History is made by charismatic leaders, brutal wars, brilliant inventions. So we think. But we forget the humble bookkeeper. That’s what really changed our future. Not guns nor armies but numbers on sheets of parchment. Not even just their sum but the little calculations behind them. Who could have known that tiny mistakes by faceless clerks would help bring down empires?
Of course, when the math goes wrong, the world changes. That’s one reason why the world we live in today would have been vastly different without these historic accounting blunders:
The Medici family almost single-handedly funded the Italian Renaissance. Behind Michelangelo’s David, Da Vinci’s The Last Supper and Botticelli’s The Birth of Venus stood the Medici family, whose vast fortune helped bankroll the Italian Renaissance. They were once the wealthiest family in Italy, controlling nearly all of Europe’s finances. But they gave managers the leeway to lend copious sums to European royalty who had no intention of paying them back. By the time these books were audited, if they ever were, the Medici family’s empire was hollowed out from within. Once the accountants revealed the bad debt, they were sent into exile and their grip on Italian politics slipped. For help from Tewkesbury Accountants, visit https://www.randall-payne.co.uk/services/accountancy/tewkesbury-accountants
From their initial public offering until the early 18th century, no other company dominated the British financial scene more than the South Sea Company. In line-itemed brilliance, the South Sea Company’s managers recorded all profits from future voyages to buy and sell slaves as current assets, inflating the value of their company through creative accounting. Even the likes of Sir Isaac Newton, one of the greatest minds the world has ever seen, invested heavily and lost his shirt when the scam was revealed and the company stock crashed. He learned that no amount of mathematical genius can beat a rigged ledger.
By 1781, everyone knew France was broke after funding the American Revolution. It didn’t matter. In 1776, the year of American independence, France decided to fund the patriots’ cause despite the crushing national debt. What followed was a series of budget manipulations that became the prelude to the French Revolution. Finance Minister Jacques Necker published the Compte Rendu, a royal financial report intended to boost confidence and raise public funds for future wars but he conveniently omitted the costs incurred in backing the American War of Independence.
France had never looked better. Its revenues appeared very profitable and everyone breathed a sigh of relief. Until, that is, Necker lost his job and another report revealed all the war debts he had hidden, exposing that the monarchy was bankrupt. Rage was triggered and the French Revolution rolled out. But had the first finance minister stuck to honest accounting, the monarchy may still be ruling France today.