Multiple Origins of Accounting? An Early Italian Example of the Development of Accounting for Managerial Purposes

ABSTRACT

Utilising archival materials relating to an Italian pottery manufacturer, Manifattura Ginori, this paper examines the development of the company's accounting system during the 19th century. By the early 1800s, Manifattura Ginori is shown to have developed a double-entry bookkeeping system and to have carried out cost calculations. Deficiencies in the archive unfortunately do not enable us to determine precisely the nature of the links between the cost calculations and the financial accounting system during the early decades of the 19th century. However, as the century wore on, and the business moved from being an artisanal based manufacturer of high quality porcelain to a large-scale, industrial producer of utilitarian wares, Manifattura Ginori developed its system of accounting to reflect organisational changes and managerial needs. The Ginori archives therefore not only provide us with a rare glimpse of accounting in an early industrial context in Italy, but also of the use of accounting as a mechanism for business management and control in a non-Anglo-Saxon context. In particular it allows us to examine the role of accountants, to throw light on factors causing accounting change, and the relevance of alternative theoretical paradigms in interpreting such changes. By placing the experiences of Manifattura Ginori in a context of developments elsewhere in Europe, especially Britain and France, some implications can be drawn regarding the possibility of multiple origins of accounting ideas.

Acknowledgements

The authors would like to thank Mrs Ligresti for her permission to consult the Ginori Archive. We are also grateful to Miss Bettio and Miss Rucellai of the Ginori Archive, and Dr Patrick O'Sullivan for their collaboration and assistance. We are also grateful to J. R. Edwards and to the two anonymous referees for their comments on two earlier drafts of this paper, which have helped to sharpen its focus and, hopefully, make it more interesting and more readable. We alone remain responsible for the views expressed.

Notes

¹For fuller details of the industrialisation process in Italy from the 18th century see Caizzi (1965), Are (1974), Mori (1978) and Castronuovo (1980).

²The other important business was the Richard Ceramics Company. This company, which comprised the former factories at San Cristoforo in Milan and Palmas in Pisa, was founded in 1873.

³There have been only three studies of pottery manufacture which touch on the role of costing: the studies of the two British firms, Wedgwood in the late 18th century (McKendrick, 1970) and Mintons in the late 19th century (Popp, 2000), and that of La Manufacture de Sèvres, in France, in the 18th and 19th centuries (Nikitin, 1992).

⁴This sub-section is based on a large number of different sources, including Favero (2006) and information contained at the following websites: www.capodimonte-ltd.com/info.htm, www.metmuseum.org/toah/hd/pori/hd_pori.htm, www.artistictile.net/frameset%20pages/pages/Info/Info_Porcelain.html

⁵Majolica is less costly to produce since it can be fired at a lower temperature than porcelain, that is, 900–1,050°C compared to c.1,400°C.

⁶Paolo Lorenzini (1822–91) was the brother of Carlo Lorenzini, the famous Carlo Collodi (1826–90), author of the best seller, Pinocchio. Both were the sons of a member of the household staff of the Ginori family, Paolo having been born in the Ginori house, in which both he and Carlo lived for a long time. While Carlo became a writer and author, including a book on Manifattura Ginori (Lorenzini, 1861), Paolo commenced working in the Ginori factory when he was 27 years old.

⁷At the time of consultation, these items did not have an archival reference number.

⁸This approach to closing all the accounts is not too dissimilar from that suggested by Ympyn (1543), Pietra (1586) and Flori (1636), or that reported by Besta (1922, p. 105).

⁹Another example is provided by the profit and loss account of 1873, in which account number 81, the firing of the porcelain, is debited to the factory account. The total amount of 33,682.63 lira, comprises 4,052.15 lira for materials and 29,630.48 lira for labour. It is worth noticing, moreover, that cost determination was based on the different phases of the productive process, enabling the analysis of each phase.

¹⁰In 1818, following Carlo's introduction of the new four-level kiln, for example, a more detailed breakdown of expenditure was begun in book (b), enabling a greater analysis of the cost of purchased materials.

¹¹The term used is ‘prodotto delle fornaci’, the productivity being measured by the number of bakings.

¹²The nature of the percentage addition to produce total cost figures varied over time, and between products. For example, in connection with the production of artistic pieces for the Turin Exhibition, a statement drawn up in 1880 (AMPDB 51) notes the application of a rate of 250% to represent ‘overheads, discounts and gains’.

¹³The term ‘scandaglio’ was used by Villa (1850) in his book on Accounting and Administration.

¹⁴Their usefulness in this regard, however, was obviously limited by the method used to account for overheads. While this is not always clear, on certain occasions it involved approximations based on simple percentage additions rather than through careful calculation.

¹⁵Unfortunately, no documents have survived providing evidence as to the way that these values were determined.

¹⁶In the ‘Relazioni al bilancio’ many other indicators useful to management were calculated, for example, ‘lucro d'esito’ on value of production; profit for each shop; ‘lucro d'esito’ on majolica and porcelains/value of production; ‘lucri d'esito’ for crystals/cost of merchandise; net income/net worth at the beginning of the period; profits/value of the warehouse; profits/revenues (esito).

¹⁷Examples of such rules include the following: ‘Rules for the painting laboratory, 1 Feb. 1866’ (AMPDB 159), ‘New rules for the firing of porcelain, 26 Oct. 1865’ (AMPDB 159), ‘Rules for apprentices of the painting laboratory, 21 Sep. 1867’ (AMPDB 162), ‘Rules for the decoration laboratory, 1 Oct. 1867’ (AMPDB 162) and ‘Rules for the general materials warehouse, 30 Mar. 1874’ (AMPDB 174).

¹⁸The fractions used in 1883 are not known but, in 1897, when products were classified as first, second or third quality, or as defective, second quality was measured at 55%, third quality at only 30% and defective at 15% of first quality (AMPDB 271).

¹⁹Some of the documents refer to ‘fortnightly’ periods, some to periods of ‘two weeks’, whilst others were produced twice per month.

²⁰Thirty years later, in July 1894, a report was compiled on the ‘several manufacturing methods and processes observed in foreign countries’ (AMPDB 204).

²¹A key element of Godard-Desmarest's strategy at the Baccarat crystalworks in France in the early 19th century was based on the provision of similar mechanisms which would help to maintain the loyalty of his skilled workers (Nikitin, 1996a, p. 99). According to Buti (1990, p. 13), the policies on education and assistance at Ginori contributed to the establishment of the business's labour force as an elite group, considered to have a different history and culture from the rest of the population of Sesto Fiorentino.

²²We are grateful to one of the referees for providing us with this information relating to the 15th edition of Degrange's work.