Double entry book-keeping is still in use to day and it differs little from the system developed in Italy in the late thirteenth century.[1] It was first widely used in Tuscany and from the 1360s to 1410 there have survived, among others, the account books and auxiliary and sub-books of Francesco di Marco Datini, some 600 of them in all.[2] The first known double entry ledger for a Milanese bank, that for Marco Serrainerio & co., dates from the second half of the fourteenth century and the first surviving ledgers for any of the Borromei companies is that for Giovanni Borromei & co. of Milan for the year 1427, beginning on 1 January and ending on 31 December.[3] By this time it was a fully-fledged system and its basic principles must be understood before any sense can be made of the accounts as presented in the ledger and the database. The first is that the entries record the account of each of its clients with the bank, how much the bank owes the client, how much the client owes the bank. It is the mirror image of the statement a modern bank sends to its clients or account holders. When he or she looks at their statement, they can clearly see whether or not they are in credit. The bank’s view is different. It sees the client’s credit in terms of how much it owes or is in debt to the customer. If the client writes a cheque to pay a third party through the bank or to cash from the bank, then it reduces the bank’s debit to that client and the payment out is recorded by the bank on the debit or dare side of its account, always on the left hand-page of the folio. Confusingly, then, the bank’s debit side is the client’s credit side. The reverse is also true so that the credit or avere side of the bank’s accounts shows how much the client owes the bank. This principle has to be grasped from the outset. Failure to do so will lead to great confusion, as one of the present writers has discovered.

            The second principle follows from this. Whenever a transaction takes place in one account, it is matched by a parallel transaction in another account. Two examples from the account of Ubertino de’ Bardi & co. show how this worked in practice. On 3 May 1438 the bank paid Anichino, the Bardi’s valet, £49 flemish at the fair at Bergen-op-Zoom. This increased the amount the Bardi owed the bank and so appears on the debit or dare side of their account at f. 52. As it was a cash payment, the parallel transaction appears in the account for Cash at Bergen-op-Zoom on the avere side as ‘Cash paid for Ubertino de’ Bardi & co’, also dated 3 May. This is money going out of the bank’s own cash account and has to be recorded on the avere or credit side. Here there is a curious mixture of ‘paper’ money and ‘real’ money. The cash was certainly paid out in coin whilst the sum debited to the Bardi was the ‘paper’ equivalent, since it simply added to the Bardi’s general indebtedness to the Borromei of Bruges.[4] In other types of transaction no ‘real’ money was used at all. Girolamo Lomellino gave either a verbal or a written order to the bank on 13 June to make a payment from his account to the Bardi. Consequently, his account was debited for £95 flemish and the Bardi’s credited with the same sum, but no money actually changed hands.[5] This was a paper or book transfer, a giro di partita, as indeed were most of the transactions recorded in this ledger. The amount Lomellino owed the bank was increased, the amount the Bardi owed the bank was decreased and both would make their settlement with the bank, again probably on paper, at the end of the accounting period. In both these examples the folio number of the account to be debited or credited is noted at the end of each of the transactions. In the case of the cash payment, on the dare side of f. 52.1, it reads ‘in credito a la cassa, f. 59’ and the parallel entry on the avere side of the cash account (at f.59) has ‘a loro [the Bardi] in questo [this ledger], f. 52’. Similarly, the book transfer reads ‘Per lui [Girolamo Lomellino] a Ubertino de’ Bardi e compagni a loro [the Bardi], f. 52’ on the dare side of Lomellino’s account (at f.16) and ‘Per Girolamo Lomellino a lui in questo [this ledger], f. 16’ and the avere side of the Bardi’s account (at f. 52). This was essential book-keeping practice, since all accounts had to balance and cross-checking for errors without cross referencing was and is nigh impossible.[6]   If confusion now reigns, then it will probably help if the following points can be remembered:

 

(i)                  Money coming in to reduce the amount the bank owes the client is always a debit for the client and appears on the left hand side of the folio.

(ii)        If a payment is made from the dare side of one account, then the double- or cross-entry will appear on the avere side of the other, and vice-versa. Newton’s third law of motion, that to every action there is an equal and opposite re-action, applies to double entry book-keeping as well as to physics.

