The Romance of Double-Entry Bookkeeping
Feature Column Archive
The Web has plentiful resources on double-entry bookkeeping and its history. Franz-Josef Arlinghaus has posted his useful encyclopedia entry on the history of Double-entry bookkeeping. Rob Hopcott's Learn Accounts page has a self-paced introduction to the concept. The Association of Chartered Accountants in the United States has a Virtual History of accounting including a page on Luca Pacioli and the ``Method of Venice''. The MacTutor Archive at the University of St Andrews has a biography of Pacioli. Some recent information on Benedetto Cotrugli is available from the Instituut Pacioli in the Netherlands. See also Miroslav Budzadzic's abstract of his research on Benedikt Kotruljevic. For the philosophical ramifications of double-entry bookkeeping, see selections from Alfred W. Crosby on the St Olaf's site, an interview with John Holt of ``How Children Fail,'' and ``Money as Global Book-keeping'' by Marc Desaules.
God geometrizes and a cherub calculates in a woodcut from the title page of Manzoni's Quaderno
1. The early history of double-entry bookkeeping; Manzoni's Quaderno
Double-Entry Bookkeeping is a method for keeping track of the income and expenditures of a small firm. Although the method dates back at least to Genoa in the 14th century, the first written description seems to be a 1458 manuscript by Benedetto Cotrugli (Benedikt Kotruljevic, of Dubrovnik). The mathematician Luca Pacioli included this technique in De Computis et Scripturis, part of his Summa de Arithmetica, Geometria, Proportioni et Proportionalita, printed on a Gutenberg press in Venice in 1494. Among the many translations and adaptations of De Computis was a work by Domenico Manzoni, a native of Oderzo, published in 1540 and entitled Quaderno doppio col suo giornale ... : ``The Double Ledger with its Journal, newly composed and organized with extreme care, following the custom of Venice.'' I used a modern reprinting of the Quaderno, in Opere Antiche di Ragioneria, Milan 1911.
The Quaderno is a textbook, and, as far as I can tell, the first book to use a realistic, fully worked out example to explain how double-entry bookkeeping works, an expository technique still used today. Manzoni leads us through a year in the life and fortunes of a Venetian merchant, one Alvise Vallaresso. We learn a lot about Alvise, because Manzoni's exposition begins with a complete inventory of the man's belongings and possessions as they were on the first of March 1540, and continues day by day tracking every lira of income and every soldo, grosso, and picciolo of expenses of his business (and of his household; the accounts were not kept separate) until the last day of February of the next year.
A note on currency. Merchants in Venice used a system of lire, soldi, grossi, piccioli akin to the pounds, shillings and pence recently abandoned in Britain: 32 piccioli make one grosso, 12 grossi make one soldo, and 20 soldi make a lira. Thus a lira was a substantial amount of money; a rough equivalent might be $1000 in today's currency. Another denomination is the ducato, which is 2 soldi or 24 grossi, like the old British florin. Prices are usually quoted in ducati and grossi; while the books are kept in lire, soldi, grossi, and piccioli.
On our rough scale a ducato is $100, a tenth of a lira. Even though translating this currency into dollars may be meaningless, it does give an easily grasped and accurate impression of relative costs.
A note on language. The Quaderno is written in Italian, but contains many words in their Venetian pronunciation (staro for staio, feze for fece, etc.) and in addition many words peculiar to Venetian. My reference for these words has been the Dizionario del Dialetto Veneziano by Giuseppe Boerio (Venice, 1856). In particular Boerio gives modern equivalents of the measures miro and bigonzo. For the translation of carisee and zambelotti I am indebted to Luca Molà of Warwick University, an expert on the Venetian textile trade. Thanks also to my colleague Lori Repetti for help with these questions.
In this column we will let Domenico Manzoni teach us double-entry bookkeeping as we follow Alvise Vallaresso through a busy and tumultuous year in 16th-century Venice.