Among the most innovative and ambitious dollars teeeighteen chose to understand the history of thought and the practical history of thinking of the many mundane and overlooked activities to transmit ideas. Teeeighteen received his ph. D. In 1998 and taught at princeton and rutgers and the European University institute before his current position at usc and has been honored by the Philosophical Society and the and the Guggenheim Memorial Foundation and most recently the Macarthur Foundation who awarded him a genius grant in 2012. He has authored numerous articles and editorials including one called avoidance by the numbers each book is the formative role of a different intellectual practice in the shaping of modern politics. In his first book with the birth of political criticism the remarkable influence editors and publishers had to make a mockery of really treat is with the text that i came to be. Vicki practice was archiving the affirmation master of the Intelligence System examines the role of the new techniques to gather and organize useful data to architectural plans to spin irish. Espy denies. Now professor soll has turned to accounting and this evening he will be speaking on his new book entitled the reckoning financial accountability and the rise and fall of nations that spans at least eight centuries and a half dozen countries and examines the profound historical consequences to leave them brothers by way of dante and it begins and with that, professor soll. [applause] thank you for coming and also to will. A lot of this book comes from talking him and his work we have been working on this project virtually together for a long time. Basically this started by trying to write a book by help people build successful states i was very interested in state building with those elements what happens i would go to the state archives and looking at the elements that were there when people will building one of the things that i found i found many accounts. This was interesting. Here we are with these great moments of tuscany and the renaissance your vr in france and each time not just with backup roles but as great leaders. But as i was doing that with the crisis in 20008 hits and dice sat and watched the crisis unfolded and watched bear stearns and Lehman Brothers collapse a. M. Of footage at night only to discover their offices were just across the street that all cbo and bundles were worthless. I said this is that we will have an amazing discussion about accounting. Why it works when it doesnt do we will hold that the accounts and discuss them because that is what happened in the 18th century with the bubble. In france later it never happened. I thought that was an interesting disconnect is there a story . I started to think of the financial crisis and a cultural way. With the financial crisis and income inequality people look to economist at least for this conference i would just bring max back into the picture because it started to think about culture and things like a six. I was very interested in why people overlook accounting. So i started to look not just as states that work to the other moments where accounting failed. It was an odd tripp. So i went to the archives to looked at the accountants and i saw the books and they were amazing and how he and people around him use accounting remarkably but then as business historians know i found later they fail. This is the ledger id which when the francesco stops balancing the books in the 14 seventies then the bank goes bankrupt or starts to go belly up and they start to raid the city coffers. There were these moments the first accounting manual the everybody holds up does an incredible rationality in financing and the book was a flop. Nobody examined it to. It did not do very well to where the author was very unhappy how the book did because there was a new ethic in europe at the time that as a merchant italy declined and spain rose up the princes were not comfortable using accounting them sauls. So i studied philip ii. Famous for his administration and i looked at his accounting policy and there was a lot of work done on this. It was amazing. Some of the most remarkable accounting reforms i have ever seen but he never brought them fully through. He tried to find accountants there were not many. Not in spain he started double entry in spanish. It did not do well but these reforms dropped. Here we have a history that i set out to write a book how it works and i am writing a book how it constantly failed over and over. I thought this makes might be a cultural tradition. I kept digging and he became fascinated. He had his minister create goldman account books for more than 20 years. When the accounts went bad he stopped at two. This is amazing. At this point, i just kept looking going to Different Countries and archives to see what i could find. I ended up in holland. Its really struck me because to stir look for the history of accounting and i also ended up going to museums in remembering paintings and i discovered there was a huge accounting chandra genre this was part of the of directors who would give the bad loans and keep the bad books. He actually paid for this before he went bust but this was a remarkable painting of a finance year being judged to face the final reckoning. That is ryan got the title for the book. But you went on from that. You cannot see it well but the dutch were very conscious there were becoming the richest small country on earth at this time. And this celebrates that but down here is the explicate explanation of double key injuring so they knew they had the skill and celebrate the fact that mastery gave them there financial prowess. Reno the dutch dont have the same financial crisis so what happened . This will be different than the other stories i have looked at. Now what should what the dutch do is to paint themselves doing the merchant art first they celebrate their skill and the paintings