More on monetary stakes, and why there was a 'stake holder'. Sounds like a promising new collectible [g].

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King Henry I, son of William the Conqueror, ascended the English throne in AD 1100. At that time, long before the invention of the printing press, taxes were generally paid in kind, Ie., in goods, based on the productive capacity of the land under the care of the taxpaying serf or lesser noble. To record production, medieval European scribes used a crude accounting device: notches on sticks, or 'tallies' (from the Latin talea, meaning 'twig' or 'stake'). Tally sticks worked better than faulty memory or notches on barn doors, as were sometimes used.

To prevent alteration or counterfeiting, the sticks were cut in half lengthwise, leaving one half of the notches on each piece-one of which was given to the taxpayer, and could be compared for accuracy by reuniting the pieces. Henry adopted this method of tax-record-keeping in England.

Over time, the role of tally sticks evolved and expanded. By the time of Henry II, taxes were paid twice a year. Giving the taxpayer a tally stick notched to indicate partial payment received, with the same lengthwise split to record, for both parties, the payment made evidenced the first payment, made at Easter.

These were presented at Michaelmas with the balance of taxes then due.

It takes only a little imagination to arrive at the next step: for tallies to be issued by the government in advance of taxes being paid, in order to raise funds in emergencies or financial straits.

The recipients would accept such tallies for goods sold at a profit or for coin at a discount, and then would use them later, at Easter or Michaelmas, for payment of the taxes. Thus, tallies took on some of the same functions as coin: they served as money for the payment of taxes. . .

After 1694, the government issued 'paper tallies' as paper evidence of debt (Ie. government borrowing) in anticipation of the collection of future taxes. Paper could be made easily negotiable, which made paper tallies the full equivalent of the paper banknote money issued by the Bank of England beginning in 1694. By 1697, tallies, banknotes and bank bills all began to circulate freely as interchangeable forms of money. Wooden-stick tallies continued to be used until 1826. Doubtless, ways were found to make them circulate at discounts, too, like the paper tallies.

One particular tally stick was quite valuable. It represented £25,000. One of the original stockholders in the Bank of England purchased his original shares with such a stick. In other words, he bought shares in the world's richest and most powerful corporation, with a stick of wood. It's ironic that after its formation in 1694, the Bank of England attacked the tally stick system because it was money issued outside the control of the Money Changers.

Why would people accept sticks of wood for money? That's a great question. Throughout history, people have traded anything they thought had value and used that for money. You see, the secret is that money is only what people agree on to use as money.

What's our paper money today? Its really just paper. But hem's the wick. King Henry VIII ordered that tally sticks he used to evidence tax payments received by the government. This built in the demand for tallies and eventually made them circulate and be accepted as money. And they worked well. In fact, no other money worked for so long as in the British Empire.