Reviewed by Robert Bloom The College of William and Mary
Originally an M. A. thesis at John Hopkins University (1946), this book is based on the accounting records and business letters of Robert Oliver, a mercantile capitalist. Bruchey uses Oliver’s records and letters as a springboard to illuminate the characteristics of mercantile capitalism and the development of accounting practice in the early 1800s.
Ledgers and journals were prepared by the Oliver family. Bruchey observes that each cargo shipment was recorded in a separate “Adventure” ledger account, an umbrella account which constituted a record of the revenues of the cargo and the costs of the journey, and was subsequently closed to Profit and Loss upon completion of the voyage. Occasionally, Adventure accounts were charged at morethancost for goods shipped. Bruchey concludes that “. . . it is conceivable . . . changing prices , . . were used as a guide to the value of goods at time of export.” Secondly, perhaps “. . . price information from abroad served as the basis for costplus evaluations of exportable goods.” Additionally, “. . . the answer is to be sought in the consideration that business ties with particular agents or particular supercargoes were stronger and longer than those with others. Long and mutually successfully relations give rise to mutual confidence. In such cases, it may be an invoice written at cost was adjudged no risk.”
Ship accounts were also maintained. “. . . the Ship account represented an investment distinct from investments in adventures. The cost of a ship could not logically have been charged to any one Adventure account; a ship was the vehicle for numerous adventures.”
For accounts payable, a “Charges” account was kept along with “Little Books” to represent a partial subsidiary ledger. Accounts receivable were additionally maintained. Other major ledger accounts included: Partners’ capital, Bills of Exchange, Insurance, Commissions, Interest, and Rents.
Expenses pertaining to one year could have been reflected in the Profit and Loss account of another year. “Some expenses were charged to the Adventure Account, some to a Ship account, others to a Disbursements on Ship account. Accounts for Ships and those for disbursements on Ships, furthermore, were not closed at the same time that the Adventure account was closed.” Moreover, the partners’ capital accounts were charged for household expenses, contrary to the separate business entity principle of contemporary financial accounting.
Trial balances were also prepared, but there was little effort made to categorize accounts by type. There is no evidence that a balance sheet was developed by Oliver. Nevertheless, these accounting books seem to have furnished a valuable stewardship function, as Bruchey observes:
Unbalanced Adventure accounts recorded the location, nature and approximate amount of capital invested in cargoes. Unbalanced Merchandise accounts recorded the value of unsold merchandise. Debit balances of accounts with individual debtors informed them of sums owed the firm. Credit balances of accounts with individual creditors informed them of sums owed to others.
This succinct essay is carefully researched, wellwritten, and enjoyabletoread, though occasionally overburdened with unnecessary accounting data. To shed light on the life and times of mercantile capitalists by putting together bookkeeping records and letters of one such businessman is the mission of this book. Without this marriage of accounting records and letters, the accounts would be difficult, if not impossible, to comprehend adequately. From these sources, a particularly enlightening study emerges.