are wellknown this is the National Gallery and the mets had it but it has not always been discussed but here in we see this guy here that live south of antwerp and see all his tools of accounting so the dutch celebrate. That is fine the italians celebrated i was wondering what made it work . I found the dutch did not just celebrate accounting they did more. They celebrated but also warned against the dangers of too much. This painting is my favorite because not only are the books accurate and it shows how the merchant has given money to the city in faithful to the virgin mary, but at the end of the day he cannot balance his books because only death there god can balance the books so the dutch give a warning. This painting fascinated me. There were more paintings that show the skilled the dutch had but this is the basis for a series of warning paintings that i call about accounting. Then they start painting showing the skill of bookkeeping this was a prayer book now is the account book and the women keep books and they count their money and wait it to do the reckoning. But this turns into more of a warning not only with the skill but to paint all the tools necessary the styles, the books, all the things you need to show their skills but at the same time that it could be antisemitic but also showing people who are good and one has to be careful to watch out just as if they did well. nr this is from the gospel of st. Matthew and he runs throughout the culture not only as the patron saint but anyone here who has read the gospel left the accounting table to follow jesus. He writes the parable that you have to invest your money to make money bet warrants against wealth and says to turn away from the accounting table and gives to messages and then to see early modern european christians struggle with this. Matthew and that giving conflicting messages and there are struggles. I think these are the struggle of st. Matthew you have to be a good manager but watch out for the worship of money because it can lead to more than just dishonesty but folly. This is a remarkably fine paintings with the tools the books or the files or the exchange all of these are incredible detail. The numbers in them but here someone twisted by hubris and folly and wearing crazy hats. There is a message no matter how b non good you are be careful because it can lead you down the path of folly. This went immediately to a remarkable tradition but it does not necessarily mean the dutch dont cheat but they are aware of this is the tool but it is dangerous and constantly have to watch out for. They talk about vigilance all the time and watch out for fraud and human pride and hubris with financial calculations. This is a remarkably sophisticated culture. Not just cheap paintings. These were big paintings paintings, they cost a lot of money. People were investing and deeply aware it was a cultural project. After i finished the book speaking with the former head of the dutch archives who is a brilliant guy and he showed me i had missed no one had pointed it out there are a huge number of accounting paintings that i will show you. This was a big tradition. So holland had a tradition to paint the warning paintings. This is fascinating. But 1581 the seven provinces from the north from the empire is a the first modern republic it is of fascinating place because it is partially managed by not ole a famous humanist but who is the most important teacher and most influential accounting offer in holland in the late 1500s. Not only did he teach accounting to the of prince who was a stockholder but there was a famous discourse about his relationship that he teaches and they said this is incredibly hard. Said this is the first time we hear of a prince taking part. He is not powerful but nonetheless a prince. So it is more than that in his accounting he says the head of state needs to know how to keep books because they have to do audits otherwise he will never get a clear view of anything. He goes further. Citizens will need to know how to do accounting to be good citizens. Not only an earlier culture of prowess and accounting. And to having a leading manager of the country making accounting education a major state policy. We know that because we know cities like amsterdam begin paying accounting masters to teach citizens they actually have a program to teach it. And the germans and others watch them do this. The spread of manuals of accounting if you do the of book history and to do accounting and the english and german and french are slowly watching this. And then to do double entry and then found the books in the archives and essentially he oversaw the books and he insisted that the personal books the capt. Double entry. But they have to balance. It is deeply involved with of practice and in one column then use it with the other then it has to balance out there is save moral rhetoric within the story each time you have for you havent. You should have a balance or a profit. And to find the east India Company the first publicly traded firm 60 no to and also found of the amsterdam stock market. If you have studied the history it is the funny story of success and failure. But that the dutch create this because the trusts. There is a great trust and holland that people keep double entry books and most do it well. Actually a prostitute describing the necessity of doing good accounting if so then we have merchants merchants, artists come everyone talks about how they how know how to do accounting looking into one of these accounting schools it is impressive. We also know the dutch have a tradition of municipal management. There is richer and cultures actually 40 percent of the country is under water they manage with the water boards they have to manage them if people mess up the management they go under water and they die. There is great pressure they are tax collectors as well as administrators of the water boards. With is