How to Succeed in Business (According to a 15th Century Trade Merchant) – Harvard Business School Working Knowledge

In what could be considered the first business how-to book, an Italian merchant from the 1400s advises leaders to be charitable, ethical, and treat people fairly; be modest; look for the right qualities in a wife; be selective in deals; and retire at 50, when “natural fervor abates, his blood calms down, his intelligence dims and his memory becomes less quick, so that he risks committing many errors in his business.”
“In a sense, these are very early concepts of corporate social responsibility,” says Harvard Business School professor of management practice Dante Roscini, “He’s addressing the issue of responsibility to the community and who you are as a person.”
Written in 1458 in Italy by trade merchant Benedetto Cotrugli, The Book of the Art of Trade recently received its first English translation. Baker Library at HBS and the HBS Business History Initiative (BHI) this fall hosted a reception celebrating the release. The library’s late medieval and early Renaissance Italian business records housed in HBS’s Historical Collections in Baker Library are among the largest and most important collections in the world outside of Italy.
“Sponsoring this event was an opportunity to highlight the extraordinary treasure trove we have here, as well as the larger return to studying early capitalism in a global context,” says HBS Associate Professor Sophus Reinert, a BHI faculty member. While Cotrugli’s manuscript is not housed at Baker, guests had the opportunity to examine ledgers and other records in the collection from the same era.
Although written 115 years earlier, Cotrugli’s treatise was not published until 1573, in Venice, when it appeared in a significantly abridged and revised edition. The English translation by John Francis Phillimore is based on an earlier and more complete manuscript discovered in Malta. Edited by Carlo Carraro and Giovanni Favero of Ca’ Foscari University of Venice, the English edition includes commentary by Niall Ferguson, Favero, Mario Infelise, Tiziano Zanato, and Vera Ribaudo.
Born into a family of cloth and wool traders, Cotrugli was a reluctant merchant, pulled from his studies at the University of Bologna to join a profession that he considered lacking in intellectual and moral discipline: “I found the state of general education inadequate, ill-organised, arbitrary and useless,” he wrote in the book’s opening pages. “…[I]t pained me that this useful and necessary activity [trade] had fallen into the hands of such undisciplined and uncouth people, who carry on without moderation or orderliness, ignoring and perverting the law, and that this profession should be considered of so little importance and be so neglected by the wise…a forum for empty chatter where anything goes.”
To correct this sorry state of affairs, Cotrugli took a holistic approach, laying out a four-part handbook that encompasses the origins and principles of trade; the role of religion; civic duties, which includes chapters on topics such as modesty and fairness; and a number of domestic matters, from the desirable qualities in a wife to the proper furnishing of a home.
“It’s a period that maybe for the first time saw wealth and its broader potential as a societal goal,” says Reinert. “You needed to be wealthy to give to others. Instead of conquering, you could achieve greatness through excellence in trade.”
“They incorporated business into a larger social and ethical framework,” adds Robert Fredona, an HBS research associate who is cataloging Baker Library’s holdings from this period. “Cotrugli is one of the earliest texts to talk about business ethics, such as treating people fairly.”
Readers also find clear instructions on what to avoid (chess, board games, cards, dice, fencing, wrestling, playing instruments, dancing, hunting, fishing) and how to conduct oneself, including the importance of attending mass, praying, and charity to others: “The merchant must be generous in extending his hand to the poor and in giving alms out of his own property in proportion to its extent.” Merchants should not be involved in politics, or the courts, “because these are perilous areas”—a statement that continues to inspire debate in the era of businessman-turned-president Donald Trump.
Honor, prudence, integrity, diligence, civility, composure, and temperance are all highlighted in separate chapters—but Cotrugli gives equal due to the importance of luck and boldness. A merchant also must be canny, but not overly so: “The shrewdness of the merchant, or his cunning, must be employed in moderation: he should neither hurt others nor allow himself to be got the better of, but manage to intuit where deceit and falsity lurk.”
