Double Entry: How the Merchants of Venice Created Modern Finance

Ms. Gleeson-White's recent work on the history and impact of double entry accounting, originating most clearly in Italy in the 15th century, seemed like a promising read based on the advance promotion and the early chapters of the book that resemble historical scholarship. But the latter half of the volume took a sharp turn to the left, drenching the reader in neo-Malthusian, quasi-Marxist rantings that hinge largely on environmentalist dogma, especially the unproven and discredited notion that cyclical global warming, a phenomenon that spans centuries, has short term anthropocentric origins. As a result, the latter half of the book casts doubt on the author's work in the preceding half, which on a second reading seemed more derivative than original. As a CPA of more than 25 years experience who is naturally drawn to the subject matter, I had hoped for more from this work. What a disappointment. Yuck.

This is not your ordinary history book. In Double Entry, Gleeson-White transforms what is ordinarily the dull and boring subject of accounting -- think of all those Monty Python jokes about Chartered Accountants -- and turned it into an exciting, lively, and relevant history. Gleeson-White's narrative is lively, highly readable and well-research in an otherwise obscure area. She has woven this lively read into a unique insight of the role the Double Entry accounting system has played in making and ultimately un-making the modern world, financial and otherwise.

The Double Entry system of accounting is a relatively new phenomenon. In the thousand years since accounting has been in existence, the Double Entry system made its appearance only five hundred years ago, in Northern Italy, devised by Luca Pacioli. A brilliant polymath, Pacioli associated with the movers and shakers of the times such as Leonardo DaVinci, and others. In a critical chapter,

Glesson-White's book may be regarded as a short, introductory history of accounting. The Double Entry system emerged at a crucial time in history. It made its appearance following the invention of the printing press, the rise of the Venetian Merchant class, and the introduction of the Arabic-Vedic number system. Gleeson-White asserts that the Double Entry system fundamentally changed the way we regarded the world. Everything now was quantified, reduced to numbers. People began to be regulated by clocks and time; drafting maps became commonplace; vison was corrected by eyeglasses; attitudes to capital, interest and money changed.

But "All That Glitters is Not Gold." There is another facet to Geeson-White's book which is unique and refreshing. The book is also a critique and criticism of the ways accounting has been used by financial organizations. The Double Entry method changed the way we viewed the world by quantifying everything into debits and credits. It has not only defined and improved the modern financial world, it has also given rise the greatest excesses and scandals. The book begins with a speech by Robert F. Kennedy during his 1968 Presidential campaign, where he questions what the GNP, the Gross National Product, has come to mean and measure. In the stirring words of RFK, the GNP does not measure a nation's happiness, well-being, nor it natural resources, although it should. Fast-forwarding forty-five years later, Geeson-White describes those efforts at revising both accounting methods and the way in which the GNP is measured. The book ends with RFK's cautious and visionary words. Geeson-White shares that caution.

I am a CPA and I enjoyed reading the history of double-entry accounting. The chapters on the issues of accounting for the environmental cost of certain decisions was very thought-provoking. I read with particular interest on the issues of accounting and the ability of accountants to hide the true financial position of a company because I work in Houston in the energy industry and was very familiar with the Enron fraud. Accounting definitely influences decisions and the field needs to be taken seriously by its practitioners.

I agree that accountants can save the world but only with the help of others!

I use it every year when I file my income tax, but I never thought that accounting could be a fascinating story. The first half of this book is definitely first class, from the discovery of the arabo-indian (or Indian?) numerals in the West with Fibonacci (12th century) to the double entry that Venetian merchants began about the same time, although Pacioli did not finalize it until the 15th century.The narration by Jane Gleason-White is like reading a mystery boook, cannot put it down. The 2nd half of the book is more ordinary, with well known refrains I agree with but they are of no use to to-day's merchants, whose double entry has simply been transformed into double income. All n all, a good book.

Double entry accounting has but one purpose: to keep the books honest. Centuries of villainy, incompetence and poor memory in the world of commerce have proved that it is far harder for a bookkeeper to cheat anyone, including him or herself, with this strange, somewhat counter-intuitive, protocol.

It insists that without exception every entry must find its way separately on to two parallel columns. So if the value of a merchant's spices in his warehouse shoots up in value, it must be credited one way or another in one of the two columns as a new liability to the owners of the enterprise.

Ingenious, practical, and deceptively effective, double entry booking was developed by medieval Venetians merchants, codified by mathematician Luca Pacioli in 1492, and used ever since in ever more complex ways. Both the accountant and the accountancy profession were created.

