| Employment |
1942 |
Cleveland, Cuyahoga, Ohio, USA [2] |
| Ernst and Ernst |
|
|
| Residence |
1942 |
Cleveland Heights, Cuyahoga, Ohio, USA |
| 2540 Fairmount Boulevard |
- Alwin C. Ernst House
By: Deanna Bremer Fisher
In ninety years, three prominent Cleveland families have called 2540 Fairmount Boulevard home. The story of this house mirrors that of Euclid Golf, an early planned suburban development that benefited from the eastward spread of Cleveland's wealthy off of Euclid Avenue in the late 19th and early 20th centuries and continued to serve as a favored address for professionals and industrialists.
The first owner of 2540 Fairmount was Alwin C. Ernst, founder of the public accounting firm Ernst & Ernst, the forerunner of Ernst & Young. Ernst is credited with pioneering the idea that accounting information could be used to make business decisions and with inventing management consulting. Born in Cleveland in 1881, he attended West High School and a business college, and then worked as a bookkeeper for the Audit Company. In 1903, he founded Ernst & Ernst with his older brother Theodore, who left the company three years later. Alwin Ernst went on to build the business to more than 50 offices in the United States and two in Canada. When Ernst died suddenly after collapsing in the Union Club on May 13, 1948, Cleveland Mayor Thomas A. Burke said, "No matter what occasion in Cleveland called for a civic group to help out, you could count on Mr. Ernst to be in the group."
|
| Illness |
13 May 1948 |
Cleveland, Cuyahoga, Ohio, USA |
| Death from Heart Attack |
|
|
| Death |
13 May 1948 |
Cleveland, Cuyahoga, Ohio, USA |
| Religion |
14 May 1948 |
Cleveland Heights, Cuyahoga, Ohio, USA |
| Fairmont Presbyterian |
- Funeral Service
2757 Fairmount Boulevard
|
| Burial |
Mayfield Heights, Cuyahoga, Ohio |
|
|
| Notes |
- Id#: 0092095
Name: Ernst, Alwin Charles
Date: May 14 1948
Source: Plain Dealer; Cleveland Necrology File, Reel #023.
Notes: Ernst, Alwin Charles, beloved husband of the late Charlotta E. (nee Fawcett); father of Mrs. Peter Hallaran, Mrs. Tinkham Veale H. Mrs. Douglas Wick, Miss Joan Ernst and the late Mrs. H. S. L. Reno, jr.; suddenly May 13; residence, 2540 Fairmount Boulevard. Cleveland Heights. Funeral Saturday afternoon from Fairmount Presbyterian Church, 2757 Fairmount Boulevard at the family mausoleum at Knollwood Cemetery
Trips:
New York Passenger Lists, 1820-1957
about Alwin C Ernst
Name: Alwin C Ernst
Arrival Date: 9 Aug 1937
Estimated birth year: abt 1881
Age: 56
Gender: Male
Port of Departure: Southampton, England
Ship Name: Queen Mary
Search Ship Database: View the Queen Mary in the 'Passenger Ships and Images' database
Port of Arrival: New York, New York
Nativity: Ohio
Line: 6
Microfilm Serial: T715
Microfilm Roll: T715_6021
Birth Location: Ohio
Birth Location Other: Cleveland
Page Number: 32
Port Arrival State: New York
Port Arrival Country: United States
View Record Allayne Ernst 9 Aug 1937 abt 1919 Female Southampton, England Queen Mary
View Record Alwin C Ernst 9 Aug 1937 abt 1881 Male Southampton, England Queen Mary
View Record Anna Fosdick Ernst 23 Aug 1937 abt 1869 Female Southampton, England Queen Mary
View Record Charlotta Ernst 9 Aug 1937 abt 1881 Female Southampton, England Queen Mary
View Record Frances Ernst 9 Aug 1937 abt 1914 Female Southampton, England Queen Mary
View Record Harriet Ernst 9 Aug 1937 abt 1917 Female Southampton, England Queen Mary
New York Passenger Lists, 1820-1957
about Alwin Charles Ernst
Name: Alwin Charles Ernst
Arrival Date: 13 Feb 1931
Estimated birth year: 1881
Age: 49
Gender: Male
Port of Departure: New-York
Ship Name: Vulcania
Search Ship Database: Search the Vulcania in the 'Passenger Ships and Images' database
Port of Arrival: New York, New York
Nativity: Ohio
Line: 16
Microfilm Serial: T715
Microfilm Roll: T715_4912
Birth Location: Ohio
Birth Location Other: Cleveland
Page Number: 42
View Record Alwin Charles Ernst 13 Feb 1931 1881 Male New-York Vulcania
View Record Charlotta Elizabeth Ernst 13 Feb 1931 1881 Female New-York Vulcania
New York Passenger Lists, 1820-1957
about Alwin Ernst
Name: Alwin Ernst
Arrival Date: 3 Sep 1931
Estimated birth year: 1881
Age: 50
Gender: Male
Port of Departure: New York, New York
Ship Name: Transylvania
Search Ship Database: View the Transylvania in the 'Passenger Ships and Images' database
Port of Arrival: New York, New York
Nativity: Ohio
Line: 18
Microfilm Serial: T715
Microfilm Roll: T715_5029
Birth Location: Ohio
Birth Location Other: Cleveland
Page Number: 104
View Record Allayne Ernst 3 Sep 1931 1919 Female New York, New York Transylvania
View Record Alwin Ernst 3 Sep 1931 1881 Male New York, New York Transylvania
View Record Charlotta Ernst 3 Sep 1931 1881 Female New York, New York Transylvania
View Record Frances Ernst 3 Sep 1931 1914 Female New York, New York Transylvania
View Record Harriett Ernst 3 Sep 1931 1917 Female New York, New York Transylvania
New York Passenger Lists, 1820-1957
about Alwin G Ernst
Name: Alwin G Ernst
Arrival Date: 13 Jan 1927
Estimated birth year: 1881
Age: 45
Gender: Male
Port of Departure: Bermuda
Ship Name: Araguaya
Search Ship Database: Search the Araguaya in the 'Passenger Ships and Images' database
Port of Arrival: New York, New York
Nativity: Ohio
Line: 18
Microfilm Serial: T715
Microfilm Roll: T715_3992
Birth Location: Ohio
Birth Location Other: Cleveland
Page Number: 176
Family History:
A.C. Ernst and Arthur Young were very different people.
