5 ms·

A Medieval British Anti-Counterfeiting System: Split Tally Sticks (2017)

49 points by jamesfisher 6y ago

chrisseaton 6y ago
What I don't understand is - if the two parts of the tally stick presented don't match, what do you do then? How do you resolve that? How do you know which party is the one in error?
- stormdennis 6y ago
  Then you've got what's called a dispute.
- elcritch 6y ago
  Wonder if they had 3-way tally sticks? Ideally the third party would be neutral.
- CodeShmode 6y ago
  Since you can't undo a cut, the one with the fewest cuts would be the legitimate one.
  - chrisseaton 6y ago
    > the one with the fewest cuts would be the legitimate one How's that? If I throw away my old half, split a new one, and add fewer cuts to it, you'd apparently assume it was the legitimate one, but it wouldn't be.
    - jedimastert 6y ago
      If you make a new one it will be fairly obvious that it doesn't match the original sticks after looking at the grain
      - chrisseaton 6y ago
        > that it doesn't match the original sticks Lol but which is the original? That's the point. If you have two that don't match you don't know which one is the legitimate one you just know that they don't match and at least one is not legitimate.
        jedimastert 6y ago
        You make a good point. There could be a couple of solutions to this: 1. Have an artisan make the sticks. These required tools to make, and I don't know how prevalent the tools were, so it's entirely possible that it would be completely infeasible for anyone not the local carpenter to make these sticks, and would also make him a sort of arbitrating third party.
        shaftway 6y ago
        It doesn't matter which one is the original. The creditor has a stick with the debtor's imprint or mark on it of some kind. That's enough. Presenting a false stick as the debtor doesn't undo the existence of the creditor's stiick, and is essentially claiming that you have both debts. Otherwise you, as the debtor, could just throw your stick away, claim the creditor's is false, and be done with it.
        chrisseaton 6y ago
        If the debtor claims the creditor's stick is fraudulent how is that resolved? The tally stick doesn't solve this problem.
sdoering 6y ago
I really loved the history lesson. Being a history nerd I wonder why I never stumbled upon this. Thanks for sharing.
dbuxton 6y ago
On the dollar bills: I've always wondered how the "rip it in half" strategy works in practice given that getting it precisely right is hard and presumably the person with 50+% can cash in for full face value (see https://www.bep.gov/resources/faqs.html https://www.bep.gov/resources/faqs.html). Did people really do this?
- netsharc 6y ago
  I doubt banks would take 52% notes... So if it's "around" 50%, both pieces are probably worthless. And writing this it occurred to me: the way to tear it well is the way you do with a piece of paper: fold it in half aligning the corners, make a good crease, and tear slowly...
- dmurray 6y ago
  There is more specific information at the bottom of this page [0], linked from your one. There are a couple of provisions, but most relevant is that you need "clearly more than 50 percent" of the note in a case like this. [0] https://www.bep.gov/services/currencyredemption.html https://www.bep.gov/services/currencyredemption.html
- ilovetux 6y ago
  In the US paper currency has two copies of a serial number printed on the right half and left half of the face. both copies of the serial numbers must be present for the note to have any value.
evgen 6y ago
Didn't notice it in the article, but I believe this is also the source of the term 'short end of the stick' (the foil that was held by the debtor was often shorter than the stock.)
aww_dang 6y ago
An early example of debt monetization. The article fails to mention that taxes were payable in these tally sticks, thereby creating a market for these pieces of wood. Here's a more in-depth article https://glintpay.com/money-en_us/how-equating-wood-with-gold-left-englands-citizens-short-changed/ https://glintpay.com/money-en_us/how-equating-wood-with-gold... "However, the reality was that the vaults soon contained more wooden sticks than gold and the King soon began to issue tally sticks as he pleased." Anti-counterfeiting is a somewhat laughable turn of phrase in this context. "Overnight the Kings’ tally sticks reverted back to their real worth: firewood. The Kings’ creditors, the goldsmiths and their customers had “drawn the short end of the stick” (the origin of a still used expression)."
smitty1e 6y ago
> Whomever first came up with the ripped-bill idea probably got the idea from British split tally sticks. Or another creative person came up with it independently. We have better resources now, but I am skeptical that per capita creativity is any better now than it ever has been in human history.
- alimw 6y ago
  There's a different logic to the tally stick anyway
b0rsuk 6y ago
A 8-minute video on the subject: https://www.youtube.com/watch?v=2DkyahZplFo https://www.youtube.com/watch?v=2DkyahZplFo (Modern History TV)
derriz 6y ago
I groan every time I read something along the lines of "before long, they began issuing additional receipts for gold even if they were not backed by a deposit. This came to be known as ‘fractional reserves banking’ – lending out far more money than one actually has on deposit – and the road to banking ruin was firmly in place." That is not what "fractional reserves (sic) banking" is. What the author is describing is pure and simple fraud and nothing to do with the mechanics of fractional reserve banking. The goldsmiths were passing off paper certificates under false pretence that they correspond with real stored gold. Fractional reserve banking is really simple: you gather up a pile of money by convincing others to deposit their money with you (although when the depositors are other banks and institutions such "deposits" are often structured as bonds); you RESERVE a fraction of gathered money (varies but usually between 6% and 15%) while lending out the rest. At no point does fractional reserve banking involve "lending out more than what you have on deposit".
- zhte415 6y ago
  I also groan at this. You, or readers, may be interested in this article from the Bank of England's blog, which provides a somewhat more modern/real-world version of the 'money multiplier' i.e. market operations to provide liquidity/funds/interbank/creation of liabilities to fund assets (lending)/balance banks' sheets on lending, which has been the case for years now. https://bankunderground.co.uk/2015/06/30/banks-are-not-intermediaries-of-loanable-funds-and-why-this-matters/ https://bankunderground.co.uk/2015/06/30/banks-are-not-inter... An excerpt: > In the simple ILF model, bank loans represent the intermediation of real savings, or loanable funds, between non-bank savers and non-bank borrowers. Lending starts with banks collecting deposits of real resources from one agent, and ends with the lending of those resources to another agent. In the real world, however, banks never intermediate real loanable funds, an activity that, correctly understood, can only amount to barter. > Rather, the key function of banks is the provision of financing, meaning the creation of new monetary purchasing power through loans, for a single agent that is both borrower and depositor. Specifically, whenever a bank makes a new loan to a non-bank customer X, it creates a new loan entry in the name of customer X on the asset side of its balance sheet, and it simultaneously creates a new and equal-sized deposit entry, also in the name of customer X, on the liability side of its balance sheet. The bank therefore creates its own funding, deposits, through lending. It does so through a pure bookkeeping transaction that involves no real resources, and that acquires its economic significance through the fact that bank deposits are any modern economy’s generally accepted medium of exchange. This understanding of the function of banks, which we will refer to as the financing and money creation (FMC) model, has been repeatedly described in publications of the world’s leading central banks—see McLeay, Radia and Thomas (2014a,b) for an excellent summary. What has been challenging is the incorporation of these insights into macroeconomic models.