(iii)               The date, the amount involved and the purpose of the transaction should be the same in both entries. If, for any reason, they are not, then an explanation is usually given at one or the other of the entries.

 

            The third principle is that a client could have more than one account, as could the bank, for its own business. In fact, most did not, in this ledger at least. They had one current account which might appear only on one folio in the ledger or could be carried forward to another folio, for reasons that are explained below. More established clients usually had several different accounts, a current account, an account for a specific purpose (a ‘conto a parte’), a trading account to buy or sell wool, cloth, madder and other commodities and sometimes ‘nostro’ and/or ‘loro’ accounts.[7] With the exception of the last two, which were and still are accounts kept abroad by a clent for the bank itself in a foreign currency and accounts kept in Bruges by the bank for clients based in Venice, Florence, Geneva, Barcelona or one of the other major European banking centres in the local currency, the same is true today. Modern business have their own cash accounts and other accounts for costs, expenses, sales and loans from individuals or banks. There will be payments from and into them both internally, from one account to another, and externally for the purchase of raw materials or other goods and services and the sale of the finished product, the company’s own services and salaries to its employees. Modern bookkeeping is done electronically. All a client’s accounts appear together in one file or folder, rather than being scattered through the ledger. A medieval scribe could not do that, simply because of physical problems of space. Whilst a small account of a merchant or tradesman who did little business with the Borromei could be and was kept on one folio only, for more substantial clients that was nigh impossible. The Bardi appear to have five separate accounts with the bank. In fact there are only three. The first and most substantial is their current account for the year 1438 from January to December. It begins on f. 23.1 and opens with a transfer of debit from the previous ledger, the libro morello. When their account for 1437 closed the bank still owed the Bardi £113.15.4 flemish. This was carried forward to the avere side of their new account for 1438, to show that the Bardi were in credit with the bank. Normal payments on both dare and avere side continued until the scribe reached the foot of the folio or the end of the space allocated for the account on one side or the other. Then he had a choice. If there were only a few entries left to be made, then they could be continued on the opposite side of the page, provided there was room for them. This is why avere entries are sometimes found on the dare side of the folio and vice-versa. If both sides were full, then the account had to be carried forward to another folio. That is what happened to the Bardi account at f. 23.1 which continues on f. 52.1 and then on f. 105.1, but it is an entity and not three separate accounts. The company also had two ‘conti a parte’, one at f. 118.1 to deal with business concerning Gherard Petrizon of Holland and the other at f. 237.2 for Rugieri Rubin of Courtrai/Kortrijk.

Other clients also had accounts for specific purposes. Gabriello and Agostino Ruffini used the bank to sell needles for them at Bergen-op-Zoom and their account at f. 232.2 deals with nothing else. Arrighino Panigarola of Venice sent a consignment of raw silk to Bruges and the bank set up a separate account for this operation at f. 353.2 which contains details of its sale and the commission and brokerage Panigorola was charged. The bank itself kept separate accounts for its own business ventures. It bought English wool in 1437 which was then sold for them in Venice by Arrighino Panigorola: the account at f. 353.3 simply tides up that operation with money carried over from the libro morello and a transfer to the Profit and Loss account. That was one of its operations. Another was for 39 sacks of wool which were sent to Milan via Catalonia and again there is a completely separate account for this, because it was sold for them by the Borromei Milan.[8] Separate ventures with different clients required either a new account or the continuation of an old one, but not necessarily on the same folio. To a modern eye some clients seem to have far too many accounts. In reality, a closer look shows that some of them were simply parts of one whole whilst others had been opened for specific purposes, such as the sale or purchase of cloth or wool.

That brings us to the next and perhaps the overriding principle, that each account or part of an account had and has to balance. The somma at the end of the dare side must equal the somma at the end of the avere side. If it did not, then a mistake had been made and it was partly to detect such errors, accidental or fraudulent, that the double entry system had been developed. All forms of medieval accounting were based largely on the principle that fraud was inevitable but could be at least avoided if simple rules were followed and double entry was no different. If, however, there was a legitimate reason for the difference between the two sides, showing that the client was either in debit or credit to the bank, then a balancing sum was inserted, to be carried forward to the next part of the account or the next ledger. A debt to the bank could also be written off, if for whatever reason, it was decided not to collect it. The standard method used in this ledger was to debit the sum from the avere side of the account to a specific section of the bank’s cash account, at f. 246.1, with the accompanying note, ‘We did not receive this money but do not want to carry this account forward to the next book.’[9] In one case only the sum was debited to ‘the note book’, possibly for a special reason since the client was the notary Maurits Hoosch, whose services the bank used fairly frequently.[10]