Young, born in Scotland in 1863 and a graduate of Glasgow University, was privileged and soft-spoken. His interest in investments and banking eventually led him to accounting. He migrated to the United States, settled in Chicago and, in 1906, founded Arthur Young & Co.
By contrast, the outgoing Ernst, born in 1881 in the United States, in Cleveland, was basically self-made. Following high school, he worked as a bookkeeper and, four years later in 1903, joined with his brother, Theodore, to start Ernst & Ernst.
Entrepreneurs and Innovators. Ernst pioneered the idea that accounting information could be used to make business decisions-the forerunner of management consulting. He also was the first to advertise professional services.
Young was profoundly interested in the development of young professionals. In the 1920s he originated a staff school; in the 1930s, his firm was the first to recruit from university campuses.
Both firms were quick to enter the global marketplace. As early as 1924, they allied with prominent British firms-Young with Broads Paterson & Co., and Ernst with Whinney Smith & Whinney. In 1979, Ernst's original agreement led to the formation of Ernst & Whinney.
These alliances were the first of many for both firms throughout the world-and they are the roots of the global organization today.
A New Power-Ernst & Young. Ironically, A.C. Ernst and Arthur Young, who never met in life, died within days of each other in 1948.
In 1989, the firms they started combined to create Ernst & Young. The new organization quickly positioned itself on the leading edge of rapid globalization, new business technologies, and continuous business change.
Both A.C. and Arthur have been gone for more than a half-century, but the sum of their legacies-innovation and drive, sensitivity and concern, honesty and trust-form the culture of today's Ernst & Young.
E&Y in its new HQ
Ernst & Young LLP is the U.S. member firm of Ernst & Young International Ltd., one of the Big Four global professional services organizations with 100,000 employees stationed throughout 140 countries. Ernst & Young audits over 100 of the Fortune 500 companies and has consistently posted double-digit growth and led its competitors in tax services and technology.
In April 2002, E&Y moved into its new, 37-floor U.S. headquarters at 5 Times Square in New York. And in May 2002, the firm began a significant expansion of its global reach, adding new offices and hundreds of former Andersen employees, including many former partners. As of 2004, the firm had 95 offices throughout the U.S.
At heart, a nice Midwestern firm
Ernst & Young goes back more than a century, to the 1890s in Chicago. At that time, many benighted American businesses had no notion of regulated accounting practice, and the government had yet to burden American taxpayers with the income tax. English businesses based in the U.S., however, knew better, and sent for British-trained Scottish accountants to look after their investments. One enterprising Scotsman, Arthur Young, set up an independent accounting firm in Chicago in 1894. This firm became Arthur Young & Company in 1906. Meanwhile, two brothers, A.C. and Theodore Ernst, Americans who had been quick to pick up on the accounting concept, launched a tiny accounting firm in Cleveland in 1903. A.C. Ernst had previously worked for the CEO of a large industrial firm and believed that accounting could be used to help corporate management make smarter, money-saving decisions.
Arthur Young and Ernst & Ernst got a big bounce in 1913, when the passage of the federal income tax suddenly created big business for tax departments. Arthur Young, growing steadily, formed a national partnership in 1921, uniting its five offices behind its new headquarters in New York City. Ernst & Ernst's expansion and promotion hit a snag in the early 1930s, when the American Institute of Certified Public Accountants (AICPA) adopted a policy prohibiting members from advertising. For a time, A.C. Ernst resigned from the association. Still, the financial chaos of the 1930s proved to be lucrative for both Arthur Young and Ernst & Ernst, as the Great Depression spawned new financial reporting regulations that increased the need for accounting and auditing services. To snare enough employees to meet demand that decade, Arthur Young began to recruit college students and to train them in its first staff school.
On April 3, 1948, Arthur Young, venerable founder of Arthur Young & Company, died in his sleep at his retirement home in Aiken, S. C. Only 40 days later, on May 13, Alwin C. Ernst, chief architect and active managing partner of Ernst & Ernst, suffered a fatal heart attack while having lunch in Cleveland.
In little more than a month, two icons of the accounting profession-and founders of two of its most prestigious firms-were gone. At the time, it seemed unlikely that their names would ever be linked so closely again. Except as business competitors, they appeared to have little in common. There's no record that the two ever met.
