Accounting and performance monitoring in Tuscany: Larderello, 1836–1858

ABSTRACT

This study examines the use of accounting for performance monitoring in a new industrial environment, the manufacture of boric acid in Tuscany during the middle decades of the nineteenth century. We provide a background context showing the growing significance of Tuscan boric acid as a source of borax for use in the industrialisation of Britain and France, and how the supply of this product came into the hands of François-Jacques Larderel. However, given the method of financing employed, Larderel was forced into fixed-price supply agreements with his financial backers, which influenced the nature of the accounting system and its use as a means of performance monitoring. We also reflect on possible sources of inspiration for the system utilised from 1836.

KEYWORDS:

• Boric acid
• Larderel
• 1849 rules
• piecework
• paternalism
• Payen

Acknowledgement

We would like to express our thanks to Elisabetta Bettio who was the archivist for the Archivio Storico Piero Ginori Conti (Larderello) collection whilst it resided in Florence. She materially assisted the research carried out for this study and without her work on the archive the writing of this paper would not have been possible. We would also like to thank the two reviewers and the editor of Accounting History Review for their comments and guidance which have made the completion of this paper possible. Any remaining errors are entirely down to the authors.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. When the initial research for this study was conducted in the first half of the 2000s, the archive material resided in Florence (as Archivio Storico Piero Ginori Conti (ASPGC)) and the Italian co-author and the Florence archivist began to list the accounting and related material. However, since then the material has been moved to Enel’s Historical Archive in Naples (as Larderello 1818–1962, Fondo Unico), and the listing currently utilised there simply uses document descriptions, not individual document reference numbers. To avoid significant repetition of such descriptions within the text, for those items allocated a reference number in Florence (e.g. ASPGC XXXX) we use these whilst cross-referencing to their current description as used in Naples within the references section of the paper. Where no reference number was allocated in Florence, we simply use the description.

2. For some time before 1800s, the Netherlands held a monopoly of refining natural borax using closely guarded methods.

3. Payen (1823, 315–316) notes that he and Cartier founded the first large factory to produce all types of borax using Tuscan boric acid and that it was capable of producing 50,000 kilograms per year, twice the then consumption in France. However, Payen’s claim to have been the first to manufacture synthetic borax was contested by Buran, a report to the French Society of Pharmacy in 1828 concluding that whilst Buran was undoubtedly the first to have manufactured octahedral borax in France, it was Payen who was the first to discover the chemistry behind it and publish and make known its method of manufacture (Journal de Pharmacie et de Chimie 1828, 176).

4. In March 1791, the duty on unrefined borax was set at 6 francs 12 centimes per 100 kilograms, subsequently being raised to 25 francs in February 1805 and 50 francs in February 1810. In April 1816, whereas the duty on unrefined borax was left unchanged, imports of refined borax were to be charged at the rate of 180 francs per 100 kilograms if entering via a French ship, or 191 francs 50 centimes if by a foreign ship or overland. In May 1826, a new category of partly-refined borax was introduced, the rates of duty on both this category and natural borax varying depending on whether it originated in India or elsewhere (the latter being charged at twice the rate for the former). The rates on refined borax remained at former levels though all rates were further amended in November and December 1851 and continued to apply beyond the period covered by this research.

5. On 15 June 1817, an advocate acting on behalf of Henry Brouzet approached the French customs authority to establish a right of entry for Tuscan boric acid (Guerrazzi 1836, XXI), with ‘Guerrazzi, Brouzet, Baglioni & Co.’ sending a shipment of 2555 kilograms to France in that year (Cronologica 1702–2004).