a matter of life and death for the dutch. It is not a causal that it causes them but it is definitely on their minds. But in many cases they keep to the best records and in fact, the provincial tax collection is so stable and a trusted that Interest Rates are pegged on these tax returns i think 150 years. A very long time. The tradition of keeping books and trusting each other that does not mean that things dont go awry. And then the dutch in the companys stores to lose money. And there are stories that directors of the company are doing insidertrading. But actually they just go to the docks to stuff their patients with gold. And the shareholders right to a complaint is the first results of the publicly traded company only 20 years later. But in 1622 that shareholders right to something called the necessary discourse they won 12 cashbooks they complained of books have been eaten by dogs. And they want the books to be transparent and open we want in on it a recon. Because basically a there is a petition in it goes to the princes desk. Talking about the financial crisis here is one of the first and most notable that way have. It is fascinating they have been taught how to do a. But morris says the stockholder bolland is fighting wars and basically what he says is fine. I will do an audit for National Security or reason unstated has to be a secret of it. I will but not publicly. And then they trust him to do it and he does it. Theyre mildly reformed. The company is back on its feet and the practices stop. That comes out of the culture of accounting. But in this case they dont get the books and we trust amanda people around him it is a small country. To know how much is or is not that they trust him and he does okay. This idea to be a good manager is a phenomenon and what happens is people in positions of Public Management have themselves painted with their books open there are 100 all over holland the managers with open books painting. There are of literally dozens and dozens and holding the books open so you can see they have done it. Women do it to one of the reasons ben franklin loves one of his workers is because she keeps great books. Even the women know how to keep books because it is valuable for a Family Business and she has her hand showing they are keeping the books. This is amazing. And at eric graft these paintings because nobody knew they were there. There in the administrative houses there are not exciting paintings but it is so essential we left it behind. The dutch spend a lot of money and time thinking about these things. During the 17th century they go further. One of my favorite political theorist right to one of the most remarkable books on political theory is a book about republican in liberty and the need for free markets for freemarket thought we need freedom of thought but all we also need good financial management. So he creates is chandra genre of the countrys political effectiveness and its members from tax receipts. But it goes further than that. Headed is the Prime Minister figure and to get into fights with us stockholder and dewitt who is a mathematical expert, he writes of a treatise that is very important to build water works and that is published with descartes he is a mathematician and is known for its. With the state annuities. So the dutch do it they create a society with the watching and Warning System but of course, this great mathematician comes up against the family and then gets killed and slaughtered and battered and maimed to put them into containersvk t. Then we start painting more of those paintings in england emerges as the center of bookkeeping bet there are 30 writing schools and gentlemen as well so with this noble distaste so there is accounting being done in britain. Not to go to a full discourse but it enters into the artistic tradition there is a huge number of british merchant smiling. It was up momentum vampire were they sit back because they make so much money they have never seen it and clearly but look at this guy he is in control if the imperial master. He is marshall launched even more sophisticated accounting also learning there are many british people who ignore accounting and in this case him and his wife who were partying all night and he has the ledger and obviously he throws up his hands and they dont want accountability but he has the party and the culture. In this 19th century tomorrow america but with the most important figure who is charles dickens. The cultural consciousness dickens father was an accountant who was robbed by the bad accountant and dickens struggles so there were good accountants and bad accountants and a Christmas Carol we have a whole story of these Business Owners that scrooge and jacob marley that marley comes back and she is held by chains by his ledgers it is consciousness there that dickens talks about it. There are songs and poems about accounting. It is on peoples minds. There are stories about family fights for example, women were allowed to keep accounts but not for trees and all these strange sayings but an 18th century britain and 19th century britain people still discuss it to. Again this is a shortened version of my argument in the book but dickens is my favorite character but it strikes me leaping over years and years of account team history and accountability but to bring us up to the Twentieth Century still with the 1960s arthur young could show a the mad man brochure this is a good job where the guy is scoping out the possibilities that he offers as an accountant but with the scandals following and the loss of social prestige when Arthur Andersen moves accounting to the midwest with that midwestern people need to do accounting it loses the cultural cachet followed by a accounting scandals now we dont see them more talk about them so now that is the stock photo it is not a great image. [laughter] there are others that are just accountant since the dark suit but none