![4 Case 1.1 Enron Corporation
1. To provide students with a brief overview of the history and development of the public
accounting profession in the United States.
2. To examine the “scope of services” issue, that is, the threats to auditor independence posed
by audit firms providing consulting services to their audit clients.
3. To examine the extent to which independent auditors should be involved in their clients’
decisions regarding important accounting and financial reporting issues.
4. To review recent recommendations made to strengthen the independent audit function.
5. To review auditors’ responsibilities regarding the preparation and retention of audit
workpapers.
Suggestions for Use
I typically begin an auditing course by discussing a major and widely publicized audit case.
Clearly, the Enron case satisfies those criteria. The purpose of presenting such a case early in the
semester is not only to acquaint students with the nature of auditing but also to make them aware
of why the independent audit function is so important. Many accounting students are not well
acquainted with the nature of the independent auditor’s work environment, nor are they generally
familiar with the critical role the independent audit function plays in our national economy.
Hopefully, cases such as this one provide students with a “reality jolt” that will stimulate their
interest in auditing and, possibly, make them more inclined to pursue a career in the auditing field.
The Enron case also serves as a good starting point for an auditing course since it provides
students with an overview of how the auditing profession developed and evolved in the United
States over the past century. The vehicle used to present this overview is the history of Arthur
Andersen & Co. You will find that the case attempts to contrast the “think straight, talk straight”
philosophy of Arthur E. Andersen, the founder of the Andersen firm, with the more business-
oriented approach to auditing that his predecessors adopted in the latter decades of the twentieth
century.
Consider asking one or more of your students to interview former Andersen personnel who
are graduates of your school. I have found that many former Andersen partners and employees
are more than willing to discuss their former employer and the series of events that led to the firm’s
sudden collapse. These individuals typically suggest that federal prosecutors’ efforts to “bring
down” the entire Andersen firm as a result of the document-shredding incident was not only
unnecessary but also inequitable, an argument that many members of the accounting profession—
including academics—find hard to refute.
Suggested Solutions to Case Questions
1. A large number of parties bear some degree of direct or indirect responsibility for the problems
that the Enron fiasco ultimately posed for the public accounting profession and the independent
audit function. The following bullet items identify several of these parties [see bold-facing] and
the role they played in the Enron drama.](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-7-320.jpg)
![Case 1.1 Enron Corporation 7
PCAOB No. 3:
This standard defines audit documentation as “the written record of the basis for the auditor’s
conclusions that provides the support for the auditor’s representations, whether those
representations are contained in the auditor’s report or otherwise” (para. .02). “Examples of audit
documentation include memoranda, confirmations, correspondence, schedules, audit programs,
and letters of representation. Audit documentation may be in the form of paper, electronic files,
or other media” (para. .04).
PCAOB No. 3 notes that there are three key objectives of audit documentation: “demonstrate
that the engagement complied with the standards of the PCAOB, support the basis for the auditor’s
conclusions concerning every major relevant financial statement assertion, and demonstrate that
the underlying accounting records agreed or reconciled with the financial statements” (para. .05).
This standard establishes an explicit benchmark that auditors can use to determine whether
audit documentation is “sufficient.” “Audit documentation must contain sufficient information to
enable an experienced auditor, having no previous connection with the engagement to: a)
understand the nature, timing, extent, and results of the procedures performed, evidence obtained,
and conclusions reached, and b) determine who performed the work and the date such work was
completed as well as the person who reviewed the work and the date of such review” (para. .06).
[Note: SAS No. 103 has a similar requirement—see AU 339.10.] PCAOB No. 3 generally
requires auditors to retain audit documentation for seven years from the date the auditor gave the
client permission to use the relevant audit report in connection with the issuance of a set of
financial statements.
Regardless of whether an audit client is a publicly owned company or another type of
organization, the audit workpapers are the property of the audit firm.
5. During and following the Enron debacle, wide-ranging recommendations were made by many
parties to strengthen the independent audit function. Listed next are several of these
recommendations, including certain measures that were incorporated in the Sarbanes-Oxley Act
of 2002.
•Establish an independent audit agency. Some critics have suggested that to “cure” the
paradoxical nature of the auditor-client relationship (that is, to eliminate the economic leverage
that clients have on their auditors), the independent audit function should be performed by a
government agency comparable to the Internal Revenue Service.
•Permit audit firms to provide only audit, reviews, compilations, and other “pure” attestation
services to their clients, that is, prohibit the provision of all non-audit services to audit clients. (As
mentioned in the suggested solution to Question 2, Sarbanes-Oxley prohibits audit firms from
providing eight specific consulting services to their audit clients.)
•Require that audit clients periodically rotate or change their independent audit firms.
(Sarbanes-Oxley requires that engagement and review partners be rotated every five years on audit
engagements involving public companies.)
•Establish an independent board to oversee the audits of public companies. (Sarbanes-Oxley
resulted in the creation of the Public Company Accounting Oversight Board “to oversee the audit
of public companies that are subject to the securities laws . . .”)
•Require independent auditors to work more closely with their clients’ audit committees.
(Section 204 of Sarbanes-Oxley is entitled “Auditor Reports to Audit Committees” and delineates
the information that auditors should exchange with a client’s audit committee, including any
alternative accounting treatments “preferred” by the auditors.)
•Establish more explicit statutory requirements that prohibit client executives from interfering
with the work of their independent auditors. (Section 303 of Sarbanes-Oxley is entitled “Improper](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-10-320.jpg)
![of the god against the despoilers of the Delphian temple; while the
Thessalians also, forming the best cavalry in Greece and fighting
with earnest valor, gave decisive advantage to his cause. The defeat
of the forces of Onomarchus and Lykophron was complete. Six
thousand of them are said to have been slain, and three thousand to
have been taken prisoners; the remainder escaped either by flight,
or by throwing away their arms, and swimming off to the Athenian
ships. Onomarchus himself perished. According to one account, he
was slain by his own mercenaries, provoked by his cowardice:
according to another account, he was drowned—being carried into
the sea by an unruly horse, and trying to escape to the ships. Philip
caused his dead body to be crucified, and drowned all the prisoners
as men guilty of sacrilege.[625]
This victory procured for Philip great renown as the avenger of
the Delphian god—and became an important step in his career of
aggrandizement. It not only terminated the power of the Phokians
north of Thermopylæ, but also finally crushed the powerful dynasty
of Pheræ in Thessaly. Philip laid siege to that city, upon which
Lykophron and Peitholaus, surrounded by an adverse population and
unable to make any long defence, capitulated, and surrendered it to
him; retiring with their mercenaries, two thousand in number, into
Phokis.[626] Having obtained possession of Pheræ and proclaimed it
a free city, Philip proceeded to besiege the neighboring town of
Pagasæ, the most valuable maritime station in Thessaly. How long
Pagasæ resisted, we do not know; but long enough to send
intimation to Athens, with entreaties for succor. The Athenians,
alarmed at the successive conquests of Philip, were well-disposed to
keep this important post out of his hands, which their naval power
fully enabled them to do. But here again (as in the previous
examples of Pydna, Potidæa, and Methônê), the aversion to personal
service among the citizens individually—and the impediments as to
apportionment of duty or cost, whenever actual outgoing was called
for—produced the untoward result, that though an expedition was
voted and despatched, it did not arrive in time.[627] Pagasæ
surrendered and came into the power of Philip; who fortified and](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-13-320.jpg)
![garrisoned it for himself, thus becoming master of the Pagasæan
gulf, the great maritime inlet of Thessaly.
Philip was probably occupied for a certain time in making good
his dominion over Thessaly. But as soon as sufficient precautions
had been taken for this purpose, he sought to push his advantage
over the Phokians by invading them in their own territory. He
marched to Thermopylæ, still proclaiming as his aim the liberation of
the Delphian temple and the punishment of its sacrilegious robbers;
while he at the same time conciliated the favor of the Thessalians by
promising to restore to them the Pylæa, or half-yearly Amphiktyonic
festival at Thermopylæ, which the Phokians had discontinued.[628]
The Phokians, though masters of this almost inexpugnable pass,
seemed to have been so much disheartened by their recent defeat,
and the death of Onomarchus, that they felt unable to maintain it
long. The news of such a danger, transmitted to Athens, excited
extraordinary agitation. The importance of defending Thermopylæ—
and of prohibiting the victorious king of Macedon from coming to
coöperate with the Thebans on the southern side of it,[629] not
merely against the Phokians, but probably also against Attica—were
so powerfully felt, that the usual hesitations and delay of the
Athenians in respect to military expeditions were overcome. Chiefly
from this cause—but partly also, we may suppose, from the
vexatious disappointment recently incurred in the attempt to relieve
Pagasæ—an Athenian armament under Nausikles (not less than five
thousand foot and four hundred horse, according to Diodorus[630])
was fitted out with not less vigor and celerity than had been
displayed against the Thebans in Eubœa, seven years before.
Athenian citizens shook off their lethargy, and promptly volunteered.
They reached Thermopylæ in good time, placing the pass in such a
condition of defence that Philip did not attack it at all. Often
afterwards does Demosthenes,[631] in combating the general
remissness of his countrymen when military exigencies arose,
remind them of this unwonted act of energetic movement, crowned
with complete effect. With little or no loss, the Athenians succeeded
in guarding both themselves and their allies against a very menacing](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-14-320.jpg)
![contingency, simply by the promptitude of their action. The cost of
the armament altogether was more than two hundred talents; and
from the stress which Demosthenes lays on that portion of the
expense which was defrayed by the soldiers privately and
individually,[632] we may gather that these soldiers (as in the Sicilian
expedition under Nikias[633]) were in considerable proportion opulent
citizens. Among a portion of the Grecian public, however, the
Athenians incurred obloquy as accomplices in the Phokian sacrilege,
and enemies of the Delphian god.[634]
But though Philip was thus kept out of Southern Greece, and the
Phokians enabled to reorganize themselves against Thebes, yet in
Thessaly and without the straits of Thermopylæ, Macedonian
ascendency was henceforward an uncontested fact. Before we follow
his subsequent proceedings, however, it will be convenient to turn to
events both in Phokis and in Peloponnesus.
In the depressed condition of the Phokians after the defeat of
Onomarchus, they obtained reinforcement not only from Athens, but
also from Sparta (one thousand men), and from the Peloponnesian
Achæans (two thousand men[635]). Phayllus, the successor (by some
called brother) of Onomarchus, put himself again in a condition of
defence. He had recourse a third time to that yet unexhausted store
—the Delphian treasures and valuables. He despoiled the temple to
a greater extent than Philomelus, and not less than Onomarchus;
incurring aggravated odium from the fact, that he could not now
supply himself without laying hands on offerings of conspicuous
magnificence and antiquity, which his two predecessors had spared.
It was thus that the splendid golden donatives of the Lydian king
Krœsus were now melted down and turned into money; one
hundred and seventeen bricks or ingots of gold, most of them
weighing two talents each; three hundred and sixty golden goblets,
together with a female statue three cubits high, and a lion, of the
same metal—said to have weighed in the aggregate thirty talents.
[636] The abstraction of such ornaments, striking and venerable in
the eyes of the numerous visitors of the temple, was doubtless](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-15-320.jpg)
![deeply felt among the Grecian public. And the indignation was
aggravated by the fact that beautiful youths or women, favorites of
Onomarchus or Phayllus, received some of the most precious gifts,
and wore the most noted ornaments, which had decorated the
temple—even the necklaces of Helen and Eriphylê. One woman, a
flute-player named Bromias, not only received from Phayllus a silver
cup and a golden wreath (the former dedicated in the temple by the
Phokæans, the latter by the Peparethians), but was also introduced
by him, in his capacity of superintendent of the Pythian festival, to
contend for the prize in playing the sacred Hymn. As the competitors
for such prize had always been men, the assembled crowd so loudly
resented the novelty, that Bromias was obliged to withdraw.[637]
Moreover profuse largesses, and flagrant malversation, became
more notorious than ever.[638] The Phokian leaders displayed with
ostentation their newly-acquired wealth, and either imported for the
first time bought slaves, or at least greatly multiplied the pre-existing
number. It had before been the practice in Phokis, we are told, for
the wealthy men to be served by the poor youthful freemen of the
country; and complaints arose among the latter class that their daily
bread was thus taken away.[639]
Notwithstanding the indignation excited by these proceedings not
only throughout Greece, but even in Phokis itself,—Phayllus carried
his point of levying a fresh army of mercenaries, and of purchasing
new alliances among the smaller cities. Both Athens and Sparta
profited more or less by the distribution; though the cost of the
Athenian expedition to Thermopylæ, which rescued the Phokians
from destruction, seems clearly to have been paid by the Athenians
themselves.[640] Phayllus carried on war for some time against both
the Bœotians and Lokrians. He is represented by Diodorus to have
lost several battles. But it is certain that the general result was not
unfavorable to him; that he kept possession of Orchomenus in
Bœotia; and that his power remained without substantial diminution.
[641]](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-16-320.jpg)
![The stress of war seems, for the time, to have been transferred
to Peloponnesus, whither a portion both of the Phokian and Theban
troops went to coöperate. The Lacedæmonians had at length
opened their campaign against Megalopolis, of which I have already
spoken as having been debated before the Athenian public assembly.
Their plan seems to have been formed some months before, when
Onomarchus was at the maximum of his power, and when Thebes
was supposed to be in danger; but it was not executed until after his
defeat and death, when the Phokians, depressed for the time, were
rescued only by the prompt interference of Athens,—and when the
Thebans had their hands comparatively free. Moreover, the Theban
division which had been sent into Asia under Pammenes a year or
two before, to assist Artabazus, may now be presumed to have
returned; especially as we know that no very long time afterwards,
Artabazus appears as completely defeated by the Persian troops,—
expelled from Asia, and constrained to take refuge, together with his
brother-in-law Memnon, under the protection of Philip.[642] The
Megalopolitans had sent envoys to entreat aid from Athens, under
the apprehension that Thebes would not be in a condition to assist
them. It may be doubted whether Athens would have granted their
prayer, in spite of the advice of Demosthenes,—but the Thebans had
now again become strong enough to uphold with their own force
their natural allies in Peloponnesus.
Accordingly, when the Lacedæmonian army under king
Archidamus invaded the Megalopolitan territory, a competent force
was soon brought together to oppose them; furnished partly by the
Argeians,—who had been engaged during the preceding year in a
border warfare with Sparta, and had experienced a partial defeat at
Orneæ,[643]—partly by the Sikyonians and Messenians, who came in
full muster. Besides this, the forces on both sides from Bœotia and
Phokis were transferred to Peloponnesus. The Thebans sent four
thousand foot, and five hundred horse, under Kephision, to the aid
of Megalopolis; while the Spartans not only recalled their own troops
from Phokis, but also procured three thousand of the mercenaries in
the service of Phayllus, and one hundred and fifty Thessalian horse](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-17-320.jpg)
![from Likophron, the expelled despot of Pheræ. Archidamus received
his reinforcements, and got together his aggregate forces earlier
than the enemy. He advanced first into Arcadia, where he posted
himself near Mantinea, thus cutting off the Argeians from
Megalopolis; he next invaded the territory of Argos, attacked Orneæ,
and defeated the Argeians in a partial action. Presently the Thebans
arrived, and effected a junction with their Argeian and Arcadian
allies. The united force was greatly superior in number to the
Lacedæmonians; but such superiority was counterbalanced by the
bad discipline of the Thebans, who had sadly declined on this point
during the interval of ten years since the death of Epaminondas. A
battle ensued, partially advantageous to the Lacedæmonians; while
the Argeians and Arcadians chose to go home to their neighboring
cities. The Lacedæmonians also, having ravaged a portion of
Arcadia, and stormed the Arcadian town of Helissus, presently
recrossed their own frontier and returned to Sparta. They left,
however, a division in Arcadia under Anaxander, who, engaging with
the Thebans near Telphusa, was worsted with great loss and made
prisoner. In two other battles, also, the Thebans were successively
victorious; in a third, they were vanquished by the Lacedæmonians.