6. This rate remained in place until 16 November 1860 when boric acid imports were made duty free.

7. Payen (1855, 238) suggests that the first borax refining factory using imported tincal was established in Paris in 1786, whilst Wisniak (2005, 492) indicates that in Britain the first appeared in 1798. A ‘Prescription’ book relating to Allen & Howard for 3 March 1799 to 22 November 1803 indicates that borax was one of the products with which it experimented in its Plaistow (London) laboratory, the product becoming a staple of successor versions of the business for more than a century (The Chemist & Druggist 1914, 116, 121). From the 1830s, Messrs. Howards began to acquire supplies of boric acid from Tuscany (The Chemist & Druggist 1897, 975) and by the mid-1860s, when it was the principal raw material used at its Stratford works, the business was described as being ‘amongst the largest consumers’ of Tuscan boric acid (Strauss et al. 1867, 146).

8. In 1803, only borax was dutiable, a distinction being made between refined and unrefined (or Tincal), with the former paying 8d. per pound, and the latter 4d. per pound. In November 1813, the former rate was doubled, whilst the latter was increased by only 50 per cent. By 1820 imports of boric acid were also being taxed, at a penal rate of 50 per cent ad valorem, but in 1823 this was altered to 4d per pound. In late August 1833, much reduced rates were introduced: refined borax 10s. per hundred weight., unrefined borax and boric acid, both 4s. per hundred weight. (i.e. less than 0.5d per pound.). These rates were further slashed in July 1842.

9. The soffioni and lagoons were formed along three tectonic lines running through the Colline Metallifere.

10. François-Jacques Larderel was born in Vienne on 17 November 1789 into a Dauphinoise family of gentlemen, subsequently ruined by the French Revolution (Frattarelli Fischer 2004). He then moved to Livorno with his family, one source putting this in 1799 although another indicates that it was during the reign of Napoleon’s sister, Elise Baciochi, as Grand Duchess of Tuscany (1809–1814) (De Germiny 1931, 156–157). In 1814, he was married to his cousin Paolina Morand, at which time almanacs describe him as a ‘chincagliere’ or seller of trinkets (Frattarelli Fischer 2004).

11. Except where otherwise indicated, the information in this paragraph is taken from ‘Cronologica 1702–2004’.

12. Ciaschi died in 1816 by falling into a lagoon which he had himself excavated (BPP C.165, 38).

13. An announcement of the formation of D’Hesecque & Co. can be found in Bollettino di notizie statistiche ed economiche d’invenzioni e scoperte Progresso dell’industria e delle utili cognizioni for the first half of 1839.

14. The first was dated 23 August 1834 with the widow Chemin and Prat, and the second 1 September 1834 with Lamotte (Annali di giurisprudenza: raccolta di decisioni della Corte suprema di Cassazione 1841, col. 680; see also Scardozzi 1992, 36).

15. George Hepburn and James Pillans, senior, had been partners in Grant, Hepburn & Co. of Trieste and, together with James Pillans, junior, in Grant, Balfour & Co. of Genoa, two of three mercantile firms based in Italy in which Isaac Grant was a senior partner in the 1820s. On 31 May 1831, both partnerships were dissolved (The London Gazette for 1831 vol. II, 2392). Hepburn and Pillans then seem to have gone their own way, acting as bankers and merchants, and being represented in Livorno by the Anglo-Livornese merchants John and Thomas Lloyd (Cartiglia 1992, 533). Thomas Lloyd had joined his cousin John at Livorno in 1824, becoming a partner in the business in 1830. When John returned to Britain, the business became known as Thomas Lloyd & Co. (Griffiths 2007, 86). The various Grant businesses continued to operate under new partnership arrangements but in 1837, got into financial difficulties and were loaned £30,000 by Barings bank. In 1848, the Trieste business was closed and the Livorno and Genoa branches re-formed as Grant, More & Co. Due to debts owed to Barings, the Genoa branch was closed in 1865 and that at Livorno in 1866 (see note to Baring Archive HC12.2 House Correspondence – Italy).

16. The low price reflects the fact that Barberet paid all the production costs on the amount which was supplied to him (share prospectus for the Société D’Hesecque, f.3). By virtue of Barberet being given shares in the Société D’Hesecque, the 120,000 kilograms to be sold to Barberet became the property of the company, and were to be purified and/or used to manufacture borax at the production sites by E. Buran & Co.