Mistakes were made, however, and were not easily corrected. Sometimes it was the bank’s fault, although clients could complicate matters by asking to be debited or credited at an account other than that in which the transaction had already been recorded. A combination of the two could lead to a flurry of cancellations, within the account itself and usually written in the form ‘To cancel an entry on the dare or avere side of this account because…’, cancellations at the cross-entry and then a new record being inserted in the correct account. The bank completely muddled some bills of exchange in the account of Bernardo da Uzzano & co. of Barcelona. First it credited them at their previous ‘conto nuovo’, rather than at the new account created for the purpose. Then it debited Filippo Borromei & co. of Barcelona for one of the bills, cancelled that entry and wrongly credited Filippo Borromei & co. of London. Eventually the debit to the  Borromei of Barcelona had to be restored since the Uzzano had twice written to the bank, telling them that they had already paid the Borromei of Barcelona the sum involved and that theirs was the account to be debited. The flurry of cancellations can be followed through the various accounts and it is worth noting the explanation given for the alterations on f. 237.1, ‘For the correction of many mistakes both on the dare and the avere side of this account. But instead of changing many entries we have calculated the total of both sides and credited them with the difference…’[11] Clients could also renege on agreements, however, and leave the bank flat-footed and having to alter ledger entries. Such was the case when it thought it had an arrangement with Jan Barto, an oil merchant of Bruges, to pay Derec de Rovere, grocer of Bruges, £300 flemish on their behalf. If a client owed the bank money it was common practice for the bank to ask him to make a payment for the same amount to another client, thus discharging his debit. So Barto is first recorded as making the payment but then it had to be cancelled in both accounts because the oil merchant alleged that ‘he had neither paid nor promised to pay that sum to de Rovere.’[12] Small wonder that the bank gave up in the matter of the Uzzano’s account and acknowledged the error of its ways. When all mistakes had been corrected, all payments made or received and the account balanced, then and only then it was crossed through, with a single slash, on both the dare and avere sides.[13] If this was not done, then the account remained unbalanced for one reason or another and the matter would have to be settled by negotiations between the bank and the client.[14]

            The final question to be asked to be asked in this section is, given its complexities, why use double-entry at all? In an important article, the accounting historian R.A.Bryer has provided us with a comprehensive discussion of this issue.[15] He begins by arguing that double-entry was and is a method of recording transactions so as to calculate automatically their effect on both closing an opening equity and profit or loss. Each transaction can also be judged according to its effect on the rate of return on capital, however, a point often overlooked in other studies of the emergence of double entry.[16] Single-entry bookkeeping is no more than a list that records the effect of each transaction on net assets. The important difference between the two systems is that double-entry automatically produces equity and profits whilst single entry does so only after subsequent calculation that involves the deduction of closing from opening net assets and adjustments for capital transactions.[17] Put more crudely, one system does it for you and has to produce the right answers because accounts must balance, the other requires a great deal of hard work.

            Bryer then moves to a discussion of two central questions, why double-entry appeared when it did and why it was used. He sees them both as linked to what Marx calls ‘social capital’, that is the change from the investment of capital by an individual or a family to multiple investors, each of whom would expect an equitable return on his investment. If the over-all return on capital was 12 per cent, then he, she or it, if another company had invested funds in the bank or other enterprise, would expect a 12 per cent return on the amount their capital. This change coincided with the ‘commercial revolution’ in northern Italy between 1250 and 1350 which also saw the introduction of Hindu-Arabic numerals and the growth of literacy there.  Bryer might also have considered the enormous growth in the money supply in the thirteenth and early fourteenth centuries and, in northern Italy, the re-introduction of gold coins that circulated alongside the ubiquitous silver coinage.[18] This was now a money economy and that of itself stimulated the demand for better accounting practices. So did the growth of the sedentary merchant and the use of agencies or correspondents in another city or another country, so obvious in the two Borromei ledgers and already discussed here. This required accurate accounting in order to keep track of all transaction and double-entry could provide it. Had Bryer looked at a ledger rather than relying primarily on printed sources, then he might have appreciated more the complexity of the business done by an Italian merchant bank based abroad in northern Europe as one of the major stimuli to the emergence of double-entry bookkeeping.