With such balanced and undecided success was the war carried on
until, at length, the Lacedæmonians proposed and concluded peace
with Megalopolis. Either formally, or by implication, they were forced
to recognize the autonomy of that city; thus abandoning, for the
time at least, their aggressive purposes, which Demosthenes had
combated and sought to frustrate before the Athenian assembly. The
Thebans on their side returned home, having accomplished their
object of protecting Megalopolis and Messênê; and we may presume
that the Phokian allies of Sparta were sent home also.[644]
The war between the Bœotians and Phokians had doubtless
slackened during this episode in Peloponnesus; but it still went on in
a series of partial actions, on the river Kephissus, at Koroneia, at
Abæ in Phokis, and near the Lokrian town of Naryx. For the most
part, the Phokians are said to have been worsted; and their
commander, Phayllus, presently died of a painful disease,—the](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-18-320.jpg)
![suitable punishment (in the point of view of a Grecian historian[645])
for his sacrilegious deeds. He left as his successor Phalækus, a
young man, son of Onomarchus, under the guardianship and advice
of an experienced friend named Mnaseas. But Mnaseas was soon
surprised at night, defeated, and slain, by the Thebans while
Phalækus, left to his own resources, was defeated in two battles
near Chæroneia, and was unable to hinder his enemies from
ravaging a large part of the Phokian territory.[646]
We know the successive incidents of this ten years’ Sacred War
only from the meagre annals of Diodorus,—whose warm sympathy
in favor of the religious side of the question seems to betray him into
exaggeration of the victories of the Thebans, or at least into some
omission of counterbalancing reverses. For in spite of these
successive victories, the Phokians were noway put down, but
remained in possession of the Bœotian town of Orchomenus;
moreover, the Thebans became so tired out and impoverished by the
war, that they confined themselves presently to desultory incursions
and skirmishes.[647] Their losses fell wholly upon their own citizens
and their own funds; while the Phokians fought with foreign
mercenaries and with the treasures of the temple.[648] The
increasing poverty of the Thebans even induced them to send an
embassy to the Persian king, entreating pecuniary aid; which drew
from him a present of three hundred talents. As he was at this time
organizing a fresh expedition on an immense scale, for the
reconquest of Phenicia and Egypt, after more than one preceding
failure, he required Grecian soldiers as much as the Greeks required
his money. Hence we shall see presently that the Thebans were able
to send him an equivalent.
In the war just recounted on the Laconian and Arcadian frontier,
the Athenians had taken no part. Their struggle with Philip had been
becoming from month to month more serious and embarrassing. By
occupying in time the defensible pass of Thermopylæ, they had
indeed prevented him both from crushing the Phokians and from
meddling with the Southern states of Greece. But the final battle](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-19-320.jpg)
![wherein he had defeated Onomarchus, had materially increased both
his power and his military reputation. The numbers on both sides
were very great; the result was decisive, and ruinous to the
vanquished; moreover, we cannot doubt that the Macedonian
phalanx, with the other military improvements and manœuvres
which Philip had been gradually organizing since his accession, was
now exhibited in formidable efficiency. The King of Macedon had
become the ascendent soldier and potentate, hanging on the skirts
of the Grecian world, exciting fears or hopes, or both at once, in
every city throughout its limits. In the first Philippic of Demosthenes,
and in his oration against Aristokrates, (delivered between
midsummer 352 B. C. and midsummer 351 B. C.), we discern evident
marks of the terrors which Philip had come to inspire, within a year
after his repulse from Thermopylæ, to reflecting Grecian politicians.
“It is impossible for Athens (says the orator[649]) to provide any land-
force competent to contend in the field against that of Philip.”
The reputation of his generalship and his indefatigable activity
was already everywhere felt; as well as that of the officers and
soldiers, partly native Macedonians, partly chosen Greeks, whom he
had assembled round him,[650]—especially the lochages or front-rank
men of the phalanx and the hypaspistæ. Moreover, the excellent
cavalry of Thessaly became embodied from henceforward as an
element in the Macedonian army; since Philip had acquired
unbounded ascendency in that country, from his expulsion of the
Pheræan despots and their auxiliaries the Phokians. The philo-
Macedonian party in the Thessalian cities had constituted him federal
chief (or in some sort Tagus) of the country, not only enrolling their
cavalry in his armies, but also placing at his disposal the customs
and market-dues, which formed a standing common fund for
supporting the Thessalian collective administration.[651] The financial
means of Philip, for payment of his foreign troops, and prosecution
of his military enterprises, were thus materially increased.
But besides his irresistible land-force, Philip had now become
master of no inconsiderable naval power also. During the early years](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-20-320.jpg)
![of the war, though he had taken not only Amphipolis, but also all the
Athenian possessions on the Macedonian coast, yet the exports from
his territory had been interrupted by the naval force of Athens, so as
to lessen seriously the produce of his export duties.[652] But he had
now contrived to get together a sufficient number of armed ships
and privateers, if not to ward off such damage from himself, at least
to retaliate it upon Athens. Her navy, indeed, was still incomparably
superior, but the languor and remissness of her citizens refused to
bring it out with efficiency; while Philip had opened for himself a
new avenue to maritime power by his acquisition of Pheræ and
Pagasæ, and by establishing his ascendency over the Magnêtes and
their territory, round the eastern border of the Pagasæan Gulf. That
gulf (now known by the name of Volo), is still the great inlet and
outlet for Thessalian trade; the eastern coast of Thessaly, along the
line of Mount Pelion, being craggy and harborless.[653] The naval
force belonging to Pheræ and its seaport Pagasæ, was very
considerable, and had been so even from the times of the despots,
Jason and Alexander;[654] at one moment painfully felt even by
Athens. All these ships now passed into the service of Philip,
together with the dues on export and import levied round the
Pagasæan Gulf; the command of which he farther secured by
erecting suitable fortifications on the Magnesian shore, and by
placing a garrison in Pagasæ.[655] Such additional naval means,
combined with what he already possessed at Amphipolis and
elsewhere, made him speedily annoying, if not formidable, to
Athens, even at sea. His triremes showed themselves everywhere,
probably in small and rapidly moving squadrons. He levied large
contributions on the insular allies of Athens, and paid the costs of
war greatly out of the capture of merchant vessels in the Ægean. His
squadrons made incursions on the Athenian islands of Lemnos and
Imbros, carrying off several Athenian citizens as prisoners. They
even stretched southward as far as Geræstus, the southern
promontory of Eubœa, where they not only fell in with and captured
a lucrative squadron of corn-ships, but also insulted the coast of
Attica itself in the opposite bay of Marathon, towing off as a prize
one of the sacred triremes.[656] Such was the mischief successfully](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-21-320.jpg)
![inflicted by the flying squadrons of Philip, though Athens had
probably a considerable number of cruisers at sea, and certainly a
far superior number of ships at home in Peiræus. Her commerce,
and even her coasts, were disturbed and endangered; her insular
allies suffered yet more. Eubœa especially, the nearest and most
important of all her allies, separated only by a narrow strait from the
Pagasæan Gulf and the southern coast of Phthiotis, was now within
the immediate reach not only of Philip’s marauding vessels, but also
of his political intrigues.
It was thus that the war against Philip turned more and more to
the disgrace and disadvantage of the Athenians. Though they had
begun it in the hope of punishing him for his duplicity in
appropriating Amphipolis, they had been themselves the losers by
the capture of Pydna, Potidæa, Methônê, etc.; and they were now
thrown upon the defensive, without security for their maritime allies,
their commerce, or their coasts.[657] The intelligence of these various
losses and insults endured at sea, in spite of indisputable maritime
preponderance, called forth at Athens acrimonious complaints
against the generals of the state, and exaggerated outbursts of
enmity against Philip.[658] That prince, having spent a few months,
after his repulse from Thermopylæ, in Thessaly, and having so far
established his ascendency over that country that he could leave the
completion of the task to his officers, pushed with his characteristic
activity into Thrace. He there took part in the disputes between
various native princes, expelling some, confirming or installing
others, and extending his own dominion at the cost of all.[659]
Among these princes were probably Kersobleptes, and Amadokus;
for Philip carried his aggressions to the immediate neighborhood of
the Thracian Chersonese.
In November, 352 B. C., intelligence reached Athens, that he was
in Thrace besieging Heræon Teichos; a place so near to the
Chersonese,[660] that the Athenian possessions and colonists in that
peninsula were threatened with considerable danger. So great was
the alarm and excitement caused by this news, that a vote was](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-22-320.jpg)
![immediately passed in the public assembly to equip a fleet of forty
triremes,—to man it with Athenian citizens, all persons up to the age
of forty-five being made liable to serve on the expedition,—and to
raise sixty talents by a direct property tax. At first active steps were
taken to accelerate the armament. But before the difficulties of detail
could be surmounted,—before it could be determined, amidst the
general aversion to personal service, what citizens should go abroad,
and how the burthen of trierarchy should be distributed,—fresh
messengers arrived from the Chersonese, reporting first that Philip
had fallen sick, next that he was actually dead.[661] The last-
mentioned report proved false; but the sickness of Philip was an
actual fact, and seems to have been severe enough to cause a
temporary suspension of his military operations. Though the
opportunity became thus only the more favorable for attacking
Philip, yet the Athenians, no longer spurred on by the fear of farther
immediate danger, relapsed into their former languor, and renounced
or postponed their intended armament. After passing the whole
ensuing summer in inaction, they could only be prevailed upon, in
the month of September 351, to despatch to Thrace a feeble force
under the mercenary chief Charidemus; ten triremes, without any
soldiers aboard, and with no more than five talents in money.[662]
At this time Charidemus was at the height of his popularity. It
was supposed that he could raise and maintain a mercenary band by
his own ingenuity and valor. His friends confidently averred, before
the Athenian assembly, that he was the only man capable of putting
down Philip, and conquering Amphipolis.[663] One of these partisans,
Aristokrates, even went so far as to propose that a vote should be
passed ensuring inviolability to his person, and enacting that any
one who killed him should be seized wherever found in the territory
of Athens or her allies. This proposition was attacked judicially by an
accuser named Euthykles, who borrowed a memorable discourse
from the pen of Demosthenes.
It was thus that the real sickness, and reported death, of Philip
which ought to have operated as a stimulus to the Athenians by](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-23-320.jpg)
![exposing to them their enemy during a moment of peculiar
weakness, proved rather an opiate exaggerating their chronic
lethargy, and cheating them into a belief that no farther efforts were
needed. That belief appears to have been proclaimed by the leading,
best-known, and senior speakers, those who gave the tone to the
public assembly, and who were principally relied upon for advice.
These men,—probably Eubulus at their head, and Phokion, so
constantly named as general, along with him,—either did not feel, or
could not bring themselves to proclaim, the painful necessity of
personal military service and increased taxation. Though repeated
debates took place on the insults offered to Athens in her maritime
dignity, and on the sufferings of those allies to whom she owed
protection,—combined with accusations against the generals, and
complaints of the inefficiency of such mercenary foreigners as
Athens took into commission but never paid,—still, the recognized
public advisers shrank from appeal to the dormant patriotism or
personal endurance of the citizens. The serious, but indispensable,
duty which they thus omitted, was performed for them by a younger
competitor, far beneath them in established footing and influence,—
Demosthenes, now about thirty years old,—in an harangue, known
as the first Philippic.
We have already had before us this aspiring man, as a public
adviser in the assembly. In his first parliamentary harangue two
years before,[664] he had begun to inculcate on his countrymen the
general lesson of energy and self-reliance, and to remind them of
that which the comfort, activity, and peaceful refinement of Athenian
life, had a constant tendency to put out of sight:—That the City, as a
whole, could not maintain her security and dignity against enemies,
unless each citizen individually, besides his home-duties, were
prepared to take his fair share, readily and without evasion, of the
hardship and cost of personal service abroad.[665] But he had then
been called upon to deal (in his discourse De Symmoriis) only with
the contingency of Persian hostilities—possible indeed, yet neither
near nor declared; he now renews the same exhortation under more
pressing exigencies. He has to protect interests already suffering,](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-24-320.jpg)
![and to repel dishonorable insults, becoming from month to month
more frequent, from an indefatigable enemy. Successive assemblies
have been occupied with complaints from sufferers, amidst a
sentiment of unwonted chagrin and helplessness among the public—
yet with no material comfort from the leading and established
speakers; who content themselves with inveighing against the
negligence of the mercenaries—taken into service by Athens but
never paid—and with threatening to impeach the generals. The
assembly, wearied by repetition of topics promising no improvement
for the future, is convoked, probably to hear some farther instance
of damage committed by the Macedonian cruisers, when
Demosthenes, breaking through the common formalities of
precedence, rises first to address them.
It had once been the practice at Athens, that the herald formally
proclaimed, when a public assembly was opened—“Who among the
citizens above fifty years old wishes to speak? and after them, which
of the other citizens in his turn?”[666] Though this old proclamation
had fallen into disuse, the habit still remained, that speakers of
advanced age and experience rose first after the debate had been
opened by the presiding magistrates. But the relations of Athens
with Philip had been so often discussed, that all these men had
already delivered their sentiments and exhausted their
recommendations. “Had their recommendations been good, you
need not have been now debating the same topic over again”[667]—
says Demosthenes, as an apology for standing forward out of his
turn to produce his own views.
His views indeed were so new, so independent of party-
sympathies or antipathies, and so plain-spoken in comments on the
past as well as in demands for the future—that they would hardly
have been proposed except by a speaker instinct with the ideal of
the Periklean foretime, familiar to him from his study of Thucydides.
In explicit language, Demosthenes throws the blame of the public
misfortunes, not simply on the past advisers and generals of the
people, but also on the people themselves.[668] It is from this](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-25-320.jpg)
![proclaimed fact that he starts, as his main ground of hope for future
improvement. Athens contended formerly with honor against the
Lacedæmonians; and now also, she will exchange disgrace for
victory in her war against Philip, if her citizens individually will shake
off their past inertness and negligence, each of them henceforward
becoming ready to undertake his full share of personal duty in the
common cause. Athens had undergone enough humiliation, and
more than enough, to teach her this lesson. She might learn it
farther from her enemy Philip himself, who had raised himself from
small beginnings, and heaped losses as well as shame upon her,
mainly by his own personal energy, perseverance, and ability; while
the Athenian citizens had been hitherto so backward as individuals,
and so unprepared as a public, that even if a lucky turn of fortune
were to hand over to them Amphipolis, they would be in no
condition to seize it.[669] Should the rumor prove true, that this Philip
were dead, they would soon make for themselves another Philip
equally troublesome.
After thus severely commenting on the past apathy of the
citizens, and insisting upon a change of disposition as indispensable,
Demosthenes proceeds to specify the particular acts whereby such
change ought to be manifested. He entreats them not to be startled
by the novelty of his plan, but to hear him patiently to the end. It is
the result of his own meditations; other citizens may have better to
propose; if they have, he shall not be found to stand in their way.
What is past, cannot be helped; nor is extemporaneous speech the
best way of providing remedies for a difficult future.[670]
He advises first, that a fleet of fifty triremes shall be immediately
put in readiness; that the citizens shall firmly resolve to serve in
person on board, whenever the occasion may require, and that
triremes and other vessels shall be specially fitted out for half of the
horsemen of the city, who shall serve personally also. This force is to
be kept ready to sail at a moment’s notice, and to meet Philip in any
of his sudden out-marches—to Chersonesus, to Thermopylæ, to
Olynthus, etc.[671]](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-26-320.jpg)
![Secondly, that a farther permanent force shall be set on foot
immediately, to take the aggressive, and carry on active continuous
warfare against Philip, by harassing him in various points of his own
country. Two thousand infantry, and two hundred horse, will be
sufficient; but it is essential that one-fourth part—five hundred of the
former and fifty of the latter—shall be citizens of Athens. The
remainder are to be foreign mercenaries; ten swift sailing war
triremes are also to be provided to protect the transports against the
naval force of Philip. The citizens are to serve by relays, relieving
each other; every one for a time fixed beforehand, yet none for a
very long time.[672] The orator then proceeds to calculate the cost of
such a standing force for one year. He assigns to each seaman, and
to each foot soldier, ten drachmæ per month, or two oboli per day;
to each horseman, thirty drachmæ per month, or one drachma (six
oboli) per day. No difference is made between the Athenian citizen
and the foreigner. The sum here assigned is not full pay, but simply
the cost of each man’s maintenance. At the same time,
Demosthenes pledges himself, that if thus much be furnished by the
state, the remainder of a full pay (or as much again) will be made up
by what the soldiers will themselves acquire in the war; and that
too, without wrong done to allies or neutral Greeks. The total annual
cost thus incurred will be ninety-two talents (= about £22,000.) He
does not give any estimate of the probable cost of his other
armament, of fifty triremes; which are to be equipped and ready at a
moment’s notice for emergencies, but not sent out on permanent
service.