Young, 18 years older than Ernst, was born in Scotland in 1863 and immigrated to America in 1890. His tall, athletic presence belied a congenital condition that slowly robbed him of his hearing. Although he was an effective and persuasive speaker, he seldom spoke in public and, as time went on, did most of his communication in writing. Still, Young was an energetic and learned man, a brilliant organizer with a quick mind and quick wit. Never married, he came to regard his partners and employees as family. When he died, he left most of his estate to his firm's employee pension fund.
By contrast, Ernst, with his reddish hair and ever-present cigar, was bold and gregarious, striding through life on a "why not?" philosophy. Born in Cleveland in 1881 of hard-working German parents, Ernst believed that he could achieve any goal he set. At 21, he impulsively decided to quit his job, start a new business, and get married-all in a single weekend. He preferred A.C. to Alwin, people to privacy, and relished playing an up-front role in the various civic activities he championed. But above all, Ernst was a hard-driving competitor, whose creative mind produced a steady stream of new services and new ideas for growing his firm.
Both men had brothers for partners. Young started his first firm-Stuart and Young-in Chicago in 1894, but it was 1906 when he joined with younger brother Stanley to form Arthur Young & Company. A.C. Ernst's older brother, Theodore, was the other half of Ernst & Ernst, founded in Cleveland in 1903. Neither partnership endured. Stanley Young died in 1915, and Theodore left Ernst & Ernst in 1906 to pursue another career. A.C. was deeply disappointed with his brother's withdrawal, and it was perhaps more than coincidence that soon after he adopted a "no relatives" hiring rule that stood at his firm until 1989.
In his native Glasgow, Young was an honor student who earned an M.A. degree from Glasgow University in only three years. He then studied law and worked as a lawyer's apprentice, but his dreams of himself becoming a trial lawyer were cut short by his progressive deafness. As fate would have it, his law apprenticeship left him with a strong interest in financial institutions and the handling of trust estates. These interests and his keen analytical abilities eventually led him to choose accounting as his life's career. And he decided that America was the place to pursue it.
Ernst, on the other hand, was basically self-made. A product of Cleveland's public schools, he displayed an extraordinary skill for managing figures. After graduating from high school, he immediately went to work as a bookkeeper, took a few night courses, and spent the next four years learning the auditing profession from the ground up. At 21, he was ready to strike out on his own with a new idea-that accountants could do more than merely report numbers, they could produce information useful for making business decisions. It was the precursor to management consulting.
Despite his success, Arthur Young was no stranger to misfortune. In addition to his hearing loss and the untimely death of his brother, he suffered a riding accident in 1915 that cost him the sight in one eye. Two of his nephews were killed in World War I. Yet, according to those who knew him, nothing could dampen his energy or spirit.
"As a small boy, I was pleased by the rough tweed suits he wore, the silver sphere through which his necktie flowed in some mysterious manner, and the red apple he always had ready for me," recalled a neighbor from Arthur's early days in Chicago. "His face combined ruggedness and kindness, and his plentiful gray hair had a wave to it like the smoke from his pipe."
Young's generosity was legendary. During WWI, he donated all his savings to Scottish charities, leaving only his personal possessions and his capital in the firm.
But if Arthur Young was the woodwinds and strings of a great orchestra, then Alwin C. Ernst was brass and percussion. "There's 'win' in my first name and my initials spell ACE," Ernst once said. "Who could help but succeed with a name like that?"
Relatively small in stature, Ernst stood tall within the accounting profession for his boundless self-confidence and determination to challenge its conventions. He was an open proponent of advertising at a time when the promotion of services was considered unprofessional.
He was both salesman and service provider, and-to the dismay of fellow professionals-would frequently sponsor client seminars that presented his firm's ideas on controlling costs, streamlining operations, and increasing business. He was unswervingly committed to quality and value, believing clients should get "more than they paid for." He believed in civic responsibility, and his firm donated its services to such organizations as the Red Cross, Community Fund, and Salvation Army.
Ernst was among the first to envision the opportunities of a global organization. His handshake agreement with London's Whinney, Smith, and Whinney in 1924 led to the formation of Ernst & Whinney some 45 years later. Young's early association with Clarkson Gordon in Canada helped sow the seeds of today's North American firm.
Both A.C. Ernst and Arthur Young understood that their ultimate success was tied to the quality of their people. Young was widely respected for his ability to surround himself with highly skilled professionals and for the basic fairness of his organization. Ernst, too, was passionate about hiring only the best and the brightest and fostering an environment that encouraged creativity and rewarded performance. A line from his operating philosophy, written in 1920, emphasized the importance of people. "The success of Ernst & Ernst depends wholly upon the character, ability, and industry of the men and women who make up the organization."
By 1933, Arthur Young had lived nearly 70 years and built one of the world's most respected accounting firms. He retired from active leadership that year, but throughout the rest of his life remained an involved, paternal presence in the continued growth of his firm and its people.
A.C. Ernst remained the driving force behind Ernst & Ernst up to his untimely death, an event that was mourned well beyond the firm he founded and the Cleveland he loved. To the end, at age 66, he remained firmly focused on the future. Ironically, the man whose firm helped scores of clients chart their financial affairs died without leaving a will.