            Nevertheless, the point he makes about the change in the nature of investment from individual to social is important. Double-entry was an essential part of this change because it did allow the relatively easy calculation of profit and loss. This could be done at regular intervals, at the end of a given period or of the financial or accounting year or at the end of the contract establishing the partnership or bank, which might run for four or five years. The ledgers of the two banks in Bruges and London show the method used by the Borromei, which seems to have been a division of profits and losses at the end of the partnership. Bruges handled a far greater volume of business than London, mainly in exchange transactions, and at the end of each year (31 December) the ledger was closed. Balances were carried forward to a new ledger on 1 January but the profits and losses of the year were not automatically transferred to the libro segreto, to be divided amongst the partners. In fact, those for 1437 were carried forward to ‘our book’ for 1438 and those for 1438 not to the ledger for 1439 but to the libro bianco of 1440.[19] The profits from London had to be transferred to Bruges anyway, but as the volume of business done there was less than at Bruges one book was used to record four years of transactions, each year being treated separately as a ledger in itself. The profit and loss accounts were drawn up on an annual basis, which means that at some point in the year the London branch had to close its its books to draw up a balance. These were then carried forward to the next year and on December 31 1439 to the new ledger for 1440, now lost. These were, of course the bank’s own profits and losses on trade and exchange. Clients presumably kept their own records of their dealings with the Borromei or had copies of them made so that they could calculate their own profits and losses in much the same way.

 

 

This was a ‘final’ ledger in the sense that it was the end product of a series of accounts kept in journals or day books, books of merchandise and commission payments, note books, copies of bill of exchange or letters of advice sent to them or by them and instructions received from their clients or sent to clients or correspondents abroad.[1] Extracting the information from these varied sources and then writing the entries for each transaction twice, according to set formulae for different types of payment or transfer must have been an onerous task. Yet, the ledger is written all in one bold, clear hand, presumably that of the cashier or treasurer, Felice da Fagnano. This would have required a complete understanding of the bank’s business because the ledger is not a random list of accounts but has its own internal organization. Folios 3-151 and 230-54 (with 220-29 and 255-63 left blank) contain the company’s own accounts and those of clients who were resident in Bruges. Folios 264-351 and 391-96 were for ‘conti nostri’, that is, accounts kept abroad for the bank by one of their correspondents and in both the local currency and the £ flemish. Their purpose was allow the bank to conduct its business in, say, Venice using the Venetian lira di grossi. In the example shown below, there are two columns on the right hand side of the dare section of the bank’s ‘nostro conto nuovo’ with Cecco di Tommaso and brothers of Venice. The first is kept, using hindu-arabic numerals, in the £ venetian, which explains the four divisions, the second in the £ flemish, for which roman numerals were used.

 

 

            Figure 5. F. 329 dare and avere, showing the Borromei Bruges’s ‘nostro conto

            nuovo’ with Cecco di Tommaso and brothers of Venice, kept in two currencies.

 

The nature of the business can be seen in the translated versions of the first two entries on the dare side where Cecco di Tommaso and brothers take up bills of exchange in Venice for the Borromei Bruges which are then remitted to the Borromei Barcelona for payment. On the avere side there were payments of bills taken up in Geneva for the Borromei Bruges and remitted to Cecco di Tommaso and brothers, who paid themselves – ‘in loro medesimi’. This was a transfer of funds from Geneva by the Borromei Bruges, through their local agent, Arrighino Panigorola to Cecco di Tommaso and brothers of Venice.

            In exactly the same way the bank kept ‘loro’ accounts in Bruges for clients in other countries, These were in the £ flemish only and record the business done in Bruges by the bank for the client.

 

 

            Figure 6. F. 184 dare and avere showing the ‘loro’ account of Cecco di Tommaso

 and brothers of Venice, kept in one currency.