His next task is, to provide ways and means for meeting such
additional cost of ninety-two talents. Here he produces and reads to
the assembly, a special financial scheme, drawn up in writing. Not
being actually embodied in the speech, the scheme has been
unfortunately lost; though its contents would help us materially to
appreciate the views of Demosthenes.[673] It must have been more
or less complicated in its details; not a simple proposition for an
eisphora or property-tax, which would have been announced in a
sentence of the orator’s speech.](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-27-320.jpg)
![Assuming the money, the ships, and the armament for
permanent service, to be provided, Demosthenes proposes that a
formal law be passed, making such permanent service peremptory;
the general in command being held responsible for the efficient
employment of the force.[674] The islands, the maritime allies, and
the commerce of the Ægean would then become secure; while the
profits of Philip from his captures at sea would be arrested.[675] The
quarters of the armament might be established, during winter or bad
weather, in Skiathos, Thasos, Lemnos, or other adjoining islands,
from whence they could act at all times against Philip on his own
coast; while from Athens it was difficult to arrive thither either
during the prevalence of the Etesian winds or during winter—the
seasons usually selected by Philip for his aggressions.[676]
The aggregate means of Athens (Demosthenes affirmed) in men,
money, ships, hoplites, horsemen, were greater than could be found
anywhere else. But hitherto they had never been properly employed.
The Athenians, like awkward pugilists, waited for Philip to strike, and
then put up their hand to follow his blow. They never sought to look
him in the face—nor to be ready with a good defensive system
beforehand—nor to anticipate him in offensive operations.[677] While
their religious festivals, the Panathenaic, Dionysiac, and others, were
not only celebrated with costly splendor, but prearranged with the
most careful pains, so that nothing was ever wanting in detail at the
moment of execution—their military force was left without
organization or predetermined system. Whenever any new
encroachment of Philip was made known, nothing was found ready
to meet it; fresh decrees were to be voted, modified, and put in
execution, for each special occasion; the time for action was wasted
in preparation, and before a force could be placed on shipboard, the
moment for execution had passed.[678] This practice of waiting for
Philip to act offensively, and then sending aid to the point attacked,
was ruinous; the war must be carried on by a standing force put in
motion beforehand.[679]](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-28-320.jpg)
![To provide and pay such a standing force, is one of the main
points in the project of Demosthenes. The absolute necessity that it
shall consist, in large proportion at least, of citizens, is another. To
this latter point he reverts again and again, insisting that the foreign
mercenaries—sent out to make their pay where or how they could,
and unaccompanied by Athenian citizens—were at best useless and
untrustworthy. They did more mischief to friends and allies, who
were terrified at the very tidings of their approach—than to the
enemy.[680] The general, unprovided with funds to pay them, was
compelled to follow them wheresoever they chose to go,
disregarding his orders received from the city. To try him afterwards
for that which he could not help, was unprofitable disgrace. But if
the troops were regularly paid; if, besides, a considerable proportion
of them were Athenian citizens, themselves interested in success,
and inspectors of all that was done; then the general would be
found willing and able to attack the enemy with vigor—and might be
held to a rigorous accountability, if he did not. Such was the only
way in which the formidable and ever-growing force of their enemy
Philip could be successfully combated. As matters now stood, the
inefficiency of Athenian operations was so ridiculous, that men might
be tempted to doubt whether Athens was really in earnest. Her chief
military officers—her ten generals, ten taxiarchs, ten phylarchs, and
two hipparchs, annually chosen—were busied only in the affairs of
the city and in the showy religious processions. They left the real
business of war to a foreign general named Menelaus.[681] Such a
system was disgraceful. The honor of Athens ought to be maintained
by her own citizens, both as generals and as soldiers.
Such are the principal features in the discourse called the First
Philippic; the earliest public harangue delivered by Demosthenes to
the Athenian assembly, in reference to the war with Philip. It is not
merely a splendid piece of oratory, emphatic and forcible in its
appeal to the emotions; bringing the audience by many different
roads, to the main conviction which the orator seeks to impress;
profoundly animated with genuine Pan-hellenic patriotism, and with
the dignity of that free Grecian world now threatened by a monarch](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-29-320.jpg)
![from without. It has other merits besides, not less important in
themselves, and lying more immediately within the scope of the
historian. We find Demosthenes, yet only thirty years old—young in
political life—and thirteen years before the battle of Chæroneia—
taking accurate measure of the political relations between Athens
and Philip; examining those relations during the past, pointing out
how they had become every year more unfavorable, and foretelling
the dangerous contingencies of the future, unless better precautions
were taken; exposing with courageous frankness not only the past
mismanagement of public men, but also those defective dispositions
of the people themselves wherein such management had its root;
lastly, after fault found, adventuring on his own responsibility to
propose specific measures of correction, and urging upon reluctant
citizens a painful imposition of personal hardship as well as of
taxation. We shall find him insisting on the same obligation, irksome
alike to the leading politicians and to the people,[682] throughout all
the Olynthiacs and Philippics. We note his warnings given at this
early day, when timely prevention would have been easily
practicable; and his superiority to elder politicians like Eubulus and
Phokion, in prudent appreciation, in foresight, and in courage of
speaking out unpalatable truths. More than twenty years after this
period, when Athens had lost the game and was in her phase of
humiliation, Demosthenes (in repelling the charges of those who
imputed her misfortune to his bad advice) measures the real extent
to which a political statesman is properly responsible. The first of all
things is—“To see events in their beginnings—to discern tendencies
beforehand, and proclaim them beforehand to others—to abridge as
much as possible the rubs, impediments, jealousies, and tardy
movements, inseparable from the march of a free city—and to infuse
among the citizens harmony, friendly feelings, and zeal for the
performance of their duties.”[683] The first Philippic is alone sufficient
to prove, how justly Demosthenes lays claim to the merit of having
“seen events in their beginnings” and given timely warning to his
countrymen. It will also go to show, along with other proofs
hereafter to be seen, that he was not less honest and judicious in his
attempts to fulfil the remaining portion of the statesman’s duty—that](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-30-320.jpg)
![of working up his countrymen to unanimous and resolute enterprise;
to the pitch requisite not merely for speaking and voting, but for
acting and suffering, against the public enemy.
We know neither the actual course, nor the concluding vote, of
this debate, wherein Demosthenes took a part so unexpectedly
prominent. But we know that neither of the two positive measures
which he recommends was carried into effect. The working
armament was not sent out, nor was the home-force, destined to be
held in reserve for instant movement in case of emergency, ever got
ready. It was not until the following month of September (the
oration being delivered some time in the first half of 351 B. C.), that
any actual force was sent against Philip; and even then nothing
more was done than to send the mercenary chief Charidemus to the
Chersonese, with ten triremes, and five talents in money, but no
soldiers.[684] Nor is there any probability that Demosthenes even
obtained a favorable vote of the assembly; though strong votes
against Philip were often passed without being ever put in execution
afterwards.[685]
Demosthenes was doubtless opposed by those senior statesmen
whose duty it would have been to come forward themselves with the
same propositions assuming the necessity to be undeniable. But
what ground was taken in opposing him, we do not know. There
existed at that time in Athens a certain party or section who
undervalued Philip as an enemy not really formidable—far less
formidable than the Persian king.[686] The reports of Persian force
and preparation, prevalent two years before when Demosthenes
delivered his harangue on the Symmories, seem still to have
continued, and may partly explain the inaction again Philip. Such
reports would be magnified, or fabricated, by another Athenian party
much more dangerous; in communication with, and probably paid
by, Philip himself. To this party Demosthenes makes his earliest
allusion in the first Philippic,[687] and reverts to them on many
occasions afterwards. We may be very certain that there were
Athenian citizens serving as Philip’s secret agents, though we cannot](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-31-320.jpg)
![assign their names. It would be not less his interest to purchase
such auxiliaries, than to employ paid spies in his operations of war:
[688] while the prevalent political antipathies at Athens, coupled with
the laxity of public morality in individuals, would render it perfectly
practicable to obtain suitable instruments. That not only at Athens,
but also at Amphipolis, Potidæa, Olynthus and elsewhere, Philip
achieved his successes, partly by purchasing corrupt partisans
among the leaders of his enemies—is an assertion so intrinsically
probable, that we may readily believe it, though advanced chiefly by
unfriendly witnesses. Such corruption alone, indeed, would not have
availed him, but it was eminently useful when combined with well-
employed force and military genius.](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-32-320.jpg)
![CHAPTER LXXXVIII.
EUBOIC AND OLYNTHIAN WARS.
If even in Athens, at the date of the first Philippic of
Demosthenes, the uneasiness about Philip was considerable, much
more serious had it become among his neighbors the Olynthians. He
had gained them over, four years before, by transferring to them the
territory of Anthemus—and the still more important town of
Potidæa, captured by his own arms from Athens. Grateful for these
cessions, they had become his allies in his war with Athens, whom
they hated on every ground. But a material change had since taken
place. Since the loss of Methônê, Athens, expelled from the coast of
Thrace and Macedonia, had ceased to be a hostile neighbor, or to
inspire alarm to the Olynthians; while the immense increase in the
power of Philip, combined with his ability and ambition alike
manifest, had overlaid their gratitude for the past by a sentiment of
fear for the future. It was but too clear that a prince who stretched
his encroaching arms in all directions—to Thermopylæ, to Illyria, and
to Thrace—would not long suffer the fertile peninsula between the
Thermaic and Strymonic gulfs to remain occupied by free Grecian
communities. Accordingly, it seems that after the great victory of
Philip in Thessaly over the Phokians (in the first half of 352 B. C.), the
Olynthians manifested their uneasiness by seceding from alliance
with him against Athens. They concluded peace with that city, and
manifested such friendly sentiments that an alliance began to be
thought possible. This peace seems to have been concluded before
November 352 B. C.[689]
Here was an important change of policy on the part of the
Olynthians. Though they probably intended it, not as a measure of](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-33-320.jpg)
![hostility against Philip, but simply as a precaution to ensure to
themselves recourse elsewhere in case of becoming exposed to his
attack, it was not likely that he would either draw or recognize any
such distinction. He would probably consider that by the cession of
Potidæa, he had purchased their coöperation against Athens, and
would treat their secession as at least making an end to all amicable
relations.
A few months afterwards (at the date of the first Philippic[690])
we find that he, or his soldiers, had attacked, and made sudden
excursions into their territory, close adjoining to his own.
In this state of partial hostility, yet without proclaimed or
vigorous war, matters seem to have remained throughout the year
351 B. C. Philip was engaged during that year in his Thracian
expedition, where he fell sick, so that aggressive enterprise was for
the time suspended. Meanwhile the Athenians seem to have
proposed to Olynthus a scheme of decided alliance against Philip.
[691] But the Olynthians had too much to fear from him, to become
themselves the aggressors. They still probably hoped that he might
find sufficient enemies and occupation elsewhere, among Thracians,
Illyrians, Pæonians, Arymbas and the Epirots, and Athenians;[692] at
any rate, they would not be the first to provoke a contest. This state
of reciprocal mistrust[693] continued for several months, until at
length Philip began serious operations against them; not very long
after his recovery from the sickness in Thrace, and seemingly
towards the middle of 350 B. C.;[694] a little before the beginning of
Olympiad 107, 3.
It was probably during the continuance of such semi-hostile
relations that two half-brothers of Philip, sons of his father Amyntas
by another mother, sought and obtained shelter at Olynthus. They
came as his enemies; for he had put to death already one of their
brothers, and they themselves only escaped the same fate by flight.
Whether they had committed any positive act to provoke his wrath,
we are not informed; but such tragedies were not unfrequent in the
Macedonian regal family. While Olynthus was friendly and grateful to](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-34-320.jpg)
![Philip, these exiles would not have resorted thither; but they were
now favorably received, and may perhaps have held out hopes that
in case of war they could raise a Macedonian party against Philip. To
that prince, the reception of his fugitive enemies served as a
plausible pretence for war—which he doubtless would under all
circumstances have prosecuted—against Olynthus; and it seems to
have been so put forward in his public declarations.[695]
But Philip, in accomplishing his conquests, knew well how to
blend the influences of deceit and seduction with those of arms, and
to divide or corrupt those whom he intended to subdue. To such
insidious approaches Olynthus was in many ways open. The power
of that city consisted, in great part, in her position as chief of a
numerous confederacy, including a large proportion, though probably
not all, of the Grecian cities in the peninsula of Chalkidikê. Among
the different members of such a confederacy, there was more or less
of dissentient interest or sentiment, which accidental circumstances
might inflame so as to induce a wish for separation. In each city
moreover, and in Olynthus itself, there were ambitious citizens
competing for power, and not scrupulous as to the means whereby it
was to be acquired or retained. In each of them, Philip could open
intrigues, and enlist partisans; in some, he would probably receive
invitations to do so; for the greatness of his exploits, while it inspired
alarm in some quarters, raised hopes among disappointed and
jealous minorities. If, through such predisposing circumstances, he
either made or found partisans and traitors in the distant cities of
Peloponnesus, much more was this practicable for him in the
neighboring peninsula of Chalkidikê. Olynthus and the other cities
were nearly all conterminous with the Macedonian territory, some
probably with boundaries not clearly settled. Perdikkas II. had given
to the Olynthians (at the beginning of the Peloponnesian war[696]) a
portion of his territory near the Lake Bolbê: Philip himself had given
to them the district of Anthemus. Possessed of so much neighboring
land, he had the means, with little loss to himself, of materially
favoring or enriching such individual citizens, of Olynthus or other
cities, as chose to promote his designs. Besides direct bribes, where](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-35-320.jpg)
![that mode of proceeding was most effective, he could grant the right
of gratuitous pasture to the flocks and herds of one, and furnish
abundant supplies of timber to another. Master as he now was of
Amphipolis and Philippi, he could at pleasure open or close to them
the speculations of the gold mines of Mount Pangæus, for which
they had always hankered.[697] If his privateers harassed even the
powerful Athens, and the islands under her protection, much more
vexatious would they be to his neighbors in the Chalkidic peninsula,
which they as it were encircled, from the Thermaic Gulf on one side
to the Strymonic Gulf on the other. Lastly, we cannot doubt that
some individuals in these cities had found it profitable to take
service, civil or military, under Philip, which would supply him with
correspondents and adherents among their friends and relatives.
It will thus be easily seen, that with reference to Olynthus and
her confederate cities, Philip had at his command means of private
benefit and annoyance to such an extent, as would ensure to him
the coöperation of a venal and traitorous minority in each; such
minority of course blending its proceedings, and concealing its
purposes, among the standing political feuds of the place. These
means however were only preliminary to the direct use of the sword.
His seductions and presents commenced the work, but his excellent
generalship and soldiers—the phalanx, the hypaspistæ, and the
cavalry, all now brought into admirable training during the ten years
of his reign—completed it.
Though Demosthenes in one passage goes so far as to say that
Philip rated his established influence so high as to expect to
incorporate the Chalkidic confederacy in his empire without serious
difficulty and without even real war[698]—there is ground for
believing that he encountered strenuous resistance, avenged by
unmeasured rigors after the victory. The two years and a half
between Midsummer 350 B. C., and the commencement of 347 B. C.
(the two last years of Olympiad 107 and the nine first months of
Olympiad 108), were productive of phænomena more terror-striking
than anything in the recent annals of Greece. No less than thirty-two](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-36-320.jpg)
![free Grecian cities in Chalkidikê were taken and destroyed, the
inhabitants being reduced to slavery, by Philip. Among them was
Olynthus, one of the most powerful, flourishing, and energetic
members of the Hellenic brotherhood; Apollonia, whose inhabitants
would now repent the untoward obstinacy of their fathers (thirty-two
years before) in repudiating a generous and equal confederacy with
Olynthus, and invoking Spartan aid to revive the falling power of
Philip’s father, Amyntas; and Stageira, the birth-place of Aristotle.
