Quotable (#100)

Jacob Soll on those well-balanced Dutch:

Any system of enforcing fiscal discipline is an incursion against the absolute control of the account-holder, and kings and the powerful tended to see themselves above the merchant-like calculations of bookkeeping. They not only hid their wealth and debts: They often did not bother to calculate them. In the end, they saw themselves as only accountable to God; if they needed more ready cash, they could always lean on their inferiors. At least in the short run, it was far more comfortable to govern without the constraints of financial accountability. […] But in one place, the idea of financial accountability did take hold. By the early 1500s, Holland had become the center of global trade, with Antwerp and later Amsterdam acting as the most important ports in the world. Ships arrived laden with spices, exotic fruit, minerals, animals, whale oil, cloths, and other luxury goods. In 1602, the Dutch government in essence created modern capitalism by founding both the first publicly traded company — the Dutch East India Company, or VOC — and the Amsterdam Stock Exchange. […] Accounting was central to managing not only these companies, but also the Dutch government itself. While not all tax collectors or company managers kept perfect double-entry books, it represented an ideal. It was also seen as a necessary skill for civic participation. Most members of Dutch society were fluent in accounting, having studied at home or in publicly funded city accounting schools. […] Double-entry accounting made it possible to calculate profit and capital and for managers, investors, and authorities to verify books. But at the time, it also had a moral implication. Keeping one’s books balanced wasn’t simply a matter of law, but an imitation of God, who kept moral accounts of humanity and tallied them in the Books of Life and Death. It was a financial technique whose power lay beyond the accountants, and beyond even the wealthy people who employed them.

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