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For millennia, simple forms of record-keeping have been used as ways to keep track of debt, to substitute for the contemporaneous conveyance of specie, or to accommodate the future settlement and netting of debts. In England, tally sticks were regularly used. From Paolo Zannoni, an excerpt from his book, Money and Promises, via Richard Vague and his invaluable Delancey Place…

A tally is usually a stick, or a bone, or a piece of ivory — some kind of artefact — that is used to record information. Palaeolithic tallies include the Lembombo bone, found in the Lembombo Mountains in southern Africa, reported to date from around 44,000 BC; the Ishango bone, which consists of the fibula of a baboon, from the Democratic Republic of the Congo (the former Belgian Congo), thought to be 20,000 years old; and the so-called Wolf bone, discovered in Czechoslovakia during excavations at Vestonice, Moravia, in the 1930s, and estimated to be around 30,000 years old. Marked with notches and symbols, these tallies are ancient recording devices, means of data storage and communication. Not merely artefacts, they are important historical documents.

In England, from around the twelfth century, and for over 600 years, tallies became important financial instruments, a key part of public finance and an answer to a perennial problem for money-lenders, merchants and those involved in commerce and trade: how to both facilitate and record the exchange of goods, services and commodities. Reading these English tallies, understanding their history and their changing use, provides us with an understanding not only of the nature of individual financial transactions during the late medieval and early modern period, but also of the development of banking practices in England and its relationship to the English state.

Usually made of willow or hazelwood, tallies were used to record the key information of a financial exchange. The name of the parties involved, the specific trade and the date were written on each side of a stick. Notches of different sizes — which stood for pounds, shillings, and pence — were also cut on both sides. Then the stick was split in two along its length, creating a unique jagged edge; only those two pieces could ever fit perfectly together again. When someone presented one side as proof of a transaction, the parties could check for the right fit.

The potential uses for such a simple tool are obvious.

To begin with: an example of the early use of tallies as a record of debt repayment. John D’Abernon was the Sheriff of Surrey. His portrait in brass, in Stoke D’Abernon Church, Cobham, shows him as a knight in full armour, wielding a broadsword.

When he died, D’Abernon left his title, possessions and debts to his son, also named John. In 1293, we know that John D’Abernon gave two pounds and ten shillings to the Exchequer to pay a fine on behalf of his father. How do we know? Because at the time of payment, the official tally cutter made a series of notches on a stick: two cuts for the two pounds and one smaller notch for the ten shillings. The stick was then split, with the longer end going to John, and the shorter end staying with the Exchequer. The following words were inscribed on both sides: ‘From John D’Abernon for his father’s fine’ and ‘XXI year of the King Edward’.

John could thus prove to anyone that he had paid the fine of his father — simple and convenient.

Tallies also enabled the functioning of the tax system in medieval England, which was a rather more complex affair. The process took months to complete. It worked roughly like this. Tax receivers collected
revenues from the King’s subjects at Easter. They then passed them on to the Exchequer, which completed an audit in late September or early October. At the time, the Exchequer had two branches: the Lower and the Higher. The Lower Exchequer received and disbursed the revenues. The Higher Exchequer audited the process. They used tallies to track who had paid whom. As soon as the Lower Exchequer received the revenues, the tally cutter recorded the payment on the tally and split the stick. The tax receiver — the debtor — got the longer part, called the ‘stock’. The Exchequer — the creditor — kept the short end of the stick, called the ‘foil’. And once a year, at Michaelmas, the Higher Exchequer audited the whole process by matching stocks and foils. The stock was the proof that the collector had not merely pocketed the tax revenues.

Over time, both the use and appearance of the tallies began to change: in the early years, tallies were 3 to 5 inches long; later, they grew to be 1 to 2 feet long, and sometimes much longer. More money meant more notches; more notches, in turn, required longer sticks. One of the last issues of tallies made by the English Exchequer was in 1729, for £50,000: the tally is a whopping 8 feet, 5 inches long, visible proof of the growth of public spending, taxation and inflation.

As the appearance of the tallies changed, so too did their uses. Inside the Exchequer, they served as receipts for money paid by taxpayers. Outside the Exchequer, they began to be put to entirely different purposes.

The business of the Exchequer simply could not work without the tally sticks. They were essential for auditing and controlling public finances, which obviously made them excellent collateral for a loan.

The tally was not a mere generic promise to pay, but a strong, unique claim on the proceeds of the Exchequer’s revenue stream. It identified the cashflow and the individual in charge of paying; the creditor gave the stock to the indicated tax receiver to get coins from a specific revenue stream, and a lender was sure to get his coins sooner or later. The humble English tally stick was therefore ripe to become a veritable public debt security, not merely a receipt. They functioned just like paper public debt securities, except instead of being written on paper, the transactions were instantiated and inscribed on sticks.

To take an early example: Richard de la Pole was a merchant who traded wool, wine and corn with France and central Europe in the early 1300s. He had a reputation for using debts aggressively to grow his business, which appealed to King Edward III and his advisors, who thought they might be able to make use of his skills. So, they appointed him Royal Butler. The job of butler was to supply all sorts of goods — food, wine and arms — to the royal household and to the army. We know that in 1328 Richard bought some wine from the French. As a good businessman, as Royal Butler, did he pay for the wine in coins? He did not. Rather, in order to pay the bill, the Lower Exchequer cut eight tallies, which were addressed to the collectors of taxes for West Riding in Yorkshire, listing the tax revenues earmarked to settle the debt. The Lower Exchequer gave the foils — one half of all the eight tallies — to Richard, who handed them to the merchants who sold him the wine. The merchants then exchanged the tallies with coins from the taxes paid in West Riding, and finally, a few months later, the Higher Exchequer called upon the tax receivers to account for the shortfall of cash, whereupon they presented the eight foils, which had been first given to Richard, as proof of the payments made. 

To be clear: unlike coins, tallies did not actually settle debt. By accepting a foil, a vendor was effectively agreeing to a delayed payment from the Exchequer; the tally was a kind of guarantee that they would get coins. For the state, meanwhile, the tally was a convenient way to borrow from its suppliers, or a form of what we would now call vendor financing — the citizens and merchants who sold goods and services for tallies were effectively financing the state, in much the same way as those who lent actual coins to the Exchequer…

How record-keeping became finance: “Tally Sticks for Money,” via @delanceyplace.

Having looked back, we’d do well to heed Jack Weatherford‘s admonition (in his 1997 book The History of Money):

As money grows in importance, a new struggle is beginning for the control of it in the coming century. We are likely to see a prolonged era of competition during which many kinds of money will appear, proliferate, and disappear in rapidly crashing waves. In the quest to control the new money, many contenders are struggling to become the primary money institution of the new era…

* Adam Smith

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As we contemplate currency, we might recall that it was on this date in 1888 that William Seward Burroughs of St. Louis, Missouri, received patents on four adding machine applications (No. 388,116-388,119), the first U.S. patents for a “Calculating-Machine” that the inventor would continue to improve and successfully market– largely to businesses and financial institutions.  The American Arithmometer Corporation of St. Louis, later renamed The Burroughs Corporation, became– with IBM, Sperry, NCR, Honeywell, and others– a major force in the development of computers.  Burroughs also gifted the world his grandson, Beat icon William S. Burroughs.

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