I've been researching the use of Tally Sticks as currency and found multiple references to Henry I using them in his tax system. It is intuitive to me how regular citizens might exchange tally sticks that originated with a wealthy lender or a goldsmith, or some high-ranking noble who (at least in theory) always be good for the debt if you wanted to "cash out" your tally stick.
It isn't clear to me how tally sticks would be used for paying taxes, seeing as they would be given to wealthy nobles rather than originating from them.
I'm making lots of assumptions here about how these things worked and who would have actually been utilizing tally sticks. If anyone can point me in the direction of some decent sources on this type of currency, I'd really appreciate it. Any general explanation of tally sticks would be incredible. Thank you for your time!
There's a good explanation on the BBC website here: https://www.bbc.co.uk/news/business-40189959
The most interesting aspect for me is that the tally stick was split into two; a stock and a foil, with the stock acting as a receipt for the investor's investment and the foil being retained by the state.
The investors soon realised that if they got into a debt (say, by gambling), they could trade their stock with the person they owed money to. After a while, the practice became so common, they needed a dedicated building to exchange stocks in, called the Stock Exchange.
Also, the foils were stored in a room in the old Palace of Westminster. One day, they had a clear out and burned some of the old foils in a furnace. The fire got out of control and the old Palace of Westminster burned to the ground: https://www.parliament.uk/globalassets/documents/WORKS-OF-ART/The-fire-of-1834-booklet.pdf
The payment of a tax would create a foil for the payee. If you were paying your tithes to the Bishop, gave him a sheep, your stock would say , essentially, you paid to the bishop, on this day, one sheep for tithe. The bishop's foil would say he'd been paid. That's for taxes. In the pre-industrial world, currency often was scarce. So, if your friend Tostig sells you five buckets of lime for 3 pennies, you could likewise give him a stock that said your name and "3 pennies", keep the foil that said the same, and that stock might get handed around for a while, as Tostig used it to buy thatch from someone else, they used it to buy a chicken. Eventually it could be presented to you for payment: but perhaps you could pay it with a stock you'd been paid with, if currency was scarce. If the debt was paid, the two halves could be tied together as a record of the debt being settled, kept by the payer. And of course, all this could apply to the bishop- his stock, that said "one sheep" might also be used to pay other people, and if anyone questioned the amount, it could be compared to the original foil.
You can also see how tallies could be kind of punitive: maybe the King pays you in Dorset with a stock, and the foil is held in Northumbria- a very long hard journey, and the man with the foil likely knows you can't make much trouble in the area if he doesn't pay you... the stock's not worth much, now, is it? There were also other tricks with them that made tallies another way monarchs could essentially avoid paying a debt.
Tallies became obsolete because they were cumbersome: written records in ledgers and written receipts were a more compact form of data storage, especially when you get to big numbers and complex transactions.... (in the 18th c. a big transaction could require a tally of several feet). But currency still could often be in short supply, and so in many places ( like the early North American colonies) there would be a lot of passing of notes for transactions that were earlier done with tallies. The note would say roughly what the tally had said : your name, and the amount. It would be signed ( or if you couldn't write, your mark witnessed by someone who could) . And it could likewise get passed around. Unlike tallies, though, a note could be forged. Which is why ones issued by banks were so elaborately printed , ergo bank notes...and paper money.
There was even a small revolution over the use of notes. In 1786, Massachusetts was deeply in debt for the Revolutionary War. Hard currency was in very short supply, and so the farmers in western Massachusetts simply traded in notes ( or, if they had them, put transactions in their ledgers). The state government, wanting to scrape up some money to pay the war debt, suddenly required taxes to be paid in cash. The farmers, led by a man called Shay, revolted. The whole affair was settled very quickly, but it was one of several problems that inspired the states to create a more effective national government ( that could mint money, among other things) and convene a Constitutional Convention the next year.
Baxter, W. (1989). EARLY ACCOUNTING: THE TALLY AND CHECKERBOARD. The Accounting Historians Journal, 16(2), 43-83. http://www.jstor.org/stable/40697984