To be a good merchant, in other words, you first had to be a good citizen, with education playing a key role in creating the “universal man, equipped with the capacity to understand and deal with all types of men.”
“Cotrugli was elevating the idea of a merchant from a very trading-oriented persona to a broader and nobler figure in society,” says Roscini, noting that this concept fit well with the highly literate, numerate culture of Renaissance Italy and its emphasis on cultivating the whole person. “It wasn’t just about pursuing a noble ideal, either,” Roscini adds, “if you followed this path, you would be more successful.”
With that said, the art of trade also requires a strong base of technical knowledge. In the book’s first section, Cotrugli covers the particulars of barter, selling for cash, selling on credit (and receiving payment), and keeping one’s books “in a mercantile manner,” among other business topics.
Scholars have noted that it is the earliest known work to cite the system of double-entry bookkeeping, which would be covered in greater detail more than 30 years later in Luca Pacioli’s Summa de arithmetica, geometria, proportioni et proportionalita (1494), a first edition of which is housed at Baker.
Cotrugli also notes the importance of a business’s location, and offers his opinion on risk and diversification in commentary as relevant in the 21st century as it was in the 15th: “Be careful not to take on too many or too large transactions: do not try to net every bird that passes, because many have failed for taking on too much, but no one for exposing himself too little.”
Extending credit was as much a necessity for trade in Cotrugli’s time as it is today, but charging interest was illegal; instead, debts were compensated through commissions or insurance premiums that skirted the definition of usury. And Cotrugli was clear on the treatment of nonperforming loans; after one year, the amount due should be cut in half, and written off entirely after two, “because for the merchant losing time and losing money are the same thing.”
Succession planning is also touched on (even if it doesn’t go by that name in Renaissance Italy). Cotrugli’s attitudes are surprisingly modern in this regard. That one’s offspring will follow in the family business, for example, is not a given.
“…we need to take particular care, when we are beginning to channel the disposition of a son…when directing them towards the practice of trade, because if that son has a leaning elsewhere…he might not well prosper in that life, or would only get on with difficulty or remain stuck halfway with small profit to himself and without reaching his objective, which should be to enrich himself honourably.”
If, however, he is lively by nature, well turned-out and of noble character, and not too fickle nor an idler, but rather aspires to acquire both honour and profit or victory in war, Cortugli opines, “then we can say that he is suitable material for a career in trade.” And if that is the case, he should learn his trade with an outside mentor for several years: “as soon as they are grown, they should be placed with a good and knowledgeable merchant so as to learn their trade, because although many want to become masters without a master, this is not possible.”
The book concludes, appropriately enough, with the proper way to end a merchant’s career. According to Cotrugli, the appropriate age for retirement was not 65 or 70, but 50 (life expectancy was shorter in those days and Cotrugli himself would die at 53). At 50, the merchant’s “natural fervor abates, his blood calms down, his intelligence dims and his memory becomes less quick, so that he risks committing many errors in his business.” According to the laws of nature, “it is good that he rest. He wanted money: he has got it; good name: he has it; possessions: he has them; he has married off his sons and daughters, he has made his pile, fathered and reared children, he has seen them learn his trade, he is fifty or sixty years old: what more does he want?” he demands, chiding anyone who wishes to continue working for fear of letting oneself go or being thought a “layabout.”
“You can think of Cotrugli’s book as an early manual for business,” Roscini says. “As Niall Ferguson notes in his introduction, it’s the beginning of the ‘how to’ tradition, in a sense. The book is a direct consequence of his everyday business practices and happens to contain some seminal concepts that are still here today.”
Much has changed in the centuries since The Book of the Art of Trade was published, perhaps most notably the role of women in society. But many of Cotrugli’s observations have continued relevance, despite the obvious differences in how we buy and sell today. And the differences that do exist are instructive.
“What we’re doing isn’t so new,” comments research associate Fredona. “We’re the children of these fathers, as it were.”
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