20 Clever Ways People Banked Before Banks Existed

In the 1100s, England’s royal treasury used hazelwood sticks, split in two, to keep track of its debts. Each side was given to one party; both parties held a copy of a debt, with the matching wood grain making forgery almost impossible. The tally sticks themselves could even be traded as a stand-in for the debt they recorded. In 1826, Parliament abolished the system. When the government burned the old sticks in 1834, the fires under the House of Lords grew too hot, and they eventually consumed the Palace of Westminster.

In July 1640, King Charles I confiscated £130,000 of merchant silver kept at the Tower of London’s Royal Mint. Merchants subsequently stored their silver bullion with private goldsmiths instead, locked inside masonry strongrooms and iron-bound wooden chests. The goldsmiths gave out paper “running cash notes” for the deposits, which then began to be signed over to others as payment, marking the earliest form of banknotes circulating in England. It wasn’t until 1694 that the Bank of England started issuing its own notes.

There were no banks in frontier towns during the gold rushes of the 1850s to 1910s. In the American West, these towns were serviced by the express firm of Wells Fargo. Founded in 1852, Wells Fargo delivered cash and gold dust in small, portable green wooden boxes made of pine and oak with iron straps, not the solid iron safes you might imagine. Empty, these boxes weighed only about 24 pounds each and sat beneath the driver’s seat in the express wagon, protected by an armed shotgun messenger.

Wampum, belts of polished clam and whelk shell beads, was used by Algonquian and Haudenosaunee peoples on the coast for diplomacy, treaty-making, and oral history, not as currency. But when there were few coins circulating in the 1600s, the colonial courts in New England and New Netherland deemed them legal tender and set the exchange rate at one dark bead per two light beads. What began as a sacred thing became currency by colonial decree.

In Yap, an island in Micronesia, large carved limestone disks, known as Rai stones, were used as money for things like buying land or paying a dowry. The stones never actually moved. When someone bought something with a Rai stone, a ceremony was held where the whole village would announce their agreement that the stone now belonged to the buyer, essentially forming a communal ledger. One stone was reportedly lost at sea during a storm but maintained its value.

In coal and logging camps in the 19th and early 20th centuries, government currency was not readily available, and companies instead compensated employees with scrip: coins or paper certificates that were redeemable for goods only at the company-owned store. Third-party dealers exchanged the scrip for U.S. dollars at a discount of between 15% and 25%. This meant workers lost part of their wages if they tried to convert it to real cash, effectively trapping many in debt to their employers. A 1938 law restricted the practice, but some mining communities continued to use scrip into the 1950s.

As early as the 8th century, caravans traversing the Silk Road trade routes were sending money across continents with a service known as Hawala (or Hundi). In a Hawala transaction, a customer would give money to a broker (hawaladar), who would then direct a corresponding broker in another city to pay the money to the recipient. The brokers would settle their accounts later through trade or personal contacts. No actual money was transferred, and no coins crossed the desert.

During the Great Depression, when banks throughout the nation were failing and there was no federal deposit insurance yet, people took their savings into their own hands. Some carried gold coins sewn into money belts or hidden inside their coats and corsets as protection from robbery on the road. Some cut slits in their horsehair mattresses to stash paper bills. People did this sort of thing in droves. It was a prudent response, not a reckless one. The Federal Reserve estimated that there were billions of dollars in cash held by the public.

The practice of pawnbroking is old. Buddhist monasteries in China had pawnshops as early as the 5th century, and the business spread to many industrialized cities during the 19th and 20th centuries. If you needed a loan, you would bring something valuable, such as clothes, a watch, or a tool, and receive money and a receipt for the amount plus interest. If you paid back the loan, your item would be returned; if not, the pawnbroker could sell it.

In Ethiopia’s Danakil Depression, workers quarried large slabs of rock salt, called amole. The salt was wrapped in grass fiber and used as money from the time of the ancient Aksumite Empire until the 1930s. The bars, measuring about 10-12 inches in length, were used to pay taxes and purchase livestock, and wealthy households stored surplus bars in sealed rooms as savings. In 1903, the government of Emperor Menelik II took in amole equivalent to 907,000 birr, or roughly 27% of its total tax revenue.

