Since the pioneer writings of Weber and Sombart, the debate on the nexus between accounting and the rise of capitalism has caused a lot of ink to flow. Literature on the subject has focused on assessing the capacity of the double-entry form to promote “rational” decision-making based on profit calculation. While the classical approach, drawing on Weber and Sombart’s initial thesis, sees accounting as the tool of early businessmen’s quest for profit, Basil Yamey and others after him have demonstrated that early double entry bookkeeping (DEB) could be, but was actually not, utilised to calculate commercial profit. The question then becomes: what did early businessmen use accounting for, and did accounting at all play a role in the development of capitalism?

Research in the archives of early modern Italian banks reveals that a correlation between accounting and the rise of capitalism can be found in the area of finance capital. Indeed, it shows that DEB contributed to the emergence and expansion of an economic system that has been defined as financial capitalism − understood as the subordination of commerce, industry and political power to financial interests or the logic of capital accumulation.

Analysis of the standard transactions performed by the Salviati bank of Lyon – a major player in Europe’s main financial centre in the mid-16th century − reveals the crucial role of accounting in creating, shaping and developing Europe’s two most important international financial markets in the early modern age: the foreign exchange and the fair deposit market.

The study relies on the analysis of 7239 transactions performed by the Salviati both on commission and for their own account in relation with 209 commercial partners located in Europe’s main trade and banking centres, during one partnership contract (1544-1547). Such transactions are not mere reflection of the Salviati’s own commercial practices, since their account books functioned in correlation with those of hundreds of commercial partners, mirroring the entries recorded in them. Furthermore, the Salviati themselves were typical of Lyon’s financial aristocracy, described by historians as having discretely controlled the economic and institutional life of the city. Finally, incursions in the accounting systems of other early modern Tuscan firms (Corsi, Saminiati, Martelli) shows normalisation of accounting and banking practices among these banking firms throughout Europe.

Figure 1. Recording of an actual exchange transaction in the ledger of the Salviati bank (clickable)

Note: Photo by Nadia Matringe. 

The notion of performativity is useful to shed light on the relationship between accounting and markets. Indeed, what is meant by the statement that accounting “made” financial markets is, first of all, that money was created and moved by simple assertion in the account books of bankers. In this sense, the accounting discourse had the same power in relation to money that the priest’s words have in relation to marriage − therefore accounting can be considered performative in the Austinian sense of illocutionary.

Many payments, fund transfers and credit operations existed only in the account books of bankers. Such transactions were not a preliminary stage preceding payments in cash: they were the payments. Comparison between debt and cash reserves revealed the absence of correlation between them, also confirmed by other banking practices where bank money and cash were used indifferently and proved to be substitutable.

As far as their use as money is concerned, the legitimacy of accounting entries was neither the sovereign’s social credit (as in the case of official currencies) nor the cash reserves of banks. It was the economic interdependency of banks and the information system they used for assessing each other’s reliability, which mostly relied on word of mouth and commercial correspondence. Not only did business letters convey information about the financial health of commercial houses. They also served as a medium through which the accounts that business partners held on commission for each other were exchanged and verified, before being copied by principals (agent-principal positions were interchangeable) in their account books. Thus, the fact that clients might rush to their banks asking for gold in times of crisis in the 16th century, just as they might do today, did not determine, any more than today, the structure and logic of the banking system or the nature of “accounting money”.

The second, slightly more complex, aspect of accounting’s performativity, concerns the impact of the double-entry logic on the structuring of financial markets. The conceptualisation of clearing inherent to double-entry engendered credit and clearing transactions at an international scale. This process closely relates to the notion of economic performativity first introduced by M. Callon, according to which economic models and theories create economic systems that function as they predicted.

This research demonstrates that not only international clearing mechanisms, but also the emergence of an international fair deposit market were, in practice, consequences of the double-entry form. Indeed, on fair locations, the cessation of all payments between each of the four annual fairs transformed any credit or debit balance at the end of a fair into a time deposit or a loan to be settled at the next. After clearing, the remaining balances were settled in cash or deferred (with interest) to the next fair. In other words, Lyons banks charged overdrafts and remunerated surplus on current accounts. The term deposito appeared in relation to these practices in the 16th century international fairs of Lyon, Antwerp, Castile and Besançon. The rate of the deposito was quoted at the end of each fair, together with exchange rates on foreign markets, and started to circulate in commercial correspondence. Consequently, “external” clients, who otherwise had no business at the fairs, started to invest and to borrow on the Lyon deposit.

While the double-entry form engendered numerous international clearing and credit mechanisms, this performative process was accompanied by small-scale deviations, i. e. cases in which double-entry was used to both perform and conceal illegal transactions contrary to the regular functioning of financial markets − such as the sale of bills of exchange at an illegal rate. Such deviations well illustrate the concept of “counterperformativity” defined by D. McKenzie as occurring when the adoption of a model leads to a situation in which price patterns undermine the very model that was devised to explain them.

Thus in the early modern age, international trade and banking were supported by a network of interconnected accounting systems of commercial partners. This accounting network appears as a major infrastructure, if not the site of finance, without which the whole European payment system would have collapsed. Accounting thus played a central role in the rise of financial capitalism as we know it today.

Also by Nadia Matringe:

Commission trading allowed Italian merchant banks to flourish in the 16th century



  • This blog post is based on the author’s working paper titled Ratio pecuniam parit. Accounting and the making of financial markets in the early modern age.
  • The post gives the views of its authors, not the position of LSE Business Review or the London School of Economics.
  • Featured image credit: Image from page 243 of “Book-keeping in the true Italian form of debtor and creditor by way of double entry…” (1771), by Internet Archive Book Images, No known copyright restrictions
  • Recording of an actual exchange transaction in the ledger of the Salviati bank (cropped), photo by Nadia Matringe. 
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Nadia Matringe is assistant professor in the Department of Accounting and affiliated researcher in the Institut d’Histoire Moderne et Contemporaine, CNRS, Paris.