Both A.C. Ernst and Arthur Young have been gone for more than a half-century, but the sum of their legacies-drive and ambition, sensitivity and concern, honesty and trust-form the culture of today's Ernst & Young.
Together, they've inspired an entrepreneurial and innovative organization, with a deep commitment to integrity, quality, and value. It's a firm that puts a high premium on people, encourages ideas, and rewards achievement. And it's a firm deeply rooted in the communities we serve.
While neither man in his time could have envisioned the eventual merging of their two great firms, both A.C. and Arthur would surely be proud of the result-a global powerhouse built on strong principles, with a future that even they could not have imagined.
"There's 'win' in my first name and my initials spell ACE," Ernst once said. "Who could help but succeed with a name like that?"
The other half of the marriage, Ernst & Whinney, can be traced back to 1906, when Ernst & Ernst was founded in Cleveland, Ohio, as a partnership between Alwin C. Ernst and his older brother, Theodore C. Ernst. The firm took on its first additional partners in 1910 and from there the family tree expanded by immense and unforeseen proportions. By 1913, when income taxes began to be levied in the United States, the need for accountants swelled dramatically. By the 1980s the firm had become one of the largest members of the Big Eight. In one of its more publicized actions, Ernst & Whinney's audit paved the way for the 1979 government bailout of the Chrysler Corporation.
3. The estate of ALWIN CHARLES ERNST -- founder and senior partner of Ernst & Ernst, accountants. He died at age 66 with a gross estate valued at $12,642,442. Administrative, attorney and executor fees took $78,862. Ohio inheritance and federal estate taxes took $6,030,936. Then his debts took another $1,014,314. This left $5,518.319 for the heirs. This was over 56% SHRINKAGE of the estate
Gross Estate Settlement Costs Net Estate % Lost
Alwin C. Ernst, CPA 12,642,431 7,124,112 5,518,319 56
3. The estate of ALWIN CHARLES ERNST -- founder and senior partner of Ernst & Ernst, accountants. He died at age 66 with a gross estate valued at $12,642,442. Administrative, attorney and executor fees took $78,862. Ohio inheritance and federal estate taxes took $6,030,936. Then his debts took another $1,014,314. This left $5,518.319 for the heirs. This was over 56% SHRINKAGE of the estate
POSTHUMOUS MEMBERS
We salute these men and women -- inducted from 1996 to 1999--who are the foundation upon which Northeast Ohio's business community continues to build and prosper. See their stories at our Web site (www.inside-business). Alwin C. Ernst,
Death SSN Index:
Alwine ERNST Birth Date: 14 Oct 1905 Death Date: 15 Aug 1998 Social Security Number: 278-34-4510 State or Territory Where Number Was Issued: Ohio Death Residence Localities ZIP Code: 07109 Localities: Belleville, Essex, New Jersey
Leslie and I were offered the Stone House that was A. C. Ernst home in Gates Mill, Ohio after we were married if we wanted to move out there.
Name: Ernst, Alwin Charles Birth - Death: 1881-1948 Source Citation:
Biography Index. A cumulative index to biographical material in books and magazines. Volume 5: September, 1958-August, 1961. New York: H.W. Wilson Co., 1962. (BioIn 5)
The National Cyclopaedia of American Biography. Volume 42. New York: James T. White & Co., 1958. Use the Index to locate biographies. (NatCAB 42)
Who Was Who in America. A companion biographical reference work to Who's Who in America. Volume 2, 1943-1950. Chicago: A.N. Marquis Co., 1963. (WhAm 2)
Possible relative:
Alwine ERNST Birth Date: 14 Oct 1905 Death Date: 15 Aug 1998 Social Security Number: 278-34-4510 State or Territory Where Number Was Issued: Ohio Death Residence Localities ZIP Code: 07109 Localities: Belleville, Essex, New Jersey
Our Namesakes
On April 3, 1948, Arthur Young, venerable founder of Arthur Young & Company, died in his sleep at his retirement home in Aiken, S. C. Only 40 days later, on May 13, Alwin C. Ernst, chief architect and active managing partner of Ernst & Ernst, suffered a fatal heart attack while having lunch in Cleveland.
In little more than a month, two icons of the accounting profession \emdash and founders of two of its most prestigious firms \emdash were gone. At the time, it seemed unlikely that their names would ever be linked so closely again. Except as business competitors, they appeared to have little in common. There's no record that the two ever met.
Young, 18 years older than Ernst, was born in Scotland in 1863 and immigrated to America in 1890. His tall, athletic presence belied a congenital condition that slowly robbed him of his hearing. Although he was an effective and persuasive speaker, he seldom spoke in public and, as time went on, did most of his communication in writing. Still, Young was an energetic and learned man, a brilliant organizer with a quick mind and quick wit. Never married, he came to regard his partners and employees as family. When he died, he left most of his estate to his firm's employee pension fund.
By contrast, Ernst, with his reddish hair and ever-present cigar, was bold and gregarious, striding through life on a "why not?" philosophy. Born in Cleveland in 1881 of hard-working German parents, Ernst believed that he could achieve any goal he set. At 21, he impulsively decided to quit his job, start a new business, and get married \emdash all in a single weekend. He preferred A.C. to Alwin, people to privacy, and relished playing an up-front role in the various civic activities he championed. But above all, Ernst was a hard-driving competitor, whose creative mind produced a steady stream of new services and new ideas for growing his firm.
