Sedentary Merchants, Agents, and Double Entry Accounting: Alvise Casanova’s "Ordine, Modo et Osservantie" (1558)

Few would disagree that the English language accounting history literature on double entry accounting before 1800 is descriptive, uncritical, partial, and lacks explanations for the practices adopted by its users. During much of that period, double entry was not used to produce financial statements. Profit was rarely calculated, never accurately. The dominant view in this literature was expressed several times by economist and accounting historian, Basil Yamey: double entry only became useful in the 19th century when financial statements for shareholders were produced; double entry served no useful purpose before then. Countering claims of the economic historian of medieval Venice, Frederic Lane, Yamey denied that double entry could ever have enabled desk-bound merchants to address the principal-agent problem. Yamey was unwilling to consider factual evidence later presented by Lane. This paper presents newly discovered evidence supporting Lane’s argument that double entry accounting served a crucially important role long before 1800.