The Origin of Stocks

Thirteenth century tally sticks

These narrow shafts of wood are receipts. They are made of hazel wood and were originally stored in leather pouches or canvas bags. The notches in the wood indicate the amount that has been paid.

According to the Latin writing on them, several of the tallies were issued to Nicholas de Turevill. He was sheriff of the counties of Buckinghamshire and Bedfordshire between 1293 and 1296, during the reign of Edward I. One tally was a payment relating to royal forest in the counties. Another cleared some of his outstanding debts to the king.

Tally sticks were used by accountants and by officials of the Exchequer who managed the revenue of the Crown. They were a physical proof of payments made into the Treasury. The ‘Dialogue of the Exchequer’ describes a tally as:

“the distance between the tip of the forefinger and the thumb when fully extended … The manner of cutting is as follows. At the top of the tally a cut is made, the thickness of the palm of the hand, to represent a thousand pounds; then a hundred pounds by a cut the breadth of a thumb; twenty pounds, the breadth of the little finger; a single pound, the width of a swollen barleycorn; a shilling rather narrower than a penny is marked by a single cut without removing any wood”.

After the notches were made on the stick, the shaft was split lengthways into two pieces of unequal length, both pieces having the same notches. The longer piece (the stock) was given to the payer and the Exchequer officials retained the shorter piece (the foil). When the accounts were audited, the two pieces were fitted together to see if they would ‘tally’.

Exchequer officials continued to use tallies until 1826, with very large tally sticks created to record huge sums of money. It was the burning of unwanted tally sticks in 1834 that caused the fire that destroyed the old Houses of Parliament.

The National Archives

The evolution of money technologies originates with the tally stick. From tally stick comes the modern word “stock,” meaning a financial certificate and deriving from the use of the Middle English for the stick. The piece retained by the bank was called the “foil.” The holder of the stock was said to be the “stockholder” and owned “bank stock.” A written certificate presented for remittance and checked against its security later became a “check.”

According to legend, Wall Street was founded in its present location because of the presence there of an enormous chestnut tree, said to be plentiful enough to supply enough tally sticks for the emerging American stock market.

University of Toronto library