The economic rights that were secured through these two charters were not only dependent upon access rights to grazing, pannage and woods, but also dependent on a stable system of exchange and coinage. Transactions were carried out in bullion; you bought and sold with coin…if you had it. Most did not. Commercial credit as a basis for business transactions virtually did not exist as we know it today in modern banking. In the middle ages England was Catholic and laws prohibiting usury were widespread in both church and state. It was a simple cash economy on the Commons protected as it were over a relatively long period of time from the insidious affects of usury.
In England from approximately the 12th to the 17th century the Commons were a kind of ‘usury free zone’. It was this free zone, coupled with an economic system that was built around the tally stick exchanges that ensured, more than anything else during this time period a relatively prosperous society with rights to self-determination. It becomes important to see here, that the rights that were confirmed in Magna Carta were only as good as the stability of the currency system that was in place on the Commons and the same is true today. Economic rights have always depended upon a stable currency, and what history has shown repeatedly is that usury destroys economies. Both the Forest Charter and Magna Carta found their roots within a much older body of law that predates modern history and that body of law, both secular and ecclesiastical in nature dealt with the problems, punishments and restrictions on usury in great detail.
Although coinage was in circulation on the Commons it was inadequate as a means of exchange; there was simply not enough of it. What financed the Commons were the tally sticks that were the principal means of exchange from the 11th century onwards. The tallies were sticks eight inches and longer notched with various size kerfs across the stick, these cuts according to depth, angle and width indicated different currency amounts in pounds, shillings and pence. The stick was then split providing each party an identical transaction record, and counterfeit proof because only the grain from the same stick would match the other half providing a match grain ‘signature’. This signature was accepted as legal proof in Napoleonic courts for hundreds of years.
Beginning in 1100 with King Henry I tallies were accepted as payment for taxes. The tallies would have been spent into circulation by the King for payment of goods, services and public works projects. They would have also been sold like bonds, although non-interest bearing, at a discount when the King needed gold coin. What vested the tallies with the power of an exchange medium was not that they were accepted by the Commoners, but that they were accepted by the King as payment for taxes. When taxes were paid, the Exchequer would keep one half of the tally on a rod, the other match side going to the King. More importantly, the tallies allowed the King the supreme prerogative (Seignorage) to create money, a sufficient quantity of money to enable commerce to function efficiently, a function that gold coinage over the previous two millennium had never accomplished.
The tallies, more then just a quaint artifact from the middles ages were the bedrock of the longest tenured, most successful form of currency in modern history spanning a period of over 700 years. They built the great cathedrals, many of which today are still the primary source of income in their respective towns and cities in Europe through tourism. These cathedrals in a very real sense became an economic, cultural and spiritual inheritance for generations to come. During this period the cathedrals each year were the site of pilgrimages for tens of thousands, who given their relative economic security had the leisure to travel for extended periods on these pilgrimages that kept money, art and ideas flowing from region to region. The litmus test of a successful civilization is how it manages its currency. How it treats its prisoners and women, should also be on the list. On the first two counts we are failing miserably.
It is interesting to note that the tally sticks underwrote part of the stock of the Bank of England in 1694 and they were still in circulation in the early 19th century. When the English plutocracy elected to put an end to the symbolic power of the tallies, they were gathered up and tossed in the fire. The tallies however, were not so easily dispatched. The fire became too hot, they caught an adjacent wall on fire and burned down two Houses of Parliament. You got to love the irony here!
The tally sticks in the Middle ages and the bills of credit in Colonial America both represent the very best of monetary enlightenment. They fulfill the foundational requirements necessary for a currency to serve the public interest as opposed to private wealth accumulation. Neither were perfect and in fact both had long standing problems, but managed a viable economy in spite of them. If we are to rediscover the merits of these exchange systems, we need to understand why they worked. Money, like gravity, has laws that it follows and those laws are immutable despite the promised benefits of the global economy that make up their own monetary laws for their exclusive benefit. Recognizing a few of these laws is the beginning of sound currency policy. Here are five:
- The ‘local’ currency had the primary function of a medium of exchange and not a medium of wealth storage. It had relatively no intrinsic value. Having no intrinsic value guaranteed both a sufficient quantity and velocity of money within a given locale.
- Both the tallies and the bills of credit functioned within a dual exchange system where gold/silver coinage carried intrinsic value and therefore was used both for wealth storage and also for international trade while maintaining the function and the integrity of the local exchange medium.
- They were ‘publicly’ controlled either through Monarchy or government and exercised the supreme prerogative of Seigniorage. As a public system, they were used to pay taxes, creating an inherent demand for the money.
- The currencies were spent into the system for public works projects guaranteeing employment.
- They were also lent into the system where the interest was cycled back to the public having an offsetting affect on the problem of usury and lessening the tax burden.