of the great art none of the cultural awareness that seems to be a huge problem in fact, we feel uncomfortable talking. Today at bloomberg they say they want to write about accounting it is not sexy it does not go on the front page. It is gloomy because moseley warning about fraud people dont want to hear it. We dont have that many accounting financial journalist that is created by accountants and the publication of the ledgers of Balance Sheets and what we see in the 18th century is the circulation and leaking of the account books of companies and states becomes news and later when the budget emerges you get financial journalism growing out of this states accounting tradition. Today we barely have any accounting journalists. That is scary with 800,000 accountants and big four accounting firms. All of our lives very quickly in one transaction will go through those big four firms. The through the accountant but yet people remain invisible we have of massive crisis. The Balance Sheets were not brought out in public. That is why i wrote this book. Thank you very much. I will be delighted to take your questions. [applause] [inaudible] and stayed. The accounts are part of his diary he is in there. He uses the language that he uses and lives in great fear but claims to have learned accounting from a one id sailor that shows it is still harder to learn that when he deals with the sandwich and the king of the dont know how to keep the books he said i fear for the country. And the he says a wish we had accounting like france. Because they have such an unaccountable system. So is in there for sure. With any topics he is there for that. Your story is very much western so talk about the chinese who have the same way for death dependents is there a great divergence aspect to what you were doing or how does that play out with your culture . Call across the world people keep accounts but only the west get the double entry which is the most accurate that is the linchpin of capitalism. Why does it be merged in the west . Because that is one of the reasons then that leads to a western culture mixed with the scriptures about accountability and warnings and balancing and the reckoning of god. Remember he keeps the books of lifeanddeath and does the final tally with judeochristian tradition. There are others but this creates modern complex capitalism. So there are many other stories out there but this comes out to empire and crashes but that spreads out across the world. Still they are fought over in america will not enter into i dont know who is right to. Is better to stick with the americans in spite of what has happened. These fights the one in the background. Their big discussions. I would take exception that accounting is not discussed. I started a Company Called great financials reluctant financials of Public Companies in the 90s and there were several of us comparable firms. And with that Financial Analysis on wall street even general mines like forbes there is a lively discussion of the rules and the impact and the complexity when that sec is enforcing a. But people are absolutely confused if they know anything about it at all. I will tell you a story about four or five years ago i met the comptroller general of the United States and what he has to do an audit each year. We have not done when the past seven or 12 years because he cannot get a clean audit because of the pentagon. Exactly. That is just one of the real issues so people who you know, about it do and those who dont dont. We talked about this all afternoon they said yes some specialists know that there are not that many accountant journalist they do have writers doing and lamented there was not more interest most people dont know anything about it. It was still part of the curriculum through world war ii. People dont know what it is but a whiff of renaissance people find that terrifying any householder would not known accounting. The crisis is not necessarily there with the experts but in the general population that is completely ignorant. People take mortgages without knowing depreciation or how to balance a booker that will not work and they warned about that in the run is on stage you cannot hold on to win unless you know, how to manage these things. This trend since the accounting so to talk about Financial Literacy in this country. And with churchills 1913 comes to takeover the navy he is cooking the books, they are broke this is always the case because they say National Security. We cannot talk about it. But he finds out in 1913 he has no money so that is why he starts to build submarines instead of battleships because he has no money. The history of submarines starts off with bad accounting practices. I really enjoyed the argument. As a dichotomy of good accounting purses bad accounting doing it well or not doing it well, i like you toots talks more and how those books are could they make us seducing this . It is in the book is a lot easier to do slave trading when you only looked at the book ends by the way we go through the account books of people like jefferson and point out it is absolutely horrific to read the passages about slavery and so way he talks about it. But the normative thing is good that the Founding Fathers do. This project would not have worked the people Like Washington and others do it for slavery. It is accounting. But because there is a morality. And in the books there are books that balance out and show profit that does not necessarily come from human suffering. The books show the numbers and they clean it up and fix it up. I talk about this in the book what i also talk about is the non normal shift they were we constantly drop or ignore these books. There was a study i forget what it is called in which people get phobias of their own accounts. I can tell you tax time. I have a phobia of my accounts. [laughter] another study said the worse your accounts are there is a phenomenon then they