It is my great pleasure to introduce professor jacob soll from the university of southern california. Among the most innovative and ambitious scholars in the field of intellectual history, professor solls work has shown that to understand the history of thought, we must understand the practical history of thinking, of the many mundane and often overlooked activities that go into making, storing and transmitting ideas. Professor soll received his ph. D. In 1998 and subsequently taught at princeton before his current position at usc. His work has been honored by the american philosophical society, the National Endowment for the humanities, the guggenheim and most recently the Macarthur Foundation who awarded a genius front in 2012. Hes the author of numerous articles, reviews and editorials including a wonderful New York Times oped in 2009 titled avoidance by the numbers as well as now three books, each of which has recovered in its own way the formative role with a different kind of inte lek call racks in the shaping of governance. So in his first book, soll looked at editing and the remarkable influence editors and publishers had in making machiavellis political treatise into the radical machiavellian be. In his second book, the key practice in question was broadly archiving. The information master examines the roles that new techniques for gathering and organizing politicallyuseful data played in the development of modern state craft. Be and most recently, professor soll has turned his focus to a new practice, to accounting. And this evening professor soll will be speaking on his new book just published by basic entitled the reckoning financial accountability and the rise and fall of nations. Its a remarkable tour that spans at least eight centuries and half a dozen countries. In the reckoning, professor soll expounds on the keeping of good books by way of dante and dickens. And with that, professor soll. [applause] thanks to, thanks for coming and thanks to the hyman center and thanks to will. A lot of this book comes from talking to him and from his work. I feel like we and some others in this room have been working on project virtually together for a long time. I basically, this book, actually, started i started by trying to write a book about how people build successful states. I was very interested in state building, and i was interested in the elements that we often overlook in state building. So what happened was i started going into state archives and just looking at the elements that were there when people were building states. The intellectual interests, the players. And one of the things i found, i found many account about thes. And i thought accountants. And i thought this is really interesting. Here we are at these great moments in tuscany, in the renaissance, and here we are in france, and here we are in holland, and each time i found accountants not just in sort of backup roles, but as these great leaders. And i was like this is really fascinating. But as i was doing that, the crisis in 2008 hit, and i sat, and i watched the crisis unfold, and i watched bear stearns and Lehman Brothers collapse, and i watched the footage as the accountants moved in at night only to discover even though their offices were just across the street that all the cdos and their bundles, their mortgage bundles were worthless. And i said this is it, were going to have this amazing discussion about accounting. And and i said this is, were going to talk about why it works, why it doesnt work. Theyre going the hold up the accounts, and were going to discuss the accounts because thats what happened in the 18th century. And wills work in the bubble, it happened in france later before the revolution, and it never happened. I thought, boy, thats an interesting disconnect, i wonder if thats a story here. Right now theres a lot of interest be in financial crisis interest in financial crisis and income inequality, and people are looking to economists. I sort of thought at least for this conference that i would just bring max vaber back into the picture, because i started thinking about culture and thing like ethics. And i was very, very interested, for example, in i was very, very interested in why people overlook accounting. So what i started doing is i started not just looking at states that worked, i started actually looking for other moments where accounting failed. And it was a sort of an odd trip. So what i did was i went to the archives of some major states and looked at the account about thes and the role of accountants and the role of accounting. I saw how people used accounting remarkably. But then i also, as many business historians know, i found that later they fail at accounting, they drop it. This is actually the ledger in which francesco cicetti stops balancing the books in the 1470 and, essentially, the medici bank goes bankrupt or starts going belly up, and they start raiding the city coffers. And i just kept going. I kept going to these sort of moments. I went to the first accounting manual which everyone holds up as this incredible moment of rationality and finance. And the book was a flop. Historians and and intellectual historians have really never examined this book. And the book didnt do very well to the point where luca pacolli was very unhappy with how the book did. These merchant italy sort of declined and spain rose up, princes became more uncomfortable with actually using accounting themselves. I went and i studied phillip ii who was the great be emperor of the spanish empire, famous for his administration, and i started looking at his accounting policies, and theres a lot of work thats been done on this by business historians, spanish business historians. And he came up with some of the most remarkable accounting reforms ive ever seen, incredibly modern, but he never brought them fully through. He put finish he tried to find account about thes. There werent many in spain. He sponsored the first manual on double entry in spanish. It didnt do very well. And all of these incredible reforms he did dropped. And i thought to myself, wow. Here we actually have this history. I had set out write a book about how accounting in states worked, and i ended up sort of writing a book about that, but also how it constantly failed over and over again. I thought this might be a cultural tradition. And