Tymoigne, Eric and L. Randall Wray. 2006. "Money: An Alternative Story." A Handbook of Alternative Monetary Economics, ed. by Philip Arestis and Malcolm Sawyer (Cheltenham, UK: Edgar Elgar): pp. 1-16. 6-7: "Historical evidence suggests that most 'commerce' from the very earliest times was conducted on the basis of credits and debits -- rather than on the basis of precious metal coins. Innes writes of the early European experience: "For many centuries, how many we do not know, the principal instrument of commerce was neither the coin nor the private token but the tally" (1913, p. 394). This was a "stick of squared hazel-wood, notched in a certain manner to indicate the amount of the purchase or debt," created when the "buyer" became a "debtor" by accepting a good or service from the "seller" who automatically became the "creditor" (ibid.). "The name of the debtor and the date of the transaction were written on two opposite sides of the stick, which was then split down the middle in such a way that the notches were cut in half, and the name and date appeared on both pieces of the tally" (ibid.). The split was stopped about an inch from the base of the stick so that one piece, the 'stock', was longer than the other, called the 'stub' (also called the 'foil'). The creditor would retain the stock (from which our terms capital and corporate stock derive) while the debtor would take the stub (a term still used as in 'ticket stub') to ensure that the stock was not tampered with. When the debtor retired his debt, the two pieces of the tally would be matched to verify the amount of the debt." 7: "Tallies could circulate as 'transferable, negotiable instruments' -- that is, as money-things. One could deliver the stock of a tally to purchase goods and services, or to retire one's own debt. "By their means all purchases of goods, all loans of money were made, and all debts cleared' (Innes 1913, p. 396). A merchant holding a number of tally stocks of customers could meet with a merchant holding tally stocks against the first merchant, 'clearing' his tally stub debts by delivery of the customers' stocks. In this way, great 'fairs' were developed to act as 'clearing houses', allowing merchants 'to settle their mutual debts and credits'; the 'greatest of these fairs in England was that of St. Giles in Winchester, while the most famous probably in all Europe were those of Champagne and Brie in France, to which came merchants and bankers from all countries' (ibid.). Debts were cleared 'without the use of a single coin'; it became common practice to 'make debts payable at one or other of the fairs', and '[a]t some fairs no other business was done except he settlement of debts and credits', although retail trade was often conducted at the fairs while conventional analysis views the primary purpose of the fairs as retail trade, Innes postulated that the retail trade originated as a sideline to the clearing-house trade. [a footnote suggests that Innes may have been too extreme in this respect] BoyerXambeu [Boyer-Xambeu, Marie-Therese, Ghislain Deleplace, and Lucien Gillard. 1994. Private Money and Public Currencies (NY: M. E. Sharpe).] concur that twelfth- and thirteenth-century European medieval fairs were essential in the trading and net settling of bills of exchange, the latter being done in several ways, from the (rare) use of coins, to bank transfers, the carrying forward of net positions to the next fair (one of the most frequently used techniques), and the use of transferable bills of exchange (ibid., pp. 34, 38-9, 65). These bills of exchange were, along with debenture bills for intra-nation trade between cities, the preferred debt instruments used by merchants in commerce. Coins were of less significance." 7: "Credits and debts are at least 2000 years older than the earliest known coins -- with the earliest coins appearing only in the seventh century BC. Second, the denominations of most (but not all -- see Kurke, 1999) early precious metal coins were far too high to have been used in everyday commerce. For example, the earliest coins were electrum (an alloy of silver and gold) and the most common denomination would have had a purchasing power of about ten sheep, so that "it cannot have been a useful coin for small transactions" (Cook, Robert M. 1958. "Speculation on the Origins of Coinage." Historia, 7: 257-62, p. 260). They might have sufficed for the wholesale trade of large merchants, but they could not have been used in day-to-day retail trade."
-- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu michaelperelman.wordpress.com
