Accounting for Alcohol – part 15 “Accounting in the Port wine Chartered Trade Company (1756–1826)”

This is a brief summary of chapter 15 in our book, written by João F. Ribeiro, José M. Oliveira and Maria F. Brandão. This is also the final chapter in the book, so back to normal posts after this. I hope you enjoyed the chapter summaries.

This chapter details some accounting of the Portuguese Companhia Geral da Agricultura das Vinhas do Alto Douro (hereafter Companhia), which was founded in 1756. While also trading, the Companhia acted as a tax collector and regulation of the Douro wine sector. It was obliged to buy production excess, in accordance with the quantities determined by
the state, to avoid lowering of prices in the market. Furthermore, it acted as a creditor, as it had to lend funds to local farmers at a subsidized annual interest rate of 3%. Finally, it supervised improvement works in roads and waterways in the region, making use of collected taxes. All of this implied in needed to maintain good accounting records. The chapter provides a very detailed chart of the organisation of the accounting function and describes the various books of account maintained. The authors note how the “bookkeeping model is in harmony with the teachings of João Henrique de Sousa, the first teacher of the Aula de Comércio – the Portuguese Public School of Commerce created by Pombal in 1759”. This system was also used by other similar companies in Portugal. It is also noted by the authors that income smoothing was a typical feature after 1784, with reported earnings being very similar and accounts such as “Casks Depreciation, Bad Debt Provision, ‘Profit’ Provision and Extraordinary Income/Costs” being used to achieve this.