49 points by jamesfisher 6y ago

What I don't understand is - if the two parts of the tally stick presented don't match, what do you do then? How do you resolve that? How do you know which party is the one in error?

stormdennis 6y ago
Then you've got what's called a dispute.
elcritch 6y ago
Wonder if they had 3-way tally sticks? Ideally the third party would be neutral.
CodeShmode 6y ago
Since you can't undo a cut, the one with the fewest cuts would be the legitimate one.
- chrisseaton 6y ago
  > the one with the fewest cuts would be the legitimate one How's that? If I throw away my old half, split a new one, and add fewer cuts to it, you'd apparently assume it was the legitimate one, but it wouldn't be.
  - jedimastert 6y ago
    If you make a new one it will be fairly obvious that it doesn't match the original sticks after looking at the grain
    - chrisseaton 6y ago
      > that it doesn't match the original sticks Lol but which is the original? That's the point. If you have two that don't match you don't know which one is the legitimate one you just know that they don't match and at least one is not legitimate.
      - jedimastert 6y ago
        You make a good point. There could be a couple of solutions to this: 1. Have an artisan make the sticks. These required tools to make, and I don't know how prevalent the tools were, so it's entirely possible that it would be completely infeasible for anyone not the local carpenter to make these sticks, and would also make him a sort of arbitrating third party.
      - shaftway 6y ago
        It doesn't matter which one is the original. The creditor has a stick with the debtor's imprint or mark on it of some kind. That's enough. Presenting a false stick as the debtor doesn't undo the existence of the creditor's stiick, and is essentially claiming that you have both debts. Otherwise you, as the debtor, could just throw your stick away, claim the creditor's is false, and be done with it.
        chrisseaton 6y ago
        If the debtor claims the creditor's stick is fraudulent how is that resolved? The tally stick doesn't solve this problem.

sdoering 6y ago

I really loved the history lesson. Being a history nerd I wonder why I never stumbled upon this. Thanks for sharing.

dbuxton 6y ago

On the dollar bills: I've always wondered how the "rip it in half" strategy works in practice given that getting it precisely right is hard and presumably the person with 50+% can cash in for full face value (see https://www.bep.gov/resources/faqs.html https://www.bep.gov/resources/faqs.html). Did people really do this?

