Abstract: What a Merchant “Ought to Know”: Account Book Structure and Business Information in the Eighteenth Century

Pierre Gervais

Abstract

Widely used among larger traders in the eighteenth century, double-entry bookkeeping entailed the painstaking recording of myriad transactions. A close look at the reasons given in textbooks on accounting and merchandising both British (Mair) and French (De La Porte, Barrême), and at the records of two large traders (Gradis of Bordeaux and Hollingsworth of Philadelphia), reveals that what a merchant “ought to know” was articulated around the notion of credit. Costs and profits were treated as inconvenient accounting elements to be sifted away in order to avoid any distortion of the credit picture; also left aside was the quality of the goods traded, which was dealt with on a qualitative basis. Accounts were credit accounts, which achieved a purpose similar to the clearing agreements developed between banks from the eighteenth century on. A sampling of the transactions recorded in Gradis' books shows that large amounts were cleared with no recourse to specie or to commercial paper; book credit was a large source of capital. I conclude that account books were used to keep track of the credit networks of a merchant. Profit and losses were sifted away more than analyzed, since accounts were primarily tools enabling a trader to build a qualitative assessment of individual credit relationships and the risks associated to each of them. The true goal of eighteenth-century accounts was thus to help determine whom to trust and to what extent.