so i sort of kept digging, and and i went to louis xiv, and it was the same thing. He became fascinated by accounting. He learned accounting. He had his minister, colbert, create golden account books for more than 20 years that he kept in his pocket. But when, you know, accounts went bad during the wars in the building of versailles, he stopped it too. So this was the sort of amazing thing. At point i was looking at this point, i was looking, i just kept looking. I kept going to Different Countries and different archives and different traditions to see what i could find. And i end up in holland. And what i found in holland really struck me because when i went there to start looking for the history of accounting and doing some work in the archives, i also ended up going to museums and also remembering paintings that i had known, and i discovered that there was a huge accounting genre of paintings in the flemish, dutch tradition. This is an early painting, actually, of the medici Branch Director who gives bad loans and keeps bad books. He actually painted this before he had this painted. He paid for it to be painted before he actually went bust in the brugges branch. But this was a sort of remarkable painting of a financier being judged and tasting the final reckoning. And facing the final reckoning. Thats where i got the idea for the title of the book. But it went on from that. You cant see it very well, but the dutch actually were very conscious that their prowess, they were becoming the richest small country really on earth at this time. And this engraving celebrates that. But it showed [inaudible] antwerp in all of its wealth. Double entry bookkeeping. So they actually knew that they had this skill, and it openly celebrated the fact that their mastery of this skill gave them their financial prowess. I thought, wow, this is really fascinating. We know that the disturb actually dont have the same financial crises, so what happened with the dutch . This storys going to be different than the other stories i had looked at. Now, what the dutch do which others, which others hadnt done is they start painting themselves doing their merchant art, and they create, first, a genre celebrating their skill. And these paintings are well known and, actually, at the met. This is a well known its in the national gallery, but the met had it, and there was discussion about it. But it hasnt really always been discussed as an accounting painting. But here we see this guy actually named schnook was his name, and he lived south of antwerp. And we see all of his tools of accounting. So the dutch celebrated this. Thats fine. I mean, the italians have celebrated it and talked about how important it was. But i was wondering sort of what made it work, and what i started finding was that the dutch didnt just celebrate accounting. They actually did more. They celebrated it, but they also warned against the dangers of putting too much faith in it. They warned against hubris. And this is my favorite of all the paintings because not only are the books remarkably accurate and you see this merchant whos made money and done well, and the other side of these panels it shows that the merchant has given money to a city and has been faithful to the virgin mary. But at the end of the day, he cant balance his books because the man who owes him money has died and only death or god can balance these books. So what the dutch do is they give a warping. And this painting really fascinated me. And there were more. There were more paintings that actually showed the skill that the dutch had. But this painting becomes the basis for what i call a series of warning paintings that the dutch have painted about accounting. Its between quentin metsys, they start showing the kill of bookkeeping. The book in the first frame was a prayer book. Nowst its an account book, and the wife where women keep books is looking over the account book, and theyre counting their money, and theyre weighing it, and theyre doing a reckoning. But this motif turns into even more of a warning. Not only do we have the skill, and youll look above. Someone spent a very long time, once again, painting all the tools necessary for accounting. The files, the books, the boxes, the filing system, the seals, all the Different Things you need to keep accounts. Theyre still showing their skill. Theyre still bragging about these skills of early capitalism. But at the same time, this painting some think it might be antisemitic. Theres an argument about it, its not certain, but its also showing people who are good at this can also be sneaky, and one has to be careful and watch out for accounting just as one does it well. Well, this is a message from the gospel of st. Matthew, and, in fact, st. Matthew runs throughout this culture because matthew is not only the patron saint of accountants and bankers, but also perfumists. But matthew, if anyone here has read the gospel who was actually levi, a jewish Tax Collector for the romans who left the accounting table to follow jesus, he writes the parable of the [inaudible] and the parable of the talents say that you have to invest your money and make money. But he also warns against following men over god, he warns against wealth, and he says to turn away from the accounting table. He gives two messages. And one of the things thats very fascinating is to see early modern european christians struggle with this dual message. Matthew ends up giving these conflicting messages, and there are struggles. These paintings, i think, are struggles with the image of matthew or the message of st. Matthew. Youve got to be a good manager, but you need to watch out for the worship of money because it can lead to more than just dishonesty, it can lead to folly. And this is really a remarkably fine painting where those, this is, i mean, the painting of the actual, once again, the tools, the books, the files, the notes of exchange, all of these things are portrayed in incredible detail in the back of the painting. The books are incredibly well shown, the numbers in them are there. I mean, we see incredible detail. But here we have someone twisted by hubris and folly, and theyre wearing hats that are crazy. And so theres this, theres this message once again that no matter how good you are at this thing that we all must do, be careful because it can lead you down the