netsharc 6y ago
I doubt banks would take 52% notes... So if it's "around" 50%, both pieces are probably worthless. And writing this it occurred to me: the way to tear it well is the way you do with a piece of paper: fold it in half aligning the corners, make a good crease, and tear slowly...
dmurray 6y ago
There is more specific information at the bottom of this page [0], linked from your one. There are a couple of provisions, but most relevant is that you need "clearly more than 50 percent" of the note in a case like this. [0] https://www.bep.gov/services/currencyredemption.html https://www.bep.gov/services/currencyredemption.html
ilovetux 6y ago
In the US paper currency has two copies of a serial number printed on the right half and left half of the face. both copies of the serial numbers must be present for the note to have any value.

evgen 6y ago

Didn't notice it in the article, but I believe this is also the source of the term 'short end of the stick' (the foil that was held by the debtor was often shorter than the stock.)

aww_dang 6y ago

An early example of debt monetization. The article fails to mention that taxes were payable in these tally sticks, thereby creating a market for these pieces of wood. Here's a more in-depth article https://glintpay.com/money-en_us/how-equating-wood-with-gold-left-englands-citizens-short-changed/ https://glintpay.com/money-en_us/how-equating-wood-with-gold... "However, the reality was that the vaults soon contained more wooden sticks than gold and the King soon began to issue tally sticks as he pleased." Anti-counterfeiting is a somewhat laughable turn of phrase in this context. "Overnight the Kings’ tally sticks reverted back to their real worth: firewood. The Kings’ creditors, the goldsmiths and their customers had “drawn the short end of the stick” (the origin of a still used expression)."

smitty1e 6y ago

> Whomever first came up with the ripped-bill idea probably got the idea from British split tally sticks. Or another creative person came up with it independently. We have better resources now, but I am skeptical that per capita creativity is any better now than it ever has been in human history.

alimw 6y ago
There's a different logic to the tally stick anyway

b0rsuk 6y ago

A 8-minute video on the subject: https://www.youtube.com/watch?v=2DkyahZplFo https://www.youtube.com/watch?v=2DkyahZplFo (Modern History TV)

derriz 6y ago

I groan every time I read something along the lines of "before long, they began issuing additional receipts for gold even if they were not backed by a deposit. This came to be known as ‘fractional reserves banking’ – lending out far more money than one actually has on deposit – and the road to banking ruin was firmly in place." That is not what "fractional reserves (sic) banking" is. What the author is describing is pure and simple fraud and nothing to do with the mechanics of fractional reserve banking. The goldsmiths were passing off paper certificates under false pretence that they correspond with real stored gold. Fractional reserve banking is really simple: you gather up a pile of money by convincing others to deposit their money with you (although when the depositors are other banks and institutions such "deposits" are often structured as bonds); you RESERVE a fraction of gathered money (varies but usually between 6% and 15%) while lending out the rest. At no point does fractional reserve banking involve "lending out more than what you have on deposit".

zhte415 6y ago
I also groan at this. You, or readers, may be interested in this article from the Bank of England's blog, which provides a somewhat more modern/real-world version of the 'money multiplier' i.e. market operations to provide liquidity/funds/interbank/creation of liabilities to fund assets (lending)/balance banks' sheets on lending, which has been the case for years now. https://bankunderground.co.uk/2015/06/30/banks-are-not-intermediaries-of-loanable-funds-and-why-this-matters/ https://bankunderground.co.uk/2015/06/30/banks-are-not-inter... An excerpt: > In the simple ILF model, bank loans represent the intermediation of real savings, or loanable funds, between non-bank savers and non-bank borrowers. Lending starts with banks collecting deposits of real resources from one agent, and ends with the lending of those resources to another agent. In the real world, however, banks never intermediate real loanable funds, an activity that, correctly understood, can only amount to barter. > Rather, the key function of banks is the provision of financing, meaning the creation of new monetary purchasing power through loans, for a single agent that is both borrower and depositor. Specifically, whenever a bank makes a new loan to a non-bank customer X, it creates a new loan entry in the name of customer X on the asset side of its balance sheet, and it simultaneously creates a new and equal-sized deposit entry, also in the name of customer X, on the liability side of its balance sheet. The bank therefore creates its own funding, deposits, through lending. It does so through a pure bookkeeping transaction that involves no real resources, and that acquires its economic significance through the fact that bank deposits are any modern economy’s generally accepted medium of exchange. This understanding of the function of banks, which we will refer to as the financing and money creation (FMC) model, has been repeatedly described in publications of the world’s leading central banks—see McLeay, Radia and Thomas (2014a,b) for an excellent summary. What has been challenging is the incorporation of these insights into macroeconomic models.