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 firm 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 firm 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. The roots of Ernst & Young go back to the 1890's, when American businesses were often small concerns. Owner-managers tightly guarded financial information and severely limited access to record keeping books. Income tax and uniform standards of accounting practice did not exist. The profession of accounting was unheard of. Scots, who were the first to recognize accounting as a profession, were sent to America to look after English investments. 1894 One such Scotsman named Arthur Young settled in Chicago, where with $500 of capital, he and a partner opened an accounting firm to handle the affairs of British investment companies. 1906 The firm became Arthur Young & Company. 1903 Two young brothers, Alvin (A.C.) and Theodore Ernst, began a small public accounting firm called Ernst & Ernst in Cleveland. Having gained valuable insights into factory operations, systems, and management while working for the CEO of a large industrial company, A.C. believed that accounting information could be used as a tool to help management make decisions. And he began to practice what became known as management consulting. 1913 The establishment of a federal income tax leads each firm to establish tax departments. 1921 Arthur Young and Co. formed a national partnership, uniting its five offices and its headquarters in New York. 1920s A.C. Ernst advertises heavily to grow his business. He temporarily resigned from the AICPA in the early 1930s after the organization adopted a policy prohibiting advertising. 1924 Ernst and Ernst formed an affiliation with the British accounting firm of Whinney, Smith and Whinney. 1933 The Great Depression spurs new financial reporting that increase the market for accounting and auditing services. 1930s A growing labor shortage among qualified accountants, led Arthur Young and Co. recruiting candidates on college campuses. Soon after the firm established its first staff school, to shorten the 15 years of working experience needed to become a senior accountant. 1948 Arthur Young dies at age 84; a few months later, A. C. Ernst passes away at the age of 66. 1957 Arthur Young and Co. is the first Big Eight accounting firm to name a woman partner. 1979 Ernst and Ernst formalizes its relationship with the British firm, now known as Whinney, Murray and Company, to form the worldwide organization called Ernst and Whinney. 1989 Arthur Young and Ernst & Whinney merge to form Ernst & Young 1995 Ernst and Young merges with Kenneth Leventhal and Company, the preeminent firm providing professional services to the real estate industry.