path of folly. Now, this went immediately to my mind. I said, well, this is really a remarkable thing. A remarkable tradition because it doesnt necessarily mean that the dutch dont cheat, it means that they are aware that its their tool, but its a dangerous one, and they constantly have to watch out for it. They have to be vigilant, and they talk about individual lance all the time. And they have to watch out for fraud, and one has to watch out for human pride and human humang race in financial calculationings. So this is a big tradition. Now, he has this tradition in the 1500s of paintings. This is quite fascinating. What happens though its in 1581 7 provinces from the north break off from spain from the hapsburg empire and the come the first modern republic to emerge and its a commercial republic. Its a fascinating place because it is partially managed by not only a famous humanist who is also a master of the waterworkwaterwork s but who is the most important teacher and the most influential accounting author in holland in the late 1500s. Its fascinating because not only did he actually teach accounting to the prince who was a stockholder of the republic he taught it to prince morris and theres a famous discourse about his relationship with prince morris when he teaches him accounting and prince morris says this is incredibly hard. Its very important but very hard. This is the first time we hear reprints actually taking part in this. He is not an incredibly powerful prince but hes nonetheless a prince. So its more that now that. Essentially in his accounting for prince the head of state needs to know how to keep books because the head of state wants to do audits of the state himself. Otherwise you will never get it clear view of anything so he even goes further and he says citizens are going to need to know how to do accounting to be good citizens. This is really fascinating. Not only do we have an earlier culture of prowess and accounting of art celebrating the prowess but warning of its dangers but here we have the leading manager of the country making accounting and accounting education for princes and other citizens a major state policy. We know its a state policy because the cities like amsterdam start paying accounting masters to comment and actually teach citizens how do accounting. They actually have a program to teach accounting which is quite remarkable. I can tell you that the germans and others are watching them do this in an act the spread of accounting manuals doesnt slow down as historians have previously said. If you do the book history and follow the manuals of the books they come to holland and its from holland that the accounting manuals actually spread. Also this idea that you need to do accounting and anguish in the germans and the french are slowly watching this go on. Now prince morris is quite remarkable, learns to do double entry. It was only in 2006 that they found his books in the archives. They are right there at the hague and essentially he oversaw the books and they were his. They have his seal on them and he insisted that his personal books and his administered look. Why the way double entry accounting being debits and credits in parallel columns. They have to balance so theres this idea of balance is deeply involved with the practice. If you sell a goat for three florence you earn three florence in one column but you lose the code in the other and it all has to balance out. You have to balance your books. Theres a kind of a moral story of accounting each time you do your book. You either have or havent balance things out and the moralists they should be balanced or he you should have a profit. Now everybody who knows financial history knows the dutch invent modern capitalism. They found in the east India Company the first publicly. Firm in 1602 and found the amsterdam stock market. Again why do they do this . If you go and study the history new research is being done right now and also of their books because their books are a funny odd story of success and failure. But what is really remarkable is that the dutch create this in great part because of trust. There is great trust in holland that most people can keep double entry looks and most people do it quite well. We have evidence of people from all levels of society. Theres a famous book actually of a prostitute describing the necessity of doing good accounting and the process does good accounting. We have merchants. We have artists. We have everyone talking about the fact that they know how to do accounting. We know if you walk out of latin school into one of the city run accounting schools. So this is quite impressive. We also know that the dutch have this old tradition of municipal management. Why . They have great hospitals. There are merchant cultures of people know how to do this but also 40 of the country is under water and they manage with waterboards their local Municipal Administration have to manage these waterboards. If people mess up the management of the waterboards they go underwater and they died. So there is great pressure for local people to do good administration. People have to trust their local provincial Tax Collectors as well as the administrators of these waterboards. Trusting the bookkeeping and the management of these localitielocalitie s is a matter of life and death for the dutch. I cant say that its a causal thing that this causes the dutch to do this but its definitely on their minds. We also know that dutch reverential tax collecting is some of the best in many cases they keep the best records and in fact dutch provincial tax collection is so stable and so trusted that Interest Rates are paid on these tax returns for a think 150 years, a very long time. Holland has this remarkable tradition of keeping books and of people trusting each other. Now that doesnt mean that things dont go all right. In 1622 the company starts losing money in their returns go to 6 from 18 and there are stories that the directors of the company are doing Insider Trading deals that they are hoarding things and actually they are just going to the docks and in many cases stuffing their pants with gold. So what happens is the shareholders, the shareholders actually write a complaint. Its the first shareholders revolt in the first publicly. Company only 20 years after its founder. They have a crisis and they s