I recently watched a lecture by L. Randall Wray in which he claimed that tally sticks were a form of money. He used this as a piece of evidence in a larger argument that money is essentially credit created by the government, not a representative store of value, as it would be under a gold standard type currency,
Tally sticks, from what I understand, are simply notches on two sticks signifying debtor and creditor. The sticks would then be matched up to make sure there was no swindling. The Encyclopedia of World Trade mentions that they were used for state financing. So I am interested to see if (1) they were actually a form of money and (2) how the monetary system functioned if it were a form of money.
A lot more could be said about tallies, but I posted an answer to a similar question about tallies over here.
Yes, tally sticks were often used as money. You would find personal notes being used in a similar way in 18th c. North America, for the same reason: when hard currency was not available. They had a defect: unlike a hard currency, notes and tallies were tied to the ability of the debtor to pay , the ability of the creditor to get the debt redeemed. So, you'd think there should be a significant difference in the value of , say, a miller in Norwich's tally and the tally of the King. Unfortunately, though, there were times when the King abused the tally system more than the miller. The king, instead of paying a creditor in currency, might give him an "assignment" tally for one of his tax collectors: and then the creditor had to travel to the tax collector and get him to pay up. He might travel far, to get to the tax collector, and then find himself in a strange place, with the tax collector in no hurry to pay and surrounded by no one willing to help him. All that difficulty of redeeming meant the government didn't have to pay quickly, and so was a way for the King borrow funds. In the midst of the Hundred Years War, it seems the Exchequer paid out about seven pounds of tallies for every single real pound of currency.
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