There are many examples throughout history where people used their knowledge of accounting to ensure the success of their nation, their business or their livelihood. In this article we are going to look at a number of examples throughout history.
The Roman Empire
Augustus Caesar was the first emperor of Rome. He not only established the imperial books of account, he also started the practice of publishing information from them.
Jacob Soll, author of The Reckoning: Financial accountability and the rise and fall of nations says in his book that the attentiveness of Augustus to the accounts was a key to Rome’s success.
The Medici family from Florence, Italy adopted double-entry accounting in their bank in the 15th century. This allowed them to dominate the financial world of the time as they could undertake much more than their competitors. For example, they were able to establish branches, offer investment opportunities and enable easy transfer of money from one country to another.
The Netherlands was the richest sector in the Spanish Empire in the 16th century. A lot of this success was due to the emphasis on accounting in their education system. This resulted in a consistent good standard of financial management that enabled them to invest around the world.
The South Sea Company scheme failed in the early 18th century. However, due to his excellent knowledge of accounting, the first lord of the Treasury, Sir Robert Walpole successfully negotiated a financial bailout that saved the economy.
Jacques Necker was a Swiss banker appointed by King Louis XVI to manage France’s finances in the late 18th century. The finances of the crown had always been kept secret, but Jacques Necker published the accounts.
In his paper France’s Financial Crisis: Analyzing the Role of the Finance Minister, Jadon B. Smith writes that the published accounts showed that the king spent 10 times more on his brothers than he spent on hospitals, and 5 times more than on upkeep of capital.
Surprise. Surprise. The king sacked Necker, but his revelation about the public finances was a major factor in the French revolution that started in 1789.
The United States
George Washington, before becoming the first US president, was accused of profiting from the War of Independence.
As he kept very detailed accounts of his activities, he decided to publish them. It was a risky choice due to his lavish personal spending patterns but he did not take a salary as the commander-in-chief of the army, which offset the criticism he received.
When he was elected as the first president he also established the administrative procedures for the new government.
So, here are a number of examples throughout history where good accounting practices have saved the day. You might never be accused of profiting from a war but the fact is, the quality of your accounting will have a large bearing on the success of your business. Make sure you establish good accounting practices and be very disciplined in implementing them.