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Several years before the Declaration of Independence was signed, the newly formed United States was already printing its own currency. Thanks to the efforts of the nation’s first Secretary of Treasury, Alexander Hamilton, the U.S. Mint was established in 1791. The dollar became the country’s standard unit of currency the following year, replacing the widely circulated Spanish Peso.

But even before that time, Americans were running their own businesses and making financial transactions. Thus, certain financial duties were required at the business level, from recording financial transactions to reporting earnings to tax collection and other governmental entities. In this way, the career of accounting was born, although it looked quite different in the 18th century than it does today.

Words, Numbers, and Accounting Ledgers in the 1700s

For starters, the English language itself was quite different during colonial times. The Americanized version of English was influenced by Spanish, French, and Native American languages, unlike its mother tongue. English poet and essayist Samuel Johnson published “A Dictionary of the English Language” in 1755, and although it was quite comprehensive, the famous work didn’t account for the nuances of American English.

 

Further, American English has evolved considerably since the 1700s, and some of the nomenclature of the times is almost indecipherable in the 21st century. In fact, a research team from the University of Wisconsin-Madison in 2013 had difficulty deciphering mid-18th century merchant ledgers due in part to words and phrases that have no meaning in modern times. For instance, they discovered that a “baddledor” was a racket used to play ball.

 

Despite numerous strange phrases, many aspects of 18th-century ledger transactions are consistent with those of modern times, with lists of purchases, payments, and monies owed. Yet there are also additional differences: Today’s accounting templates are primarily digitized and can be found easily online. Of course, accountants of the 18th-century didn’t have that luxury. Ledgers, invoices, and balance sheets were painstakingly handwritten and, as such, were subject to human error.

Different Branches of Accounting

The unfortunate reality is that human error remains a major part of accounting in modern times, too. A 2015 Bloomberg BNA study determined that human error is responsible for 27% of accounting mistakes. Although it has helped combat the number of inaccurate, handwritten ledgers, the overarching digitalization of the industry still can’t completely eliminate those types of errors.

 

Bookkeeping and accounting were a cornerstone of business in the 1700s, yet we don’t have much data regarding the accuracy of the industry. At the very least, 18th-century shopkeepers were likely more involved with the accounting side of their business than modern business owners. That’s because accounting was much less complex during that time, and didn’t involve considerations such as cost-benefit analysis, tax planning, or risk management.

 

In modern times, accounting is much more multifaceted. Depending on the nature and size of a company, business owners may require a variety of accounting services. A modern business owner may employ a managerial accountant to assist with elevating the company’s financial performance. In addition, a financial accountant may also be consulted in an internal capacity, communicating with managers, investors, and clients. 

The Progressive Duties of Accountants

But managerial and financial accounting are just a few of the various accounting branches in modern times. In the 18th-century, financial professionals were basically either bankers or bookkeepers. As technology progressed, so did the financial industry, and with it, the field of accounting.

 

The technologies that fueled the Industrial Revolution (approximately 1760 to 1830) helped usher in a new era of convenience, while also making financial transactions and bookkeeping more complex. Interestingly, it was railroads that were essentially responsible for transforming simple bookkeeping, primarily defined by the balancing of ledgers, into the field of accounting.

 

Those who owned railroads had to deal with complex distribution networks, which included scheduling, fare collection, and cargo-based logistics. Accountants became a crucial part of the way in which railroads conducted business and brought in revenue. And as technology continues to evolve and alter the ways in which we interact, communicate, and conduct business transactions, accounting becomes even more complex.

 

Modern accountants have a number of daily responsibilities, which may include organizing financial records, ensuring the accuracy of financial statements, and calculating taxes. Accountants may work side by side with professional actuaries, who take accounting a step further. Actuaries focus more on risk management and analyzing data to help businesses predict consumer behavior in order to grow and thrive.

Final Thoughts

We’ve come a long way since the Continental Congress first established a national bank and centralized currency. The bookkeepers and accountants of the 1700s could never have predicted how complex their field would become. Modern accountants now work in numerous branches, some of which are similar to the simple ledger balancing practiced by their 18th-century counterparts. Other subsets of modern accounting are much more complex, involving advanced calculations and predictive analysis performed by professionals with advanced degrees.

 

About the Author:
Frankie Wallace contributes to a wide variety of blogs and writes about many different topics, including politics and the environment. Wallace currently resides in Boise, Idaho and is a recent graduate of the University of Montana.