Double Entry: How the Merchants of Venice Created Modern Finance

by Jane Gleeson-White

Overview

“Lively history. . . . Show[s] double entry’s role in the creation of the accounting profession, and even of capitalism itself.”—The New Yorker

Filled with colorful characters and history, Double Entry takes us from the ancient origins of accounting in Mesopotamia to the frontiers of modern finance. At the heart of the story is double-entry bookkeeping: the first system that allowed merchants to actually measure the worth of their businesses. Luca Pacioli—monk, mathematician, alchemist, and friend of Leonardo da Vinci—incorporated Arabic mathematics to formulate a system that could work across all trades and nations. As Jane Gleeson-White reveals, double-entry accounting was nothing short of revolutionary: it fueled the Renaissance, enabled capitalism to flourish, and created the global economy. John Maynard Keynes would use it to calculate GDP, the measure of a nation’s wealth. Yet double-entry accounting has had its failures. With the costs of sudden corporate collapses such as Enron and Lehman Brothers, and its disregard of environmental and human costs, the time may have come to re-create it for the future.

Product Details

ISBN-13:	9780393346596
Publisher:	Norton, W. W. & Company, Inc.
Publication date:	10/07/2013
Edition description:	Reprint
Pages:	304
Sales rank:	177,590
Product dimensions:	5.40(w) x 8.10(h) x 0.90(d)

About the Author

Jane Gleeson-White is the author of Double Entry: How the Merchants of Venice Created Modern Finance, which won the 2012 Waverley Library Award for Literature. Gleeson-White has degrees in economics and literature from the University of Sydney.

Table of Contents

Preface: Bobby Kennedy and the wealth of nations and corporations 1

1 Accounting: our first communications technology 10

2 Merchants and mathematics 29

3 Luca Parioli: from Sansepolcro to celebrity 49

4 Pacioli's landmark bookkeeping treatise of 1494 91

5 Venetian double entry goes viral 115

6 Double entry morphs: the industrial revolution and the birth of a profession 132

7 Double entry and capitalism-chicken and egg? 161

8 John Maynard Keynes, double entry and the wealth of nations 176

9 The rise and scandalous rise of a profession 194

10 Gross Domestic Product and how accounting could make or break the planet 226

Epilogue 250

Acknowledgements 255

Notes 257

Bibliography 271

Index 283

Editorial Reviews

"Entertaining and informative."

The Economist

"Elegantly written . . . charts the epic journey of the humble device that showed how to count the cost of everything, from the Doge’s Palace to the acrobatics of John Maynard Keynes’s General Theory."

Nicholas Wapshott

"Stimulating. . . . Fascinating."

Seattle Times - Drew DeSilver

"Lucidly presented. . . . An accessible introduction to this key development in the history of capitalism."

Wall Street Journal - Edward Chancellor

"A timely, topical, readable, and thought-provoking look at the history and legacy of double-entry bookkeeping."

Elif Batuman

Gleeson-White offers a lively and elegantly written account of the history of double-entry bookkeeping. Though the topic hardly sounds intriguing, the author makes ledgers and numbers come alive. As she writes: "Our urge to account—to measure and record our wealth—is one of the oldest human impulses." Gleeson-White, who holds degrees in economics and accounting, describes in vibrant and engaging prose how early writing systems were shaped by clay counting tokens, and how the development of the double-entry system, derived from Arabic mathematics, revolutionized commerce and capitalism in Renaissance Italy and contributed to the development of today's global economy. In a spellbinding historical narrative, the author traces the system from Luca Pacioli's pioneering accounting treatise, "Summa de arithmetica, geometria, proportione et proportionalità," to the Industrial Revolution, when the profession of "chartered accountant" was established. Moving into modern times, Gleeson-White details how shortcomings in the system and "gaping holes in the Sarbanes-Oxley Act" and other regulations that contributed to recent corporate collapses, such as Enron and WorldCom.This dynamic examination of the impact and legacy of double-entry bookkeeping is sure to appeal to those in the accounting profession, business leaders, and history buffs, and will likely become required reading in business school curricula. Agent: Wenona Byrne, Allen & Unwin. (Oct.)

Publishers Weekly

Though a history of accounting might sound like dry reading, that is not the case in this narrative of the birth of double-entry bookkeeping in 15th-century Venice. Gleeson-White (Australian Classics: 50 Great Writers and Their Celebrated Works) tells the story of double-entry bookkeeping to show the historical importance of keeping accounts, not only of cash and profits but also of resources. She begins with Italian friar and mathematician Luca Pacioli (1445–1517) and the treatise in which he first codified the concept. His process survived basically unchanged until the Industrial Revolution, when it was tested by the rise of the corporation, which increased demands on record keeping. Gleeson-White tracks double-entry bookkeeping all the way through the economic crisis of 2008 and explains current trends to create more qualitative measures that rate a country or company's worth. VERDICT With little mathematics or accounting described in its pages, this is not a technical work. The book instead explains how accounting, a natural human instinct, became a profession. Recommended for readers interested in the origins of modern accounting and how that history relates to the recent financial near collapse.—Elizabeth Nelson, Honeywell UOP Lib., Des Plaines, IL

Library Journal

Gleeson-White (Australian Classics: 50 Great Writers and Their Celebration Works, 2007, etc.) finds the origins of double-entry bookkeeping in Renaissance mathematics and art. The author covers a broad historical sweep, from ancient Mesopotamia and Hammurabi's Code to the accounting disasters and financial collapses represented by Enron and the Royal Bank of Scotland, whose books were nowhere near adequate representations of the company's position. But Gleeson-White centers the narrative on the convergence of the modern history of mathematics, great art and artists and business organization. She focuses on a relation of influence between Fibonacci, discoverer of the eponymous series, and Luca Pacioli, geometer, mathematical researcher and collaborator of Leonardo da Vinci. Pacioli was the author of a treatise on double-entry bookkeeping, which was published in his Summa on mathematics in 1494. His system discussed the proper use of three related volumes of records wherein initial entries, journaling and ledger entries were formulated. Profit and loss were calculable in detail by account. Gleeson-White names this Venetian accounting, distinguishing herself from others who attribute the system to Florentines. She presents Pacioli's system as the basis for manufacturers' efforts to reconcile the double-entry system, which was based on trade, with industrial manufacturing and the production of new wealth rather than the exchange of existing products. The author maintains that the origins of capitalism are tightly intertwined with the development of double-entry bookkeeping, and that joint-stock companies and dividend payments are spinoffs. A stimulating approach that presents a compelling outline for further detailed review.

Kirkus Reviews