The destruction of thirty-two free Hellenic communities in two years
by a foreign prince, was a calamity the like of which had never
occurred since the suppression of the Ionic revolt and the invasion of
Xerxes. I have already recounted in a previous chapter[699] the
manifestation of wrath at the festival of the ninety-ninth Olympiad
(394 B. C.) against the envoys of the elder Dionysius of Syracuse,
who had captured and subverted five or six free Hellenic
communities in Italy and Sicily. Far more vehement would be the
sentiment of awe and terror, after the Olynthian war, against the
Macedonian destroyer of thirty-two Chalkidic cities. We shall find this
plainly indicated in the phænomena immediately succeeding. We
shall see Athens terrified into a peace alike dishonorable and
improvident, which even Demosthenes does not venture to oppose;
we shall see Æschines passing out of a free spoken Athenian citizen
into a servile worshipper, if not a paid agent, of Philip: we shall
observe Isokrates, once the champion of Pan-hellenic freedom and
integrity, ostentatiously proclaiming Philip as the master and arbiter
of Greece, while persuading him at the same time to use his power
well for the purpose of conquering Persia. These were terrible times;
suitably illustrated in their cruel details by the gangs of enslaved
Chalkidic Greeks of both sexes, seen passing even into
Peloponnesus[700] as the property of new grantees who extolled the
munificence of the donor Philip; and suitably ushered in by awful
celestial signs, showers of fire and blood falling from the heavens to
the earth, in testimony of the wrath of the gods.[701]
While, however, we make out with tolerable clearness the general
result of Philip’s Olynthian war, and the terror which it struck into the](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-37-320.jpg)
![Grecian mind—we are not only left without information as to its
details, but are even perplexed by its chronology. I have already
remarked, that though the Olynthians had contracted such
suspicions of Philip, even before the beginning of 351 B. C., as to
induce them to make peace with his enemy Athens—they had
nevertheless, declined the overtures of Athens for a closer alliance,
not wishing to bring upon themselves decided hostility from so
powerful a neighbor, until his aggressions should become such as to
leave them no choice. We have no precise information as to Philip’s
movements after his operations in Thrace and his sickness in 351
B. C. But we know that it was not in his nature to remain inactive;
that he was incessantly pushing his conquests; and that no conquest
could be so important to him as that of Olynthus and the Chalkidic
peninsula. Accordingly, we are not surprised to find, that the
Olynthian and Chalkidian confederates became the object of his
direct hostility in 350 B. C. He raised pretences for attack against one
or other of these cities separately; avoiding to deal with the
confederacy as a whole, and disclaiming, by special envoys,[702] all
purposes injurious to Olynthus.
Probably the philippizing party in that city may have dwelt upon
this disclaimer as satisfactory, and given as many false assurances
about the purposes of Philip, as we shall find Æschines hereafter
uttering at Athens. But the general body of citizens were not so
deceived. Feeling that the time had come when it was prudent to
close with the previous Athenian overtures, they sent envoys to
Athens to propose alliance and invite coöperation against Philip.
Their first propositions were doubtless not couched in the language
of urgency and distress. They were not as yet in any actual danger;
their power was great in reality, and estimated at its full value
abroad; moreover, as prudent diplomatists, they would naturally
overstate their own dignity and the magnitude of what they were
offering. Of course they would ask for Athenian aid to be sent to
Chalkidikê—since it was there that the war was being carried on; but
they would ask for aid in order to act energetically against the](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-38-320.jpg)
![common enemy, and repress the growth of his power—not to avert
immediate danger menacing Olynthus.
There needed no discussion to induce the Athenians to accept
this alliance. It was what they had long been seeking, and they
willingly closed with the proposition. Of course they also promised—
what indeed was almost involved in the acceptance—to send a force
to coöperate against Philip in Chalkidikê. On this first recognition of
Olynthus as an ally—or perhaps shortly afterwards, but before
circumstances had at all changed—Demosthenes delivered his
earliest Olynthiac harangue. Of the three memorable compositions
so denominated, the earliest is, in my judgment, that which stands
second in the edited order. Their true chronological order has long
been, and still is, matter of controversy; the best conclusion which I
can form, is that the first and the second are erroneously placed, but
that the third is really the latest;[703] all of them being delivered
during the six or seven last months of 350 B. C.
In this his earliest advocacy (the speech which stands printed as
the second Olynthiac), Demosthenes insists upon the advantageous
contingency which has just turned up for Athens, through the
blessing of the gods, in the spontaneous tender of so valuable an
ally. He recommends that aid be despatched to the new ally; the
most prompt and effective aid will please him the best. But this
recommendation is contained in a single sentence, in the middle of
the speech; it is neither repeated a second time, nor emphatically
insisted upon, nor enlarged by specification of quantity or quality of
aid to be sent. No allusion is made to necessities or danger of
Olynthus, nor to the chance that Philip might conquer the town; still
less to ulterior contingencies, that Philip, if he did conquer it, might
carry the seat of war from his own coasts to those of Attica. On the
contrary, Demosthenes adverts to the power of the Olynthians—to
the situation of their territory, close on Philip’s flanks—to their fixed
resolution that they will never again enter into amity or compromise
with him—as evidences how valuable their alliance will prove to
Athens; enabling her to prosecute with improved success the war](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-39-320.jpg)
![the rights of other Greeks—that you now shrink from personal
service and payment of money for the defence of your own
possessions. You, who have so often rescued others, can now sit still
after having lost so much of your own! I wonder you do not look
back to that conduct of yours which has brought your affairs into
this state of ruin, and ask yourselves how they can ever mend, while
such conduct remains unchanged. It was much easier at first to
preserve what we once had, than to recover it now that it is lost; we
have nothing now left to lose—we have everything to recover. This
must be done by ourselves, and at once; we must furnish money, we
must serve in person by turns; we must give our generals means to
do their work well, and then exact from them a severe account
afterwards—which we cannot do so long as we ourselves will neither
pay nor serve. We must correct that abuse which has grown up,
whereby particular symmories in the state combine to exempt
themselves from burdensome duties, and to cast them all unjustly
upon others. We must not only come forward vigorously and
heartily, with person and with money, but each man must embrace
faithfully his fair share of patriotic obligation.”
Such are the main points of the earliest discourse delivered by
Demosthenes on the subject of Olynthus. In the mind of modern
readers, as in that of the rhetor Dionysius,[704] there is an
unconscious tendency to imagine that these memorable pleadings
must have worked persuasion, and to magnify the efficiency of their
author as an historical and directing person. But there are no facts
to bear out such an impression. Demosthenes was still comparatively
a young man—thirty-one years of age; admired indeed for his
speeches and his compositions written to be spoken by others;[705]
but as yet not enjoying much practical influence. It is moreover
certain—to his honor—that he described and measured foreign
dangers before they were recognized by ordinary politicians; that he
advised a course, energetic and salutary indeed, but painful for the
people to act upon, and disagreeable for recognized leaders to
propose; that these leaders, such as Eubulus and others, were
accordingly adverse to him. The tone of Demosthenes in these](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-41-320.jpg)
![speeches is that of one who feels that he is contending against
heavy odds—combating an habitual and deep-seated reluctance. He
is an earnest remonstrant—an opposition speaker—contributing to
raise up gradually a body of public sentiment and conviction which
ultimately may pass into act. His rival Eubulus is the ministerial
spokesman, whom the majority, both rich and poor, followed; a man
not at all corrupt (so far as we know), but of simple conservative
routine, evading all painful necessities and extraordinary
precautions; conciliating the rich by resisting a property-tax, and the
general body of citizens by refusing to meddle with the Theôric
expenditure.
The Athenians did not follow the counsel of Demosthenes. They
accepted the Olynthian alliance, but took no active step to coöperate
with Olynthus in the war against Philip.[706] Such unhappily was their
usual habit. The habit of Philip was the opposite. We need no
witness to satisfy us, that he would not slacken in his attack—and
that in the course of a month or two, he would master more than
one of the Chalkidic cities, perhaps defeating the Olynthian forces
also. The Olynthians would discover that they had gained nothing by
their new allies; while the philippizing party among themselves
would take advantage of the remissness of Athens to depreciate her
promises as worthless or insincere, and to press for accommodation
with the enemy.[707] Complaints would presently reach Athens,
brought by fresh envoys from the Olynthians, and probably also from
the Chalkidians, who were the greatest sufferers by Philip’s arms.
They would naturally justify this renewed application by expatiating
on the victorious progress of Philip; they would now call for aid more
urgently, and might even glance at the possibility of Philip’s conquest
of Chalkidikê. It was in this advanced stage of the proceedings that
Demosthenes again exerted himself in the cause, delivering that
speech which stands first in the printed order of the Olynthiacs.
Here we have, not a Philippic, but a true Olynthiac. Olynthus is
no longer part and parcel of a larger theme, upon the whole of
which Demosthenes intends to discourse; but stands out as the](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-42-320.jpg)
![prominent feature and specialty of his pleading. It is now
pronounced to be in danger and in pressing need of succor;
moreover its preservation is strenuously pressed upon the Athenians,
as essential to their own safety. While it stands with its confederacy
around it, the Athenians can fight Philip on his own coast; if it falls,
there is nothing to prevent him from transferring the war into Attica,
and assailing them on their own soil.[708] Demosthenes is wound up
to a higher pitch of emphasis, complaining of the lukewarmness of
his countrymen on a crisis which calls aloud for instant action.[709]
He again urges that a vote be at once passed to assist Olynthus, and
two armaments despatched as quickly as possible; one to preserve
to Olynthus her confederate cities—the other, to make a diversion by
simultaneous attack on Philip at home. Without such two-fold aid
(he says) the cities cannot be preserved.[710] Advice of aid generally
he had already given, though less emphatically, in his previous
harangue; but he now superadds a new suggestion—that Athenian
envoys shall be sent thither, not merely to announce the coming of
the force, but also to remain at Olynthus and watch over the course
of events. For he is afraid, that unless such immediate
encouragement be sent, Philip may, even without the tedious
process of a siege, frighten or cajole the Olynthian confederacy into
submission; partly by reminding them that Athens had done nothing
for them, and by denouncing her as a treacherous and worthless
ally.[711] Philip would be glad to entrap them into some plausible
capitulation; and though they knew that they could have no security
for his keeping the terms of it afterwards, still he might succeed, if
Athens remained idle. Now, if ever, was the time for Athenians to
come forward and do their duty without default; to serve in person
and submit to the necessary amount of direct taxation. They had no
longer the smallest pretence for continued inaction; the very
conjuncture which they had so long desired, had turned up of itself
—war between Olynthus and Philip, and that too upon grounds
special to Olynthus—not at the instigation of Athens.[712] The
Olynthian alliance had been thrown in the way of Athens by the
peculiar goodness of the gods, to enable her to repair her numerous
past errors and short-comings. She ought to look well and deal](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-43-320.jpg)
![rightly with these last remaining opportunities, in order to wipe off
the shame of the past; but if she now let slip Olynthus and suffer
Philip to conquer it, there was nothing else to hinder him from
marching whithersoever he chose. His ambition was so insatiable,
his activity so incessant, that, assuming Athens to persist in her
careless inaction, he would carry the war forward from Thrace into
Attica—of which the ruinous consequences were but too clear.[713]
“I maintain (continued the orator) that you ought to lend aid at
the present crisis in two ways; by preserving for the Olynthians their
confederated cities, through a body of troops sent out for that
express purpose—and by employing at the same time other troops
and other triremes to act aggressively against Philip’s own coast. If
you neglect either of these measures, I fear that the expedition will
fail. As to the pecuniary provision, you have already more money
than any other city, available for purposes of war; if you will pay that
money to soldiers on service, no need exists for farther provision—if
not, then need exists; but above all things, money must be found.
What then! I shall be asked—are you moving that the Theôric fund
shall be devoted to war purposes? Not I, by Zeus. I merely express
my conviction, that soldiers must be equipped, and that receipt of
public money, and performance of public service, ought to go hand
in hand; but your practice is to take the public money, without any
such condition, for the festivals. Accordingly, nothing remains except
that all should directly contribute; much, if much is wanted—little, if
little will suffice. Money must be had; without it, not a single
essential step can be taken. There are moreover different ways and
means suggested by others. Choose any one of these which you
think advantageous; and lay a vigorous grasp on events while the
opportunity still lasts.”[714]
It was thus that Demosthenes addressed his countrymen some
time after the Olynthians had been received as allies, but before any
auxiliary force had been either sent to them or even positively
decreed—yet when such postponement of action had inspired them
with mistrust, threatening to throw them, even without resistance,](https://image.slidesharecdn.com/16125-250420082445-ec6a48e5/85/Solution-Manual-for-Contemporary-Auditing-Real-Issues-and-Cases-8th-Edition-by-Knapp-44-320.jpg)
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- 5. 2 Case 1.1 Enron Corporation scope of professional services that Andersen provided to Enron. Critics charged that the enormous consulting fees Enron paid Andersen impaired the audit firm’s independence. The second issue stemmed from Andersen’s alleged role in Enron’s aggressive accounting and financial reporting treatments for its SPE-related transactions. Finally, the most embarrassing issue was the massive effort of Andersen’s Houston office to shred Enron audit documents, which eventually led to the demise of the firm.
- 6. Case 1.1 Enron Corporation 3 Enron Corporation—Key Facts 1. Throughout Arthur E. Andersen’s life, “Think straight, talk straight” served as a guiding principle for himself and Arthur Andersen & Co., the accounting firm that he founded. 2. Arthur Andersen’s reputation for honesty and integrity resulted in Arthur Andersen & Co. gaining stature in the business community and growing into one of the nation’s leading accounting firms by the time of his death in 1947. 3. Leonard Spacek succeeded Arthur Andersen as managing partner of Arthur Andersen & Co. in 1947 and continued Andersen’s legacy of lobbying for more rigorous accounting, auditing, and ethical standards for the public accounting profession. 4. When Spacek retired in 1973, Arthur Andersen & Co. was one of the largest and, arguably, the most prominent accounting firm worldwide 5. The predecessor of Enron Corporation was an Omaha-based natural gas company created in 1930; steady growth in profits and sales and numerous acquisitions allowed Enron to become the largest natural gas company in the United States by the mid-1980s. 6. During the 1990s, Kenneth Lay, Enron’s CEO, and his top subordinate, Jeffrey Skilling, transformed the company from a conventional natural gas supplier into an energy trading company. 7. Lay and Skilling placed a heavy emphasis on “strong earnings performance” and on increasing Enron’s stature in the business world. 8. Enron executives used hundreds of SPEs (special purpose entities) to arrange large and complex related party transactions that served to strengthen Enron’s reported financial condition and operating results. 9. During 2001, Enron’s financial condition deteriorated rapidly after many of the company’s SPE transactions unraveled; in December 2001, Enron filed for bankruptcy. 10. Following Enron’s collapse, the business press and other critics began searching for parties to hold responsible for what, at the time, was the nation’s largest corporate bankruptcy. 11. Criticism of Andersen’s role in the Enron debacle focused on three key issues: the large amount of consulting revenue the firm earned from Enron, the firm’s role in many of Enron’s SPE transactions, and the efforts of Andersen personnel to destroy Enron audit documents. 12. Andersen’s felony conviction in June 2002 effectively ended the firm’s long and proud history in the public accounting profession. Instructional Objectives
- 7. 4 Case 1.1 Enron Corporation 1. To provide students with a brief overview of the history and development of the public accounting profession in the United States. 2. To examine the “scope of services” issue, that is, the threats to auditor independence posed by audit firms providing consulting services to their audit clients. 3. To examine the extent to which independent auditors should be involved in their clients’ decisions regarding important accounting and financial reporting issues. 4. To review recent recommendations made to strengthen the independent audit function. 5. To review auditors’ responsibilities regarding the preparation and retention of audit workpapers. Suggestions for Use I typically begin an auditing course by discussing a major and widely publicized audit case. Clearly, the Enron case satisfies those criteria. The purpose of presenting such a case early in the semester is not only to acquaint students with the nature of auditing but also to make them aware of why the independent audit function is so important. Many accounting students are not well acquainted with the nature of the independent auditor’s work environment, nor are they generally familiar with the critical role the independent audit function plays in our national economy. Hopefully, cases such as this one provide students with a “reality jolt” that will stimulate their interest in auditing and, possibly, make them more inclined to pursue a career in the auditing field. The Enron case also serves as a good starting point for an auditing course since it provides students with an overview of how the auditing profession developed and evolved in the United States over the past century. The vehicle used to present this overview is the history of Arthur Andersen & Co. You will find that the case attempts to contrast the “think straight, talk straight” philosophy of Arthur E. Andersen, the founder of the Andersen firm, with the more business- oriented approach to auditing that his predecessors adopted in the latter decades of the twentieth century. Consider asking one or more of your students to interview former Andersen personnel who are graduates of your school. I have found that many former Andersen partners and employees are more than willing to discuss their former employer and the series of events that led to the firm’s sudden collapse. These individuals typically suggest that federal prosecutors’ efforts to “bring down” the entire Andersen firm as a result of the document-shredding incident was not only unnecessary but also inequitable, an argument that many members of the accounting profession— including academics—find hard to refute. Suggested Solutions to Case Questions 1. A large number of parties bear some degree of direct or indirect responsibility for the problems that the Enron fiasco ultimately posed for the public accounting profession and the independent audit function. The following bullet items identify several of these parties [see bold-facing] and the role they played in the Enron drama.