17. This detail is taken from a letter written by Grant & Co., Livorno, to David Taylor & Sons, druggists of Mincing Lane, London, dated 14 March 1836. The letter also suggests that this amount was to be delivered in seven lots from 1 January 1837 to the end of June 1839 and that a first tranche of 3 million pounds had already been delivered to Hepburn, Pillans & Co. and ‘resold to W. Lloyd (the refiner) at about £50’. However, the first claim seems questionable given the then current annual output of about 1.75 million pounds, unless large stocks were previously held at Larderello or Livorno.

18. They had previously taken legal action in 1832 claiming that the Larderello partnership had violated its contractual arrangement by selling acid to other merchants thereby undermining the Lloyds’ exclusive arrangement for supplying the British market. With the courts suggesting a potential reduction of 13 lire per 100 pounds of acid in the price received for acid supplied to the Lloyds, the Larderello partners agreed to stop this activity (Nicolini 2007).

19. In this source, Payen states that his visit was in 1835 though other sources indicate he was there in 1836 (Nasini 1930, 40; letter from the Larderello bookkeeper Pezzati, dated 11 May 1856, which refers to Payen signing the Larderello visitor’s book on 11 October 1836). It is, of course, not impossible that he made more than one visit especially given his subsequent connection with the Société d’Hesecque. Cronologica (1702–2004) suggests that Payen first began a chemical-physical analysis of the soffioni waters in 1832, visited the lagoons in 1835, and resided for a time in the Larderello village during 1838.

20. Frattarelli Fischer (1992, 50) suggests that it was in 1838 that Payen began to apply steam to the purification of the acid at Larderello.

21. At the beginning, workers lived in huts but from around 1830, Larderel started to build small houses in which a family lived in a single room (Fondazione Michelucci, Comune di Pomarance, Il villaggio di Larderello, 2006).

22. Cronologica (1702–2004) provides some (incomplete) data for 1850: 18 inhabitants at the Lagoni Rossi factory, 29 at Serrazzano, 73 (including 16 workers) at Sasso, 28 at Monterotondo … 

23. The establishment of these rules may, in part, reflect the recent political turmoil that had affected Tuscany and Livorno in particular during 1848 and 1849, part of wider uprisings across Europe. Despite Grand Duke Leopoldo signing the Statuto on 17 February 1848, riots occurred in Livorno in June 1848, Larderel being appointed a member of the emergency governing commission put in place to try to restore order (LoRomer 1987, 281–282).

24. The difference in the language used is probably explained by the fact that those who kept the accounts at the factories were unable to write in French.

25. Some of the workers, bricklayers and carters employed by the firm were casual workers, so it is difficult to identify precisely the permanent staff of the company. Nevertheless, the book does enable the identification of the various functions and the skills required at the time.

26. In 1840, each factory showed a profit.

27. In addition to rewards, there were also to be ‘relative penalties for shortcomings and … in the application of which I will be as fair as I am severe’ (quoted in Bianchi et al n.d., 442).

28. The number of workers employed at each dome varied over time reflecting the technology of the time. The introduction of Adriane boilers after 1842, whilst reducing the length of the production cycle, actually increased the number of workers required per dome.

29. It is not entirely clear how product quality was monitored since, although the factory sheets from 1836 on contain space for a measure of the percentage of acid, in the sample of sheets examined, this column was always blank.

30. The book was entitled Essai sur la tenue des comptes d’un manufacturier. For more details, see Nikitin (1992, 373–383, 1996).

31. Payen sets out the accounts for three types of business, the last two clearly based on his own chemical manufacturing experience: firstly, an individual who produces custom-made products from materials supplied to them; secondly, a manufacturer of a single product, colle forte, using a single boiler and one furnace; and thirdly an enterprise in which more than one product is manufactured using many boilers and furnaces.