1. Tally sticks – The First Credits.
A number of notched bones have survived from the Ice Age. The notches and marks made on these bones were clearly made by humans for some sort of intentional purpose.
The interpretation of these bones is, or course, highly speculative. However, a convincing argument has been put forward by studying the patterns inscribed on them that these bones were used as a form of primitive record-keeping. The patterns on them indicate a careful tracking of the lunar waxing and waning as a way of marking off time. Lunar cycles would have been used to track the migrations of herds, the reproductive and moulting patterns of animals, the growth of plants, and even the menstrual cycles of fertile females. In this latter role, they may be related to the enigmatic so-called “Venus figurines,” found throughout Ice-Age Europe, which appear to be pregnant females.
These calendrical rhythms were also used to order the ritual life of Ice Age peoples, indicating that even at this distant phase of history, humans were extremely social and not just isolated bands roaming peripatetically across the landscape:
Calendrical rhythms determined the times when sparse populations came together in the seasonal gatherings that were the occasions for exchange – of family members as well as gifts. These ritual sites typically were on rivers, often near distinguishing natural features such as caves. The most famous sites were orientated to the rising or setting of the sun at the four major points of the year, the solstices and equinoxes….
After the Ice Age (Michael Hudson)
The Lembobo bone is a fibula of a baboon with artificial notches on it which was found in a cave in Swaziland which dates from the Paleolithic period-about 45,000 years ago. The notches are thought to represent some sort of calendrical counting system, probably based on the phases of the moon. The Ishango bone is another baboon fibula bone from about 20,000 years ago bearing similar markings. This is thought to also have a possible lunar calendrical function, but it has also been speculated that it may represent a tally stick. The Wolf Bone, found in Europe and dated from about 30,000 years ago, is another example.
These tally sticks may have been single tally, in which an object is notched as a mnemonic device. Examples include the messenger sticks of the Inuit people, and the knotted strings used many native American tribes. In Peru, these evolved into the khipu: the bundles of strings used to manage the inventory of the Inka redistributive economy.
The other tally stick “technology” was the split tally, in which both parties to a transaction retained a copy of the transaction record as a means of verification. One half would go to the debtor, and the other half to the creditor. Some unique item which could be split apart was chosen, such as stick or a bone. The natural variability of the split and of the material itself prevented forgery. The ancient Chinese used bamboo sticks about the size of two chopsticks for this purpose.
In Medieval England, tally sticks were made of hazelwood harvested from the banks of the Thames near parliament. Such wood had a distinct feel and grain to prevent counterfeiting. Each tally stick would be squared off and marked–V-shaped notches would represent pounds, broad grooves would indicate shillings, and sharp notches would indicate pence. A debtor’s name and a short description of the transaction would be inscribed, and the stick would be split vertically in two down the center. The debtor would retain one piece, called the “foil,” while the creditor would receive the other piece, called the “stock.”
The portion of the stick retained by the creditor retained the entirety of the original base where the stick was cut from the tree or branch to prevent counterfeiting. If marks were altered by one party, the discrepancy would be obvious to the other, making sure the transaction was secure. In fact, the term “stock” used in tallies is the origin of our term today:
Curiously, our modern use of the term “stock” to represent a share in a corporation may derive from the stock and foil technology. Almost certainly the British term for fixed income obligations–stocks–comes directly from the use of stocks and foils up to the early nineteenth century to record loans to the Bank of England. For generations, to have “stock” in the Bank of England literally meant that one held a creditor’s wooden stock, and dividends were presumably collected by presentation of the stock at the bank.
The Origins of Value, p. 110
The tally system survived in England and was a major means for raising funds by the Exchequer for at least six centuries. Often times the credit portion might be transferred to someone else as a form of “payment.” That is tally sticks circulated as money–transferable credit. If the king needed money, he would “raise a tally” by issuing tally sticks addressed to the local tax collector in place of cash. These sticks would then circulate: their value came from the fact that they could be used to pay the tax obligation. The sticks would be presented at the time of tax collection (“I already paid”). In this way, they circulated as bills of exchange.
Geoffrey Gardiner imagines what such a system might look like in a pre-literate society:
Let us assume that the huntsman is in need of a supply of arrows, but until he can hunt he has nothing to give in exchange. So he promises the fletcher ten haunches of venison in exchange for a supply of arrows. In modern terminology he is asking for ‘trade credit.’ In evidence of his promise he notches ten bones and gives them to the fletcher. These are his ‘markers.’ The fletcher needs wood, so he asks the woodsman for trade credit, promising haunches of venison when the hunter has been successful. He could hand over some of the markers of the huntsman as evidence of his promise. The various deals might be notified to the headman, who, we may confidently assume, will also require a reward of venison in return for a promise to enforce the deals. The huntsman gets his arrows, and goes off to the hunt. Having been successful, he pays off his debts to the holders of his markers. The chief gets his reward too.
Wray, Credit and State Theory of Money, p. 119
In reality, the above scenario is not very likely. We know from anthropological studies that In small-scale tribal societies, cooperation is given open-handedly, without the need to have some sort of formal record of who owes what to whom.
But perhaps the notched bones above indicate some sort of dealing with outsiders, perhaps from another tribe. We know that rituals took place at certain specified portions of the year, and during these rituals, exchanges took place. In fact, we know that ritual reciprocal exchange was explicitly designed to establish and maintain social bonds in disparate groups, as in the Kula trade.
Such rituals and exchanges probably took place long before the advent of domesticated agriculture, far back into the Ice Age. The presence of seashell ornaments hundreds of miles inland indicates that such trade routes existed as far back as the Ice Age. We also know, for example, that the ochre used to decorate the painted cave walls at Lascaux did not come from the same region, or nearby, but instead came from hundreds of miles away from deep beneath the earth’s surface, probably changing hands along the way. This ocher indicates that already in the Ice Age there must have already been some sort of primitive “mining” industry.
The aboriginal natives of Australia lived a Stone-Age existence and yet had complex trade routes between various tribes, exchanging stones, ochres, tools, hides, ceremonial items and other resources. Tribes would come together at certain specified portions of the year for rituals involving music and dancing. At these rituals, ceremonial trade would take place.
On the Daly River, south of Darwin, trade took place at occasions when neighbouring tribes gathered for other reasons such as initiation or sacred ceremonies…each man and woman had a special trading partner in a complex network of gift exchange. A vast network of trade routes criss-crossed the Australian continent prior to white settlement, after which the trade contacts were soon broken. Pearl shell was traded from tribe to tribe to the Nullarbor Plain. Native tobacco moved from the central ranges to the south of the continent, while wombat fur for twine making moved from the south to the north. Stone spear heads were traded from the central Australian quarries to the tribes of Arnhem Land.
It’s possible that the tally sicks, whether single or split, were the earliest permanent records of economic transactions that we know of. Such items indicate that money is not a “thing” but transferable credits (neither the bones nor sticks themselves had any intrinsic value). Their simplicity is deceptive. In fact, they are surprisingly effective financial instruments, which is attested to by the longevity. The Napoleonic Code recognized them as valid financial instruments, and some were still in use in part of Central Europe into the Twentieth Century. When the Bank of England retired them from circulation in favor of coins and paper money in the nineteenth century, the tally sticks were burned en masse in a bonfire. The resulting fire burned down the Houses of Parliament; today’s iconic Gothic Revival building alongside the Thames is its replacement.
We cannot be sure that such arrangements ever happened exactly as thus surmised, but notched bones do survive from hunter-gatherer settlements of the Stone Age. Indeed, some are very elaborately notched, suggesting to some scholars quite sophisticated accounting. Others claim that the earliest notched bones are calendrical in character. This scholarly dispute may be of no great significance as accounting techniques must at some stage absorb calendrical technology, as time is an important factor in accounting, and the transition from astronomical notation to a notation of obligations is, we are informed, documented by c. 9000 BC.
Sticks are easier to notch than bones, and the notched stick was the main method of keeping permanent accounts in places with ample supplies of wood until the end of the 18th century. In Chapter 5 of The Universal History of Numbers (1994) Georges Ifrah introduces his readers to the mode of using notched sticks. In the first sentence of the English edition of this comprehensive work of impressive scholarship he tells his readers that notched sticks – tally sticks – were first used at least 40,000 years ago. He states that as a method of accounting the notched stick has stood the test of time. He suggests that only the invention of fire is older technology than the accounting tally.
In the first part of the chapter Georges Ifrah describes notched sticks merely as a means of counting, but on the second page he explains how the tally can be used as a form of bill and receipt, and then likens it to a wooden credit card, nearly as efficient and reliable as the plastic ones with magnetic stripes and microchips with which people today are so familiar.
Wray, Credit and State Theory of Money, pp. 119-120
The next archaeological indicators of formal economic arrangements are small clay tokens found throughout archaeological sites in the ancient Near East after 9000 BC. But to understand their role, we must first understand the changing nature of social relations are we moved into the Neolithic (farming) period of history. The changing nature of social relations due to farming, especially irrigated farming, is necessary to understanding the origin of money.