Bookkeeping and the rise of “The Medici”

Power of money

Money’s history date back to the birth of civilization. As Harvard’s professor Niall Ferguson reports in “The Ascent of money”, the earliest coin known date back to 600 BS, found in what is today’s modern Turkey. The Roman system of coinage was so powerful that it outlived the Roman Empire itself. Dozens of wars between ancient civilizations, such as Egyptians, Greeks and Romans were fought because of money. And this still goes on in modern times. Indeed, people employ ideals as façade to fight for money.

Bookkeeping and The Medici

Although money took on an important role in human history, the language of money assumed even more importance amid the end of middle age and the beginning of renaissance. Indeed, this language became so significant at a certain point in human history; that dynasties rose to power for centuries. This language was “bookkeeping” and the first dynasty that conquered the power thru it was “The Medici”. This dynasty was so wealthy that it set the agenda for the entire “known world” for over two centuries. Not by chance Florence was at the time the wealthiest country on the globe. How did the Medici’s Family become so powerful? As Niall Ferguson reports, Medici at the beginning of their ascent to power, were more gangsters than bankers. Although at the end of the XIV century, Giovanni De Medici built up his reputation as currency trader. The world at the time was very globalized and Florence was the epicenter of the business realm. Merchants needed someone able to convert one currency to the other. Giovanni took advantage of it to build the family business. From then on his clan became known for centuries as the most powerful family in the world. How did Giovanni built up this success? Although the Medici were not using yet the double entry system, their neatness in organizing the accounts and balance sheets was stunning. Their mastery of bookkeeping made them so shrewd that the Medici became more influential of banks and kings. Ultimately bookkeeping played a central role in Medici’s success. The moral of the story is that financial success depends upon the understanding of the business language. In turn, accounting is the language of business. Therefore, accounting is the foundation for business success. This has been showed many times in the course of human history.

The cave man vs. the modern man

For the cave man “the survival of the fittest” was the rule. For the modern man the paradigm has shifted toward “the survival of the shrewdest”. As Warren Buffet would confirm, financial literacy (or accounting) determines the triumph of the businessmen. If the cave man carried around the cudgel; The Modern man carries his copy of Graham’s “Intelligent Investor”.

If you want to learn accounting and have no idea where to start, grab a copy of “The Enlightened Accountant: Accounting Revealed in 100 Pages”.


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Gennaro Cuofano, International MBA. Author of "The Enlightened Accountant," and "The Art of Mentorship."