The chapter opens with an observation about disputes that is unusually cold. When a great bitterness is settled, some bitterness is bound to remain, so how can that count as good?
The claim is that settlement is not resolution. A quarrel large enough to require settling has produced a state of feeling that the settlement does not remove, and whatever the terms, one party has conceded and remembers it. The chapter therefore refuses to treat successful arbitration as a good outcome, which sets it against the ordinary assumption that the job of government is to resolve disputes well.
What it recommends instead is prevention by non-enforcement, and it uses a piece of everyday commercial practice to say so. The sage holds the left half of the tally and does not press his claim on the other party.
A tally was a contract: a piece of wood or bamboo inscribed and then split, with each party keeping a half that matched only the other. Producing your half was how an obligation was proved. Commentators do not agree about which half the creditor kept, and the chapter has been read both as saying the sage holds the claim and declines to use it and as saying he holds the debtor's half, so the two readings differ on whether he is forgiving a debt or acknowledging one. What both agree on is the next line: one who has power attends to the tally, and one without power attends to collecting.