 

 

The loro accounts , which are also known as ‘vostro’ accounts, can be found in the ledger at folios 152-219. Finally, the accounts for merchandise and expenses were at the end of the ledger, on folios 352-88, with the last two folios, 389-90 left blank.

            These were practical and sensible arrangements. Different types of business were clearly distinguished and Felice da Fagnano, as one of the senior members of staff as well as Count Vitaliano’s brother-in-law, would have understood this. Whether he made up the accounts at the end of each day, week or month is not known but internal evidence from the ledger suggests that was done on a regular basis, as might be expected. The Bardi’s main account began on f. 23 with the first entries dated I January 1438. From then it ran on to 29 March, when it was carried forward to f. 52. There the first entry is also for 29 March and the last on 8 September, but the accountant must have realised that he was already running out of space because he began the third and final section on f. 105 with some over-lapping entries for 19 August. The whole account ended on 16 December and, unusually, was not carried forward to the libro azzurro, as many other accounts were. There is also one other hint that writing up the ledger was always ‘work in progress’. In late March 1438 it was sent from Bruges to Antwerp, perhaps in anticipation of transactions to be recorded at Passmarkt at Bergen-op-Zoom, which in that year began on 10 April. Interestingly, in the light of what has already been said about co-operation between the Borromei of Milan and the Borromei of Venice, it was Alessandro Borromei and Antonio di Francesco & co. who paid 12 groschen for the carrying costs.[2]

 

 

Each entry in the ledger had to show clearly from whose account a payment was being made and into whose account that payment was going and vice-versa. All parties involved in the transaction were named in at least one of the accounts being debited or credited and if there were any conditions attached to the transaction, then they were also noted. That may sound straightforward but the reality is considerable variations in the terms used to record payments or transfers and this has posed formidable problems of translation and calendaring. As no-one has transcribed and translated an entire ledger before, there were no examples for us to follow. It was decided from the outset that the ledger would be calendared rather than transcribed so that short English versions of the original Italian records could be entered on the database. Consequently, the first few months of our joint work on the Project were spent establishing the formulae to be followed when translating the entries. The English versions had to mirror the Italian and show  clearly and concisely how and why the money was being debited or credited from one account to another. This was also necessary for achieving consistency of data entry and the list of formulae became and remains an essential working tool. There have been continuing alterations and additions to this list as the accounting procedures and practices became clearer and new and different types of entry were encountered. Problems remain, however, and there are some entries with less than satisfactory translations, in our opinion. More difficulties are likely to be encountered as work on the London ledger progresses and if users of this website discover errors in the translations or can suggest alternative and better versions, we will be glad to hear from them.[1]

            In George Eliot’s novel Middlemarch the Reverend Edward Casaubon spent his whole life trying to construct a Key to All Mythologies. He died in the attempt and we have no desire to follow him by struggling to provide a Key to All Entries. Nonetheless, some explanation of the methods used to translate and calendar the various transactions has to be given, always remembering that these were the bank’s accounts with its clients and not the reverse. Payments can be divided into four very broad groups:

 

Those made by the bank either to the account holder or to a third party on his or her behalf.

 

Those made by the account holder either to the bank or to a third party.

 

 

Those made by a third party, usually the holder of the account at the double entry cross-reference, to the bank or to the account holder.

 

Those made from or into the cash account to the account holder, by the account holder or to a third party on his or her behalf.

 

 

No such distinctions were drawn within the accounts themselves. An entry recording a cash payment can be followed by a book transfer to a third party and then by a bill of exchange. But each of these groups has a phraseology or, perhaps better, a terminology of its own which, of course, also varies according to whether the transaction is recorded on the dare or the avere side. This can best be demonstrated by showing some of the formulae used for the first of the above groups:

 

Payments etc. made by us (Borromei Bruges) D = dare  A = avere

a) to the account holder

D Li demo contanti                                                              Paid in cash to him / them

D Li demo in BF                                                                  Paid to him through BF

D Li demo in BF e il detto per GR                                       Paid to him on behalf of GR

                                                                                           through BF

                                                                                           July

D Li mandamo contanti per BF                                           Paid in cash to him through BF

D Diè contanti per lui a BF Paolo nostro                           Paid in cash for him to BF by our

                                                                                           Paolo [da Castagnolo]

A Li facemo buoni per GA                                                  Made good (‘facemo buoni’) to