Both men had brothers for partners. Young started his first firm \emdash Stuart and Young \emdash in Chicago in 1894, but it was 1906 when he joined with younger brother Stanley to form Arthur Young & Company. A.C. Ernst's older brother, Theodore, was the other half of Ernst & Ernst, founded in Cleveland in 1903. Neither partnership endured. Stanley Young died in 1915, and Theodore left Ernst & Ernst in 1906 to pursue another career. A.C. was deeply disappointed with his brother's withdrawal, and it was perhaps more than coincidence that soon after he adopted a "no relatives" hiring rule that stood at his firm until 1989.
In his native Glasgow, Young was an honor student who earned an M.A. degree from Glasgow University in only three years. He then studied law and worked as a lawyer's apprentice, but his dreams of himself becoming a trial lawyer were cut short by his progressive deafness. As fate would have it, his law apprenticeship left him with a strong interest in financial institutions and the handling of trust estates. These interests and his keen analytical abilities eventually led him to choose accounting as his life's career. And he decided that America was the place to pursue it.
Ernst, on the other hand, was basically self-made. A product of Cleveland's public schools, he displayed an extraordinary skill for managing figures. After graduating from high school, he immediately went to work as a bookkeeper, took a few night courses, and spent the next four years learning the auditing profession from the ground up. At 21, he was ready to strike out on his own with a new idea\emdash that accountants could do more than merely report numbers, they could produce information useful for making business decisions. It was the precursor to management consulting.
Despite his success, Arthur Young was no stranger to misfortune. In addition to his hearing loss and the untimely death of his brother, he suffered a riding accident in 1915 that cost him the sight in one eye. Two of his nephews were killed in World War I. Yet, according to those who knew him, nothing could dampen his energy or spirit.
"As a small boy, I was pleased by the rough tweed suits he wore, the silver sphere through which his necktie flowed in some mysterious manner, and the red apple he always had ready for me," recalled a neighbor from Arthur's early days in Chicago. "His face combined ruggedness and kindness, and his plentiful gray hair had a wave to it like the smoke from his pipe."
Young's generosity was legendary. During WWI, he donated all his savings to Scottish charities, leaving only his personal possessions and his capital in the firm.
But if Arthur Young was the woodwinds and strings of a great orchestra, then Alwin C. Ernst was brass and percussion. "There's 'win' in my first name and my initials spell ACE," Ernst once said. "Who could help but succeed with a name like that?"
Relatively small in stature, Ernst stood tall within the accounting profession for his boundless self-confidence and determination to challenge its conventions. He was an open proponent of advertising at a time when the promotion of services was considered unprofessional.
He was both salesman and service provider, and \emdash to the dismay of fellow professionals \emdash would frequently sponsor client seminars that presented his firm's ideas on controlling costs, streamlining operations, and increasing business. He was unswervingly committed to quality and value, believing clients should get "more than they paid for." He believed in civic responsibility, and his firm donated its services to such organizations as the Red Cross, Community Fund, and Salvation Army.
Ernst was among the first to envision the opportunities of a global organization. His handshake agreement with London's Whinney, Smith, and Whinney in 1924 led to the formation of Ernst & Whinney some 45 years later. Young's early association with Clarkson Gordon in Canada helped sow the seeds of today's North American firm.
Both A.C. Ernst and Arthur Young understood that their ultimate success was tied to the quality of their people. Young was widely respected for his ability to surround himself with highly skilled professionals and for the basic fairness of his organization. Ernst, too, was passionate about hiring only the best and the brightest and fostering an environment that encouraged creativity and rewarded performance. A line from his operating philosophy, written in 1920, emphasized the importance of people. "The success of Ernst & Ernst depends wholly upon the character, ability, and industry of the men and women who make up the organization."
By 1933, Arthur Young had lived nearly 70 years and built one of the world's most respected accounting firms. He retired from active leadership that year, but throughout the rest of his life remained an involved, paternal presence in the continued growth of his firm and its people.
A.C. Ernst remained the driving force behind Ernst & Ernst up to his untimely death, an event that was mourned well beyond the firm he founded and the Cleveland he loved. To the end, at age 66, he remained firmly focused on the future. Ironically, the man whose firm helped scores of clients chart their financial affairs died without leaving a will.
Both A.C. Ernst and Arthur Young have been gone for more than a half-century, but the sum of their legacies \emdash drive and ambition, sensitivity and concern, honesty and trust \emdash form the culture of today's Ernst & Young.
Together, they've inspired an entrepreneurial and innovative organization, with a deep commitment to integrity, quality, and value. It's a firm that puts a high premium on people, encourages ideas, and rewards achievement. And it's a firm deeply rooted in the communities we serve.
While neither man in his time could have envisioned the eventual merging of their two great firms, both A.C. and Arthur would surely be proud of the result \emdash a global powerhouse built on strong principles, with a future that even they could not have imagined.
Ernst & Young
Type: Private Company
Address: 787 Seventh Avenue, New York, New York 10019, U.S.A.