- 8. Case 1.1 Enron Corporation 5 •The leadership of the Andersen firm that allegedly focused too much attention on practice development activities at the expense of the public service ideal embraced by Arthur E. Andersen and other early leaders of the profession. •Impertinent corporate executives who insisted on aggressive, if not illegal, accounting and financial reporting treatments. •Individual auditors who made shortsighted and/or unprofessional decisions that tainted the perceived integrity of all auditors. •Regulatory authorities that failed to take proactive measures to limit the ability of rogue corporate executives, accountants, and auditors to circumvent their professional responsibilities. •Academics who failed to goad their students into internalizing the accounting profession’s high ethical principles. 2. One approach to answering this question is to review with your students the eight specific types of non-audit services that the Sarbanes-Oxley Act of 2002 prohibited auditors of public companies from providing to their clients. Listed next are those eight non-audit services. •Bookkeeping or other services related to the accounting records or financial statements of the audit client •Financial information systems design and implementation •Appraisal or valuation services, fairness opinions, or contribution-in-kind reports •Actuarial services •Internal audit outsourcing services •Management functions or human resources functions •Broker or dealer, investment adviser, or investment banking services •Legal services and expert services unrelated to the audit Many of these services would eventually place auditors in situations in which they had to effectively audit their own work. For example, auditors providing “financial information systems design services” could be forced to evaluate the integrity of an accounting system they had designed for an audit client. Providing “human resources” functions, such as executive search services, to audit clients could threaten auditors’ independence by causing them to evaluate the work product of high- ranking client employees who they had recommended that a client hire. An audit firm that provided some type of “expert service unrelated to the audit” could find itself in a dicey situation if the given service proved to be less than expert quality. For example, if an audit firm recommended to a client a strategy for dealing with a labor strike or other work stoppage and that strategy proved ineffective, client executives would potentially have some degree of leverage to extract concessions from the audit firm during subsequent audit engagements. 3. Given the assumption that the Powers Report excerpts included in Exhibit 3 are accurate, one could plausibly argue that Arthur Andersen violated several of the ten generally accepted auditing standards, including the following: •Independence (second general standard): by becoming too involved in Enron’s decisions for important accounting and financial reporting treatments, the Arthur Andersen auditors may have forfeited some degree of objectivity when they reviewed those decisions during the course of subsequent audits.
- 9. 6 Case 1.1 Enron Corporation •Due professional care (third general standard): any violation of one of the other nine GAAS effectively results in a violation of the catchall due professional care standard. •Planning and supervision (first fieldwork standard): a reliable quality control function, including proper audit planning decisions and effective supervision/review during an audit, should result in the identification of problematic situations in which auditors have become too involved in client accounting and financial reporting decisions. •Internal control evaluation (second fieldwork standard): one could argue that given the critical and seemingly apparent defects in Enron’s internal controls, Andersen auditors failed to gain a “sufficient understanding” of the client’s internal control system. •Sufficient competent evidential matter (third fieldwork standard—under the current third fieldwork standard the auditor must obtain “sufficient appropriate” audit evidence): many critics suggest that Andersen’s deep involvement in Enron’s aggressive accounting and financial reporting treatments may have precluded the firm from collecting sufficient competent evidence to support the audit opinions issued on the company’s financial statements (that is, the Andersen auditors may have been less than objective in reviewing/corroborating the client’s aggressive accounting and financial reporting treatments). •Reporting (fourth reporting standard): If Andersen did not maintain its independence and objectivity while auditing Enron, the audit firm should have issued a disclaimer of opinion on the company’s periodic financial statements. 4. Note: The PCAOB has established the documentation requirements for the audits of publicly owned companies in PCAOB Auditing Standard No. 3, “Audit Documentation.” The documentation requirements that pertain to audits of other organizations can be found in Statement on Auditing Standards No. 103, “Audit Documentation,” that became effective for audits of financial statements for periods ending on or after December 15, 2006. SAS No. 103: This standard has been integrated into AU Section 339. Paragraph .03 of AU 339 provides the following general guidance to independent auditors. “The auditor must prepare audit documentation in connection with each engagement in sufficient detail to provide a clear understanding of the work performed (including the nature, timing, extent, and results of audit procedures performed), the audit evidence obtained and its source, and the conclusions reached. Audit documentation: a. Provides the principal support for the representation in the auditor’s report that the auditor performed the audit in accordance with generally accepted auditing standards. b. Provides the principal support for the opinion expressed regarding the financial information or the assertion to the effect that an opinion cannot be expressed.” Paragraph .32 of AU 339 notes that the “auditor should adopt reasonable procedures to retain and access audit documentation for a period of time sufficient to meet the needs of his or her practice and to satisfy any applicable legal or regulatory requirements for records retention.” This paragraph goes on to note that the retention period for audit documentation “should not be shorter than five years from the report release date.”
- 10. Case 1.1 Enron Corporation 7 PCAOB No. 3: This standard defines audit documentation as “the written record of the basis for the auditor’s conclusions that provides the support for the auditor’s representations, whether those representations are contained in the auditor’s report or otherwise” (para. .02). “Examples of audit documentation include memoranda, confirmations, correspondence, schedules, audit programs, and letters of representation. Audit documentation may be in the form of paper, electronic files, or other media” (para. .04). PCAOB No. 3 notes that there are three key objectives of audit documentation: “demonstrate that the engagement complied with the standards of the PCAOB, support the basis for the auditor’s conclusions concerning every major relevant financial statement assertion, and demonstrate that the underlying accounting records agreed or reconciled with the financial statements” (para. .05). This standard establishes an explicit benchmark that auditors can use to determine whether audit documentation is “sufficient.” “Audit documentation must contain sufficient information to enable an experienced auditor, having no previous connection with the engagement to: a) understand the nature, timing, extent, and results of the procedures performed, evidence obtained, and conclusions reached, and b) determine who performed the work and the date such work was completed as well as the person who reviewed the work and the date of such review” (para. .06). [Note: SAS No. 103 has a similar requirement—see AU 339.10.] PCAOB No. 3 generally requires auditors to retain audit documentation for seven years from the date the auditor gave the client permission to use the relevant audit report in connection with the issuance of a set of financial statements. Regardless of whether an audit client is a publicly owned company or another type of organization, the audit workpapers are the property of the audit firm. 5. During and following the Enron debacle, wide-ranging recommendations were made by many parties to strengthen the independent audit function. Listed next are several of these recommendations, including certain measures that were incorporated in the Sarbanes-Oxley Act of 2002. •Establish an independent audit agency. Some critics have suggested that to “cure” the paradoxical nature of the auditor-client relationship (that is, to eliminate the economic leverage that clients have on their auditors), the independent audit function should be performed by a government agency comparable to the Internal Revenue Service. •Permit audit firms to provide only audit, reviews, compilations, and other “pure” attestation services to their clients, that is, prohibit the provision of all non-audit services to audit clients. (As mentioned in the suggested solution to Question 2, Sarbanes-Oxley prohibits audit firms from providing eight specific consulting services to their audit clients.) •Require that audit clients periodically rotate or change their independent audit firms. (Sarbanes-Oxley requires that engagement and review partners be rotated every five years on audit engagements involving public companies.) •Establish an independent board to oversee the audits of public companies. (Sarbanes-Oxley resulted in the creation of the Public Company Accounting Oversight Board “to oversee the audit of public companies that are subject to the securities laws . . .”) •Require independent auditors to work more closely with their clients’ audit committees. (Section 204 of Sarbanes-Oxley is entitled “Auditor Reports to Audit Committees” and delineates the information that auditors should exchange with a client’s audit committee, including any alternative accounting treatments “preferred” by the auditors.) •Establish more explicit statutory requirements that prohibit client executives from interfering with the work of their independent auditors. (Section 303 of Sarbanes-Oxley is entitled “Improper
- 11. 8 Case 1.1 Enron Corporation Influence on Conduct of Audits.” This section of the federal law makes it unlawful for corporate executives “to fraudulently influence, coerce, manipulate, or mislead” their company’s independent auditors.”) 6. Many critics of our profession suggest that beginning in the latter part of the twentieth century certain accounting firms gradually turned away from the public service ideal embraced by Arthur E. Andersen and other early pioneers within the profession and, instead, adopted a somewhat mercenary attitude toward the independent audit function. A key factor that certainly accelerated this trend was the profession’s decision in the 1970s, with the goading of the Federal Trade Commission and the courts, to drop bans on competitive bidding, client solicitation, and other ethical rules that effectively restrained competition among audit firms. The elimination of those rules enticed audit firms to begin competing against each other for the finite number of large corporate audits. Practices such as “lowballing” to gain such clients allegedly resulted in audit firms “cutting corners” on audits. Likewise, audit firms began vigorously marketing non-audit services to supplement their suddenly low-margin audit services. A related factor that allegedly contributed to the move away from the public service ideal was the growing tendency for large audit firms to consider strong marketing skills, as opposed to strong technical skills, as the key criterion in determining which individuals would be promoted to partner. Finally, pure and simple greed is a factor that motivates most of us. The large and lucrative market for business consulting services over the past few decades may have enticed audit firms to focus more on becoming “strategic business advisers” to their clients rather than placing an unrelenting emphasis on the quality of their audits of those clients’ financial statements. 7. In the spring of 2000, the SEC began requiring public companies to have their quarterly financial reports (typically included in Form 10-Q filings) reviewed by their independent auditors. (Note: AU Section 722, “Interim Financial Information,” provides guidance to auditors on the “nature, timing, and extent of procedures to be applied” to a client’s interim financial information.) Should quarterly reports be audited? In fact, many parties have advocated an even more extreme measure, namely, that independent auditors continually monitor and report on the integrity of their clients’ financial disclosures. In the current environment when information is distributed so readily and widely to millions of investors and other decision makers, the validity or utility of independent audits that focus on discrete time periods has been challenged. As recent history has proven, by the time that auditors issue their reports on a client’s financial statements for some discrete period, the “horse may already be out of the barn”—the “horse” in this case being the damage to investors and other parties resulting from oversights and other misrepresentations in the given financial statements. This problem could be cured, or, at least, mitigated to some extent, by requiring auditors to provide real-time disclosures of potential problems in their clients’ financial records.
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- 13. of the god against the despoilers of the Delphian temple; while the Thessalians also, forming the best cavalry in Greece and fighting with earnest valor, gave decisive advantage to his cause. The defeat of the forces of Onomarchus and Lykophron was complete. Six thousand of them are said to have been slain, and three thousand to have been taken prisoners; the remainder escaped either by flight, or by throwing away their arms, and swimming off to the Athenian ships. Onomarchus himself perished. According to one account, he was slain by his own mercenaries, provoked by his cowardice: according to another account, he was drowned—being carried into the sea by an unruly horse, and trying to escape to the ships. Philip caused his dead body to be crucified, and drowned all the prisoners as men guilty of sacrilege.[625] This victory procured for Philip great renown as the avenger of the Delphian god—and became an important step in his career of aggrandizement. It not only terminated the power of the Phokians north of Thermopylæ, but also finally crushed the powerful dynasty of Pheræ in Thessaly. Philip laid siege to that city, upon which Lykophron and Peitholaus, surrounded by an adverse population and unable to make any long defence, capitulated, and surrendered it to him; retiring with their mercenaries, two thousand in number, into Phokis.[626] Having obtained possession of Pheræ and proclaimed it a free city, Philip proceeded to besiege the neighboring town of Pagasæ, the most valuable maritime station in Thessaly. How long Pagasæ resisted, we do not know; but long enough to send intimation to Athens, with entreaties for succor. The Athenians, alarmed at the successive conquests of Philip, were well-disposed to keep this important post out of his hands, which their naval power fully enabled them to do. But here again (as in the previous examples of Pydna, Potidæa, and Methônê), the aversion to personal service among the citizens individually—and the impediments as to apportionment of duty or cost, whenever actual outgoing was called for—produced the untoward result, that though an expedition was voted and despatched, it did not arrive in time.[627] Pagasæ surrendered and came into the power of Philip; who fortified and
- 14. garrisoned it for himself, thus becoming master of the Pagasæan gulf, the great maritime inlet of Thessaly. Philip was probably occupied for a certain time in making good his dominion over Thessaly. But as soon as sufficient precautions had been taken for this purpose, he sought to push his advantage over the Phokians by invading them in their own territory. He marched to Thermopylæ, still proclaiming as his aim the liberation of the Delphian temple and the punishment of its sacrilegious robbers; while he at the same time conciliated the favor of the Thessalians by promising to restore to them the Pylæa, or half-yearly Amphiktyonic festival at Thermopylæ, which the Phokians had discontinued.[628] The Phokians, though masters of this almost inexpugnable pass, seemed to have been so much disheartened by their recent defeat, and the death of Onomarchus, that they felt unable to maintain it long. The news of such a danger, transmitted to Athens, excited extraordinary agitation. The importance of defending Thermopylæ— and of prohibiting the victorious king of Macedon from coming to coöperate with the Thebans on the southern side of it,[629] not merely against the Phokians, but probably also against Attica—were so powerfully felt, that the usual hesitations and delay of the Athenians in respect to military expeditions were overcome. Chiefly from this cause—but partly also, we may suppose, from the vexatious disappointment recently incurred in the attempt to relieve Pagasæ—an Athenian armament under Nausikles (not less than five thousand foot and four hundred horse, according to Diodorus[630]) was fitted out with not less vigor and celerity than had been displayed against the Thebans in Eubœa, seven years before. Athenian citizens shook off their lethargy, and promptly volunteered. They reached Thermopylæ in good time, placing the pass in such a condition of defence that Philip did not attack it at all. Often afterwards does Demosthenes,[631] in combating the general remissness of his countrymen when military exigencies arose, remind them of this unwonted act of energetic movement, crowned with complete effect. With little or no loss, the Athenians succeeded in guarding both themselves and their allies against a very menacing
- 15. contingency, simply by the promptitude of their action. The cost of the armament altogether was more than two hundred talents; and from the stress which Demosthenes lays on that portion of the expense which was defrayed by the soldiers privately and individually,[632] we may gather that these soldiers (as in the Sicilian expedition under Nikias[633]) were in considerable proportion opulent citizens. Among a portion of the Grecian public, however, the Athenians incurred obloquy as accomplices in the Phokian sacrilege, and enemies of the Delphian god.[634] But though Philip was thus kept out of Southern Greece, and the Phokians enabled to reorganize themselves against Thebes, yet in Thessaly and without the straits of Thermopylæ, Macedonian ascendency was henceforward an uncontested fact. Before we follow his subsequent proceedings, however, it will be convenient to turn to events both in Phokis and in Peloponnesus. In the depressed condition of the Phokians after the defeat of Onomarchus, they obtained reinforcement not only from Athens, but also from Sparta (one thousand men), and from the Peloponnesian Achæans (two thousand men[635]). Phayllus, the successor (by some called brother) of Onomarchus, put himself again in a condition of defence. He had recourse a third time to that yet unexhausted store —the Delphian treasures and valuables. He despoiled the temple to a greater extent than Philomelus, and not less than Onomarchus; incurring aggravated odium from the fact, that he could not now supply himself without laying hands on offerings of conspicuous magnificence and antiquity, which his two predecessors had spared. It was thus that the splendid golden donatives of the Lydian king Krœsus were now melted down and turned into money; one hundred and seventeen bricks or ingots of gold, most of them weighing two talents each; three hundred and sixty golden goblets, together with a female statue three cubits high, and a lion, of the same metal—said to have weighed in the aggregate thirty talents. [636] The abstraction of such ornaments, striking and venerable in the eyes of the numerous visitors of the temple, was doubtless
- 16. deeply felt among the Grecian public. And the indignation was aggravated by the fact that beautiful youths or women, favorites of Onomarchus or Phayllus, received some of the most precious gifts, and wore the most noted ornaments, which had decorated the temple—even the necklaces of Helen and Eriphylê. One woman, a flute-player named Bromias, not only received from Phayllus a silver cup and a golden wreath (the former dedicated in the temple by the Phokæans, the latter by the Peparethians), but was also introduced by him, in his capacity of superintendent of the Pythian festival, to contend for the prize in playing the sacred Hymn. As the competitors for such prize had always been men, the assembled crowd so loudly resented the novelty, that Bromias was obliged to withdraw.[637] Moreover profuse largesses, and flagrant malversation, became more notorious than ever.[638] The Phokian leaders displayed with ostentation their newly-acquired wealth, and either imported for the first time bought slaves, or at least greatly multiplied the pre-existing number. It had before been the practice in Phokis, we are told, for the wealthy men to be served by the poor youthful freemen of the country; and complaints arose among the latter class that their daily bread was thus taken away.[639] Notwithstanding the indignation excited by these proceedings not only throughout Greece, but even in Phokis itself,—Phayllus carried his point of levying a fresh army of mercenaries, and of purchasing new alliances among the smaller cities. Both Athens and Sparta profited more or less by the distribution; though the cost of the Athenian expedition to Thermopylæ, which rescued the Phokians from destruction, seems clearly to have been paid by the Athenians themselves.[640] Phayllus carried on war for some time against both the Bœotians and Lokrians. He is represented by Diodorus to have lost several battles. But it is certain that the general result was not unfavorable to him; that he kept possession of Orchomenus in Bœotia; and that his power remained without substantial diminution. [641]
