In England tallies were wooden sticks that functioned as
instruments of credit and exchange in public finance. The Exchequer (treasury)
began using tallies in the Middle Ages, and by the humor of history the use of
tallies survived into the early nineteenth century.
A tally was a wooden stick with notches denoting various sums of money. A
notch the length of a man’s hand denoted 1,000 pounds, while a notch the width
of a man’s thumb denoted 100 pounds. A simple V-shaped notch represented 20
pounds. The handle of the tally remained notchless. In a credit transaction, the
notched segment of the wooden tally was split lengthwise down the middle and the
handle remained with one half of the tally. The creditor kept the larger half
with the handle, and the debtor kept the smaller half, called the foil. The two
halves would match or “tally.” The tallies were assignable, meaning creditors
could transfer ownership of tally debts to third parties. In this connection
tallies circulated as money.
Tallies entered into the British public finance system in two ways. First, a
citizen owing taxes to the government might hand the Exchequer a tally,
signifying a debt of taxes. The government would use the tally to pay for goods
and services. The recipient of the tally presented it to the taxpayer who had
the other half (the foil) and demanded payment. A second use of tallies in
public finance occurred when the government issued tallies in payment for goods
and services. In this instance the government was the debtor, and tallies
originating from the government could be used in payment of taxes. Originally
the government pledged future tax revenue from specific sources earmarked for
redemption of these tallies. Later the government issued tallies to be redeemed
from the general revenue. Tallies used as an instrument of government debt paid
interest.
It was this second use of tallies that contributed to the growth of a
primitive money market in London. Purveyors of goods to the government received
tallies, and discounted them—that is they sold them at less than
face value—to goldsmith bankers rather than using them in exchange, a practice
that reached its zenith in the seventeenth century. The goldsmith bankers, in
turn, expected the government to redeem at face value at some date in the future
the tallies that they had purchased. Later, the Bank of England also discounted
tallies, creating an even more ready market in tallies and adding to their
acceptability in exchange.
By the seventeenth century tallies were already an anachronism, but they were
not officially discontinued until 1834. In addition to assisting the emergence
of the London money market, tallies reduced the need for money minted from
precious metals and eased pressure on the English government to debase the
coinage to finance excess government expenditures.
See also:
References:
Davies, Glyn. 1994. A History of Money.
Dickson, P. G. M. 1967. Financial Revolution in England.
Feavearyear, Sir Albert. 1963. The Pound Sterling: A History of
English Money.