                                                                                           him for GA

A Li promettemo per BG                                                     Promised by us to him for BG

b) to a third party

D Per GU                                                                            Paid to GU by us on his behalf

D Per lui a GA                                                                    For him to GA

D Demo contanti per lui a GA                                             For him, cash, to GA

D Facemo buoni per lui a GA                                             Made good (‘facemo buoni’) for

                                                                                           him to GA

D Promettemo per lui a GA                                                 Promised by us for him to GA

D Demo per lui a GA in FS                                                 For him to GA through FS

D Per lui a GA e a lui li demo in FS                                    For him to GA through FS

D Ne schrissono faciessimo boni per loro a GA                  Made good (‘facemo buoni’) to GA

                                                                                           on their instructions             

 

    What should be immediately obvious is that there were many different ways of saying the same thing. The bank could pay; promise to pay; make good; pay for, that is, on behalf of the account holder; pay to a third party; pay to the account holder through a third party who himself would be a debtor to the bank; or pay for the account holder to a third party who then paid a fourth party although the payment to the fourth party was actually made by a fifth party. There are six more pages of these formulae,

with notes or highlights marking uncertainties about the translation and interpretation of the original entries. Where possible, the Italian word order has been followed but in some cases that was neither practical nor desirable. The most notable are the bills of exchange and letters of advice. The acceptance or payment of a bill was usually set out in a complex sentence that indicated who had delivered the bill, who had taken it up, who had agreed to pay it and who was to be paid.[2] In the following example the Bardi of Bruges were takers of a bill of exchange for 800 scudi or flemish écus at an exchange rate of 7s 5d of the £ Barcelona per écu. The Deliverer sent the bill to the Payee in Barcelona; the Taker would write to the Payor in Barcelona with instructions to pay it to Payee at usance, that is 65 days from the writing of the letter. The Italian entry reads:

 

Ubertino de’ Bardi e compagni deon havere … sono per una lettera ne fecie a Barzalona di scudi 800 a s7 d5 per scudo per dì 65 fatta insino a dì 5 di questo in Antonio de Pazi e Francesco Tosinghi i quali rimettemo a Bernardo da Uzano e compagni per loro conto a loro, fo 168

 

The text of the database entry has been simplified to show all the relevant details:

 

                                    Bill of exchange for sc. 800 at s.7 d.5 per sc.

                                    Deliverer: Borromei Bruges

                                    Taker: Ubertino de' Bardi & co. of Bruges

                                    Payor: Antonio de' Pazzi and Francesco Tosinghi of Barcelona

                                    Payee: Uzzano & co.

                                    Letter written: 5 February. Settlement date: 65 days from date [11

                                    April]

                                    At Uzzano & co., f. 168[3]         

 

The word order of letters of advice has also been changed to clarify their purpose, that is, who was to be made creditor, who debitor, for what sum at what interest rate and where. On 5 February 1438 the bank wrote to Cecco di Tommaso and brothers of Venice asking them to make its client Marco da Suigo of Milan debtor and it creditor in Venice on the following 13 March for 60 ½ venetian ducats at grossi 48 per ducat. In Italian this reads:

 

        Marco da Suigo de’ havere a dì 5 di febraio £12 2. sono per ducati 60 ½

        schrivemo a Venezia a’ Tomaxi il faciessino debitore per dì 13 di marzo e noi

creditori conti con noi a grossi 48 per ducato. A detti Tomaxi in debito in questo, fo 283

 

This has been translated as :

 

        For our letter to Venice to Cecco di Tommaso and brothers instructing them to

        make Marco da Suigo debtor and us creditors on 13 March for v.d. 60 ½ at gr. 48

        per v.d., f. 283

 

Our aim has been to make it quite clear in each case whose account was being debited or credited or, to put it simply and the question we most frequently asked ourselves, ‘Where was the money going?’ Three other basic principles have also been followed. Material in round brackets in the text of any entry is original, that is, it appears in Italian in the ledger entry. It has been entered in this way for the sake of convenience or where there is doubt about a particular word or name. Square brackets signify editorial additions or notes. One of the two entries often contains more information than the other and that has either been added to the text or cross-referenced, in square brackets. Original errors have also been noted in this way, be they differences in dates or exchange rates. Lastly, editorial doubts have always been indicated by question marks. Users can pursue these doubts further by consulting the digital image of the account or entry in question.

