Chapter VII
The Pound
About the year 775 A.D., the people of England adopted the word "pound" as the name of the unit which expressed the exchange value of coins and other goods and services. They used 925 parts of silver and 75 parts of copper to make a one-pound (by weight) block of alloy. From this one-pound block were coined 240 silver coins called "sterlings" or silver pennies. That alloy has since been called "sterling silver."
The exchange value of goods or services was expressed in "pounds of sterling." Later the term was shortened to “pounds sterling” and is frequently referred to as "pounds."
One-pound sterling silver coins were not made. The word "pound," therefore, was not the name of a coin. The sterling was the coin (monetary) unit. The word “pound” was the name of the unit used to express the exchange value of the coins and other goods and services. It also was the name of the unit used in accounting. The exchange value of goods, services, income, expenditures, and so on, is recorded in accounting by means of the unit that is used to express the exchange value of the items recorded.
The sterlings were coins, each with an exchange value of 1/240 pounds or pounds sterling. These coins served as a medium of exchange.
In later years, England made many different coins. In 1351, England made a gold coin called a "noble." That [p. 70] was a coin (monetary) unit. England also made gold coins called half nobles and quarter nobles. The noble, at that time, had 120 grains of gold with an expressed exchanged value of 1/3 pound. In 1489, England made a coin with 240 grains of gold, called a "sovereign," with an expressed exchange value of one-pound sterling. The shilling was issued about the year 1504. There were times when England made coins called “crowns,” "groats," "florins," and "double florins." These were gold or silver coins upon which the government placed a fixed value. When the market value of the metal in these coins became higher than the government-fixed value, the coins were exchanged for the higher market value and no longer circulated as media of exchange.
All of these coins were properly called units of coins or monetary units, but the names of these coins were not officially used as the names of units to express exchange value. The exchange value of these coins was expressed in pounds, or pounds sterling, or fractions thereof, a fact that provides further proof that the pound or pound sterling was not a monetary unit but the name of the abstract unit used to express the exchange value of the corns as well as the exchange value of other goods and services. To call the pound the British monetary unit, as some writers do, does not make it so. It is correct to call the pound the British unit of account because the unit is used in accounting.
An Early English Currency
About the year 1100 A.D., the English government issued items which were used as currency but which did not consist of coins or paper bills. They were made of wooden sticks called "tally sticks."
The sticks were issued directly by the government as payment for goods and services purchased by the government. They were the equivalent of what we call tax credit certificates. They were, in effect, bona fide documents "written" by means of cutting notches in the wooden sticks. They gave evidence of the amount of [p. 71] pounds worth of due taxes for which they would be received as payment.
From the time they were issued as a payment for goods or services rendered to the government until they were redeemed as payment for taxes, they served the people as currency.
The following quotation is taken from the 1913 edition of The Century Dictionary and Cyclopedia:
Tally
“A piece of wood on which notches or scores are cut to mark numbers, as in keeping an account or giving a receipt; loosely, anything on which a score or account is kept.
“Before the use of writing, or before writing became general, this or something like it was the usual method of keeping accounts. In purchasing and selling it was customary to make duplicate tallies of the transaction, or to split one tally through the middle.
“In the English Exchequer (Treasury) tallies were used until 1812, which answered the purpose of receipts as well as simple records of matters of account.
“An Exchequer tally was an account of a sum of money lent to the government, or a sum for which the government would be responsible.
“The tally itself consisted of a square rod of hazel or other wood, having on one side notches indicating the sum for which the tally was an acknowledgment. On two other sides, opposite to each other, the amount of the sum, the name of the payer, and the date of the transaction were written by an officer called the writer of the tallies. This being done, the rod was then cleft longitudinally in such a manner that each piece retained one of the written sides, and one-half of each notch cut in the tally.
“One of these parts, the counter foil or counterstock, was kept in the Exchequer, and only the other, the stock, issued. When the part issued was returned to the Exchequer (usually as a payment of taxes) the two parts [p. 72] were compared, as a check against fraudulent imitation. This was called tally or tallies.
“The size of the notches made on the tallies varied with the amounts. The notch for 100 pounds was the breadth of a thumb; the 1 pound notch, the breadth of a barleycorn. A penny was indicated by a slight slit.”
More details on the issuing and use of tally sticks are given by Gertrude M. Coogan in Money Creators beginning on page 313.(1)
“English Tallies:
“This form of national money was adopted in England as the means of financing the government, by Henry the First, fourth son of William the Conqueror. Henry I ascended the throne in the year 1100 A.D.
“The 'tallies' were made of wood, being four-sided rods of hazel or linden wood about an inch thick. The amount due from the state to the payee was designated by notches cut into one of the flat sides, and also written in ink on the two adjacent sides. The piece was then split lengthwise through the notches, so that each piece carried ink markings of value.
