The Secret History of the Tally Stick

Money as Debt

For tens of thousands of years, humans have cut notches into pieces of bone, ivory, wood or stone, to tally numbers of animals, objects, people, or events. These were simple accounting devices. They were cheap to obtain, and their users did not have to be literate. Marco Polo reported their use in China in the thirteenth century. 

Eventually, some tallies were modified to serve as a form of money. It is possible that the money-use of the tally goes back to the ancient Greeks in about 500 BC. In Britain they were legally recognized as money from about 1100 to 1826. In France they were legally viable until 1854 or later.(1) 

Much is written about money. But very few economists even mention the humble tally. Yet the history of money-tallies tells us something about the nature of money, as both Alfred Mitchell Innes (1913, 1914) and David Graeber (2014) fully appreciated. The history of money is not solely about precious metals, notes or coins. It is fundamentally about debt. 

The same point is highly relevant today. Data collected in 2011 show that about 90 percent of money in the US has no physical existence at all, it consisted of electronic account records, of assets and liabilities, held by banks. In the UK it is 97 per cent. Money is not primarily physical. As Geoffrey Ingham observed, money is a “social technology” resting on sovereign political power. It is informational and relational, depending on institutions and laws.(2) 

Before there were electronic computers there were wooden tallies. From medieval times, and possibly earlier, the crucial innovation was the split tally. The sides of a twig of seasoned hazelwood or willow were shaved to create a square section along its length. Some tallies were as short as five inches. Later, partly due to inflation, some became much longer. 

Just as it had been done for tens of thousands of years before, notches were cut crosswise into one side of the stick, and sometimes into the opposite side as well. These notches could represent goods or amounts of money. Cuts and notches, of different widths and alignments, recorded amounts of money according to an established convention. 

As shown below, a curved notch, about the width of a thumb, represented £100. To the right of this in the picture, a ”V” is incised. This represents £20. To the right of that, with “the width of a ripe barleycorn” is a notch representing £1. Two further notches to the right, of diminishing widths, represent 1 shilling and 1 penny respectively. The total value of the tally in the picture is £121 plus 1 shilling and 1 penny. 

The amounts in the agreement would also be recorded in ink on the side of the tally. It was then split along most of its length, dividing the notched side and its obverse into two. One section at the end of the tally (without notches, for about an inch or more) remained intact. 

The result was two pieces of wood, one longer than the other, but both carrying the same notched records. There were helpful irregularities in the wood grain and its carving. The two pieces could be brought back together to verify the record of the agreed transaction. The irregularities helped to show that the two parts were authentic. Fraud was difficult or impossible. Money is a duality – a debt and a credit, based on a relational agreement. The tally stick was split to represent this.(3) 

The shorter part was called the foil or stub, the longer part was called the stock. The foil indicated an obligation to pay the stockholder. In accounting terms, it was a liability. The stock was the creditor’s IOU. It had positive value – an asset for its legal owner. The legal contract that was recorded on the tally, followed by it being split, created a positive monetary value and a numerically equal negative amount, on two pieces of wood of negligible intrinsic worth. The money was not created out of physical stuff, but out of the legal and customary social arrangements that allowed the creation of debt and an expectation of its recovery. 

The stock could be sold to a third party, typically at a discount. The discount reflected the cost and difficulty of finding the debtor and enforcing payment. The tally stock is the etymological origin of financial stocks. Today the word refers to Treasury bonds.  

Clearly, the use of the tally stick as money depended on the previous evolution of money as a legally enforced unit of account. Tally sticks did not originate money. But they played a crucial role in the development of medieval and modern monetary systems until the nineteenth century. 

In England, in about 1100, Henry I began to use tallies for public finances, including using foils as receipts in the collection of taxes. The stock was kept by the depositor. Henry required that the transactions, the transactors, and the amounts involved be written in ink on both parts of the tally. By the 1437-47 accounting period, 64 per cent of tax receipts were “tallies of assignment.” As Mitchell Innes noted: “Practically the entire business of the English Exchequer consisted in the issuing and receiving of tallies.” Tallies were also used as devices to circumvent the usury laws, often by fictitiously swelling its record of an original loan.(4) 

After Charles II came to the throne in 1660, he expanded the use of tallies to increase public borrowing. His Treasury officials created the “tally of loan.” Such tallies were backed up by a repayment order with six per cent interest. In 1694, tallies played a major role in the founding of the Bank of England. 

But, almost a century later, an Act of Parliament of 1782 declared that the Exchequer’s use of tally sticks would be phased out over time. In 1834 the Exchequer gathered the many thousands of pieces of wood were stuffed and burnt in bundles in a stove in the House of Lords, thus destroying seven centuries of invaluable public financial records. The fire spread out of control and destroyed both Houses of Parliament. In its fiery death, tally money had its symbolic revenge. As if in retaliation, it destroyed the building that had helped to give it meaning, authority, and power. These unfortunate tallies had already been deprived of their monetary value. They avenged with their material form.(5)