It was a very tantalising lecture. Dr Lewis and his co-authors had been given jpeg images of 18th-century accounting records from Kaesong by a shadowy intermediary. The agent hoped that having seen some quality goods, representing a very small portion of a set of books and records, the academics would fork out hard cash for the complete picture (if indeed it exists).
In the first part of the lecture, Dr Lewis spent much time reviewing various modern materials which discuss the importance of double-entry book-keeping. Humble bean-counters will be encouraged that some authors place the invention of double-entry book-keeping on the same level as the discoveries of Galileo, while other scholars claim that capitalism would be impossible without it. In the end, this was an interesting discussion but tangential to what the books and records contained.
What was revealed on Friday night at SOAS were some pages from some 18th century accounting records of a Kaesong merchant. But whereas you and I might think of a merchant as someone who buys and sells goods for profit, this particular merchant who kept his books so diligently was in fact a money-lender. Lewis explained how the typical purpose of a loan would be to fund the harvesting of ginseng by a third party. Whether or not double-entry book-keeping is necessary or sufficient for capitalism1, surely capitalism cannot exist without banking.
Were these records double-entry book-keeping in the sense that a modern accountant would recognise? To be honest, we didn’t see enough of them to judge. We have a more complete set of books from the late Choson dynasty, and on the basis that what we have of the 18th century records seem to be identical in structure to the 19th century, Dr Lewis argued with some plausibility that we can use the 19th century records to talk about the accounting methods of the 18th.
But even in the 19th century records, the brief extracts we saw would not be sufficient for someone to control their business. Yes, there is a rudimentary concept of double entry: Cash comes in, liabilities go up (“ipsang”). Cash goes out, assets go up (“taego” or “chaegupha”). But if these are the only concepts the system used, this is a recipe for a ballooning balance sheet and no way of recording profitability. For cash coming in can also represent assets going down (repayment of a loan) or receipt of revenue (interest income). And cash going out can also represent liabilities going down or payment of expenses.
But if these records (including parts we are missing) do represent genuine double-entry book-keeping, the Koreans beat the Japanese to it by about 100 years, because the Japanese are said not to have introduced such methods until the Meiji era. And Dr Lewis also argued that the Korean records used methods and concepts which could be distinguished from Chinese methods of the time (though some Sinologists disagree).
Tantalisingly, the 18th century records documented the inception of a loan at 1.5% interest. We didn’t see, however, the entries made when the loan and interest is repaid. And we saw a loan ledger, not the other side of the entry in the cash book. Whether capitalism had a foothold in 18th century Kaesong, it is alive and kicking in the 21st century DPRK: the shady pedlar of antique Choson dynasty accounting documents is assured of plenty of future interest from foreign economic historians.
- It was noted that the Rothschilds did not start using double entry book-keeping until the 20th Century