Tally sticks are an ancient mnemonic device (memory aid) to record and document numbers, quantities, or even messages. While the origin of this technique is lost in prehistory, archaeological proof of the existence of such devices is ample. One of the most famous ancient artifacts is the so called Ishango Bone. The oldest known device is the Lebombo bone and is dated from 35,000 BC. Historical reference is made by Pliny the Elder (23 - 79 AD) about the best wood to use for tallies and Marco Polo (1254-1324) who mentions the use of the tally in China.
Principally there are two different kinds of tally sticks, the single and the split tally.
The single tally stick is an elongated piece of bone, ivory, wood, or stone which is marked with a system of notches. The single tally stick serves predominantly mnemonic purposes. Related to the single tally concept are messenger sticks (e.g. Inuit tribes), the knotted cords - khipus or quipus - as used by the Inca. Herodotus (485 (about) -- 425 BC) reported the use of a knotted cord by Darius I of Persia (521 (about) -- 486 BC). The rosary is a remnant of the technique represented in the knotted cord.
The split tally is a technique that became common in medieval Europe which was constantly short of money (coins) and predominantly illiterate in order to record bilateral exchange and debts. A stick (squared Hazelwood sticks were most common) was marked with a system of notches and then split lengthwise. This way both of the two halves record the same notches and each party to the transaction received one half of the marked stick as proof. Later this technique was refined in various ways and became virtually tamper proof. One of the refinements was to make the two halves of the stick of different lengths. The longer part was called stock and was given to the party which had advanced money or (other items) to the receiver. Hence the word stockholder.
The shorter portion of the stick was called foil and was given to the party which had received the funds/goods. Using this technique each of the parties had an identifiable and tamper-proof record of the transaction. The split tally was accepted as legal proof in medieval courts and the Napoleonic Code (1804) still makes reference to the tally stick in Article 1333. Along the Danube and in Switzerland the tally was still used in the 20th Century in rural economies.
The most prominent and best recorded use of the split tally was in medieval England as a tool of the Exchequer for the collection of taxes by local sheriffs (tax farmers 'farming the shire'). The split tally of the Exchequer was in continuous use until 1826 and the system of tally marks of the Exchequer is described in The Dialogue Concerning the Exchequer as follows: