This week the GIMMS team is offering something a little different for its weekly MMT Lens.
Do you know what a tally stick is? In David Graeber’s celebrated work ‘Debt: The first five thousand years’ the anthropologist explained that tally sticks were, quite simply, IOUs whereby a transaction was represented by a hazelwood twig notched to indicate the amount owed and then split in half. The creditor kept one half called a stock and the debtor the other which was called a stub.
Richard Tye, our guest writer this week, traces the history of the tally stick from the early 12th century until its fiery demise in the 18th. A fascinating and very readable account of how debt was recorded before written ledgers and today’s computer accounting systems. A recommended read.
Tally sticks were hazel wood sticks that for several centuries served as Exchequer accounting records, detailing payments of taxes made to the Royal Treasury by the Sovereign’s tax collectors. They later served as records of payments owed by the Exchequer to the Sovereign’s creditors, marking the creditor’s claim to specific future tax revenues. In this later guise, they were an interest-free IOU (a promise to pay coin), they were fully transferrable and acceptable as a means to pay taxes. As such they had currency as money, substituting and extending the reach of the Sovereign’s coined money, which was the primary means of settlement of payment.
Commodity coin, minted from silver (and gold) bullion via “Free Minting”, formed the foundation of the mediaeval monetary system upon which the Sovereign issued many types of debt instruments in order to overcome a paucity of tax revenues and force a flow of coin into the Exchequer.
Fig. 1 Examples of Tally Sticks
Tallies of Sol – The Tally of Receipt
Issued by the Exchequer of Receipt in the early 12th century and probably earlier, tallies first served as accounting records of tax revenues collected by the Sovereign’s tax collectors. These tallies were known as Tallies of Sol (“solutum” meaning giving in payment) or Tallies of Receipt. English sovereigns had networks of tax collectors throughout the land and when a local tax collector brought tax revenue in the form of cash (specie or coin) into the Exchequer of Receipt, tellers would count the revenue totals and check the quality of the coin. With the amounts confirmed, knights chamberlain would cut a tally stick, usually made of hazel wood, for the relevant sum. Different sized notches cut into the tally recorded different denominations (in £-librae, s-solidi and d-denarii or pounds, shillings and pence) and the details of the payment (the name of the tax collector and the total sum) would be inscribed on the side of the tally. The tally would then be split lengthways down the middle; one half (the “stock”) would be kept by the tax collector, while the other half (the “foil”) would be kept by the Exchequer. The essential details of each tally cut were also entered on the Receipt Roll (“pellus recepte”). Later, when the time came for the Exchequer of Audit to hear the account of the tax collector for the tax revenues he owed the crown, the tax collector would present the tally-stock. The Exchequer of Audit would match the stock with the foil thus verifying delivery of the tax revenues and the sum would be entered on the Pipe Roll (a near continuous collection of financial records kept by the Exchequer, dating from early 12th century to 1833). Having demonstrated to the Exchequer of Audit that the tax collector’s debts had been discharged, the exchequer clerk subsequently destroyed the tally.
Fig.2 Tallies of Sol
Royal Payments and the Royal Writ
The officials of the Exchequer of Receipt were also in charge of making payments out of the Royal Treasury. Payments were made by royal writs of “liberate”, ordering clerks of the Exchequer to pay royal creditors specified sums. A writ is a document under seal issued by the Crown commanding the person to whom it is addressed to carry out a specific act. The creditor would present his writ at the Exchequer of Receipt ordering payment whereupon the clerks would cancel it once paid in full. Details of payments made out of the royal treasury were recorded in the Issues Roll (“pellus exitus”).
Fig.3 Writs of liberate were issued by the sovereign’s administrators to its creditors, who presented them to the Exchequer of Receipt for cash payment.
(Some payments were made directly to royal creditors by local tax collectors in the country rather than by the Exchequer of Receipt. Payments in such cases were ordered by royal writ of “computate” or “allocate”, ensuring the Exchequer make allowance to the tax collectors for the specified sums when subsequently submitting their revenues to the Exchequer of Receipt. The Exchequer of Audit specifically recorded such payments in the Pipe Rolls as “made by the king’s writ”.)
Tallies of Pro – The Tally of Assignment and the Writ of Assignment
From c.1290, during the reign of Edward I, Issue Rolls begin recording in increasing numbers payments made “per talliam”, which was a financial innovation motivated by increasing pressure on the royal finances as tax revenues into the Exchequer slowed. These are known as tallies of assignment and were payments made by the Crown to its creditors against specific local tax collectors’ revenue prior to submission of their returns at the Exchequer of Receipt. This financial innovation differed from Tallies of Receipt in that they are a record of financial transactions outside of the Treasury.
Creditors would be issued with a writ of assignment by the Crown, which was an authorisation for cash payment when submitted to local tax collectors. With payment discharged, the tax collector would later present the writ alongside other cash returns to the Exchequer of Receipts and a tally would be raised as a record of payment. An entry was subsequently made in the Receipt Roll and a corresponding entry would be created in the Issue Roll, recording payment to the creditor, the reasons for the payment and by the warrant it was made. The tax collector would at a later date attend a hearing at the Exchequer of Audit to have his accounts verified and entered into the Pipe Rolls, whereupon the tally would be destroyed.
It is probable that creditors preferentially sought tallies of assignment, as they provided greater security of payment. Monies paid into the Exchequer could more easily be requisitioned for use by the Sovereign. Creditors to the Crown were, therefore, more vulnerable to sovereign default as the King was immune to suit. By reference to local tax collectors rather than the Exchequer, tallies of assignment gave favoured creditors preferential claims on royal income before receipt at the Exchequer, allowing them to jump the payment queue and thus ensure prompt payment, avoiding potential default.
The reader will note that in this guise the tally of assignment involved little financial innovation as it still served much like a tally of receipt issued by the Exchequer of Receipt upon presentation of tax revenues by the tax collector. As such it was still an ex-post accounting record of tax revenues received, rather than an ex-ante accounting record, anticipating future tax revenues.
Fig.4 Writ of Assignments issued by the sovereign’s administrators allocated specific tax revenues from tax collectors as payment to creditors. The writ was subsequently presented to the Exchequer of Receipt, who raised a tally as record of payment. The accounting circuit was completed when the tally stock was presented his accounts to the Exchequer of Audit for inspection.
Tallies of Assignment-anticipation of tax revenues
Later, in the 14th century, the Exchequer of Receipt began issuing tallies of assignment directly to creditors of the Crown. As these were issued prior to receipt of any payment into the Exchequer, tallies of assignment began to anticipate specific tax revenues. In possession of a royal writ of assignment, a creditor would present it to the Exchequer of Receipt. A tally would be raised and notched for the amount owing, the name and office of the tax collector whose tax revenue was to be charged payment and the date. Meanwhile, the clerks of the Exchequer of Receipt entered the details of the tally into the Receipt Roll alongside a matching entry into the Issue Roll. In due course, the creditor surrendered the tally to the local tax collector upon receipt of the cash payment specified or for a credit on his own tax obligation. The tax collector subsequently presented the tally in the normal manner to the Exchequer of Audit to verify his account, whereupon the tally was destroyed, completing the accounting circuit.
It is clear from this account that tallies were raised by the Exchequer in favour of the creditor before any final monetary payment had been made, either by the Exchequer or the tax collector. It is also clear that as a result of this innovation the Receipt Roll no longer recorded actual tax receipts but anticipated future tax receipts and similarly the Issue Roll recorded future payments to creditors.
In this guise, tally sticks anticipated tax revenues. They either represented a promise to pay cash (specie) in the future or more significantly they were a money substitute, issued in payment by the Exchequer for services rendered and accepted in payment of future tax obligations. Tallies of anticipation were a means for the Crown of extracting resources in advance of payment; for the creditors, tallies of anticipation were a claim against the Crown, good for money or absolution from tax obligations. Consequently, tax anticipation tallies were a form of (mostly short-term) interest free sovereign debt.
Fig.5 Writ of Assignment and Tally of Assignment – allocating and anticipating future tax revenues. Tallies of Assignment were issued directly to creditors, who subsequently presented them to tax collectors for cash payment or in payment of tax obligations. Tallies of Assignment were transferable, a form of money substituting coin.
Tallies of Anticipation as Money
The advantages to the creditor of receiving anticipatory tallies were that they did not bear the creditor’s name and so they could be put up as collateral for private debts or exchanged in the market place (at a discount). Tallies of anticipation thus became transferrable credit, acting as a form of money. In the case of default, they provided the financier with good security, as the tallies could be delivered to the specified tax collectors to be cashed in at face value.
The first known evidence of pledging tallies of anticipation as collateral is recorded in the Issue Rolls in the year 1343, when tallies of anticipation totalling £7000 were advanced to Paul de Montefiore, who subsequently borrowed against them at a discount. Other supporting evidence for the existence of secondary markets for tallies of anticipation is suggested by a number of assignments that were divided into a large number of tallies. A tally was indivisible and could not be pledged or sold to more than one creditor. By receiving several tallies of varying denomination, they could be pledged or exchanged to pay a number of creditors.
The Decline of the Tally Stick
During the reign of the early Stuart sovereigns, the expanding needs for finance and difficulties in forcing the flow of tax revenues eventually pitted the sovereign against parliamentary elites giving rise to the conflicts of the mid-17th century. The conflicts spawned government innovation with regards to the issuance of debt instruments that lead directly, by the end of the century, to the incorporation of the Bank of England (also the South Sea Company, a renewed East India Company and the failed Land Bank) and to the decline of tally sticks.
In 1604, a decision was taken by the Crown to contract out the collection of customs duties to ‘Customs Farmers’ in return for an annual rent. This arrangement enabled the Crown to anticipate specific annual revenues flowing into the Royal Treasury, bypassing recourse to parliament. However, Customs Farmers began a new practice of cashing tally sticks upon demand. They advanced rents owed to the Crown directly to the Crown’s creditors, accepting tallies written on those rents prior to their collection. They were in effect lending their own money to the Crown, interest free. Eventually, they succeeded in their demands to receive interest on the money they advanced. As a result of their actions, however, tally sticks began to cease circulating: as they had been accepted by the Customs Farmers, they were only of value by virtue of their being a record of personal funds they had paid out. Tally sticks thus became a means of the sovereign raising interest bearing cash loans from a very specific group of creditors and consequently they fell into decline, being slowly side-lined by the issuance of the first English bonds, confusingly called “Tallyes of Loan” that were accompanied by “orders of repayment”, in the 1660s.
Tally sticks finally became obsolete in 1826. On 16th October 1834, two cart loads of tally sticks were disposed of by burning them in underfloor stoves in the basement of the House of Lords. Unfortunately, the fire spread out of control destroying both the House of Lords and the House of Commons. Fortunately, Westminster Hall was spared along with Jewel Tower, the Undercroft Chapel, the Cloisters and Chapter House of St Stephen’s. As a consequence of their being burned, the significance of tally sticks as supplementary money has largely been forgotten.
Sources:
Desan, Christine. Making Money. Coin, Currency and the coming of Capitalism
Von Philippovich, Eugen. History of the Bank of England
Moore, Tony. ‘Score it upon my Taille’: The Use (and Abuse) of Tallies by the Medieval Exchequer
yeah! nice posting. since when did you become a writer?