- 17. The stress of war seems, for the time, to have been transferred to Peloponnesus, whither a portion both of the Phokian and Theban troops went to coöperate. The Lacedæmonians had at length opened their campaign against Megalopolis, of which I have already spoken as having been debated before the Athenian public assembly. Their plan seems to have been formed some months before, when Onomarchus was at the maximum of his power, and when Thebes was supposed to be in danger; but it was not executed until after his defeat and death, when the Phokians, depressed for the time, were rescued only by the prompt interference of Athens,—and when the Thebans had their hands comparatively free. Moreover, the Theban division which had been sent into Asia under Pammenes a year or two before, to assist Artabazus, may now be presumed to have returned; especially as we know that no very long time afterwards, Artabazus appears as completely defeated by the Persian troops,— expelled from Asia, and constrained to take refuge, together with his brother-in-law Memnon, under the protection of Philip.[642] The Megalopolitans had sent envoys to entreat aid from Athens, under the apprehension that Thebes would not be in a condition to assist them. It may be doubted whether Athens would have granted their prayer, in spite of the advice of Demosthenes,—but the Thebans had now again become strong enough to uphold with their own force their natural allies in Peloponnesus. Accordingly, when the Lacedæmonian army under king Archidamus invaded the Megalopolitan territory, a competent force was soon brought together to oppose them; furnished partly by the Argeians,—who had been engaged during the preceding year in a border warfare with Sparta, and had experienced a partial defeat at Orneæ,[643]—partly by the Sikyonians and Messenians, who came in full muster. Besides this, the forces on both sides from Bœotia and Phokis were transferred to Peloponnesus. The Thebans sent four thousand foot, and five hundred horse, under Kephision, to the aid of Megalopolis; while the Spartans not only recalled their own troops from Phokis, but also procured three thousand of the mercenaries in the service of Phayllus, and one hundred and fifty Thessalian horse
- 18. from Likophron, the expelled despot of Pheræ. Archidamus received his reinforcements, and got together his aggregate forces earlier than the enemy. He advanced first into Arcadia, where he posted himself near Mantinea, thus cutting off the Argeians from Megalopolis; he next invaded the territory of Argos, attacked Orneæ, and defeated the Argeians in a partial action. Presently the Thebans arrived, and effected a junction with their Argeian and Arcadian allies. The united force was greatly superior in number to the Lacedæmonians; but such superiority was counterbalanced by the bad discipline of the Thebans, who had sadly declined on this point during the interval of ten years since the death of Epaminondas. A battle ensued, partially advantageous to the Lacedæmonians; while the Argeians and Arcadians chose to go home to their neighboring cities. The Lacedæmonians also, having ravaged a portion of Arcadia, and stormed the Arcadian town of Helissus, presently recrossed their own frontier and returned to Sparta. They left, however, a division in Arcadia under Anaxander, who, engaging with the Thebans near Telphusa, was worsted with great loss and made prisoner. In two other battles, also, the Thebans were successively victorious; in a third, they were vanquished by the Lacedæmonians. With such balanced and undecided success was the war carried on until, at length, the Lacedæmonians proposed and concluded peace with Megalopolis. Either formally, or by implication, they were forced to recognize the autonomy of that city; thus abandoning, for the time at least, their aggressive purposes, which Demosthenes had combated and sought to frustrate before the Athenian assembly. The Thebans on their side returned home, having accomplished their object of protecting Megalopolis and Messênê; and we may presume that the Phokian allies of Sparta were sent home also.[644] The war between the Bœotians and Phokians had doubtless slackened during this episode in Peloponnesus; but it still went on in a series of partial actions, on the river Kephissus, at Koroneia, at Abæ in Phokis, and near the Lokrian town of Naryx. For the most part, the Phokians are said to have been worsted; and their commander, Phayllus, presently died of a painful disease,—the
- 19. suitable punishment (in the point of view of a Grecian historian[645]) for his sacrilegious deeds. He left as his successor Phalækus, a young man, son of Onomarchus, under the guardianship and advice of an experienced friend named Mnaseas. But Mnaseas was soon surprised at night, defeated, and slain, by the Thebans while Phalækus, left to his own resources, was defeated in two battles near Chæroneia, and was unable to hinder his enemies from ravaging a large part of the Phokian territory.[646] We know the successive incidents of this ten years’ Sacred War only from the meagre annals of Diodorus,—whose warm sympathy in favor of the religious side of the question seems to betray him into exaggeration of the victories of the Thebans, or at least into some omission of counterbalancing reverses. For in spite of these successive victories, the Phokians were noway put down, but remained in possession of the Bœotian town of Orchomenus; moreover, the Thebans became so tired out and impoverished by the war, that they confined themselves presently to desultory incursions and skirmishes.[647] Their losses fell wholly upon their own citizens and their own funds; while the Phokians fought with foreign mercenaries and with the treasures of the temple.[648] The increasing poverty of the Thebans even induced them to send an embassy to the Persian king, entreating pecuniary aid; which drew from him a present of three hundred talents. As he was at this time organizing a fresh expedition on an immense scale, for the reconquest of Phenicia and Egypt, after more than one preceding failure, he required Grecian soldiers as much as the Greeks required his money. Hence we shall see presently that the Thebans were able to send him an equivalent. In the war just recounted on the Laconian and Arcadian frontier, the Athenians had taken no part. Their struggle with Philip had been becoming from month to month more serious and embarrassing. By occupying in time the defensible pass of Thermopylæ, they had indeed prevented him both from crushing the Phokians and from meddling with the Southern states of Greece. But the final battle
- 20. wherein he had defeated Onomarchus, had materially increased both his power and his military reputation. The numbers on both sides were very great; the result was decisive, and ruinous to the vanquished; moreover, we cannot doubt that the Macedonian phalanx, with the other military improvements and manœuvres which Philip had been gradually organizing since his accession, was now exhibited in formidable efficiency. The King of Macedon had become the ascendent soldier and potentate, hanging on the skirts of the Grecian world, exciting fears or hopes, or both at once, in every city throughout its limits. In the first Philippic of Demosthenes, and in his oration against Aristokrates, (delivered between midsummer 352 B. C. and midsummer 351 B. C.), we discern evident marks of the terrors which Philip had come to inspire, within a year after his repulse from Thermopylæ, to reflecting Grecian politicians. “It is impossible for Athens (says the orator[649]) to provide any land- force competent to contend in the field against that of Philip.” The reputation of his generalship and his indefatigable activity was already everywhere felt; as well as that of the officers and soldiers, partly native Macedonians, partly chosen Greeks, whom he had assembled round him,[650]—especially the lochages or front-rank men of the phalanx and the hypaspistæ. Moreover, the excellent cavalry of Thessaly became embodied from henceforward as an element in the Macedonian army; since Philip had acquired unbounded ascendency in that country, from his expulsion of the Pheræan despots and their auxiliaries the Phokians. The philo- Macedonian party in the Thessalian cities had constituted him federal chief (or in some sort Tagus) of the country, not only enrolling their cavalry in his armies, but also placing at his disposal the customs and market-dues, which formed a standing common fund for supporting the Thessalian collective administration.[651] The financial means of Philip, for payment of his foreign troops, and prosecution of his military enterprises, were thus materially increased. But besides his irresistible land-force, Philip had now become master of no inconsiderable naval power also. During the early years
- 21. of the war, though he had taken not only Amphipolis, but also all the Athenian possessions on the Macedonian coast, yet the exports from his territory had been interrupted by the naval force of Athens, so as to lessen seriously the produce of his export duties.[652] But he had now contrived to get together a sufficient number of armed ships and privateers, if not to ward off such damage from himself, at least to retaliate it upon Athens. Her navy, indeed, was still incomparably superior, but the languor and remissness of her citizens refused to bring it out with efficiency; while Philip had opened for himself a new avenue to maritime power by his acquisition of Pheræ and Pagasæ, and by establishing his ascendency over the Magnêtes and their territory, round the eastern border of the Pagasæan Gulf. That gulf (now known by the name of Volo), is still the great inlet and outlet for Thessalian trade; the eastern coast of Thessaly, along the line of Mount Pelion, being craggy and harborless.[653] The naval force belonging to Pheræ and its seaport Pagasæ, was very considerable, and had been so even from the times of the despots, Jason and Alexander;[654] at one moment painfully felt even by Athens. All these ships now passed into the service of Philip, together with the dues on export and import levied round the Pagasæan Gulf; the command of which he farther secured by erecting suitable fortifications on the Magnesian shore, and by placing a garrison in Pagasæ.[655] Such additional naval means, combined with what he already possessed at Amphipolis and elsewhere, made him speedily annoying, if not formidable, to Athens, even at sea. His triremes showed themselves everywhere, probably in small and rapidly moving squadrons. He levied large contributions on the insular allies of Athens, and paid the costs of war greatly out of the capture of merchant vessels in the Ægean. His squadrons made incursions on the Athenian islands of Lemnos and Imbros, carrying off several Athenian citizens as prisoners. They even stretched southward as far as Geræstus, the southern promontory of Eubœa, where they not only fell in with and captured a lucrative squadron of corn-ships, but also insulted the coast of Attica itself in the opposite bay of Marathon, towing off as a prize one of the sacred triremes.[656] Such was the mischief successfully
- 22. inflicted by the flying squadrons of Philip, though Athens had probably a considerable number of cruisers at sea, and certainly a far superior number of ships at home in Peiræus. Her commerce, and even her coasts, were disturbed and endangered; her insular allies suffered yet more. Eubœa especially, the nearest and most important of all her allies, separated only by a narrow strait from the Pagasæan Gulf and the southern coast of Phthiotis, was now within the immediate reach not only of Philip’s marauding vessels, but also of his political intrigues. It was thus that the war against Philip turned more and more to the disgrace and disadvantage of the Athenians. Though they had begun it in the hope of punishing him for his duplicity in appropriating Amphipolis, they had been themselves the losers by the capture of Pydna, Potidæa, Methônê, etc.; and they were now thrown upon the defensive, without security for their maritime allies, their commerce, or their coasts.[657] The intelligence of these various losses and insults endured at sea, in spite of indisputable maritime preponderance, called forth at Athens acrimonious complaints against the generals of the state, and exaggerated outbursts of enmity against Philip.[658] That prince, having spent a few months, after his repulse from Thermopylæ, in Thessaly, and having so far established his ascendency over that country that he could leave the completion of the task to his officers, pushed with his characteristic activity into Thrace. He there took part in the disputes between various native princes, expelling some, confirming or installing others, and extending his own dominion at the cost of all.[659] Among these princes were probably Kersobleptes, and Amadokus; for Philip carried his aggressions to the immediate neighborhood of the Thracian Chersonese. In November, 352 B. C., intelligence reached Athens, that he was in Thrace besieging Heræon Teichos; a place so near to the Chersonese,[660] that the Athenian possessions and colonists in that peninsula were threatened with considerable danger. So great was the alarm and excitement caused by this news, that a vote was
- 23. immediately passed in the public assembly to equip a fleet of forty triremes,—to man it with Athenian citizens, all persons up to the age of forty-five being made liable to serve on the expedition,—and to raise sixty talents by a direct property tax. At first active steps were taken to accelerate the armament. But before the difficulties of detail could be surmounted,—before it could be determined, amidst the general aversion to personal service, what citizens should go abroad, and how the burthen of trierarchy should be distributed,—fresh messengers arrived from the Chersonese, reporting first that Philip had fallen sick, next that he was actually dead.[661] The last- mentioned report proved false; but the sickness of Philip was an actual fact, and seems to have been severe enough to cause a temporary suspension of his military operations. Though the opportunity became thus only the more favorable for attacking Philip, yet the Athenians, no longer spurred on by the fear of farther immediate danger, relapsed into their former languor, and renounced or postponed their intended armament. After passing the whole ensuing summer in inaction, they could only be prevailed upon, in the month of September 351, to despatch to Thrace a feeble force under the mercenary chief Charidemus; ten triremes, without any soldiers aboard, and with no more than five talents in money.[662] At this time Charidemus was at the height of his popularity. It was supposed that he could raise and maintain a mercenary band by his own ingenuity and valor. His friends confidently averred, before the Athenian assembly, that he was the only man capable of putting down Philip, and conquering Amphipolis.[663] One of these partisans, Aristokrates, even went so far as to propose that a vote should be passed ensuring inviolability to his person, and enacting that any one who killed him should be seized wherever found in the territory of Athens or her allies. This proposition was attacked judicially by an accuser named Euthykles, who borrowed a memorable discourse from the pen of Demosthenes. It was thus that the real sickness, and reported death, of Philip which ought to have operated as a stimulus to the Athenians by
- 24. exposing to them their enemy during a moment of peculiar weakness, proved rather an opiate exaggerating their chronic lethargy, and cheating them into a belief that no farther efforts were needed. That belief appears to have been proclaimed by the leading, best-known, and senior speakers, those who gave the tone to the public assembly, and who were principally relied upon for advice. These men,—probably Eubulus at their head, and Phokion, so constantly named as general, along with him,—either did not feel, or could not bring themselves to proclaim, the painful necessity of personal military service and increased taxation. Though repeated debates took place on the insults offered to Athens in her maritime dignity, and on the sufferings of those allies to whom she owed protection,—combined with accusations against the generals, and complaints of the inefficiency of such mercenary foreigners as Athens took into commission but never paid,—still, the recognized public advisers shrank from appeal to the dormant patriotism or personal endurance of the citizens. The serious, but indispensable, duty which they thus omitted, was performed for them by a younger competitor, far beneath them in established footing and influence,— Demosthenes, now about thirty years old,—in an harangue, known as the first Philippic. We have already had before us this aspiring man, as a public adviser in the assembly. In his first parliamentary harangue two years before,[664] he had begun to inculcate on his countrymen the general lesson of energy and self-reliance, and to remind them of that which the comfort, activity, and peaceful refinement of Athenian life, had a constant tendency to put out of sight:—That the City, as a whole, could not maintain her security and dignity against enemies, unless each citizen individually, besides his home-duties, were prepared to take his fair share, readily and without evasion, of the hardship and cost of personal service abroad.[665] But he had then been called upon to deal (in his discourse De Symmoriis) only with the contingency of Persian hostilities—possible indeed, yet neither near nor declared; he now renews the same exhortation under more pressing exigencies. He has to protect interests already suffering,
- 25. and to repel dishonorable insults, becoming from month to month more frequent, from an indefatigable enemy. Successive assemblies have been occupied with complaints from sufferers, amidst a sentiment of unwonted chagrin and helplessness among the public— yet with no material comfort from the leading and established speakers; who content themselves with inveighing against the negligence of the mercenaries—taken into service by Athens but never paid—and with threatening to impeach the generals. The assembly, wearied by repetition of topics promising no improvement for the future, is convoked, probably to hear some farther instance of damage committed by the Macedonian cruisers, when Demosthenes, breaking through the common formalities of precedence, rises first to address them. It had once been the practice at Athens, that the herald formally proclaimed, when a public assembly was opened—“Who among the citizens above fifty years old wishes to speak? and after them, which of the other citizens in his turn?”[666] Though this old proclamation had fallen into disuse, the habit still remained, that speakers of advanced age and experience rose first after the debate had been opened by the presiding magistrates. But the relations of Athens with Philip had been so often discussed, that all these men had already delivered their sentiments and exhausted their recommendations. “Had their recommendations been good, you need not have been now debating the same topic over again”[667]— says Demosthenes, as an apology for standing forward out of his turn to produce his own views. His views indeed were so new, so independent of party- sympathies or antipathies, and so plain-spoken in comments on the past as well as in demands for the future—that they would hardly have been proposed except by a speaker instinct with the ideal of the Periklean foretime, familiar to him from his study of Thucydides. In explicit language, Demosthenes throws the blame of the public misfortunes, not simply on the past advisers and generals of the people, but also on the people themselves.[668] It is from this
- 26. proclaimed fact that he starts, as his main ground of hope for future improvement. Athens contended formerly with honor against the Lacedæmonians; and now also, she will exchange disgrace for victory in her war against Philip, if her citizens individually will shake off their past inertness and negligence, each of them henceforward becoming ready to undertake his full share of personal duty in the common cause. Athens had undergone enough humiliation, and more than enough, to teach her this lesson. She might learn it farther from her enemy Philip himself, who had raised himself from small beginnings, and heaped losses as well as shame upon her, mainly by his own personal energy, perseverance, and ability; while the Athenian citizens had been hitherto so backward as individuals, and so unprepared as a public, that even if a lucky turn of fortune were to hand over to them Amphipolis, they would be in no condition to seize it.[669] Should the rumor prove true, that this Philip were dead, they would soon make for themselves another Philip equally troublesome. After thus severely commenting on the past apathy of the citizens, and insisting upon a change of disposition as indispensable, Demosthenes proceeds to specify the particular acts whereby such change ought to be manifested. He entreats them not to be startled by the novelty of his plan, but to hear him patiently to the end. It is the result of his own meditations; other citizens may have better to propose; if they have, he shall not be found to stand in their way. What is past, cannot be helped; nor is extemporaneous speech the best way of providing remedies for a difficult future.[670] He advises first, that a fleet of fifty triremes shall be immediately put in readiness; that the citizens shall firmly resolve to serve in person on board, whenever the occasion may require, and that triremes and other vessels shall be specially fitted out for half of the horsemen of the city, who shall serve personally also. This force is to be kept ready to sail at a moment’s notice, and to meet Philip in any of his sudden out-marches—to Chersonesus, to Thermopylæ, to Olynthus, etc.[671]
- 27. Secondly, that a farther permanent force shall be set on foot immediately, to take the aggressive, and carry on active continuous warfare against Philip, by harassing him in various points of his own country. Two thousand infantry, and two hundred horse, will be sufficient; but it is essential that one-fourth part—five hundred of the former and fifty of the latter—shall be citizens of Athens. The remainder are to be foreign mercenaries; ten swift sailing war triremes are also to be provided to protect the transports against the naval force of Philip. The citizens are to serve by relays, relieving each other; every one for a time fixed beforehand, yet none for a very long time.[672] The orator then proceeds to calculate the cost of such a standing force for one year. He assigns to each seaman, and to each foot soldier, ten drachmæ per month, or two oboli per day; to each horseman, thirty drachmæ per month, or one drachma (six oboli) per day. No difference is made between the Athenian citizen and the foreigner. The sum here assigned is not full pay, but simply the cost of each man’s maintenance. At the same time, Demosthenes pledges himself, that if thus much be furnished by the state, the remainder of a full pay (or as much again) will be made up by what the soldiers will themselves acquire in the war; and that too, without wrong done to allies or neutral Greeks. The total annual cost thus incurred will be ninety-two talents (= about £22,000.) He does not give any estimate of the probable cost of his other armament, of fifty triremes; which are to be equipped and ready at a moment’s notice for emergencies, but not sent out on permanent service. His next task is, to provide ways and means for meeting such additional cost of ninety-two talents. Here he produces and reads to the assembly, a special financial scheme, drawn up in writing. Not being actually embodied in the speech, the scheme has been unfortunately lost; though its contents would help us materially to appreciate the views of Demosthenes.[673] It must have been more or less complicated in its details; not a simple proposition for an eisphora or property-tax, which would have been announced in a sentence of the orator’s speech.
- 28. Assuming the money, the ships, and the armament for permanent service, to be provided, Demosthenes proposes that a formal law be passed, making such permanent service peremptory; the general in command being held responsible for the efficient employment of the force.[674] The islands, the maritime allies, and the commerce of the Ægean would then become secure; while the profits of Philip from his captures at sea would be arrested.[675] The quarters of the armament might be established, during winter or bad weather, in Skiathos, Thasos, Lemnos, or other adjoining islands, from whence they could act at all times against Philip on his own coast; while from Athens it was difficult to arrive thither either during the prevalence of the Etesian winds or during winter—the seasons usually selected by Philip for his aggressions.[676] The aggregate means of Athens (Demosthenes affirmed) in men, money, ships, hoplites, horsemen, were greater than could be found anywhere else. But hitherto they had never been properly employed. The Athenians, like awkward pugilists, waited for Philip to strike, and then put up their hand to follow his blow. They never sought to look him in the face—nor to be ready with a good defensive system beforehand—nor to anticipate him in offensive operations.[677] While their religious festivals, the Panathenaic, Dionysiac, and others, were not only celebrated with costly splendor, but prearranged with the most careful pains, so that nothing was ever wanting in detail at the moment of execution—their military force was left without organization or predetermined system. Whenever any new encroachment of Philip was made known, nothing was found ready to meet it; fresh decrees were to be voted, modified, and put in execution, for each special occasion; the time for action was wasted in preparation, and before a force could be placed on shipboard, the moment for execution had passed.[678] This practice of waiting for Philip to act offensively, and then sending aid to the point attacked, was ruinous; the war must be carried on by a standing force put in motion beforehand.[679]
- 29. To provide and pay such a standing force, is one of the main points in the project of Demosthenes. The absolute necessity that it shall consist, in large proportion at least, of citizens, is another. To this latter point he reverts again and again, insisting that the foreign mercenaries—sent out to make their pay where or how they could, and unaccompanied by Athenian citizens—were at best useless and untrustworthy. They did more mischief to friends and allies, who were terrified at the very tidings of their approach—than to the enemy.[680] The general, unprovided with funds to pay them, was compelled to follow them wheresoever they chose to go, disregarding his orders received from the city. To try him afterwards for that which he could not help, was unprofitable disgrace. But if the troops were regularly paid; if, besides, a considerable proportion of them were Athenian citizens, themselves interested in success, and inspectors of all that was done; then the general would be found willing and able to attack the enemy with vigor—and might be held to a rigorous accountability, if he did not. Such was the only way in which the formidable and ever-growing force of their enemy Philip could be successfully combated. As matters now stood, the inefficiency of Athenian operations was so ridiculous, that men might be tempted to doubt whether Athens was really in earnest. Her chief military officers—her ten generals, ten taxiarchs, ten phylarchs, and two hipparchs, annually chosen—were busied only in the affairs of the city and in the showy religious processions. They left the real business of war to a foreign general named Menelaus.[681] Such a system was disgraceful. The honor of Athens ought to be maintained by her own citizens, both as generals and as soldiers. Such are the principal features in the discourse called the First Philippic; the earliest public harangue delivered by Demosthenes to the Athenian assembly, in reference to the war with Philip. It is not merely a splendid piece of oratory, emphatic and forcible in its appeal to the emotions; bringing the audience by many different roads, to the main conviction which the orator seeks to impress; profoundly animated with genuine Pan-hellenic patriotism, and with the dignity of that free Grecian world now threatened by a monarch
- 30. from without. It has other merits besides, not less important in themselves, and lying more immediately within the scope of the historian. We find Demosthenes, yet only thirty years old—young in political life—and thirteen years before the battle of Chæroneia— taking accurate measure of the political relations between Athens and Philip; examining those relations during the past, pointing out how they had become every year more unfavorable, and foretelling the dangerous contingencies of the future, unless better precautions were taken; exposing with courageous frankness not only the past mismanagement of public men, but also those defective dispositions of the people themselves wherein such management had its root; lastly, after fault found, adventuring on his own responsibility to propose specific measures of correction, and urging upon reluctant citizens a painful imposition of personal hardship as well as of taxation. We shall find him insisting on the same obligation, irksome alike to the leading politicians and to the people,[682] throughout all the Olynthiacs and Philippics. We note his warnings given at this early day, when timely prevention would have been easily practicable; and his superiority to elder politicians like Eubulus and Phokion, in prudent appreciation, in foresight, and in courage of speaking out unpalatable truths. More than twenty years after this period, when Athens had lost the game and was in her phase of humiliation, Demosthenes (in repelling the charges of those who imputed her misfortune to his bad advice) measures the real extent to which a political statesman is properly responsible. The first of all things is—“To see events in their beginnings—to discern tendencies beforehand, and proclaim them beforehand to others—to abridge as much as possible the rubs, impediments, jealousies, and tardy movements, inseparable from the march of a free city—and to infuse among the citizens harmony, friendly feelings, and zeal for the performance of their duties.”[683] The first Philippic is alone sufficient to prove, how justly Demosthenes lays claim to the merit of having “seen events in their beginnings” and given timely warning to his countrymen. It will also go to show, along with other proofs hereafter to be seen, that he was not less honest and judicious in his attempts to fulfil the remaining portion of the statesman’s duty—that
- 31. of working up his countrymen to unanimous and resolute enterprise; to the pitch requisite not merely for speaking and voting, but for acting and suffering, against the public enemy. We know neither the actual course, nor the concluding vote, of this debate, wherein Demosthenes took a part so unexpectedly prominent. But we know that neither of the two positive measures which he recommends was carried into effect. The working armament was not sent out, nor was the home-force, destined to be held in reserve for instant movement in case of emergency, ever got ready. It was not until the following month of September (the oration being delivered some time in the first half of 351 B. C.), that any actual force was sent against Philip; and even then nothing more was done than to send the mercenary chief Charidemus to the Chersonese, with ten triremes, and five talents in money, but no soldiers.[684] Nor is there any probability that Demosthenes even obtained a favorable vote of the assembly; though strong votes against Philip were often passed without being ever put in execution afterwards.[685] Demosthenes was doubtless opposed by those senior statesmen whose duty it would have been to come forward themselves with the same propositions assuming the necessity to be undeniable. But what ground was taken in opposing him, we do not know. There existed at that time in Athens a certain party or section who undervalued Philip as an enemy not really formidable—far less formidable than the Persian king.[686] The reports of Persian force and preparation, prevalent two years before when Demosthenes delivered his harangue on the Symmories, seem still to have continued, and may partly explain the inaction again Philip. Such reports would be magnified, or fabricated, by another Athenian party much more dangerous; in communication with, and probably paid by, Philip himself. To this party Demosthenes makes his earliest allusion in the first Philippic,[687] and reverts to them on many occasions afterwards. We may be very certain that there were Athenian citizens serving as Philip’s secret agents, though we cannot
- 32. assign their names. It would be not less his interest to purchase such auxiliaries, than to employ paid spies in his operations of war: [688] while the prevalent political antipathies at Athens, coupled with the laxity of public morality in individuals, would render it perfectly practicable to obtain suitable instruments. That not only at Athens, but also at Amphipolis, Potidæa, Olynthus and elsewhere, Philip achieved his successes, partly by purchasing corrupt partisans among the leaders of his enemies—is an assertion so intrinsically probable, that we may readily believe it, though advanced chiefly by unfriendly witnesses. Such corruption alone, indeed, would not have availed him, but it was eminently useful when combined with well- employed force and military genius.