 

The most common dictionary definition of money of account is ‘a monetary unit in which accounts are kept that may or may not correspond to actual currency denominations.’ This confuses as much as it clarifies but it does at least provide a starting point for discussion. A glance at any folio of the Borromei Bruges ledger will show the accountant’s or the book-keeper’s problem quite clearly. He was faced with a multiplicity of coins and currencies, Flemish, English, Venetian, Milanese, Florentine, Rhenish, Genevan, many of them used in exchange transactions, others actually in circulation on the local money markets.[1] The solution that was found to a problem common all over western Europe was to use money of account. This was based on the old Roman system of pounds, shillings and pence, libra, solidi, denari or denarii. There were 240 pence or pennies to the pound, 12 pence to the shilling and 20 shillings to the pound. The only one of these denominations that actually existed was the penny, almost always a silver penny. The other two were accounting units only: shillings or schillings were minted but scarcely ever to the value of 12 pence. The face value of all other coins, silver or gold, was related to the penny. The Flemish groat was worth four silver pennies or groschen and the Flemish gold écu was worth 24 groschen, the English groat 4 silver pennies or sterlings, the English gold noble 80 sterlings or 6s 8d, the Venetian ducat 24 grossi and so on. There were no pound coins: it was simply a unit of account.

            The best way to understand this is to look at a worked examples, once again from the account of Ubertino de’ Bardi & co. of Bruges at f. 52.1. On 29 May the company delivered 900 flemish écus to the Borromei Bruges who took it up on behalf of Benardo Uzzano and Diego degli Alberti of Basel, one of their clients.  The Borromei Bruges drew on the Borromei London to pay Ubertino de’ Bardi & co. of London this money, in sterling, at an exchange rate of 20 11/12 sterlings per écu. All that had to be recorded in the right-hand column in this ledger was £90 flemish, as there were 10 écus to the £ flemish. The yield of this bill in sterling in London can be calculated quite simply by multiplying 900 by 20.917 (the decimal equivalent of 20 11/12) and then dividing by 240 to obtain the answer, 78.438 or £78 8s 9d sterling. The bill first appears in the London ledger in the Borromei Bruges’s ‘loro’ conto. The same details are recorded in the text, 900 écus at 20 11/12 sterlings per écu but £78 8s 9d was debited to this account and the same sum credited to Ubertino de’ Bardi & co. of London.[2] Both ledgers were kept by using money of account, but in Bruges it was the £ flemish and in London the £ sterling. Both were directly related to the value of the silver penny, the groot vierlander and the sterling, and both were composed of 240 pennies and 20 shillings of 12 pence each to the £. The exchange relationship between the two was determined by the value of the specie, the gold and silver, in their coins, according to its worth on the open bullion market. It was in England’s favour in 1438, since £90 flemish was worth £78 8s 9d sterling, the écu of 24 groschen being worth only 20 11/12 sterlings. But the Borromei Bruges kept their accounts in the £ flemish, the Borromei London in the £ sterling and all transaction had to be entered in the local money of account. It was the only possible way of accounting for a bank dealing in international exchange and commerce.

            By now it will be obvious that the accounts were kept using both hindu-arabic and roman numerals. Hindu mathematicians had first used the zero figure and by the third century BC numbers with units, tens, hundreds and thousands were found all over the Indian sub-continent. The numerals and the decimal system that went with them were spread to the west by the Arabs. The great mathematician Al-Kwarizmi wrote two fundamental treatises on algebra and arithmetic about AD 820 and these were translated into Latin and passed to western Europe via Muslim Spain, then one of the greatest intellectual centres in the world. Their use was spread through the works of Adelard of Bath, the English mathematician and natural philosopher who translated Al-Kwarizmi’s treatise on Arithmetic into Latin in the mid-twelfth century and, in Italy, through those of Leonardo da Pisa or Fibonnacio, whose ‘Liber Abbaci’ first appeared in 1202. The first four seven chapters of this work describe the practice of arithmetic, using the nine hindu-arabic numbers, 1, 2, 3, 4, 5, 6, 7, 8, 9 and the zero figure. The next four chapters were entirely practical and aimed at merchants since they contained problems directly of concern to them, such as prices, the calculation of profits, barter, the computation of interest, currency conversion and metal alloys. The spread of roman numerals was slower than might be expected, especially in England, but in 1299 Florence banned their use because they could easily be forged.[3] That also explain why roman numerals were retained. They were of little use in arithmetical calculations but less easy to forge, or so it seems to have been thought. Consequently, in the two Borromei ledgers both systems were used. Sums of money and all fractions in the text were given in hindu-arabic figures  and, in lengthy accounts with many entries, Felice da Fagnano and his counter-part in London Niccolò Micheli calculated sub-totals and final totals using them. These appear as small notes, sometimes barely decipherable, but it is clear which system was used to add and subtract. The ‘column of record’, as it were, on the right hand of both dare and avere, was kept in roman numerals, however, as were the somma. Either the fear of fraud or simple inertia had preserved an obsolete Roman heritage.