stopped doing accounting because it is so horrible. Louis xiv did the same thing so there is another story of this functioning and human nature n it is very odd and i found that to be incredibly strange however at the same time we need to do it to manage a household. So with the 17 trillion deficit is that accurate and is there a reckoning . I cannot answer those questions but i can tell you from their earliest publications of the budget i do think the cbo does a pretty impressive job with what it gets. I think there are some numbers out there for those who are trained can get a sense but accountants will always tell you this is not an exact art and valuations might not be completely accurate. Theyre not always allowed to say that by the way with their statements. But there is a large addition to fudge the books. A reckoning is coming after talking to leading journalists there are some serious experts about finance i was deeply concerned but that is just me. [laughter] [inaudible] with the rising providence of the market. But the accounting schools fret about their image. The will not make as much as a banker. And they struggle with this those are big questions. With the mismanagement of the brain and antiimpartial Sherlock Holmes of finance who did not care about the of money that image was very strong in 1904. [inaudible] [inaudible] when they still argue about this direct my question in this. [inaudible] is. First of all, i talk about that briefly but not in detail. The history of modern accounting is so complex that is something i could not do. Would talk about historical accounting but one thing to talk to real accountants we are all about doubt. To use hilariously postmodern language. And to tell you a remarkable story with people you least expect to tell you we story about doubt than questioning numbers. But theyll is try to tell people. It can never be exact. Into half to do is good of a job as you can. And then i find that amazing absolutely. But with the of physical practices over the cultural and but in doing those things have to go together . If not then come back with the question of the us lay if so in other words, does that depend on having that integrated package . [laughter] i think it would help. In the perfect world. But certainly it helps to have that greater view that is why i find 18thcentury america so fascinating you helped me with that chapter so you know, the information better but most americans did not know how but many who formed the government know how to do this accounting and those who had plantations are very good doing a. That is terrific for also those who do accounting. That is the story of america. But that internal tension that is absolutely immoral and good but also as a tool of fraud. The more you know, the more careful you will be with the power who also has the force with the bear Stearns Lehman brothers scale to wipe out a whole system. Bad accounting on that scale , there was a lot of bad accounting going on. While. The linchpin of capitalism. I read a lot of 15th century. But it is so detailed everyone put against the wall. It is remarkable how resistant they are. It is also a republic that sparks a lot of auditing. Talking about this that siena that great book this city state has a big double entry ledger with all the threads so nobody can sheikh double signatures to keep the books of the republic because it is the only way to do that we will not see a system like that again that is not effective you dont see that as a standardized government practice that what they do is for hundreds of years they lose that is deeply sobering. One. Matsys [inaudible] but now it is a profession that means not everybody does it. I dunno works better read general culture were everybody does that they are also professionals but we do know that having government oversight can help as the accountants will tell you they feel their hands are tied and they cannot do good audits right now. It is not completely clear who is right that were in a hyper financial moment that is so complex it is hard to figure out. The. With the danger with the double entry box what is that the danger . This is the idea from st. Matthew but be careful with worshiping fact. Trusting is too much that is the message that they picked that up with the dutch calvinisms, fraud. Fraud. Flock trod by great accountants. They show the tools are fantastic doing everything they are supposed to do but there is something wrong. Be careful with the numbers. Do you think double entry books could solve that . I talked about this today. I think learning how to keep the books is very important. Riiy. Cultural practice that we have lost. [inaudible] i totally agree but where does it start . I dont want to compliment myself because you can read the book and decide if it is any good or not but there is no history of accountability. I find that im nursing and kind of scary. So where do we start . My Research Shows learning this is to begin going back to the fondness. How it doesnt function and how terrifying it is. Ipeople dont know what that accounting is. [inaudible] that is what people talk about to the 18th century britain. He feels good at the end of the day we are supposed to balance the books. And then you pray afterwards. But the point is to a certain extent it might be a great place to diverse about conservation and even to begin to Start Talking about the crazy financial world that we live in and most people are financially illiterate so this is a story about Higher Education and culture. There are other stories that could be told as well. [inaudible] unique double entry first and then if you read the history of the Cost Accounting that is fascinating i talk about it and really perfecting it comes out of the book keeping and then you get the more complex appreciation that really is a fascinating concept. To get systematized in the midlands during the First Industrial revolution. [inaudible] nobody