The question may be whether double entry bookkeeping actually merits a popular history.
The answer is undoubtedly yes. Gleeson-White tells a fine tale of Pacioli, friend of Leonardo Da Vinci, and heir to Fibonaci (the numbers-in-the-natural-world man). In a highly readable style aimed squarely at the lay reader, she weaves together the rise of modern mathematical notation, printing, junking Latin in favour of Italian and many other strands to explain how Pacioli's book had such an impact. Today's most complex and heavily automated accounting system are all the linear descendants of this invention.

So was double-entry bookkeeping a creation of capitalism or was it the other way around? Perhaps inevitably, the author opts for the big, bold thesis that this new accounting system more or less created capitalism. This, she cheerfully admits, entails that double-entry then helped to precipitate financial engineering with all the excesses of the banking crisis. So the iron rule holds that each entry in one column finds itself set against an entry in the opposing one.

This gracefully written history of accounting illuminates the origins of a profession which has become both enormous and vitally important to the world of business. Amazingly, little has changed in the basic structure since Pacioli first wrote his treative 500 years ago. As a bonus Ms. Gleeson-White draws a lovely picture of life in Venice and the intersection of mathematics and art. She ends the book with a challenge to our profession, to use our skills to investigate Sustainability, probably sound advice.

Stanley Goldstein, CPA
Chairman, New York Hedge Fund Roundtable

This is an amazing story of the birth of the accounting method known as "double entry" that is still used today. As an accounting major in college, I remember hearing the name Luca Pacioli, but none of my accounting courses dwelled on the man or the time in history that he occupied. After working in the accounting profession as a certified public accountant and as a corporate financial officer with a publicly-traded corporation, I have finally learned of the origins of my profession.

The history that the author explores is fascinating. From the development of double entry accounting to aid the merchants of Venice to the spread of knowledge throughout Europe as a result of the printing press, the reader will be lead on a journey on the development of capitalism as we know it today.

In my opinion, the author has been somewhat harsh in judging the auditing profession, because of some major accounting frauds, which have been highly publicized. Having been a part of the profession and having worked on the other side of the table, from my view point, the profession, in my opinion, is highly ethical and I am proud to have been a part of it. Having said that, I do agree that there have been some real blunders on the part of certain individuals, intentional, as well as unintentional, which have cost investors a lot of money.

The only puzzling thing about the story is the author's criticism that the double entry accounting system isn't being used to account for the depletion of the natural resources and harm to the environment in calculating Gross National Product. The story opens with a speech by Robert F. Kennedy wherein he comments that GNP does not account for the destruction of our nation's environment, the health and welfare of our citizens, and a number of other intangibles that make life worthwhile. At the end of the book the author devotes a whole chapter to this subject.

At first, I found the discussion annoying; however, after thinking about it, I found it to be thought provoking. I am still thinking about how double entry accounting could ever account for such events. Generally, speaking, "cost" is the basis for almost all accounting transactions. There are times when judgment is needed to make allocations between accounting periods, such as the computation of depreciation or the calculation of loss reserves, but the underlying concepts are based on "cost". So what would be used to account for the destruction of our environment or the depletion of the country's natural resources? I don't think the cost of the Louisiana Purchase would provide any meaningful information. Perhaps, this is an assignment for the academics in our universities.

Again, I found this whole discussion puzzling and started to wonder if the author was only writing about the history of double entry accounting to establish a platform to discuss a more esoteric topic. Nevertheless, I did enjoy the book.

I have mixed feelings about this book.

Certainly it's really well researched, and the historical aspects are fascinating. Double entry bookkeeping may sound extremely dull but in fact it was a brilliant invention that's lasted centuries and remains at the heart of even the largest of today's megacorps.

The book explains this history and evolution, along the way dispelling myths about how it came to be, setting the record straight, and providing fascinating details and insights. The research was obviously extensive and impeccable, and the interpretations logical and compelling.

Up to a point.

The latter part of the book gets into what is commonly called social justice, and how accounting needs to change to take into effect various modern issues such as the environment. I neither dispute nor agree with these claims in this review; that's a different discussion. My point is that the book would have been better as an informative and entertaining history rather than veering into modern issues.

That's not to say that the discussion of how accounting should change in today's world is invalid or unnecessary. Far from it. It is to say that this was not the right vehicle, and in mixing this with what was supposed to have been a history and an historical interpretation, the book loses some effect and perhaps some credibility.

But I still rate it four stars. It's a great book to read and you'll learn a lot from it.

A clear and compelling explanation for the impetus to the end of the MIddle Ages. An original and persuasive argument.

The origin of double entry bookkeeping would have been of interest. The book did not address this subject in any manner