In many parts of the world, rotating savings groups were called something different: susu in West Africa, hui in China, and tandas in Mexico. They were all based on the same principle. Members of a group would pool together some amount of money at regular intervals, and the full sum would be given to one person at each meeting. The recipient was usually determined by lot, or sometimes by an auction or agreement, with each member receiving the pot once before the cycle restarted. These groups functioned as organized savings systems rather than games of chance.

Between the late 1780s and 1797, Britain’s Royal Mint stopped striking copper coins. The problem was that this left employers without any small-denomination currency with which they could pay weekly wages. So private businesses minted their own copper pennies and halfpennies, often featuring advertisements for local businesses or pictures of local landmarks, and millions were produced and circulated as change across the country. These are now known as Conder tokens, after James Conder, who compiled the first catalog of the pieces in 1798.

At one point in 18th-century Scotland’s county of Fife, copper coins were so scarce in Pathhead, a manufacturing village, that miners and nail-makers used iron nails, valued by merchants according to weight and size, to pay for beer and bread. Adam Smith included this practice in his classic 1776 book, The Wealth of Nations.

In colonial Virginia, planters deposited their crop in a government-owned warehouse, where tobacco inspectors appraised its quality and incinerated inferior grades. The warehouse then granted them a “tobacco note” specifying the quantity and quality of the leaf in their possession. Because each note could be exchanged for a specific amount of actual tobacco held in the warehouse, the note was legal currency that could be used to pay taxes, purchase land, and settle debts up to the 1760s.

Between the 1850s and the mid-1900s, grain-growing farmers of the Midwest would bring their wheat to a central grain elevator, where an elevator operator would provide them with a standard warehouse receipt for the weight and grade of grain they had just put in the silo, legally guaranteed to correspond exactly to the grain on deposit. These were not like regular receipts you receive from dropping off something at a shop. The grain receipts could be exchanged between parties: farmers bartered them with other businesses in lieu of cash, or used them as collateral to get a loan without needing a bank to issue credit.

From the 12th to 19th centuries, European parish churches kept their tithes, charity alms, parish registers and emergency funds in heavy wooden chests reinforced with iron banding. Each chest was fitted with three separate locks, with keys held by three people. These were the parish priest and the two elected churchwardens, and since each key belonged to a different person, no single person controlled the money. To open the chest, they all had to attend together.

During the 18th and 19th centuries in Britain and North America, many members of the working classes created member-owned Friendly Societies to provide security against calamity. For a few pence per week, the money was deposited in a common box, kept in a local hall, from which it would be used to pay sick wages for injured laborers, provide support for widows, or cover funeral costs. The societies were fraternal and nonprofit and functioned as mutual aid, rather than as a form of commercial insurance.

During the 17th, 18th, and 19th centuries, cabinetmakers made secret compartments in secretary desks, highboys, bureaus, and other furniture, such as false bottoms, secret spring-loaded drawers concealed behind turned columns, and even hollowed-out baseboards. These compartments were a security measure, meant for holding coins, loan documents, deeds, and other valuables when there were no safes, vaults, or deposit boxes.

Back in the 1700s and 1800s in rural North America, where cash was tight and the nearest bank could be many miles away, the country general store served as the community’s de facto bank. Storekeepers recorded all transactions in huge, heavy daybooks, and farmers typically paid their debts once or twice per year, usually shortly after the harvest season. Many were not able to pay in cash, but paid in butter, eggs, and livestock. The store’s high markups on goods could quickly result in debt.

In 1910, President William Howard Taft signed legislation to create a Postal Savings System for Americans, which went into effect on January 3, 1911. Farmers in rural areas and new immigrants who didn’t trust commercial banks could set up a savings account in their local post office. They received a fixed 2% interest rate and a postal savings certificate as proof of their deposits. Deposits surged during the Depression when many sought the safety of the federal government, and the program continued until 1966.

This content was created with the help of AI.