Double-entry bookkeeping system

Those who are acquainted with the Italian method of book-keeping [i.e. double-entry bookkeeping] must allow that it is an ingenious invention, of great utility to men in business, and that it has contributed to extend commerce and to facilitate its operations. It requires no less attention, care, and accuracy, than many works which are styled learned: but it is undoubtedly true, that most mercantile people, without knowing the foundation of the rules on which they proceed, conduct their books in as mechanical a manner as many of the literati do their writings.

The name, Italian book-keeping, Doppia scrittura, with several words employed in this branch of science and still retained in all languages, make it probable that it was invented by the Italians; and that other nations borrowed it, as well as various short methods of reckoning, from their mercantile houses, at the time when all the East-India trade passed through Italy.

De la Porte says 8 , “About the year 1495, brother Luke, an Italian, published a treatise of it in his own language. He is the oldest author I have seen upon the subject.” Anderson, in his Historical and Chronological Deduction of the Origin of Commerce 9 , gives the following account: “In all probability, this art of double-entry accounts had its rise, or at least its revival, amongst the mercantile cities of Italy: possibly it might be first known at Venice, about the time that numeral algebra was taught there; from the principles of which science double-entry, or what we call merchants' accounts, seems to have been deduced. It is said that Lucas de Burgo, a friar, was the first European author who published his algebraic work at Venice, anno 1494.”

This author, who was one of the greatest mathematicians of the fifteenth century, and who is supposed to be the first person who acquired a knowledge of algebra from the writings of the Arabians, was called Lucas Paciolus, e Burgo S. Sepulchri. He was a Franciscan, and so surnamed from a town in the duchy of Urbino, on the Florentine confines, called Burgo S. Sepulchro 10.

Anderson tells us 11 , that he had in his possession the oldest book published in England in which any account is given of the method of book-keeping by double-entry. It was printed at London, in 1569, in folio. The author, whose name is James Peele, says, in his preface, that he had instructed many mercantile people in this art, which had been long practised in other countries, though in England it was then undoubtedly new. One may readily believe that Mr. Anderson was not ignorant of the difference between the method of book-keeping by single and that by double-entry; but he produces nothing to induce us to believe that Peele taught the latter and not the former; for what he says of debit and credit is of no importance, as it may be applied also to the method by single-entry.

Of this Peele no mention is made in Ames's Typographical Antiquities; but in that work (p. 410) there is an account of a still older treatise of book-keeping, entitled A briefe instruction and manner how to keepe bookes of accompts, after the order of debitor and creditor, and as well for proper accompts, partible, &c. by three bookes, named the memoriall, journall, and leager. Newly augmented and set forth by John Mellis schole maister. London 1588, 12mo. Mellis, in his preface, says that he is only the re-publisher of this treatise, which was before published at London in 1543 by a schoolmaster named Hugh Oldcastle. From the above title, and particularly from the three account books mentioned in it, I am inclined to believe that this work contained the true principles of book-keeping by double-entry.

The oldest German work on book-keeping by double-entry with which I am at present acquainted, is one written by John Gotlieb, and printed at Nuremberg, by Frederick Peypus, in 1531 12. The author in his preface calls himself a citizen of Nuremberg, and says that he means to give to the public a clear and intelligible method of book-keeping, such as was never before printed. It appears, therefore, that he considered his book as the first of the kind ever published in Germany.