Telephone: (212) 773-3000
Toll Free: 800-688-3677
Fax: (212) 773-6350
Web: <http://www.eyi.com>
Employees: 85,000
Sales: $10.9 billion (1998)
Incorporated: 1989
NAIC: 541211 Offices of Certified Public Accountants
SIC: 8721 Accounting, Auditing & Bookkeeping
Ernst & Young is the fourth largest public accounting firm in the world. The firm was formed in 1989 when the third largest accounting firm at the time, Ernst & Whinney (based in Cleveland, Ohio), merged with the sixth largest firm, Arthur Young (headquartered in New York), forming what, at the time, was the world's largest accounting firm. As of 1999 Ernst & Young stood as one of the "Big Five" accounting firms that dominated the accounting business. A private partnership, Ernst & Young was owned by its senior partners. Ernst & Young provided auditing services primarily to the world's largest corporations. In addition, it specialized in tax advice for multinational firms. In recent years, the firm increasingly moved into the business of management consulting, providing guidance to clients in such areas as risk management, mergers and acquisitions, and recent trends in worker-management relations. Other service areas included consulting on information technology and legal services.
The roots of Ernst & Young can be traced back well over 100 years to the formation of the auditing business and the development of generally accepted accounting practices, rules that became increasingly necessary with the rise of the multinational corporation and the intrusion of complicated taxes into private business. Prior to the 1989 merger, each of the two firms had enjoyed rich histories. Both rose from very small beginnings by capitalizing on the enterprise potential of accounting in its early years. Pioneer Arthur Young founded and headed the original Arthur Young firm back in 1895 in Kansas City after breaking from an earlier union of the firm of Stuart and Young in Chicago. In 1896 Young formed the firm of Arthur Young and Company with his brother Stanley, but by 1906 Young had completely terminated his unsatisfactory partnership with Stuart. Arthur Young and Company flourished for many years, slowly developing its reputation as "old reliable" for auditing, adding more and more partners throughout the years.
The other half of the marriage, Ernst & Whinney, can be traced back to 1906, when Ernst & Ernst was founded in Cleveland, Ohio, as a partnership between Alwin C. Ernst and his older brother, Theodore C. Ernst. The firm took on its first additional partners in 1910 and from there the family tree expanded by immense and unforeseen proportions. By 1913, when income taxes began to be levied in the United States, the need for accountants swelled dramatically. By the 1980s the firm had become one of the largest members of the Big Eight. In one of its more publicized actions, Ernst & Whinney's audit paved the way for the 1979 government bailout of the Chrysler Corporation.
Meanwhile, the Arthur Young firm endured a rocky decade in the 1980s. Long known for its reliable auditing practice and a clean, conservative interpretation of tax law, the company image was tarnished by events of the 1980s, many in the area of the national savings and loan scandal. For instance, Arthur Young was sued for $560 million for allegedly allowing Western Savings Association of Dallas to overstate its net worth by more than $400 million. In 1988 the Bank of England sued Arthur Young and collected $44 million after a bank that Young audited collapsed.
In contrast to the struggles of Arthur Young prior to the merger, Ernst & Whinney's business had thrived, with its management consulting practice growing faster than its audit and tax practice. In fact, at the time of the merger, consulting fees accounted for 24 percent of Ernst & Whinney's revenues, whereas only 17 percent of Arthur Young's revenues came from consulting.
In general, both firms thought that a merger represented a comparative advantage for each. Although both had heavy hitters for clients, Arthur Young's clients were mostly investment banks and high-tech firms on the East and West Coasts, while Ernst & Whinney had more healthcare and manufacturing industry clients concentrated in the Midwest and South. Internationally, Arthur Young had more clients in Europe, while Ernst & Whinney had established a presence in the Pacific Rim countries. Arthur Young's clients included American Express, Mobil, and Texas Instruments, while Ernst & Whinney had BankAmerica , Time, Inc., and Eli Lilly .
Although touted as a merger, the evidence suggests that the 1989 transaction that created the firm Ernst & Young was, in fact, an acquisition in disguise, with the stronger Ernst & Whinney swallowing up the floundering Arthur Young practice. Arthur Young had established a strong reputation over many years, although it was generally seen as a cautious and stodgy practice. But by the 1980s, after much of its traditional audit practice started to collapse and massive leveraged buyouts became an increasingly common practice in the business world, Arthur Young had difficulty competing in the cutthroat environment of the accounting arena.
Historically, the accounting business has seen increasing numbers of partners concentrated in a decreasing number of firms. In this respect, the birth of Ernst & Young in 1989 was the natural outcome of the cycle of competition that breeds concentration and expansion, thus leading to further rounds of competition. But for over half a century previous to the creation of Ernst & Young, eight firms had dominated the accounting business. The elite group was dubbed the "Big Eight" by Fortune magazine.
Following two major mergers in the 1980s (the Ernst & Young deal and the merger the same year between Deloitte, Haskins & Sells and Touche Ross), the Big Eight became the Big Six. All of the Big Six were private partnerships, meaning that all were owned by the firm's senior executives, which also meant that none of the firms were required to report their profits.
The Ernst & Young merger created a firm with 6,100 partners and two chief executive officers, Ray Groves from Ernst & Whinney and William Gladstone from Arthur Young. The newly formed firm had world revenues in 1989 of $4.27 billion , and its total sales eclipsed that established by a merger in 1987 of Peat Marwick and KMG Main Hurdman.
