That time when bookkeeping gentrified greed

Don't listen to Mr. Anchovy; accountancy was once as exciting as lion taming

There’s a very funny old Monty Python sketch (most of them are, I suppose) where an accountant played by Michael Palin, goofily named Mr. Anchovy, goes to a vocational guidance counselor for helping looking for a new career. The counselor, played by John Cleese, says his experts described Mr. Anchovy as an “appallingly dull fellow, unimaginative, timid, spineless, easily dominated, no sense of humor, tedious company and irrepressibly drab and awful.” Those qualities, the counselor says, makes the perfect job for him an…accountant. Mr. Anchovy hates that. He wants to be, he says energetically, a lion tamer.

“It’s a bit of a jump, isn’t it?” Cleese deadpans.

Of course, the joke works only if indeed accounting is seen as, in the words of Mr. Anchovy, “dull, dull, dull, my god it’s dull, it’s so desperately dull and tedious and stuffy and boring and desperately dull.” And, well, no offense to any accountants reading this, but today that is pretty much how accounting is viewed. Important, but dull.

But 600 years ago it wasn’t dull. Far from dull, accounting was on the cutting edge of a cultural revolution that changed the world. Really! I spend a chapter in The Almightier explaining the entire story, but I’ll share a sketch of it here. Before double-entry bookkeeping, European merchants used single-entry, which was just a long, long list of transactions. These books weren’t just a jumble of numbers, either. They were long, narrative explanations of the business. They were essentially stories. In double-entry bookkeeping, every transaction gets recorded twice, once as a credit, once as a debit. It’s a superior form of accounting, because if the numbers don’t add up at the end, the error is easier to spot. But it wasn’t just dry efficiency that made double-entry so important.

I actually think this is one of the more revealing stories from the book and I hope it draws some attention, because it really helps explain how we got where we are today. Double-entry was introduced to Europe in the 12th century, and really came into its supremacy in the 15th when it was popularized by Cosimo de’ Medici and his Medici Bank. This is the period of time where Europe is emerging from the horrors of the Black Death, the 14th century pandemic that killed at least a third of Europe’s population, and maybe even half. Everything collapsed. They had to rebuild society, and since the plague kept popping up for another couple of centuries, people lived in the constant shadow of death. As you might imagine, this had an impact on the European mind. People became obsessed with confession, seeing it as a way to keep their souls intact should the icy hand of death suddenly reach out for them. People wrote down extensive catalogs of their sins, every single action, every single thought. They confessed to their local preachers constantly. (These details are largely from a 2005 book called Confession and Bookkeeping by James Aho; if you’re interested I’d highly recommend it.)

This is the culture into which double-entry bookkeeping fell. This new kind of accounting allowed merchants and bankers to tell a new kind of story about themselves. With the dual columns that showed a credit for every debit and a debit for every credit, merchants and bankers were able to show that for every thing they took in, they also gave something out. Usurers had for centuries operated in the shadows, their practice barred by law. Mainly this was because the practice of money-lending was seen as something that had a completely one-way effect. Productive resources went from the people into the hands of the usurer, and always to the detriment of society, and God. But now, they could show that it was a two-way street. For everything they took in, they also gave something out. They could, and did, argue that they weren’t just taking from society, they were giving something out as well. Double-entry bookkeeping was a way for the merchant or banker to prove their piety.

Double-entry metaphorically was like God’s big ledger in the Book of Revelations, which also had two columns, and recorded every deed every person committed in their lives—very similar to the lists of sins people were already making themselves for their constant confessions. God added up your sins and your good deeds, and if your final balance was positive, off you went to Heaven. If your final balance was negative, you got the lake of fire.

The accounting ledger with two columns kind of resembled God’s big book and it became a way to prove moral piety and religious fidelity. Using this balance sheet allowed merchants and bankers, and bankers especially, to rewrite the narrative around their businesses. This happened at a time when another idea was burrowing its way into the collective consciousness: that greed was actually beneficial, that the greedy man could be counted on to produce and contribute to society. These two strands combined in the European mind, and changed how Europeans thought about finance and commerce, and helped greed break free from the shackles that had bound it for millennia.

If you want to read more, pick up The Almightier (I know writers aren’t supposed to to be concerned about such things as commerce, but you know we’re yes merchants, too, at least when selling books, and as such we also need to have a positive balance sheet, or we’ll, like, starve.) You can read all about greed, bookkeeping, the Black Death, and much more.