It is worthy of remark, that even at the end of the sixteenth century, the Italian method of book-keeping began to be applied to finances and public accounts. In the works of the celebrated Simon Stevin, published at Leyden in Dutch, and the same year in Latin, we find a system of book-keeping, as applied to finances, drawn up it appears for the use of Maurice prince of Orange. To this treatise is prefixed, in Dutch and Latin, a dedication to the duke of Sully, in which the author says, that his reason for dedicating the work to Sully was because the French had paid the greatest attention to improve the method of keeping public accounts. The work begins with a conversation, which took place between Stevin and prince Maurice, respecting the application of book-keeping to public accounts, and in which he explains to the prince the principles of mercantile book-keeping. This conversation commences with explaining the nature of debit and credit, and the principal accounts. Then follow a short journal and ledger, in which occur only the most common transactions; and the whole concludes with an account of the other books necessary for regular book-keeping, and of the manner of balancing. Stevin expressly says, that prince Maurice, in the year 1604, caused the treasury accounts to be made out after the Italian method, by an experienced book-keeper, with the best success; but how long this regulation continued I have not been able to learn. Stevin supposes, in this system, three ministers, and three different accounts: a quæstor, who receives the revenues of the domains; an acceptor, who receives all the other revenues of the prince; and a thesaurarius  (treasurer), who has the care of the expenditure. All inferior offices for receiving or disbursing are to send from their books monthly extracts, which are to be doubly-entered in a principal ledger; so that it may be seen at all times how much remains in the hands of each receiver, and how much each has to collect from the debtors. One cannot help admiring the ingenuity of the Latin translator 13 , who has found out, or at least invented, words to express so many new terms unknown to the ancient Romans. The learned reader may, perhaps, not be displeased with the following specimen. Book-keeping is called apologistica  or apologismus ; a book-keeper apologista ; the ledger codex accepti expensique ; the cash-book arcarii liber ; the expense-book impensarum liber ; the waste-book liber deletitius ; accounts are called nomina ; stock account sors ; profit and loss account lucri damnique ratiociniumcontentio  or sortium comparatio ; the final balance epilogismus ; the chamber of accounts, or counting-house, logisterium, &c.

In the end of this work Stevin endeavours to show that the Romans, or rather the Grecians (for the former knew scarcely anything but what the latter had discovered), were in some measure acquainted with book-keeping, and supports his conjecture by quoting Cicero's oration for Roscius. I confess that the following passage in Pliny,Fortunæ omnia expensa, huic omnia feruntur accepta, et in tota ratione mortalium sola utramque paginam facit 14 , as well as the terms tabulæ accepti et expensi nomina translata in tabulas, seem to indicate that the Romans entered debit and credit in their books on two different pages; but it appears to me not yet proved, and improbable, that they were acquainted with our scientific method of book-keeping; with the mode of opening various accounts; of comparing them together, and of bringing them to a final balance. As bills of exchange and insurance were not known in the commerce of the ancients, the business of merchants was not so intricate and complex as to require such a variety of books and accounts as is necessary in that of the moderns.

Klipstein is of opinion that attempts were made in France to apply book-keeping, by double-entry, to the public accounts, under Henry IV., afterwards under Colbert, and again in the year 1716. That attempts were made, for this purpose, under Henry IV., he concludes from a work entitled An Inquiry into the Finances of France; but I do not know whether what the author says be sufficient to support this opinion.

[The system of double-entry began from the commencement of the present century to be adopted by several governments in the management of the public accounts, among others by those of Austria, France and Holland, with highly beneficial effects. Some attempts have been more recently made in this country to introduce it into the government offices, and from the great success which has attended them, this system will probably soon be generally used.]

8  La science des négocians et teneurs de livres. Paris 1754.

9  Vol. i. p. 408.

10  Those who are desirous of further information respecting Lucas de Borgo, may consult Scriptores ordinis Minorum, recensuit Fr. Lucas Waddingus, Romæ 1650;—Heilbronneri Historia Matheseos universæ, Lipsiæ 1742;—Histoire des Mathématiques, par Montucla, Paris 1758.

11  Vol. i. p. 409.

12  The title runs thus: Ein Teutsch verstendig Buchhalten für Herren oder Gesellschafter inhalt wellischem Process.

13  Bayle says, that the Latin translation of Stevin's works was executed principally by Willebrord Snellius.

14  Lib. ii. cap. 7.