The actual merger in 1989 was essentially viewed as a smart competitive move, although some observers thought the merger might be difficult due to perceived differences in management styles, with Ernst & Whinney governed from the top and Arthur Young favoring a more decentralized management system. At the time of the merger Ernst & Whinney had 1,276 partners and 14,739 total personnel in 118 U.S. offices as well as 3,159 partners and 35,600 total personnel in 89 countries. The smaller Arthur Young had 829 U.S.-based partners and 10,652 total U.S. personnel in 93 offices; worldwide they had 2,900 partners and 33,000 total personnel in 74 countries.
There was a conflict at the time of the merger over each firm's "cola" clients. A conflict of interest existed in that PepsiCo had been an Arthur Young client since 1965, while Coca-Cola had been an Ernst & Whinney client since 1924. Coca-Cola forced the firm to dump PepsiCo, as Ernst & Young noted that Coca-Cola had been a client for a longer time and that Coke's annual audit fee was $14 million, a much higher figure than Pepsi's $8.8 million audit fee. (Note: Ann Leach, who's husband Willifred was a friend of Leslie and Joan Ernst in West Palm Beach, and like a grandmother to Leslie Ernst)
In one of its first business decisions following the merger, Ernst & Young began to move into computer-aided software engineering. This step reflected Ernst & Young's diversification into management systems and strategic planning services for businesses. Under the general heading of Development Effectiveness, these services capped a string of moves into computer-aided software engineering. The general thrust of the project incorporated management consulting, Total Quality Management, and process innovation. The process innovation services were sold worldwide, primarily to the insurance and banking industries.
However, as the newly formed firm faced the 1990s, it was steeped in the controversy surrounding the crisis of the savings and loan industry. Ernst & Young's audits of 23 failed savings and loans were investigated by the Office of Thrift Supervision under a subpoena issued in June 1991. OTS was formed by the federal government to recover losses from accounting firms that should have discovered improprieties during S&L audits and to impose fines on auditors for violations of accounting rules. Some of the thrifts that Ernst & Young audited included Charles Keating's failed Lincoln Savings & Loan (Irvine, California), Silverado Banking (Denver, Colorado), Vernon Savings & Loan (Vernon, Texas), and Western Federal Savings & Loan (Dallas, Texas), all of which experienced total losses of over $5.5 billion. The OTS subpoena required that Ernst & Young surrender one million documents from its work for the 23 failed S&Ls.
Several judgments were rendered against Ernst & Young in connection with the investigation. In July 1992, for instance, the firm paid a fine of $1.66 million to settle accusations that it helped Charles H. Keating, Jr., deceive the federal government about the health of his failing S&L. Moreover, former Ernst & Young partner Jack D. Atchison's license was suspended for four years by the accounting board of Arizona. He was accused of helping persuade five U.S. senators to intervene with federal regulators on Keating's behalf. In connection with this settlement, Ernst & Young paid $63 million to settle charges of wrongdoing in the Keating affair. Ernst & Young did not admit guilt, however, and the claim was paid largely by insurance. In total, some $204 million in fines were paid in this civil suit.
In another settlement, Ernst & Young paid $400 million to the federal government in compliance with a federal ruling against the company. The settlement secured recovery of losses attributable to audit failures. In addition, the settlement avoided huge litigation costs and assured that future audits of insured institutions would be conducted according to the highest professional standards. With potential claims that could have mounted to an estimated $1 billion, the ruling relieved Ernst & Young of concerns regarding future penalties involving S&L auditing improprieties. Ernst & Young also agreed to change its accounting practices and ensure that its partners meet federal guidelines for working with federally insured financial institutions. Some of Ernst & Young's partners were barred from doing such work and changes in banking laws required accounting firms to be legally responsible for sharing with regulators reports prepared for bank management.
Despite these troubles, Ernst & Young defied the rumors that it would fold. To eliminate overlap created by the merger and to reduce its payroll expenses, the firm cut its staff in 1991 and eliminated many partner positions. Although revenues had fallen slightly in the late 1980s, by the early 1990s revenues were modestly but steadily rising. Sales from Ernst & Young's risk management and actuarial services group rose 7.4 percent from 1990 to 1991, from $9.5 million to $10.2 million. Overall revenues rose from $5 billion in 1990 to $5.4 billion in 1991 and $5.7 billion in 1992.
The company garnered an increasing number of clients, and their involvement in such large projects as municipal insurance and environmental risk management consulting continued to grow. Revenues in risk management consulting went from $10.3 million in 1991 to $10.9 million in 1992. This increase reflected a growing market for these kinds of services. Moreover, major restructuring was taking place in hospitals and in the healthcare industry in general, creating a need for consultants. The traditional Ernst & Young mainstay, auditing, still fared quite well in the new firm's early years. By 1992, in fact, Ernst & Young performed the most audits of large publicly held multinational companies. It audited 3,231 companies with a total value audited of $10.228 trillion (based on asset figures for financial companies and sales for all other firms audited).
Ernst & Young's costly legal battles encouraged several changes in the mid-1990s. First, the firm hired a new general legal counsel, Kathryn Oberly, who reputedly made keeping costs down a higher priority than battling on principle. Second, the firm stepped up its expansion into consulting, an area much less fraught with legal responsibilities and their concomitant lawsuits than auditing. In addition to increasing its consulting in risk management, the company moved into information software products.