“One piece was paid out to the payee; the matching piece being retained in the treasury as a method of preventing counterfeiting.
“State Money
“All who served the king or state were paid in these tallies, enough being issued so that they could be paid out until tax collection time again brought in this money for state use. Supplies for the royal household were also purchased by the issuing of these tallies, which circulated among merchants and people, being used in the exchange of commodities and services. [p. 73]
“At tax collection time the sheriff of each county called all who had exchequer tallies to present them and obtain allowances for them. They were matched with the counter-tallies. When the edges matched, they were said to 'tally’ hence the name.
“Their sole value was derived from their acceptability by the people in payment for any kind of goods and services, which in turn was derived solely from the acceptability as (payment for) taxes (levied) by the government which had paid them into circulation in the first place.
“Used For Centuries
“These tallies were used as money by the people of England for 594 years, exclusively; for the next 89 years partially, and for another 43 years unofficially, a total of 726 years. This is a tribute to their usefulness and acceptability, and political soundness, which may well be marked by the advocates of the gold standard, an infant in comparison. It will be noted that the incidence of violent depressions is traced back, in all modern treatises, only a little over one hundred years; which period corresponds accurately with the use of the gold standard.
“The Bank 'of England' was chartered in 1694. There were then about $70,000,000 in wooden tallies in circulation. The new bank was given the original privilege of issuing paper money, loaning it into circulation, and collecting interest on its creations. The plain fact was that there were not enough tallies in circulation! At any rate, the new private money did not seem dangerous, because no one could get it without paying interest. It turned out, however, to be a case of the camel being allowed first to put his toe inside the tent, which was followed by further extension of privilege until the camel alone was in the tent, the master having been crowded out.
“A weak king could not defend himself; parliamentary hirelings of the money creators did the rest.
“Naturally, the use of the more convenient paper [p. 74] bank money after a time displaced the cumbersome wooden tallies, some of which were two or four feet in length.
“In 1783 the use of tallies was abolished by an Act of Parliament. America was free but England sank deeper into false money principles and hence slavery!
“In spite of this, however, tallies were continued until 1826. In 1830 the heaps of broken tallies were ordered burned in the furnaces of the Houses of Parliament. A defective or overheated flue started a fire, which completely destroyed the buildings.
“One of the tallies is still preserved in the British Museum. Edmund Burke mentions tallies in his Speech of Conciliation.
“And note well, that the value of the tallies was acknowledged by the incorporators of the Bank 'of England,’ for, in 1697, when the capital was increased, $800,000 of the new capital was paid for with the wooden tallies. They were accepted at par.
“The English tallies were another form of sound money maneuvered out of existence by the privately owned Bank of England. The Bank of England usurped the prerogative of money issuance, and its owners caused the tallies to be taken out of use.”
Summary
When the word "pound" was adopted in England in the year 775 as the name of the unit used to express the exchange value of goods and services, it really expressed the market exchange value (the price) of one pound of sterling silver. The exchange values of all goods and services were expressed in the ratio of their exchange values to what was then the exchange value of one pound of sterling silver. The result of establishing that ratio was that the exchange value of each item had a definite ratio to the exchange value of every other item. Items equal to the same thing are equal to each other. Thus, items having a definite ratio of exchange value to the exchange value of one pound of sterling silver [p. 75] will have a definite ratio of exchange value to the exchange value of each other.
That exchange value may be accurately expressed by using that common denominator unit called the pound. The unit called the pound served the same purpose in England that the unit called the point served when Peter Meyer first used it to express the exchange value of the goods in his store.
After some time passed and the ratio of the exchange value of each item was well established in relation to the exchange value of other items, it was no 1onger necessary for the exchange value of a pound, by weight, of sterling silver to remain constant.
The exchange value of sterling silver did not remain constant, but the term "pound" or "pound sterling" continued to serve as the name of the unit used to express the exchange value of all goods, coins, and services, including the) exchange value of a pound, by weight, of sterling silver.
In 1973 a pound, by weight, of sterling silver had an exchange value of about seven pounds or pounds sterling. Note the two different meanings of the term "pound sterling."
When it was announced that the pound had lost value, it meant that the exchange value of the currency, which was expressed in pounds, lost value. The term "pound" (or pound sterling) was the name of the abstract unit used to express the exchange value of the currency, but it had no exchange value in itself. Therefore, it had no exchange value to lose.
In the preceding descriptions of tally sticks and their function, it was shown that currency may be issued by a government without gold, without silver, and without borrowing.
Today, in place of tally sticks, a governmental body could issue tax credit certificates which would serve the same purpose that tally sticks served. They would be as convenient and acceptable as the present Federal Reserve notes. [p. 76]
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