- 33. CHAPTER LXXXVIII. EUBOIC AND OLYNTHIAN WARS. If even in Athens, at the date of the first Philippic of Demosthenes, the uneasiness about Philip was considerable, much more serious had it become among his neighbors the Olynthians. He had gained them over, four years before, by transferring to them the territory of Anthemus—and the still more important town of Potidæa, captured by his own arms from Athens. Grateful for these cessions, they had become his allies in his war with Athens, whom they hated on every ground. But a material change had since taken place. Since the loss of Methônê, Athens, expelled from the coast of Thrace and Macedonia, had ceased to be a hostile neighbor, or to inspire alarm to the Olynthians; while the immense increase in the power of Philip, combined with his ability and ambition alike manifest, had overlaid their gratitude for the past by a sentiment of fear for the future. It was but too clear that a prince who stretched his encroaching arms in all directions—to Thermopylæ, to Illyria, and to Thrace—would not long suffer the fertile peninsula between the Thermaic and Strymonic gulfs to remain occupied by free Grecian communities. Accordingly, it seems that after the great victory of Philip in Thessaly over the Phokians (in the first half of 352 B. C.), the Olynthians manifested their uneasiness by seceding from alliance with him against Athens. They concluded peace with that city, and manifested such friendly sentiments that an alliance began to be thought possible. This peace seems to have been concluded before November 352 B. C.[689] Here was an important change of policy on the part of the Olynthians. Though they probably intended it, not as a measure of
- 34. hostility against Philip, but simply as a precaution to ensure to themselves recourse elsewhere in case of becoming exposed to his attack, it was not likely that he would either draw or recognize any such distinction. He would probably consider that by the cession of Potidæa, he had purchased their coöperation against Athens, and would treat their secession as at least making an end to all amicable relations. A few months afterwards (at the date of the first Philippic[690]) we find that he, or his soldiers, had attacked, and made sudden excursions into their territory, close adjoining to his own. In this state of partial hostility, yet without proclaimed or vigorous war, matters seem to have remained throughout the year 351 B. C. Philip was engaged during that year in his Thracian expedition, where he fell sick, so that aggressive enterprise was for the time suspended. Meanwhile the Athenians seem to have proposed to Olynthus a scheme of decided alliance against Philip. [691] But the Olynthians had too much to fear from him, to become themselves the aggressors. They still probably hoped that he might find sufficient enemies and occupation elsewhere, among Thracians, Illyrians, Pæonians, Arymbas and the Epirots, and Athenians;[692] at any rate, they would not be the first to provoke a contest. This state of reciprocal mistrust[693] continued for several months, until at length Philip began serious operations against them; not very long after his recovery from the sickness in Thrace, and seemingly towards the middle of 350 B. C.;[694] a little before the beginning of Olympiad 107, 3. It was probably during the continuance of such semi-hostile relations that two half-brothers of Philip, sons of his father Amyntas by another mother, sought and obtained shelter at Olynthus. They came as his enemies; for he had put to death already one of their brothers, and they themselves only escaped the same fate by flight. Whether they had committed any positive act to provoke his wrath, we are not informed; but such tragedies were not unfrequent in the Macedonian regal family. While Olynthus was friendly and grateful to
- 35. Philip, these exiles would not have resorted thither; but they were now favorably received, and may perhaps have held out hopes that in case of war they could raise a Macedonian party against Philip. To that prince, the reception of his fugitive enemies served as a plausible pretence for war—which he doubtless would under all circumstances have prosecuted—against Olynthus; and it seems to have been so put forward in his public declarations.[695] But Philip, in accomplishing his conquests, knew well how to blend the influences of deceit and seduction with those of arms, and to divide or corrupt those whom he intended to subdue. To such insidious approaches Olynthus was in many ways open. The power of that city consisted, in great part, in her position as chief of a numerous confederacy, including a large proportion, though probably not all, of the Grecian cities in the peninsula of Chalkidikê. Among the different members of such a confederacy, there was more or less of dissentient interest or sentiment, which accidental circumstances might inflame so as to induce a wish for separation. In each city moreover, and in Olynthus itself, there were ambitious citizens competing for power, and not scrupulous as to the means whereby it was to be acquired or retained. In each of them, Philip could open intrigues, and enlist partisans; in some, he would probably receive invitations to do so; for the greatness of his exploits, while it inspired alarm in some quarters, raised hopes among disappointed and jealous minorities. If, through such predisposing circumstances, he either made or found partisans and traitors in the distant cities of Peloponnesus, much more was this practicable for him in the neighboring peninsula of Chalkidikê. Olynthus and the other cities were nearly all conterminous with the Macedonian territory, some probably with boundaries not clearly settled. Perdikkas II. had given to the Olynthians (at the beginning of the Peloponnesian war[696]) a portion of his territory near the Lake Bolbê: Philip himself had given to them the district of Anthemus. Possessed of so much neighboring land, he had the means, with little loss to himself, of materially favoring or enriching such individual citizens, of Olynthus or other cities, as chose to promote his designs. Besides direct bribes, where
- 36. that mode of proceeding was most effective, he could grant the right of gratuitous pasture to the flocks and herds of one, and furnish abundant supplies of timber to another. Master as he now was of Amphipolis and Philippi, he could at pleasure open or close to them the speculations of the gold mines of Mount Pangæus, for which they had always hankered.[697] If his privateers harassed even the powerful Athens, and the islands under her protection, much more vexatious would they be to his neighbors in the Chalkidic peninsula, which they as it were encircled, from the Thermaic Gulf on one side to the Strymonic Gulf on the other. Lastly, we cannot doubt that some individuals in these cities had found it profitable to take service, civil or military, under Philip, which would supply him with correspondents and adherents among their friends and relatives. It will thus be easily seen, that with reference to Olynthus and her confederate cities, Philip had at his command means of private benefit and annoyance to such an extent, as would ensure to him the coöperation of a venal and traitorous minority in each; such minority of course blending its proceedings, and concealing its purposes, among the standing political feuds of the place. These means however were only preliminary to the direct use of the sword. His seductions and presents commenced the work, but his excellent generalship and soldiers—the phalanx, the hypaspistæ, and the cavalry, all now brought into admirable training during the ten years of his reign—completed it. Though Demosthenes in one passage goes so far as to say that Philip rated his established influence so high as to expect to incorporate the Chalkidic confederacy in his empire without serious difficulty and without even real war[698]—there is ground for believing that he encountered strenuous resistance, avenged by unmeasured rigors after the victory. The two years and a half between Midsummer 350 B. C., and the commencement of 347 B. C. (the two last years of Olympiad 107 and the nine first months of Olympiad 108), were productive of phænomena more terror-striking than anything in the recent annals of Greece. No less than thirty-two
- 37. free Grecian cities in Chalkidikê were taken and destroyed, the inhabitants being reduced to slavery, by Philip. Among them was Olynthus, one of the most powerful, flourishing, and energetic members of the Hellenic brotherhood; Apollonia, whose inhabitants would now repent the untoward obstinacy of their fathers (thirty-two years before) in repudiating a generous and equal confederacy with Olynthus, and invoking Spartan aid to revive the falling power of Philip’s father, Amyntas; and Stageira, the birth-place of Aristotle. The destruction of thirty-two free Hellenic communities in two years by a foreign prince, was a calamity the like of which had never occurred since the suppression of the Ionic revolt and the invasion of Xerxes. I have already recounted in a previous chapter[699] the manifestation of wrath at the festival of the ninety-ninth Olympiad (394 B. C.) against the envoys of the elder Dionysius of Syracuse, who had captured and subverted five or six free Hellenic communities in Italy and Sicily. Far more vehement would be the sentiment of awe and terror, after the Olynthian war, against the Macedonian destroyer of thirty-two Chalkidic cities. We shall find this plainly indicated in the phænomena immediately succeeding. We shall see Athens terrified into a peace alike dishonorable and improvident, which even Demosthenes does not venture to oppose; we shall see Æschines passing out of a free spoken Athenian citizen into a servile worshipper, if not a paid agent, of Philip: we shall observe Isokrates, once the champion of Pan-hellenic freedom and integrity, ostentatiously proclaiming Philip as the master and arbiter of Greece, while persuading him at the same time to use his power well for the purpose of conquering Persia. These were terrible times; suitably illustrated in their cruel details by the gangs of enslaved Chalkidic Greeks of both sexes, seen passing even into Peloponnesus[700] as the property of new grantees who extolled the munificence of the donor Philip; and suitably ushered in by awful celestial signs, showers of fire and blood falling from the heavens to the earth, in testimony of the wrath of the gods.[701] While, however, we make out with tolerable clearness the general result of Philip’s Olynthian war, and the terror which it struck into the
- 38. Grecian mind—we are not only left without information as to its details, but are even perplexed by its chronology. I have already remarked, that though the Olynthians had contracted such suspicions of Philip, even before the beginning of 351 B. C., as to induce them to make peace with his enemy Athens—they had nevertheless, declined the overtures of Athens for a closer alliance, not wishing to bring upon themselves decided hostility from so powerful a neighbor, until his aggressions should become such as to leave them no choice. We have no precise information as to Philip’s movements after his operations in Thrace and his sickness in 351 B. C. But we know that it was not in his nature to remain inactive; that he was incessantly pushing his conquests; and that no conquest could be so important to him as that of Olynthus and the Chalkidic peninsula. Accordingly, we are not surprised to find, that the Olynthian and Chalkidian confederates became the object of his direct hostility in 350 B. C. He raised pretences for attack against one or other of these cities separately; avoiding to deal with the confederacy as a whole, and disclaiming, by special envoys,[702] all purposes injurious to Olynthus. Probably the philippizing party in that city may have dwelt upon this disclaimer as satisfactory, and given as many false assurances about the purposes of Philip, as we shall find Æschines hereafter uttering at Athens. But the general body of citizens were not so deceived. Feeling that the time had come when it was prudent to close with the previous Athenian overtures, they sent envoys to Athens to propose alliance and invite coöperation against Philip. Their first propositions were doubtless not couched in the language of urgency and distress. They were not as yet in any actual danger; their power was great in reality, and estimated at its full value abroad; moreover, as prudent diplomatists, they would naturally overstate their own dignity and the magnitude of what they were offering. Of course they would ask for Athenian aid to be sent to Chalkidikê—since it was there that the war was being carried on; but they would ask for aid in order to act energetically against the
- 39. common enemy, and repress the growth of his power—not to avert immediate danger menacing Olynthus. There needed no discussion to induce the Athenians to accept this alliance. It was what they had long been seeking, and they willingly closed with the proposition. Of course they also promised— what indeed was almost involved in the acceptance—to send a force to coöperate against Philip in Chalkidikê. On this first recognition of Olynthus as an ally—or perhaps shortly afterwards, but before circumstances had at all changed—Demosthenes delivered his earliest Olynthiac harangue. Of the three memorable compositions so denominated, the earliest is, in my judgment, that which stands second in the edited order. Their true chronological order has long been, and still is, matter of controversy; the best conclusion which I can form, is that the first and the second are erroneously placed, but that the third is really the latest;[703] all of them being delivered during the six or seven last months of 350 B. C. In this his earliest advocacy (the speech which stands printed as the second Olynthiac), Demosthenes insists upon the advantageous contingency which has just turned up for Athens, through the blessing of the gods, in the spontaneous tender of so valuable an ally. He recommends that aid be despatched to the new ally; the most prompt and effective aid will please him the best. But this recommendation is contained in a single sentence, in the middle of the speech; it is neither repeated a second time, nor emphatically insisted upon, nor enlarged by specification of quantity or quality of aid to be sent. No allusion is made to necessities or danger of Olynthus, nor to the chance that Philip might conquer the town; still less to ulterior contingencies, that Philip, if he did conquer it, might carry the seat of war from his own coasts to those of Attica. On the contrary, Demosthenes adverts to the power of the Olynthians—to the situation of their territory, close on Philip’s flanks—to their fixed resolution that they will never again enter into amity or compromise with him—as evidences how valuable their alliance will prove to Athens; enabling her to prosecute with improved success the war
- 40. against Philip, and to retrieve the disgraceful losses brought upon her by previous remissness. The main purpose of the orator is to inflame his countrymen into more hearty and vigorous efforts for the prosecution of this general war; while to furnish aid to the Olynthians, is only a secondary purpose, and a part of the larger scheme. “I shall not (says the orator) expatiate on the formidable power of Philip as an argument to urge you to the performance of your public duty. That would be too much both of compliment to him and of disparagement to you. I should, indeed, myself have thought him truly formidable, if he had achieved his present eminence by means consistent with justice. But he has aggrandized himself, partly through your negligence and improvidence, partly by treacherous means—by taking into pay corrupt partisans at Athens, and by cheating successively Olynthians, Thessalians, and all his other allies. These allies, having now detected his treachery, are deserting him; without them, his power will crumble away. Moreover, the Macedonians themselves have no sympathy with his personal ambition; they are fatigued with the labor imposed upon them by his endless military movements, and impoverished by the closing of their ports through the war. His vaunted officers are men of worthless and dissolute habits; his personal companions are thieves, vile ministers of amusement, outcasts from our cities. His past good fortune imparts to all this real weakness a fallacious air of strength; and doubtless his good fortune has been very great. But the fortune of Athens, and her title to the benevolent aid of the gods is still greater—if only you, Athenians, will do your duty. Yet here you are, sitting still, doing nothing. The sluggard cannot even command his friends to work for him—much less the gods. I do not wonder, that Philip, always in the field, always in movement, doing everything for himself, never letting slip an opportunity—prevails over you who merely talk, inquire, and vote, without action. Nay—the contrary would be wonderful—if under such circumstances, he had not been the conqueror. But what I do wonder at is, that you Athenians—who in former days contended for Pan-hellenic freedom against the Lacedæmonians—who, scorning unjust aggrandizement for yourselves, fought in person and lavished your substance to protect
- 41. the rights of other Greeks—that you now shrink from personal service and payment of money for the defence of your own possessions. You, who have so often rescued others, can now sit still after having lost so much of your own! I wonder you do not look back to that conduct of yours which has brought your affairs into this state of ruin, and ask yourselves how they can ever mend, while such conduct remains unchanged. It was much easier at first to preserve what we once had, than to recover it now that it is lost; we have nothing now left to lose—we have everything to recover. This must be done by ourselves, and at once; we must furnish money, we must serve in person by turns; we must give our generals means to do their work well, and then exact from them a severe account afterwards—which we cannot do so long as we ourselves will neither pay nor serve. We must correct that abuse which has grown up, whereby particular symmories in the state combine to exempt themselves from burdensome duties, and to cast them all unjustly upon others. We must not only come forward vigorously and heartily, with person and with money, but each man must embrace faithfully his fair share of patriotic obligation.” Such are the main points of the earliest discourse delivered by Demosthenes on the subject of Olynthus. In the mind of modern readers, as in that of the rhetor Dionysius,[704] there is an unconscious tendency to imagine that these memorable pleadings must have worked persuasion, and to magnify the efficiency of their author as an historical and directing person. But there are no facts to bear out such an impression. Demosthenes was still comparatively a young man—thirty-one years of age; admired indeed for his speeches and his compositions written to be spoken by others;[705] but as yet not enjoying much practical influence. It is moreover certain—to his honor—that he described and measured foreign dangers before they were recognized by ordinary politicians; that he advised a course, energetic and salutary indeed, but painful for the people to act upon, and disagreeable for recognized leaders to propose; that these leaders, such as Eubulus and others, were accordingly adverse to him. The tone of Demosthenes in these
- 42. speeches is that of one who feels that he is contending against heavy odds—combating an habitual and deep-seated reluctance. He is an earnest remonstrant—an opposition speaker—contributing to raise up gradually a body of public sentiment and conviction which ultimately may pass into act. His rival Eubulus is the ministerial spokesman, whom the majority, both rich and poor, followed; a man not at all corrupt (so far as we know), but of simple conservative routine, evading all painful necessities and extraordinary precautions; conciliating the rich by resisting a property-tax, and the general body of citizens by refusing to meddle with the Theôric expenditure. The Athenians did not follow the counsel of Demosthenes. They accepted the Olynthian alliance, but took no active step to coöperate with Olynthus in the war against Philip.[706] Such unhappily was their usual habit. The habit of Philip was the opposite. We need no witness to satisfy us, that he would not slacken in his attack—and that in the course of a month or two, he would master more than one of the Chalkidic cities, perhaps defeating the Olynthian forces also. The Olynthians would discover that they had gained nothing by their new allies; while the philippizing party among themselves would take advantage of the remissness of Athens to depreciate her promises as worthless or insincere, and to press for accommodation with the enemy.[707] Complaints would presently reach Athens, brought by fresh envoys from the Olynthians, and probably also from the Chalkidians, who were the greatest sufferers by Philip’s arms. They would naturally justify this renewed application by expatiating on the victorious progress of Philip; they would now call for aid more urgently, and might even glance at the possibility of Philip’s conquest of Chalkidikê. It was in this advanced stage of the proceedings that Demosthenes again exerted himself in the cause, delivering that speech which stands first in the printed order of the Olynthiacs. Here we have, not a Philippic, but a true Olynthiac. Olynthus is no longer part and parcel of a larger theme, upon the whole of which Demosthenes intends to discourse; but stands out as the
- 43. prominent feature and specialty of his pleading. It is now pronounced to be in danger and in pressing need of succor; moreover its preservation is strenuously pressed upon the Athenians, as essential to their own safety. While it stands with its confederacy around it, the Athenians can fight Philip on his own coast; if it falls, there is nothing to prevent him from transferring the war into Attica, and assailing them on their own soil.[708] Demosthenes is wound up to a higher pitch of emphasis, complaining of the lukewarmness of his countrymen on a crisis which calls aloud for instant action.[709] He again urges that a vote be at once passed to assist Olynthus, and two armaments despatched as quickly as possible; one to preserve to Olynthus her confederate cities—the other, to make a diversion by simultaneous attack on Philip at home. Without such two-fold aid (he says) the cities cannot be preserved.[710] Advice of aid generally he had already given, though less emphatically, in his previous harangue; but he now superadds a new suggestion—that Athenian envoys shall be sent thither, not merely to announce the coming of the force, but also to remain at Olynthus and watch over the course of events. For he is afraid, that unless such immediate encouragement be sent, Philip may, even without the tedious process of a siege, frighten or cajole the Olynthian confederacy into submission; partly by reminding them that Athens had done nothing for them, and by denouncing her as a treacherous and worthless ally.[711] Philip would be glad to entrap them into some plausible capitulation; and though they knew that they could have no security for his keeping the terms of it afterwards, still he might succeed, if Athens remained idle. Now, if ever, was the time for Athenians to come forward and do their duty without default; to serve in person and submit to the necessary amount of direct taxation. They had no longer the smallest pretence for continued inaction; the very conjuncture which they had so long desired, had turned up of itself —war between Olynthus and Philip, and that too upon grounds special to Olynthus—not at the instigation of Athens.[712] The Olynthian alliance had been thrown in the way of Athens by the peculiar goodness of the gods, to enable her to repair her numerous past errors and short-comings. She ought to look well and deal
- 44. rightly with these last remaining opportunities, in order to wipe off the shame of the past; but if she now let slip Olynthus and suffer Philip to conquer it, there was nothing else to hinder him from marching whithersoever he chose. His ambition was so insatiable, his activity so incessant, that, assuming Athens to persist in her careless inaction, he would carry the war forward from Thrace into Attica—of which the ruinous consequences were but too clear.[713] “I maintain (continued the orator) that you ought to lend aid at the present crisis in two ways; by preserving for the Olynthians their confederated cities, through a body of troops sent out for that express purpose—and by employing at the same time other troops and other triremes to act aggressively against Philip’s own coast. If you neglect either of these measures, I fear that the expedition will fail. As to the pecuniary provision, you have already more money than any other city, available for purposes of war; if you will pay that money to soldiers on service, no need exists for farther provision—if not, then need exists; but above all things, money must be found. What then! I shall be asked—are you moving that the Theôric fund shall be devoted to war purposes? Not I, by Zeus. I merely express my conviction, that soldiers must be equipped, and that receipt of public money, and performance of public service, ought to go hand in hand; but your practice is to take the public money, without any such condition, for the festivals. Accordingly, nothing remains except that all should directly contribute; much, if much is wanted—little, if little will suffice. Money must be had; without it, not a single essential step can be taken. There are moreover different ways and means suggested by others. Choose any one of these which you think advantageous; and lay a vigorous grasp on events while the opportunity still lasts.”[714] It was thus that Demosthenes addressed his countrymen some time after the Olynthians had been received as allies, but before any auxiliary force had been either sent to them or even positively decreed—yet when such postponement of action had inspired them with mistrust, threatening to throw them, even without resistance,
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