 

 

Roundhouse Software Ltd. was commissioned by the Borromei Bank Research Project in 2001 to construct a database with two main functions. It had to produce a searchable record of each account in the ledger and of each entry in those accounts. In addition, when information was entered on the database, it had to be stored for further analysis by a second program, Historic Accounts Enquiry®, that has not been made available here. This sits on top of the database of record, as it were, extracts information from it and presents that information in a variety of different ways so that, for example, it is possible to track movements in exchange rates between major centres and display the results in the form of graphs. The database was written using MS SQL Server 2003, Access Database Project and Visual Basic. The original version was first tested in Spring 2001 and since then it has been modified extensively to overcome practical problems encountered and to improve its working. The version now being used is Roundhouse-Queen Mary Historic Accounts® 2.1.14. If further funds become available, it is likely that there will other improvements to it.

            Figure 7 shows the raw data, as it were, again using part of the account of Ubertino de’ Bardi & co. of Bruges.

 

 

Figure 7. Opening section of the dare account of Ubertino de’Bardi & co. of Bruges, f. 52.1.

 

 This is a typical mixed account, containing a variety of different types of transaction from bills of exchange to payments to another account-holder by book transfer (no cash involved) or cash payments through the Borromei’s cash accounts. Each entry on the folio is entered on a standard form like this:

 

 

            Figure 8. Blank data entry form

 

The name of the account holder is accessed from a main list. The folio number refers to the original number of the folio on which the account was entered, the suffix .1 shows it is the first account on that folio. Both these entries appear automatically when a new entry for this account is begun, as does Bank Folio Type which is either D for dare or A for avere. The date of the transaction, its value in £ flemish and, under Notes, a translation of the transaction according to the set of formulae already discussed are entered, along with the folio number on which the cross-entry appears, the Transaction Type and any comments or queries the operator may have.  This is the data entry for the first item on the dare side of the Bardi account above, a bill of exchange.

 

           

Figure 9. Data entry for a bill of exchange.

It shows the currency involved, the exchange rates, the parties to the bill (the Payee, the Borromei Bruges, is not shown), vital for knowing which way the money is travelling, in this case it is from Venice to Bruges . It also contains the settlement date, when the bill was paid, and the folio number of the other account where the entry will be found. The double entry folio number has to be recorded precisely to cross match it (which is done automatically when all the data is entered) and to ensure that the sum involved is not counted twice when the account is analysed. Finally, the type of transaction has to be entered for purposes of analysis. The next two figures shows how this is done for bills of exchange, by first recording the exchange rate on a drop-down and then, on a second drop down, the parties to the bill, to track its direction, which in this case is from Venice to Bruges, with all the names having to be taken from a central list – the program will not accept any other versions.

 

 

 

Figures 10-11. Data entries for exchange rates and parties to the bill of exchange.

These processes are followed for each of the entries on the account, both dare and avere. Different types of transaction are recorded in different ways, using different codes and different drop downs. The end product is a bank statement for that part of the Bardi’s account entered on f. 52.1:

 

 

            Figure 12. Opening page of the statement of the Bardi account at f. 52.1.

 

This is a brief description of a complex process, remembering that the operator has to make simultaneous translations from Italian to English whilst entering the data and worked to a set of predetermined formulae.

 

                          Back to Top of Page                                                                    Indexes