Ernst & Young also entered new business areas in the mid-1990s by developing alliances and by acquiring smaller companies. In 1996 the firm forged an alliance with Tata Consulting, headquartered in India. The same year, its alliance with ISD/Shaw gave the firm an entree into banking industry consulting. The firm moved into the petroleum and petrochemical consulting business in 1996 when it purchased Wright Kellen & Co. Ernst & Young created a new subsidiary with the Houston-based company, which they named Ernst & Young Wright Killen.
In 1997 Ernst & Young forged an agreement to merge with KPMG International , another Big Six accounting firm. The agreement came only weeks after the announcement of a merger between Price Waterhouse and Coopers & Lybrand, which would have created the world's biggest accounting firm, with $12 billion in revenues and a staff of 135,000. However, the Ernst & Young-KPMG International merger overshadowed that, with combined revenues of $16 billion and 160,000 people. According to Ernst & Young, the deal was designed to satisfy multinational clients who wanted an auditor and consultant with offices in every city in which the client had offices. In addition, the merger would have limited the risk of a liability suit severely damaging earnings and would have made greater economies of scale for developing new products or services.
Combining the two huge companies presented a formidable task, particularly because they were intense competitors. Between 1991 and 1997 KPMG had lost approximately 60 of its auditing clients in the United States to Ernst & Young. A larger problem than overcoming historic rivalries, however, was gaining regulatory approval. The Ernst & Young-KPMG International merger and the Price Waterhouse-Coopers & Lybrand merger would have furthered the consolidation of the major accounting firms into the Big Four, an outcome disturbing to many industry analysts. Along with fears that the relative lack of choice would encourage a rise in prices, there were fears among clients that the combined firms would make company secrets vulnerable to rivals using the same firm.
Citing the high cost of pursuing the merger and the uncertain regulatory outcome, Ernst & Young suggested in early 1998 that the two firms abandon their merger plans. Some analysts thought that the money and attention required to integrate the firms, at a time when all Big Six firms were expanding rapidly, also discouraged the merger.
Ernst & Young experienced substantial growth in 1997, despite being hit by a $4 billion lawsuit alleging the firm mishandled the restructuring of Merry-Go-Round Enterprises in 1993. Overall revenues rose from $7.8 billion in 1996 to $9.1 billion in 1997. A substantial amount of this growth was fueled by a 30 percent surge in tax advice revenues and an 18 percent increase in worldwide tax revenues, an area in which Ernst & Young led the Big Six. The firm also boosted its efficiency in 1997, raising its revenue per employee ten percent that year, to $238,360. Revenues continued to rise spectacularly in 1998, reaching $10.9 billion, a jump of almost 20 percent.
The Big Five, as they were called with the completion of the Price Waterhouse-Coopers & Lybrand merger in 1998, continued to diversify their services in the late 1990s. Revenues from consulting on tax issues, personnel, management, property, and personal finance swamped revenues from auditing for Ernst & Young. In 1999 the firm had plans to add a worldwide law practice to its stable of services. Ernst & Young already had associated law practices in several countries by the end of the century and planned to build a global staff of 4,000 by the year 2005.
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| Person ID |
I1940 |
Booth Family |
| Last Modified |
25 Aug 2017 |
| Family |
ERNST Charlotta Elizabeth Fawcett, b. 21 Jul 1881, Cleveland, Cuyahoga, Ohio, USA d. 27 Dec 1947 (Age 66 years) |
| Marriage |
Abt 1905 [5, 6] |
- Alwin was single in the 1900 census
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| Children |
| | 1. ERNST Ruth Charlotta, b. 28 Nov 1908, Cleveland Heights, Cuyahoga, Ohio, USA d. 5 Oct 1934, Mayfield Heights, Cuyahoga, Ohio (Age 25 years) |
| | 2. ERNST Frances N., b. 22 Sep 1915 d. Gates Mills, Cuyahoga, Ohio, USA |
| | 3. ERNST Harriett Alice, b. Abt 1917, Gates Mills, Cuyahoga, Ohio, USA d. Yes, date unknown |
| | 4. ERNST Allayne Claire, b. 23 Feb 1919 |
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| Family ID |
F641 |
Group Sheet | Family Chart |
| Last Modified |
26 Jun 2007 |
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| Event Map |
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 | Birth - 21 Jul 1881 - Cleveland, Cuyahoga, Ohio, USA |
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 | Census - Single - 1900 - Cuyahoga Heights, Cuyahoga, Ohio, USA |
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| Employment - Ernst and Ernst - 1942 - Cleveland, Cuyahoga, Ohio, USA |
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| Illness - Death from Heart Attack - 13 May 1948 - Cleveland, Cuyahoga, Ohio, USA |
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| Death - 13 May 1948 - Cleveland, Cuyahoga, Ohio, USA |
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| Sources |
- [S235] US Gov't Census, 1910 Census, (1910 Census, Sussex County) (Reliability: 3).
- [S304] WW-II Registration Card (Reliability: 3).
- [S238] US Gov't, 1930 Census (Reliability: 3).
- [S236] US Gov't, 1900 Census (Reliability: 3).
- [S281] US Government, 1920 Census.
- [S289] Birth Record, Birth Record (Reliability: 2).
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