does that because you cannot run a business doing that. If you go back and read the article you can see the process by which you start losing money, go back to the entry began to realize ibook andrealize it is s problem and he puts the famous thing where he starts costing people dollars area and one of the biggest moments in the history is that clock. Its pretty rough and intense and defective defective. Im driving to work out the difference between the state and the merchant in the story. Its almost always begun so i wonder on your part do you think about the right of housing dependent upon the states and [inaudible] i dont make sweeping judgments like that, thats what is very interesting is to see the states try to failed, one of the reasons the spanish cell is they dont have an any accountants at will work for them and it takes so long. You have to start with a child have you ever seen that . If you dont keep it that is the educational rule. But this deep discipline is necessary. Guess what if you are a state and have the spanish empire in the state and you need accountants and you cant get them and you cant train them so you could do the civilians, nobody knows anything about it, its why old to see in 1726 after the stockmarket bubble there is a proposal and an internal memo that only three people basically have seen. Ive read it and its a horrible thing to read but quite interesting and there are enemies who dont want to be tacked. And they lose on the cost of doing this. It is a complicated story. I dont have a chicken and egg or a pure causality but i do see historically some impressive moments where these elements Work Together and that is the historians job. [inaudible] thinking and struggling whether it is good or bad or both, there is a office where everything goes in and nothing comes out. That is the art of not doing it. Its this remarkable thing. We have all of these rational account books and get nothing works. Its a ver very nightmarish form personally. The thing that strikes me about him is that he is a moral and social proselytizer that happens to be one of the greatest novelists of all time coming and by that i know some people dont like him. He staggers me and he thinks and writes a lot about accounting. Hes my other favorite novelist. What i think hes doing is trying to make a point about what hes struggling with. I dont think that he has the full answer, but he clearly wants people to be aware of how to does and does not work. I have not scanned him. They are constantly painting matthew in this book so that there. I havent done the entire work for this. [inaudible] they have all of these good accountants. Its the story of good and evil and these two choices on accounting. That awareness i think its very important. As a financial figure and someone that is also using language. We have writings on the financial problems like accounting . That is an idea utopia. [inaudible] we talked about this at the bloomberg news. We thought both. They are the ones that can begin the discussion and can put it back into the curriculum. If we want to be a country that we really are right now. In this grant them the first time [inaudible] i said before you go into it [inaudible] in the early medieval finance with good accounting. By the way, one journalist told me they have 120 or so competing firms with better Financial Accounting during the crisis. That is the claim that i heard in london last week. I dont know if it is true but it was fascinating. [inaudible] one of the issues that i have seen on the past to the Financial Statements if you look at the Financial Statements at the turnofthecentury, the footnote are a very modern portion of the state on the Financial Statement of which probably 20 pages to 230foot notes and so the footnotes have taken over. Any sense of the Financial Statements today we have to withdraw. They want more explanations to say that we are not totally sure. It is a remarkable form of writing expression, one that we dont talk about very much. People dont even have any idea of this and people are arguing about it. Those are issues especially for the auditors. [inaudible] even go to accounting is fundamental and has much more than it reveals a lot of times. Even if they are doing their best there is a certain amount of discretion to protect the picture. It doesnt have a soft starts to generate the problems if you get a picture that have been people forget that nothing is behind it and that sort of creates if you think about the Balance Sheet and 29 they were just producing these Balance Sheet and there were warnings about the crash there are better and worse Balance Sheets but there are also problems. To understand that there are problems and how to construct the discussions about them i think is always best to begin with. People in the business know they are in private equity so when you buy the company do you trust the books . Of course not. And that is a big business lesson right there. A gradual destruction of the first mouthy obstruction is to go from doing the accounting to the professional and then you go from 100 companies to four companies. Its approximately increasing. Thats why we need some kind of literacy. We have to start somewhere. That is my true conclusion as a historian. I believe personally that that is the case. We have to start the discussion. Its going to be a long and complicated one. Its tricky out there and we are in new york city. [inaudible] [laughter] according to the journalist, yes people that want to do the honor and blow the whistles find themselves in deep trouble. They are a dangerous thing sometimes. Thank you very much. [applause] provides a history of the conservative movement through the works of people that shaped it, people like william f. Buckley junior, phyllis schlafly. This is 45. I do want to point out one aspect or guest today is also a parttime commentator. Millions of americans of